THE KINKI SHARYO CO., LTD.
AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR'S REPORT
Years Ended March 31, 2022 and 2021

THE KINKI SHARYO CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED BALANCE SHEETSMarch 31, 2022 and 2021
Millions of yen
2022
2021
LIABILITIES AND NET ASSETSASSETS

Current Assets
Cash and time deposits (Notes 6 and 7)
Receivables
Notes and accounts - trade (Notes 7, 15 and 20)
Notes and accounts - trade, and contract assets (Notes 7, 15 and 20)
Other accounts
Allowance for doubtful receivables (Note 7)\\

18,330479(22)18,787

Inventories
Work-in-process (Note 10)
Raw materials and supplies

Other current assets
Total current assets

Property, Plant and Equipment
Land (Notes 9 and 18)
Buildings and structures (Notes 9 and 18)
Machinery and equipment
Leased assets
Construction in progress
Accumulated depreciation

Investments and Other Assets
Stocks of subsidiaries and affiliates（Note 7）
Investment securities（Notes 7 and 8）
Intangible assets
Other assets
Allowance for doubtful receivables
Total assets

9,941

\

4,353
27,755-19(35)
27,73914,934525
15,45915,623523
16,146800
44,987653
48,891

2,582
14,89813,49985
1931,083(20,191)
10,892

2,582
14,59912,676908
830,773(19,532)
11,241

36
5,130
158
303
(9)
5,618
61,497

Current Liabilities
Short-term loans payable (Notes 7, 9 and 11)
Current portion of long-term loans payable (Notes 7 and 11)
Lease obligations (Notes 7 and 11)

\

36
5,411
215
239
(10)
5,889
66,021Millions of yen
2022
2021

\

PayablesTrade accounts (Note 7)
Construction
Advances received
Contract liabilities (Note 20)
Income and enterprise taxes payable
Accrued expenses
Provision for bonuses
Allowance for losses on contracts (Note 10)
Provision for product warranties
Other current liabilities
Total current liabilities

9,326
573
1,610
32
993
378
2,595
578
954
32,754

Noncurrent Liabilities
Long-term loans payable (Notes 7 and 11)
Lease obligations (Notes 7 and 11)
Deferred income tax liabilities (Note 13)
Net defined benefit liability (Note 12)
Other noncurrent liabilities (Note 9)

6
675
2,881
706
4,268
37,022

Total liabilities
Net Assets (Note 14)
Shareholders' equity
Common stock
Authorized - 12,000,000 shares
Issued - 6,908,359 shares
Capital surplus
Retained earnings
Treasury stock, at cost
27,008 shares in March 2022
26,761 shares in March 2021
Total shareholders' equity
Accumulated other comprehensive income
Net unrealized holding gains on securities
Net unrealized holding gains on derivatives
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

See accompanying Notes.

15,7003
12

15,170
6,234
435

7,976
723
938

-

535
1,016
368
4,087
567
1,790
39,839

-

-

578
16
730
2,879
660
4,863
44,702

5,253

5,253

3,125
14,653(105)

3,125
12,152(105)

22,926

20,425

1,202

\

\

-

429
(82)
1,549
24,47561,497

\

1,396
4
(419)
(87)
894
21,31966,021

THE KINKI SHARYO CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
Years Ended March 31, 2022 and 2021

Net sales (Notes 15,20 and 21)
Cost of sales (Note 16)
Gross profit
Selling, general and administrative expenses
Operating profit

Millions of yen
2022
2021
\
39,334\49,41934,13046,015
5,204
3,404
3,409
3,084
1,795
320

Other income (expenses)
Interest and dividend income
Interest expense
Foreign exchange gain
Gain on sale of investment securities (Note 8)
Gain on forgiveness of debt (Note 23)
Other, net
Income before income taxes
Income taxes (Note 13)
Current
RefundDeferred
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent

Amounts per share (Note 22)
Net income
Cash dividends applicable to the year
See accompanying Notes.

\

96
(104)
459
611
(67)
995

113
(196)
86
705
(2)
706

2,790

1,026

(15)
(9)
2,766
―
2,766

\

(475)
106
4
661
―
661

\
\

96.22
30.00

Yen
\
\

401.9230.00

THE KINKI SHARYO CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended March 31, 2022 and 2021
Millions of yen
2022
2021
\
2,766
\
661

Net income
Other comprehensive income
Net unrealized holding gains (losses) on securities
Net unrealized holding gains (losses) on derivatives
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income (Note 5)
Comprehensive income
Comprehensive income attributable toowners of the parent
Comprehensive income attributable tonon-controlling interests
See accompanying Notes.

\

(194)
(4)
848
5
655
3,421

\

(740)
10
(1,110)47(1,793)(1,132)

3,421(1,132)--

THE KINKI SHARYO CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years Ended March 31, 2022 and 2021
Millions of yen

Shareholders' equity
Number ofshares ofcommonstock
Balance at April 1, 2021

6,908,359

Commonstock\

Capitalsurplus

5,253\

Retainedearnings

3,125\

Treasurystock

12,152\(105)

Accumulated other comprehensive income
Net
Net
RemeasureForeign
unrealized
unrealized
ments ofcurrency
holding
holdingdefinedtranslation
gains
gains
adjustments benefit plansonon securities
derivatives
\

1,396

4

\

\

(419)

\

(87)

Total

\

21,319Cash dividends paid at ￥30.00 per share（Note 14）

-

-

-

(206)

-

-

-

-

-

(206)

Net income

-

-

-

2,766

-

-

-

-

-

2,766

Purchase of treasury stock

-

-

-

-

(0)

-

-

-

-

(0)

Change in scope of consolidation

-

-

-

(59)

-

-

-

-

-

(59)

-

-

-

(194)

(4)

848

5

655

Net changes during the year
Balance at March 31, 2022

6,908,359

Number ofshares ofcommonstock
Balance at April 1, 2020

6,908,359

\

5,253

Common
stock

\

\

3,125

Capitalsurplus

5,253

\

\

14,653Retainedearnings

3,125

\

\

(105)

\

1,202

Net
unrealized
holding
gains
on securities

Treasurystock

11,491

\

(105)

\

2,136

\

-

\

Net
unrealized
holding
gains
onderivatives
\

(6)

429

Foreigncurrencytranslation
adjustments
\

691

\

(82)

\

Remeasurements ofdefinedbenefit plans
\

(134)

24,475

Total\

22,451

Net income

-

-

-

661

-

-

-

-

-

661

Purchase of treasury stock

-

-

-

-

(0)

-

-

-

-

(0)

Net changes during the year

-

-

-

-

-

(740)

10

(1,110)47(1,793)

Balance at March 31, 2021

6,908,359

\

5,253

\

3,125

\

12,152\

See accompanying Notes.

