Taisei Japan_ Signed [ハード提出用]Financial Report (FY2023 ended Mar 2024)電子署名パネル画面合体版

Consolidated Financial Statements From April 1, 2023 to March 31, 2024 (The 164 th Business Term) TAISEI CORPORATION 1. Consolidated Financial Statements, etc. (1) Consolidated Financial Statements 1) Consolidated Balance Sheets Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Assets Current assets Cash and time deposits *8 415,950 *8 434,711 2,871,091 Notes and accounts receivable trade *1 688,768 *1, *9 864,694 5,710,945 Cost on uncompleted contracts *7 67,658 *7 79,903 527,728 Real estate for sale and development projects in progress 131,439 *8 166,293 1,098,298 Other inventories 4,003 6,841 45,186 Other current assets *8 45,847 *8, *9 79,106 522,463 Allowance for doubtful accounts (182) (375) (2,477) Total current assets 1,353,485 1,631,175 10,773,237 Fixed assets Tangible fixed assets Buildings and structures *5 161,554 *5, *8 173,894 1,148,501 Machinery, vehicles and equipment 68,273 84,429 557,623 Land *3 120,488 *3, *8 219,316 1,448,490 Construction in progress 5,354 15,426 101,884 Accumulated depreciation (142,320) (160,351) (1,059,055) Total tangible fixed assets 213,349 332,715 2,197,444 Intangible fixed assets 17,581 27,151 179,326 Investments and other assets Investment securities *2, *4 386,906 *2, *4 478,191 3,158,258 Net defined benefit asset 10,875 80,316 530,454 Deferred income tax assets 5,918 4,504 29,750 Other fixed assets *4, *8 30,570 *4, *8 31,751 209,702 Allowance for doubtful accounts (1,969) (2,164) (14,295) Total investments and other assets 432,300 592,599 3,913,869 Total fixed assets 663,232 952,466 6,290,641 Total assets 2,016,717 2,583,641 17,063,878 Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Liabilities Current liabilities Notes and accounts payable trade 476,115 *9 597,704 3,947,587 Short-term borrowings 81,965 *10 110,530 730,010 Short-term non-recourse loans payable 11 261 1,724 Lease obligations 347 731 4,832 Income taxes payable 12,628 37,059 244,760 Advances received and progress billings on uncompleted contracts *1 181,226 *1 215,432 1,422,838 Deposit received 170,995 196,991 1,301,049 Provision for warranties on completed contracts 3,325 3,467 22,900 Provision for losses on construction contracts *7 47,897 *7 96,661 638,406 Allowance for losses on orders received – 71 471 Other current liabilities 48,139 *9 43,802 289,298 Total current liabilities 1,022,652 1,302,713 8,603,882 Long-term liabilities Straight bonds 40,000 50,000 330,229 Long-term borrowings 79,606 142,787 943,048 Long-term non-recourse loans payable 117 72,686 480,065 Lease obligations 716 1,533 10,127 Deferred income tax liabilities 1,711 11,953 78,944 Deferred income tax liabilities for revaluation of land 3,274 4,480 29,590 Retirement benefits for directors and corporate auditors 508 840 5,548 Provision for share-based remuneration for directors 48 271 1,793 Net defined benefit liability 15,037 18,417 121,643 Other long-term liabilities 19,100 16,957 111,995 Total long-term liabilities 160,120 319,927 2,112,986 Total liabilities 1,182,773 1,622,641 10,716,868 Net assets Shareholders’ equity Common stock 122,742 122,742 810,660 Capital surplus 30,382 30,382 200,663 Retained earnings 562,774 558,721 3,690,123 Treasury stock (906) (898) (5,936) Total shareholders’ equity 714,992 710,947 4,695,511 Accumulated other comprehensive income Unrealized gains on available-for-sale securities, net of taxes 97,090 154,295 1,019,056 Unrealized losses on hedging derivatives, net of taxes (6) (1) (9) Revaluation reserve for land 1,235 1,176 7,773 Foreign currency translation adjustments 237 2,530 16,711 Remeasurements of defined benefit plans 15,638 60,385 398,822 Total accumulated other comprehensive income 114,194 218,387 1,442,355 Non-controlling interests 4,756 31,666 209,143 Total net assets 833,944 961,000 6,347,010 Total liabilities and net assets 2,016,717 2,583,641 17,063,878 2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income Consolidated Statements of Income Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Net sales Construction business 1,499,803 1,602,000 10,580,544 Development projects 142,909 163,023 1,076,700 Total net sales *1 1,642,712 *1 1,765,023 11,657,244 Cost of sales Construction business *2, *3 1,378,637 *2, *3 1,509,665 9,970,713 Development projects *3 116,301 *3 127,957 845,103 Total cost of sales 1,494,939 1,637,622 10,815,817 Gross profit Construction business 121,165 92,334 609,830 Development projects 26,607 35,066 231,596 Total gross profit 147,773 127,400 841,426 Selling, general and administrative expenses Selling expenses *4 