(105)

\

1,396

\

4

\

(419)

\

(87)

\

21,319

THE KINKI SHARYO CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended March 31, 2022 and 2021
Millions of yen
2022
2021
Cash flows from operating activities
Income before income taxes
Adjustments to reconcile income (loss) before income taxes
to net cash provided by (used in) operating activities
Depreciation and amortization
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for product warranties
Increase (decrease) in allowance for losses on contracts
Interest and dividend income
Interest expense
Gain on forgiveness of debts
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade accounts payable
Increase (decrease) in accounts payable and accrued expenses
Other, net
Subtotal
Payments for loss on disaster
Interest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities\

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Acquisitions of property, plant and equipment
and intangible assets
Proceeds from sales of property, plant and equipment
and intangible assets
Purchases of investment securities
Decrease (increase) in deposits pledged as collateral
Proceeds from sales of investment securities
Net cash provided by (used in) investing activities

2,790

\

1,026

1,193
30
11
(1,508)
(96)
104
(611)
11,721
757
257
(27)
(951)
13,670
96
(156)
(662)
12,948

1,182
81
(83)
640
(113)
197
(12,574)
5,045
3,386
(51)
1,472
208
(31)
113
(254)
(12)
24

(9)
9

(9)
9

(852)

(433)

16
(280)
(2,917)(4,033)

1
(631)
935
(128)

Cash flows from financing activities
Net increase in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments of lease obligations
Cash dividends paid
Purchases of treasury stock
Net cash provided by (used in) financing activities

402(6,242)
(436)
(206)
(0)
(6,482)(128)575(1,023)
(120)
(0)
(696)

Effect of exchange rate changes on cash and cash equivalents

134

(70)

2,567
4,345

(870)
5,215

(64)

-

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Cash and cash equivalents at end of year (Note 6)

See accompanying Notes.

\

6,848

\

4,345

THE KINKI SHARYO CO., LTD. AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of THE KINKI SHARYO CO., LTD. (the“Company”) and its consolidated subsidiaries have been prepared in accordance with theprovisions set forth in the Japanese Financial Instruments and Exchange Law and its related
accounting regulations and in conformity with accounting principles generally accepted inJapan (“Japanese GAAP”) which are different in certain respects as to application and disclosure
requirements from International Financial Reporting Standards.
The accounts of the Company’s overseas subsidiary are based on their accounting records
maintained in conformity with generally accepted accounting principles in the United States ofAmerica (“US GAAP”) and partially reflect the adjustments which are necessary to conformwith Japanese GAAP. The accompanying consolidated financial statements have been
restructured and translated into English from the consolidated financial statements of theCompany prepared in accordance with Japanese GAAP and filed with the appropriate Local
Finance Bureau of the Ministry of Finance as required by the Japanese Financial Instruments
and Exchange Law. Certain supplementary information included in the statutory Japanese
language consolidated financial statements, but not required for fair presentation, is notpresented in the accompanying consolidated financial statements.
2. Significant accounting policies(a) Consolidation - The consolidated financial statements include the accounts of the Company
and one significant company over which the Company has power of control through majority
voting rights or the existence of certain other conditions evidencing control. There are no equity
method affiliates. Intercompany transactions and accounts have been eliminated. From the fiscal
year ended March 31, 2022, KS TECHNOS CO., LTD. has been excluded from the scope of
consolidation because of its lack of materiality.
(b) Consolidated subsidiary's fiscal year-end- The consolidated overseas subsidiary has a fiscal
year ending on December 31. Significant transactions between December 31 and March 31, thefiscal year-end of the Company, are reflected in the consolidated financial statements.
(c) Cash flow statements - In preparing the consolidated statements of cash flows, cash on hand,readily available deposits and short-term highly liquid investments with maturities notexceeding three months at the time of purchase are considered to be cash and cash equivalents.

2. Significant accounting policies (cont’d.)(d) Allowance for doubtful receivables - The Company and its consolidated subsidiaries (the“Companies”) provide for doubtful accounts principally at an amount based on management’s
estimate of the bad debt ratio plus the estimated uncollectible amount of certain individual
receivables.
(e) Securities - Available-for-sale securities with available fair market values are stated at fairmarket value. Unrealized gains and unrealized losses on these securities are reported, net of
applicable income taxes, as a separate component of net assets. Realized gains and losses on thesale of such securities are computed using moving average cost. Securities with no available fairmarket values, including equity securities issued by subsidiaries and affiliates which are notconsolidated or accounted for using the equity method, are stated at moving average cost.
(f) Derivatives and hedge accounting - The Companies state derivative financial instruments atfair value and recognize a change in the fair value as gain or loss unless the derivative financial
instrument is accounted for with hedge accounting. If derivative financial instruments are usedas hedges and meet certain hedging criteria, the Companies defer recognition of gain or loss
resulting from a change in the fair value of the derivative financial instrument until the related
loss or gain on the hedged item is recognized. However, in cases in which forward foreignexchange contracts are used as hedges and meet certain hedging criteria, the contracts and thehedged items are accounted for in the following manner:① If a forward foreign exchange contract is executed to hedge an existing foreign currency
receivable or payable,(i) the difference, if any, between the Japanese yen amount of the hedged foreign currency
receivable or payable translated using the spot rate at the inception date of the contract andthe book value of the receivable or payable is recognized in the statement of income in the
period which includes the inception date, and(ii) the discount or premium on the contract (the difference between the Japanese yen amountof the contract translated using the contracted forward rate and that translated using the
spot rate at the inception date of the contract) is recognized over the term of the contract.
② If a forward foreign exchange contract is executed to hedge a future transaction denominatedin a foreign currency, the future transaction is recorded using the contracted forward rate,
and no gain or loss on the forward foreign exchange contract is recognized.
(g) Inventories - Work-in-process is stated mainly at identified cost. Raw materials and supplies
are stated at cost determined by the moving average method. For balance sheet valuation, in theevent that an impairment in the value of inventory is determined, the inventory is written down
to the lower of cost or market using net realizable value.
(h) Property, plant and equipment (except for capitalized leases) - Property, plant andequipment are carried at cost. Depreciation is calculated by the straight-line method over theestimated useful life of the asset.

2. Significant accounting policies (cont’d.)(i) Intangible assets (except for capitalized leases) - Intangible assets are amortized by thestraight-line method over the estimated useful life of the asset.
(j) Software costs - The Companies include software used for internal purposes in intangible
assets and amortize it using the straight-line method over the estimated useful life of five years.
(k) Capitalized leases - Property, plant and equipment capitalized under finance leases are
depreciated over the term of the lease.
(l) Research and development expenses - The Companies charge research and development
expenses to selling, general and administrative expenses as incurred. Research anddevelopment expenses amounted to ¥244 million and ¥205 million for the years ended March
31, 2022 and 2021, respectively.
(m) Retirement and severance benefits for employees - Under the terms of the Company’s
unfunded lump-sum retirement plans, substantially all employees are entitled to a lump-sum
payment at the time of retirement. The amount of the retirement benefit is, in general, basedon the length of service, base salary at the time of retirement and the reason for retirement. The
Company also has a funded noncontributory pension plan which covers a portion of total
retirement benefits.
In order to provide for the employees’ retirement benefits, the Company accrues the liability asof the end of the fiscal year in an amount based on the estimated projected benefit obligation.
Actuarial gains and losses are recognized in expenses using the straight-line method over 10
years, which is within the average of the estimated remaining service years of employees,commencing from the following period.
(n) Provision for bonuses - Provision for bonuses at the balance sheet date are based on theestimated amounts to be paid to employees in the future.
(o) Provision for product warranties - A provision for product warranties is provided at thebalance sheet date when future losses for product warranties can be reasonably estimated andat an amount based on management's estimate of the past expense ratio for sales.
(p) Allowance for losses on contracts - An allowance for losses on contracts is provided at thebalance sheet date when future losses on particular contracts can be reasonably estimated.

2. Significant accounting policies (cont’d.)(q) Income taxes - Income taxes comprise corporate tax, prefectural and municipal inhabitants
taxes and enterprise tax. The asset-liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes.
(r) Translation of foreign currencies - Monetary assets and liabilities denominated in foreign
currencies are translated into Japanese yen at exchange rates prevailing at the balance sheet date.
Financial statements of the consolidated overseas subsidiary are translated at the rates in effectat the balance sheet date, except for net assets accounts, which are translated at historical rates,
and revenue and expense accounts, which are translated at the average exchange rates in effectduring the year. The resulting translation adjustments are reflected in the consolidated financial
statements as “foreign currency translation adjustments.”(s) Net income and cash dividends per share - Basic net income per share is computed by
dividing income available to common shareholders by the weighted average number of sharesof common stock outstanding during the respective year. Diluted net income per share for theyears ended March 31, 2022 and 2021 is not applicable because the Company had no dilutive
common shares. Cash dividends per share presented in the accompanying consolidated
statements of income are dividends applicable to the respective years, including dividends tobe paid after the end of the year.
(t) Revenue and related cost recognition – The revenue attributed to the Rolling Stock segment
is mainly from the sale of trains manufactured by the Company and the Company has theperformance obligations to transfer the products based on the contract with customers.
The Company's performance obligations in its contracts with customers are satisfied over time.
The Company estimates the completion status of the performance obligations and recognizes
revenue based on the status. In determining the status, the Company estimates the satisfactionof the performance obligations reasonably based on the number of trains transferred since theCompany can directly identify the goods or services transferred to the customers by the deliveryof the trains.
The Company’s overseas subsidiary also considers its performance obligations satisfied overtime. The subsidiary estimates the completion status of the performance obligation reasonably
and recognizes revenue based on the cost incurred, since the cost incurred reflects the progressof manufacturing the trains and the transfer of control of goods or service to customers withthat progress appropriately.
(u) Reclassifications - Certain prior year amounts have been reclassified to conform to the 2022
presentation.

3. Significant accounting estimates(a) Allowance for losses on contracts① Carrying amounts in the current year’s financial statements
In the consolidated balance sheets of the Company and its consolidated subsidiaries as ofMarch 31, 2022 and 2021, allowances for losses on contracts of ¥2,594 million and ¥4,087
million, respectively, were recognized. Included in the amounts were ¥2,508 million and¥3,909 million of allowance for losses on contracts recognized by the Company as of March
31, 2022 and 2021, respectively.
② Information on the nature of significant accounting estimates for identified items
As described in Note2, “Significant accounting policies, (p) Allowance for losses oncontracts”, an allowance for losses on contracts was provided for estimated future losses
on particular contracts. In recognizing the allowance, total costs including direct selling
expenses corresponding to total revenue need to be reasonably estimated. The total costs
were estimated for each contract. Raw material prices might change and work hours for acontract could increase due to unexpected design or process amendments. Accordingly,
estimating the total costs involved a high degree of uncertainty, and management’s
judgment on raw material prices and work hours for a contract had a significant effect on
the estimate of total costs.
4. Change in accounting policies(a) Application of the Accounting Standard for Revenue Recognition
The Company applies “Accounting Standard for Revenue Recognition” (ASBJ Statement
No.29, March 31, 2020, hereinafter referred to as “the Accounting Standard for Revenue
Recognition”) from the beginning of the current consolidated fiscal year and recognizes
revenue at amounts expected to be received in exchange for the promised goods or services as
the control of such goods or services is transferred to the customer. Previously, the percentageof-completion method was applied to construction contracts for which the outcome of theconstruction activity could be estimated reliably, and the completed contract method wasapplied to other construction contracts. However, by the new application, if control over the
goods or services is transferred to the customer over a period of time, the Company recognizes
revenue over the period of time as the performance obligation to transfer the goods or services
to the customer is satisfied.
The application of these changes in accounting policies follows the transitional treatmentprescribed in Paragraph 84 of the Accounting Standard for Revenue Recognition such that the
new accounting policy was applied from the beginning balance of retained earnings of thecurrent consolidated fiscal year, but the cumulative effect of applying retrospectively the new
accounting policy was none, and the beginning balance of retained earnings of the current
consolidated fiscal year was neither added nor deducted.

4. Change in accounting policies (cont’d.)
The adoption of the Accounting Standard for Revenue Recognition has not had a material
impact on profit or loss for the current consolidated fiscal year. In the consolidated balance
sheet for the previous financial year, “Notes and accounts -trade”, which was presented in“Current Assets”, is included in “Notes and accounts -trade, and contract assets” from thecurrent financial year, while “Advances received”, which was presented in “Current
Liabilities”, is included in “Contract liabilities” from the current financial year. However, in
accordance with the transitional treatment stipulated in Paragraph 89-2 of the AccountingStandard for Revenue Recognition, no reclassification was made for the previous financial
year according to the new presentation. In accordance with the transitional treatment
stipulated in Paragraph 89-3 of the Accounting Standard for Revenue Recognition, no notes
have been provided for “Revenue recognition” for the previous financial year.
(b)Application of Accounting Standard for Calculation of Fair Value Measurement
The Company applies “Accounting Standard for Calculation of Fair Measurement” (ASBJ
Statement No.30, July 4, 2019, hereinafter referred to as “the Accounting Standard for
Calculation of Fair Value Measurement”) from the beginning of the current fiscal year, and inaccordance with the transitional treatment stipulated in Paragraph 19 of the AccountingStandard for Fair Value Measurement and Paragraph 44-2 of the Accounting Standard for
Financial Instruments (Corporate Accounting Standard No.10, July 4, 2019), the new
accounting policy stipulated by the Accounting Standard for Fair Value Measurement, etc., isapplied for the future. This change had no impact on the consolidated financial statements.
In addition, information for the fair value of financial instruments by level is disclosed in thenotes of “Financial Instruments”. However, in accordance with the transitional treatment inParagraph 7-4 of “Implementation Guidance on Disclosures about Faire Value of Financial
Instruments” (ASBJ Guidance No.19, July 4, 2019), relevant information for the previous
consolidated fiscal year is not provided.

5. Comprehensive income information
Amounts reclassified to net income (loss) in the current period that are recognized in othercomprehensive income in the current or previous periods and the tax effects for each componentof other comprehensive income are as follows:
Millions of yen
2022
2021
Net unrealized holding gains (losses) on
securities
Increase (decrease) during the year
¥
(280)
¥
(362)
Reclassification adjustments(705)
Subtotal, before tax(280)(1,067)Tax (expense) or benefit
86327
Subtotal, net of tax
(194)
(740)
Net unrealized holding gains on derivatives
Increase (decrease) during the year
(15)
20
Reclassification adjustments
Subtotal, before tax(15)20
Tax (expense) or benefit
11(11)
Subtotal, net of tax(4)
9Foreign currency translation adjustments
Increase (decrease) during the year848
(1,109)Reclassification adjustments
Subtotal, before tax
848(1,109)Tax (expense) or benefit
Subtotal, net of tax
848(1,109)Remeasurements of defined benefit plans
Increase (decrease) during the year
(28)
10
Reclassification adjustments
33
37
Subtotal, before tax
547
Tax (expense) or benefit
Subtotal, net of tax
547
Total other comprehensive income¥
655¥(1,793)

6. Cash flow information
The reconciliation of cash and time deposits in the consolidated balance sheets and cash andcash equivalents in the consolidated statements of cash flows at March 31, 2022 and 2021 are as
follows:
Millions of yen
2022
2021
Cash and time deposits (in balance sheets)¥

Time deposits maturing after three months
Pledged deposits
Cash and cash equivalents (in statements of cash flows)

¥

9,941

¥

4,353

(40)

(8)

(3,053)

-

6,848

¥

4,345

7. Financial instruments: disclosure(a) Qualitative information on financial instruments
Short-term deposits - The Companies use short-term deposits to manage excess funds.
Trade notes and accounts receivable - Because of the nature of the business, the credit risk
associated with trade notes and accounts receivable is concentrated with a limited numberof major customers with high creditworthiness. At March 31, 2022, 98.4% of the operatingreceivables are due from specific major customers. The Companies decrease the risk bymanaging the notes and receivables according to internal credit control rules.
Foreign currency forward exchange contracts - The Company uses foreign currency
forward exchange contracts only to hedge foreign currency exchange risk associated withtrade accounts receivables and payables, not for speculative purposes, and enters into suchcontracts according to the Company’s internal rules.
Investment securities - Investment securities comprise mostly stocks and are evaluated forthe market prices or fair value provided by the financial condition of the corporations on
a quarterly basis.
Trade accounts payable - Payment terms of payable are less than one year.
Loans payable - Short-term loans payable are used mainly for financing operating capital,and long-term loans payable are used primarily for financing capital investments.
Lease obligations - Lease obligations are used primarily for financing capital investments.

7. Financial instruments: disclosure (cont’d.)(b) Fair values of financial instruments
The book values of the financial instruments included in the consolidated balance sheets
and their fair values at March 31, 2022 and 2021 are as follows:
Millions of yen
2022
Investment securities

Book value

Fair value¥¥

Long-term loans payable

5,090

Difference

5,090

-

(3)

(3)

(0)

(669)

(669)

-

-

-

-

Derivatives
Not applying hedge accounting
Applying hedge accounting

Millions of yen
2021
Investment securities
Long-term loans payable

Book value

Fair value

¥

¥

5,371

Difference

5,371

-

(6,812)(6,815)

3

(55)

(55)

-

15

15

-

Derivatives
Not applying hedge accounting
Applying hedge accounting
Notes＊1 Cash and time deposits, Notes and accounts – trade, Trade accounts
payable and Short-term loans payable for the years ended March 31, 2022 and2021 have been omitted as Cash and time deposits is cash and the others
which are settled in a short period of time and their fair value approximatesbook value.
＊2 The figures in parentheses indicate liabilities.

7. Financial instruments: disclosure (cont’d.)
The fair value of the financial instruments in the table above approximates the book value incase in which the maturities are short. The value of derivatives is determined using the rateof the foreign currency forward exchange contract, and long-term loans payable is calculatedby discounting the principal and interest payments by the assumed discount rates for similar
new loans transactions.
Financial instruments for which the fair value is difficult to determine are as follows:
Millions of yen
2022
2021
Unlisted stocks
¥
40
¥
40
Stocks of subsidiaries and affiliates (unlisted stocks)
36
36
Unlisted stocks and stocks of subsidiaries and affiliates (unlisted stocks) are not included ininvestment securities above because they have no estimated fair value.
Maturity value after closing dateMillions of yen
2022
Within one year
Cash and time deposits¥

Trade notes and trade accounts

Over one year

9,941

¥

9,370

-

Millions of yen
2021
Within one year
Cash and time deposits
Trade notes and trade accounts

¥

4,353
27,755

Over one year¥-(c) Fair values of financial instruments
Based on the observability and the significance of the inputs used to determine the fairvalues, the fair value information of financial instruments is presented by categorizing themeasurements into the following three levels:
Level 1 fair value: the fair value measured by quoted prices of identical assets or liabilities
in active markets.
Level 2 fair value: the fair value measured using observable inputs other than Level 1.
Level 3 fair value: the fair value measured using unobservable inputs.
When multiple inputs of different categories are used in measuring fair value, the Company
and its subsidiary classified fair values into a category to which the lowest priority is
assigned.

7. Financial instruments: disclosure (cont’d.)(1) Financial instruments measured at fair values in the consolidated balance sheet

Investment securities
Derivatives

Not applying hedge accounting

Level 1
5,090-

Millions of yen
2022
Fair value
Level 2
Level 3
669

-

Total
5,090
669

(2) Financial instruments other than those measured at fair values in the consolidatedbalance sheet
Millions of yen
2022
Fair value
Level 1
Level 2
Level 3Total
Long-term loans payable33(Note) Valuation techniques and inputs used in measuring fair values
Investment securities
Investment securities are classified as level 1, because they are exchanged in active markets.
Derivatives
Derivatives are measured based on forward exchange rates, and they are classified as level2.
Long-term loans payable
Long-term loans payable is calculated by discounting the principal and interest payments
by the assumed discount rates for similar new loans, and it is classified as level 2.

8. Securities
At March 31, 2022 and 2021, information on securities is as follows:(a) Trading securities: None(b) Bonds intended to be held to maturity with readily determinable fair values: None(c) Available-for-sale securities with readily determinable fair value as of March 31, 2022
and 2021 are as follows:
Securities with book value (fair value) that exceed acquisition cost

Equity securities
Total

Equity securities
Total

Acquisition cost
3,261
3,261

Millions of yen
2022
Book value
¥
5,011
¥
5,011

¥
¥

Acquisition cost
¥
3,261
¥
3,261

Millions of yen
2021
Book value
¥
5,302
¥
5,302

Difference
¥
2,041
¥
2,041

¥
¥

Difference
1,750
1,750

Securities with book value (fair value) that don’t exceed acquisition cost

Equity securities
Total

Equity securities
Total

Acquisition cost
¥
98
¥
98

Millions of yen
2022
Book value
¥
80
¥
80

Difference
¥
(18)
¥
(18)

Acquisition cost
¥
98
¥
98

Millions of yen
2021
Book value
¥
69
¥
69

Difference
¥
(29)
¥
(29)

8. Securities (cont’d.)(d) For the years ended March 31, 2022 , there are no sales of available-for-sale securities(equity securities) and the gain on the sales. For the years ended March 31, 2021, total
sales of available-for-sale securities (equity securities) is ¥935 million and the gain on
the sales is ¥705 million.

9. Pledged assets
At March 31, 2022 and 2021, the following assets are pledged as collateral for short-term loans
payable of ¥2,000 million:
Millions of yen
2022
2021
Land
¥
179
¥
179
At March 31, 2022 and 2021, the following assets are pledged as collateral for deposits oncontracts of ¥7 million and ¥87 million, respectively, and deposits from tenants of ¥70 million(included in other noncurrent liabilities):
Millions of yen
2022
2021
Buildings, net book value
¥
330
¥
351
At March 31, 2022 and 2021, the following assets are pledged as collateral to issue the letter ofcredit and there is no corresponding liability:
Millions of yen
2022
2021
Cash and deposits
¥
3,053
¥
10. Allowance for losses on contracts
Inventories for contracts with anticipated losses and allowance for losses on contracts are notoffset. For the years ended March 31, 2022 and 2021, the inventories associated with theallowance for losses on contracts are ¥2,190 million and ¥3,452 million, respectively.
These amounts are included in "Work-in-process."

11. Short-term loans payable, long-term loans payable and lease obligations
Short-term loans payable substantially represent short-term loans from banks at a weighted
average annual rate of 0.4% and 0.8% at March 31, 2022 and 2021, respectively.
Long-term loans payable as of March 31, 2022 are as follows:
Millions of yen
2022
Loans from banks, due through 2023 at an weighted
average rate of 0.9% in 2022
Less current portion

¥

3

¥

3
-

The aggregate annual maturities of finance lease obligations subsequent to March 31, 2022 are
as follows:
Millions of yen
2022
Years ending March 31,
2023
2024
2025
2026
2027 and after

¥

¥

12
6
0
18

Long-term loans payable as of March 31, 2021 are as follows:
Millions of yen
2021
Loans from banks, due through 2023 at an weighted
average rate of 0.6% in 2021
Less current portion

¥

6,812

¥

6,234
578

11. Short-term loans payable, long-term loans payable and lease obligations (cont’d.)
The aggregate annual maturities of long-term loans payable outstanding at March 31, 2021 are
as follows:
Millions of yen
2021
Years ending March 31,
2023
2024 and after

¥
¥

578
578

The aggregate annual maturities of finance lease obligations subsequent to March 31, 2021 are
as follows:
Millions of yen
2021
Years ending March 31,
2022
2023
2024
2025
2026 and after

¥

¥

435
10
5
1
451

12. Retirement and severance benefits
The Company provides for employee’ retirement and severance benefits under two plans, adefined contribution pension plan and unfunded lump-sum benefits plan. The Company’s
consolidated overseas subsidiary provides a defined contribution pension plan.
Defined benefit plans(a) Movement in retirement benefit obligations, except for plans that applied the simplified
methodMillions of yen
2022
2021
Balance at April 1, 2021 and 2020
¥
2,879
¥
2,845
Service cost
189
280
Interest cost
23
22
Actuarial loss (gain)28(10)
Benefits paid
(215)
(258)
Adjustment associated with change in scope of(23)
consolidation
Balance at March 31, 2022 and 2021
¥
2,881
¥
2,879
(b) Reconciliation from retirement benefit obligations to liability for retirement benefits
Millions of yen
2022
2021
Unfunded retirement benefit obligations
¥
¥
2,881
2,879
Total net liability for retirement benefits at March ¥
2,881
¥
2,879
31, 2022 and 2021
Net defined benefit liability
Total net liability for retirement benefits at March ¥31, 2022 and 2021(c) Retirement benefit costs

Service cost
Interest cost
Net actuarial loss amortization

¥
¥

2,881
2,881

2,879
¥

2,879

Millions of yen
2022
2021
189
¥
280
23
22
33
37
245
¥
339

12. Retirement and severance benefits (cont’d.)(d) Remeasurements of defined benefit plans
Actuarial gain(loss)¥¥

Millions of yen
2022
2021
5
¥
47
5
¥
47

¥
¥

Millions of yen
2022
2021
(82)
¥
(87)
(82)
¥
(87)

(e) Accumulated remeasurements of defined benefit plans
Unrecognized actuarial loss(f) Actuarial assumptions
The principal actuarial assumptions at March 31, 2022 and 2021 (expressed as weighted
averages) are as follows:
2022
2021
Discount rate
0.8%
0.8%
Expected salary increase rate
1.6%
1.7%
Defined contribution plans
Contributions to the defined contribution plans in 2022 and 2021 are ¥250 million and ¥280
million, respectively.

13. Income taxes(a) Significant components of the Companies’ deferred tax assets and liabilities as of March 31,
2022 and 2021 are as follows:

Deferred income tax assets:
Net operating loss carryforwards ＊2
Net defined benefit liability
Allowance for losses on contracts
Valuation loss on inventories
Research and development expenses
Provision for product warranties
Provision for bonuses
Excess depreciation
Other

Millions of yen
2022
2021
¥

Valuation reserve for net operating loss
carryforwards ＊2
Valuation reserve for deductible
temporary differences
Valuation reserve - total ＊1
Total deferred income tax assets
Deferred income tax liabilities:
Net unrealized holding gains on securities
Net unrealized holding gains on derivatives
Other
Total deferred income tax liabilities
Net deferred income tax liabilities
¥

3,004
882
791
167
315
177
116
87
481
6,020

¥

2,748
882
1,246
588
263
174
112
68
500
6,581

(3,004)(2,748)(3,016)(3,833)(6,020)-(6,581)
-

(530)
(40)
(105)
(675)
(675)

(616)
(18)
(96)
(730)
(730)

¥

Notes ＊1 The valuation reserve decreased by ¥561 million. The main reason for this decreaseis a ¥455 million decrease in the valuation reserve for allowance for losses on contracts.

13. Income taxes (cont’d.)＊2 Net operating loss carryforwards and deferred income tax assets by expiration
periods are as follows:
Current Fiscal year ended March 31, 2022
Millions of yen

Year ending March
31,
Net operating loss
carryforwards ＊3

2023

2024

2025

2026

2027

2028 and
after

¥ 437

¥ 949

－

¥ 233

－

¥ 1,385

Valuation reserve

(437)

(949)

－

(233)

－

(1,385)(3,004)

Net deferred income
tax assets

－

－

－

－

－

－

－

Total
¥

3,004

＊3 Net operating loss carryforwards shown in the above table are after multiplying thestatutory tax rate.
Previous Fiscal year ended March 31, 2021
Year ending March
31,
Net operating loss
carryforwards ＊3

Millions of yen
2022

2023

2024

2025

2026

2027 and
after

¥ 9

¥ 437

¥ 949

－

¥ 233

¥ 1,120

Valuation reserve

(9)

(437)

(949)

－

(233)

(1,120)(2,748)Net deferred income
tax assets

－

－

－

－

－

－

－

Total
¥

2,748

＊3 Net operating loss carryforwards shown in the above table are after multiplying thestatutory tax rate.
(b) The following table summarizes the significant differences between the statutory tax rate
and the effective tax rate for the years ended March 31, 2022 and 2021 after tax effectaccounting is applied.

Statutory tax rate
Permanently nondeductible expenses
Permanently nontaxable expenses
Taxation on per capita basis
Change in valuation reserve
Other
Effective tax rate

2022
30.6
0.2
(6.1)
0.3
(23.0)
(1.1)
0.9

%

%

2021
30.6%
0.8
(0.4)
0.8
4.4
(0.7)
35.5 %

14. Net assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be
designated as common stock. However, a company may, by a resolution of the Board of
Directors, designate an amount not exceeding one half of the price of the new shares asadditional paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (the “Law”), in cases in which a dividend distribution of
surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of
25% of common stock over the total of additional paid-in capital and legal earnings reserve must
be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is
included in retained earnings in the accompanying consolidated balance sheets.
Under the Law, both of these appropriations generally require a resolution of the shareholders’meeting.
Under the Law, all additional paid-in capital and all legal earnings reserve may be transferred
to other capital surplus and retained earnings, respectively, which are potentially available fordividends.
The maximum amount that the Company can distribute as dividends is calculated based on thenonconsolidated financial statements of the Company in accordance with Japanese laws andregulations.
(a) Number and type of shares issued and number and type of shares of treasury stock

Common stock
Treasury stock

April 1, 2021
6,908,359
26,761

2022
Number of shares
Increase
Decrease
247-

March 31, 2022
6,908,359
27,008The increase in treasury stock of 247 shares is due to the acquisition of fractional shares.
2021
Number of shares
April 1, 2020
Increase
Decrease
March 31, 2021
Common stock
6,908,359
6,908,359
Treasury stock
26,310451
26,761
The increase in treasury stock of 451 shares is due to the acquisition of fractional shares.

14. Net assets (cont’d)(b) Dividends
Dividends whose recorded date is during the year ended March 31, 2022, but whose effective
date is the following fiscal year are as follows.
Resolution adopted
Board of Directors’Meeting
on May 12, 2022

Type ofsharesMillions ofyen
Aggregate
amountAppropriation
from

Yen

Common
stock

¥ 206

Retainedearnings

Amount per
share¥ 30.00

Record date

March 31,2022

Effective
date
June 13, 2022

Dividends whose recorded date is during the year ended March 31, 2021, but whose effective
date is the following fiscal year are as follows.
Resolution adopted
Board of Directors’Meeting
on May 13, 2021

Type ofsharesMillions ofyen
Aggregate
amountAppropriation
from

Yen

Common
stock

¥ 206

Retainedearnings

Amount per
share¥ 30.00

Record date

March 31,2021

Effective
date
June 11, 2021

15. Related party transactions
At March 31, 2022 and 2021, Kintetsu Railway Co., Ltd. (“Kintetsu”) directly own 30.4% of theCompany’s outstanding common stock. For the year ended March 31, 2022, there are no
significant related party transactions. The Company’s sales to Kintetsu for the year ended March
31, 2021 amounted to ¥6,998 million. Receivables from Kintetsu for the year ended March 31,
2021 amounted to ¥20 million.
16. Cost of Sales
For the year ended March 31, 2022, reversals of the allowance for losses on contracts deductedfrom the cost of sales is ¥1,493 million.
For the year ended March 31, 2021, provisions for the allowance for losses on contracts added
to the cost of sales is ¥623 million.

17. Derivative transactions
Information on derivatives for which hedge accounting had not been applied at March 31, 2022
is as follows:
Millions of yen
2022
Contract amountTotal

Due after

Fair value

one year

Realized
gain (loss)

Foreign currency forward exchange
contracts:
Selling
US dollar

¥

7,014

¥

-

¥

(670)

¥

(670)

Total

¥

7,014

¥

-

¥

(670)

¥

(670)

Information on derivatives for which hedge accounting had not been applied at March 31, 2021
is as follows:

Millions of yen
2021
Contract amountTotal

Due after

Fair value

Realized
gain (loss)

one year

Foreign currency forward exchange
contracts:
Selling
US dollar

¥

4,905

¥

-

¥

(55)

¥

(55)

Total

¥

4,905

¥

-

¥

(55)

¥

(55)

17. Derivative transactions (cont’d)
At March 31, 2022, there are no derivatives for which hedge accounting have been applied.
Information on derivatives for which hedge accounting is applied at March 31, 2021 is asfollows:
Millions of yen
2021
Contract amount

Fair value

Due after

Total

one year

Foreign currency forward exchange
contracts:
Selling
US dollar（forecasted transactions）¥

US dollar（receivables - trade）＊1

1,635

¥

3,650

Total

¥

5,285

BuyingUS dollar（forecasted transactions）

¥

961

Total

¥

961

-

¥

(20)

¥

¥

-

-

¥

(20)

-

¥

35

-

¥

35

Note ＊1 Foreign currency forward exchange contracts for which the designation method isapplied are accounted for together with the receivables - trade that are the hedged
items. As a result, the fair values of those contracts are included in the fair values of
the receivables - trade.
18. Fair value of investment and rental property
The Company owns real estate for lease in Osaka and other prefectures. The income from thereal estate for lease is ¥699 million and ¥622 million for the years ended March 31, 2022 and 2021,
respectively. The book value (balance), net changes during the year and fair value of the realestate for lease are as follows:
Millions of yen
2022
Balance at April 1, 2021¥

Net changes during the year
Balance at March 31, 2022
Fair value at March 31, 2022

1,575
(33)

¥

1,542
10,04018. Fair value of investment and rental property (cont’d)Millions of yen
2021
Balance at April 1, 2020

¥

1,568

Net changes during the year

7

Balance at March 31, 2021

¥

1,575

Fair value at March 31, 2021

10,08019. Leases(a) Finance leases(As lessee)
Non-ownership-transfer Finance lease transactions
Leased assets consist mainly of machinery and equipment of factory, tools, furniture andfixtures at the head office and software for server at the head office.
(b) Operating leases(As lessee)
Obligations under non-cancellable operating leases at March 31, 2022 and 2021 are as
follows:
Millions of yen
2022

2021

Payments due within one year
Payments due after one year

¥

130
271

¥

113
361

Total payments remaining

¥

401

¥

474

20. Revenue Recognition
1. Information on disaggregated revenue arising from contracts with customers
Information on disaggregated revenue arising from contracts with customers is included in
Note 21, “Segment information”.
2. Basic information for understanding revenue
Basic information for understanding revenue is included in Note 2, “Significant Accounting
Policies (t) Revenue and related cost recognition”

20. Revenue Recognition (cont’d)
3. Information on the relationship between fulfilment of the performance obligations based on
the contracts with customers and cash flow generated from the contracts, and the amount andtiming of revenue expected to be recognized in current or subsequent fiscal years from a contract
with customers that exists as of the end of the current consolidated fiscal year(a) The balance of contract assets and contract liabilities
Millions of yen
2022
Receivables arising from contracts with customers (opening balance)
Notes
Accounts

14,275
14,275

Receivables arising from contracts with customers (ending balance)
Notes
Accounts

9,370
9,370

Contract assets（opening balance）

13,480Contract assets（ending balance）

8,959

Contract liabilities（opening balance）

868

Contract liabilities（ending balance）

1,610

Contract assets represent unbilled consideration for revenue recognized based on the progressof fulfillment of the performance obligations under construction contracts of the overseas
consolidated subsidiary. The contract assets are transferred to receivables arising from contracts
with customers when the right of the overseas subsidiary to the consideration becomes
unconditional and are invoiced after customer inspection and received at the contractual
collection time in accordance with the contract with the customer.
Contract liabilities relate to advances from customers under construction contracts for which
the Company and its overseas consolidated subsidiary recognize revenue over a period of time.
The contract liabilities are reversed upon revenue recognition.

20. Revenue Recognition (cont’d)
The amount of revenue recognized in the current consolidated fiscal year that was included in
the contract liabilities balance at the beginning of the period amounted to ¥395 million. The
decrease of ¥4,520 million in contract assets in the current consolidated fiscal year was a resultof the progress in customer inspection and billing at the overseas consolidated subsidiary. In
addition, the increase of ¥741 million in contract liabilities in the current consolidated fiscal year
resulted mainly from advances received in connection with the conclusion of new contracts atoverseas consolidated subsidiary.
(b) Transaction price allocated to residual performance obligations
The total transaction price allocated to the residual performance obligation is ¥116,898 million
and the Company and the overseas consolidated subsidiary expect to recognize revenue forthese residual performance obligations between 2022 and 2029 as the performance obligations
are fulfilled.
21. Segment information(a) General information about reportable segments
Reportable segment information of the Company is the obtainable financial information which
is made available to and used by the Officers Committee and Board of Directors to determine
the allocation of management resources and to evaluate business performance. The Company
has a Rail Transit Division that focuses on manufacturing rolling stock. It formulates strategy
and deals with business concerning trains and the related parts and maintenance for the JRgroup, public and private railways and subways in Japan and foreign countries. In addition, theCompany deals with the lease of real estate. Therefore, the reportable segments of the Company
are that of “Rolling Stock” and “Lease of Real Estate.”(b) Basis of measurement for reportable segment profit or loss, segment assets, segment
liabilities and other material items
As stated in "Changes in Accounting Policies", the Company has applied the AccountingStandard for Revenue Recognition from the beginning of the current consolidated fiscal year,
and has changed the accounting method for revenue recognition, and has therefore similarlychanged the method for calculating profit or loss in the business segment. As the result, thischange has no material impact on the consolidated financial statements.

21. Segment information (cont’d)(c) Information about reportable segment profit or loss, segment assets, segment liabilities andother material items and information on disaggregated revenue
Current fiscal year ended March 31, 2022:
Millions of yen
Reportable segments
Rolling Stock

Lease of Real Estate

Adjustment

Consolidated

Revenue fromcontractswith customers¥

38,530

¥

-

¥

-

¥

38,530

Other revenue

¥

-

¥

804

¥

-

¥

804

Net sales¥

38,530

¥

804

¥

-

¥

39,334

Segment profit

2,175

699

(1,079)1,795

Segment assets

52,928

1,559

7,010

61,497

Segment liabilities

15,252

618

21,15237,022

1,108

26

59

1,193

640

0

62

702

Depreciation andamortization
Increase in tangible
and intangible assets

1. Adjustments are as follows:(a) Adjustment of segment profit of ¥(1,079) million is corporate expenses of ¥(1,079) million
that are not attributable to reportable segments and represents administrative expenses of theCompany.
(b) Adjustment of segment assets of ¥7,010 million is for surplus funds and assets that are notallocable to any reportable segments.
(c) Adjustment of segment liabilities of ¥21,152 million is for liabilities that are not allocable toany reportable segments.
(d) Depreciation and amortization of ¥59 million is depreciation and amortization that are notallocable to any reportable segments.
(e) Increase in tangible and intangible assets of ¥62 million is equipment investment that is notallocable to any reportable segments.
2. Segment profit is adjusted to operating profit in the consolidated statements of income.

21. Segment information (cont’d)Previous fiscal year ended March 31, 2021:
Millions of yen
Reportable segments
Rolling Stock
Net sales¥

48,618

Lease of Real Estate¥

801

Adjustment¥

Consolidated(0)¥49,419Segment profit

760

622

(1,062)320

Segment assets

59,861

1,592

4,568

66,021

Segment liabilities

16,920714

27,06844,702

1,097

25

60

1,182

688

32

47

767

Depreciation andamortization
Increase in tangible
and intangible assets

1. Adjustments are as follows:(a) Adjustment of segment profit of ¥(1,062) million is corporate expenses of ¥(1,062) million
that are not attributable to reportable segments and represents administrative expenses of theCompany.
(b) Adjustment of segment assets of ¥4,568 million is for surplus funds and assets that are notallocable to any reportable segments.
(c) Adjustment of segment liabilities of ¥27,068 million is for liabilities that are not allocable toany reportable segments.
(d) Depreciation and amortization of ¥60 million is depreciation and amortization that are notallocable to any reportable segments.
(e) Increase in tangible and intangible assets of ¥47 million is equipment investment that is notallocable to any reportable segments.
2. Segment profit is adjusted to operating profit in the consolidated statements of income.

21. Segment information (cont’d)Related information
Information for each country and area for the year ended March 31, 2022 is as follows:(a) Net sales
Millions of yenJapan¥

29,088

United States

Othersof America
¥

7,920

¥

2,326

Consolidated¥

39,334The principal countries and areas in each segment are as follows:
OthersChina (Hong Kong), State of Qatar, United Arab Emirates, The
Republic of the Philippines, Arab Republic of Egypt

Note "State of Qatar", which had been presented separately in the previous consolidated fiscal
year, is included in "Others" in this consolidated fiscal year due to its decreased
quantitative materiality. To reflect this change in presentation, "Related information (a)Net sales" in the previous consolidated fiscal year has been reclassified.
(b) Property, plant and equipment
Millions of yen
Japan
¥

9,788

United Statesof America
¥

1,104

Consolidated¥

10,892

Information for major customers for the year ended March 31, 2022 is as follows:
Customer
Bureau of Transportation Tokyo

Net sales (millions of yen)¥Segment

9,852

Rolling stock

Tokyo Metro Co., Ltd.

7,062

Rolling stockWest Japan Railway Company

5,939

Rolling stock

Metropolitan Government

21. Segment information (cont’d)Information for each country and area for the year ended March 31, 2021 is as follows:(a) Net sales
Millions of yen
Japan¥

20,040

United States

Othersof America¥

10,724¥

18,655

Consolidated¥

49,419The principal countries and areas in each segment are as follows:
China (Hong Kong), State of Qatar , United Arab Emirates,
Arab Republic of Egypt

Others(b) Property, plant and equipment
Millions of yen
Japan
¥

9,995

United Statesof America
¥

1,246

Consolidated¥

11,241

Information for major customers for the year ended March 31, 2021 is as follows:
Customer
Mitsubishi Corporation

Net sales (millions of yen)¥Segment

18,231

Rolling stock

Kintetsu Railway Co., Ltd.

6,998

Rolling stockWest Japan Railway Company

6,819

Rolling stock22. Per share information
Per share information for the years ended March 31, 2022 and 2021 is as follows:
Yen
2022
2021
Net assets per share¥
3,556.63¥ 3,097.96
Net income per share
401.92
96.22
Notes : (1) Diluted net income per share is not disclosed because there are no dilutive shares.
(2) Net income per share is calculated on the following basis.

Net income (millions of yen)Amounts not attributable to ordinary shares(millions of yen)
Net income attributable to ordinary shares(millions of yen)
Average number of shares outstanding during eachyear (shares)

2022
2,766

2021
661

-

-

2,766

661

6,881,447

6,882,851

23. Gain on forgiveness of debt
The Company's overseas subsidiary received loans using the Paycheck Protection Program(PPP), which is an employment protection policy in the United States related to the newcoronavirus infection. The loan was exempted from repayment because it was used for thepayment of salaries, etc. and satisfied the debt forgiveness conditions for the loan.

Independent auditor’s report
To the Board of Directors of THE KINKI SHARYO Co., Ltd:
OpinionWe have audited the accompanying consolidated financial statements of THE KINKI SHARYO Co.,
Ltd. (“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”), which
comprise the consolidated balance sheets as at March 31, 2022 and 2021, the consolidated statements ofincome, comprehensive income, changes in net assets and cash flows for the years then ended, andnotes, comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2022 and 2021, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.

Reasonableness of the Company’s estimate of total costs related to the recognition of anallowance for losses on contracts
The key audit matter

How the matter was addressed in our audit

In the consolidated balance sheet of THE
KINKI SHARYO CO., LTD. (the“Company”) and its consolidated subsidiary
as of March 31, 2022, as described in Note3,“Significant accounting estimates”, anallowance for losses on contracts of ¥2,594
million was recognized. Included therein was¥2,508 million of an allowance for losses oncontracts recognized by the Company.

The primary procedures we performed to assess thereasonableness of the Company’s estimate of the total
costs related to the recognition of an allowance forlosses on contracts, included the following:

As described in Note2, “Significant
accounting policies, (p) Allowance for losses
on contracts”, an allowance for losses oncontracts was provided for estimated future
losses on particular contracts. In recognizing
the allowance, total costs including direct
selling expenses corresponding to total
revenue need to be reasonably estimated.
The total costs were estimated for eachcontract. Raw material prices might change
and work hours for a contract could increase
due to unexpected design or process
amendments. Accordingly, estimating thetotal costs involved a high degree of
uncertainty, and management’s judgment on
raw material prices and work hours for acontract had a significant effect on theestimate of total costs.
We, therefore, determined that thereasonableness of the estimate of total costs
related to the recognition of an allowance forlosses on contracts of the Company was of
most significance in our audit of theconsolidated financial statements for thecurrent fiscal year, and accordingly, a key
audit matter.

(1) Internal control testing
We tested the design and operating effectiveness ofcertain of the Company’s internal controls relevant to
the recognition process for an allowance for losses oncontracts. In this assessment, we focused our testing oncontrols relevant to the approval process of the resultsof the calculation of the allowance.
(2) Assessment of the reasonableness of the estimateof the total costs
In order to assess the reasonableness of key
assumptions applied to estimate the total costs for eachcontract, we performed the following procedures
among others:

agreed the estimated costs for each contract withthe supporting worksheets that calculated theaccumulated costs and compared them with actual
costs of similar contracts in the past;evaluated the accuracy of the estimated costs bycomparing the actual costs with their estimatedcosts and examining variances between the two,and assessed whether those variances werereflected in the updated estimated costs at the endof the current fiscal year, as necessary; andinquired of management of the Company and thehead of Business Planning Center regarding their
judgments on any changes in circumstances that
occurred after the start of a project and updates ofthe estimated costs, as well as assessed theconsistency of their responses with the estimatedcosts at the end of the current fiscal year.

Other Information
The other information comprises the information included in the disclosure documents that contain or
accompany the audited consolidated financial statements, but does not include the consolidated
financial statements and our auditor’s report thereon.
We do not perform any work on the other information as we determine such information does not exist.
Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors
for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’
performance of their duties with regard to the design, implementation and maintenance of the Group’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.


Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

We communicate with corporate auditors and the board of corporate auditors regarding, among othermatters, the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.
From the matters communicated with corporate auditors and the board of corporate auditors, we
determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.

Yasuhiro Wada
Designated Engagement Partner
Certified Public Accountant

Seiko Ohashi
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Osaka Office, Japan
August 31, 2022
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.