40,698 *4 40,756 269,182 General and administrative expenses *3, *4 52,333 *3, *4 60,163 397,353 Total selling, general and administrative expenses 93,032 100,920 666,535 Operating income 54,740 26,480 174,890 Non-operating income Interest income 543 1,315 8,686 Dividend income 5,366 5,958 39,353 Foreign exchange gains 1,024 2,581 17,052 Investment gain on equity method 2,054 4,195 27,706 Other non-operating income 721 646 4,268 Total non-operating income 9,709 14,697 97,068 Non-operating expenses Interest expenses 861 1,080 7,133 Taxes and dues 154 542 3,583 Other non-operating expenses *7 309 *7 643 4,253 Total non-operating expenses 1,325 2,266 14,970 Ordinary income 63,125 38,910 256,988 Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Extraordinary gains Gain on sales of investment securities 2,405 17,908 118,280 Gain on sales of investments in capital of subsidiaries and associates 3,925 – – Other extraordinary gains 236 1,970 13,012 Total extraordinary gains 6,567 19,879 131,293 Extraordinary losses Loss on sales of fixed assets *5 485 *5 47 316 Impairment losses on fixed assets *6 295 *6 586 3,873 Loss on retirement of fixed assets 246 726 4,800 Loss on valuation of investment securities 198 25 167 Compensation for damage – 204 1,348 Settlement payments 203 – – Other extraordinary losses *8 168 105 694 Total extraordinary losses 1,597 1,695 11,201 Income before income taxes 68,094 57,093 377,080 Income taxes - current 28,369 48,482 320,209 Income taxes - deferred (7,630) (32,722) (216,121) Total income taxes 20,738 15,760 104,088 Net income 47,356 41,333 272,992 Net income attributable to non-controlling interests 231 1,060 7,006 Net income attributable to owners of parent 47,124 40,272 265,986 Consolidated Statements of Comprehensive Income Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Net income 47,356 41,333 272,992 Other comprehensive income Unrealized gains on available-for-sale securities, net of taxes (447) 57,481 379,640 Unrealized gains (losses) on hedges derivatives, net of taxes (4) 4 30 Foreign currency translation adjustments 2,136 2,267 14,976 Remeasurements of defined benefit plans (12,776) 45,087 297,786 Share of other comprehensive income of entities accounted for using equity method 337 221 1,462 Total other comprehensive income *1 (10,755) *1 105,063 693,897 Comprehensive income 36,600 146,396 966,889 Comprehensive income attribute to Owners of parent 36,030 144,523 954,519 Non-controlling interests 570 1,873 12,370 3) Consolidated Statements of Changes in Net Assets Consolidated fiscal year March 31, 2023 (Millions of Yen) Shareholders’ equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Balance as of April 1, 2022 122,742 30,382 591,383 (898) 743,609 Changes during the period Dividends (25,722) (25,722) Net income attributable to owners of parent 47,124 47,124 Acquisition of treasury stock (50,007) (50,007) Disposal of treasury stock 0 0 0 Cancellation of treasury stock (49,999) 49,999 – Transfer from retained earnings to capital surplus 49,999 (49,999) – Reversal of revaluation reserve for land (11) (11) Change in ownership interest of parent due to transactions with non-controlling interests – Changes other than shareholders’ equity, net (Note) Total changes during the period – – (28,609) (7) (28,616) Balance as of March 31, 2023 122,742 30,382 562,774 (906) 714,992 Accumulated other comprehensive income Non- controlling interests Total net assets Unrealized gains on available-for- sale securities, net of taxes Unrealized gains (losses) on hedging derivatives, net of taxes Revaluation reserve for land Foreign currency translation adjustments Remeasure- ments of defined benefit plans Total accumulated other comprehensive income Balance as of April 1, 2022 97,535 (8) 1,223 (1,903) 28,429 125,277 3,948 872,835 Changes during the period Dividends (25,722) Net income attributable to owners of parent 47,124 Acquisition of treasury stock (50,007) Disposal of treasury stock 0 Cancellation of treasury stock – Transfer from retained earnings to capital surplus – Reversal of revaluation reserve for land 11 11 – Change in ownership interest of parent due to transactions with non-controlling interests – Changes other than shareholders’ equity, net (Note) (445) 1 2,140 (12,791) (11,094) 807 (10,286) Total changes during the period (445) 1 11 2,140 (12,791) (11,082) 807 (38,890) Balance as of March 31, 2023 97,090 (6) 1,235 237 15,638 114,194 4,756 833,944 Consolidated fiscal year March 31, 2024 (Millions of Yen) Shareholders’ equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Balance as of April 1, 2023 122,742 30,382 562,774 (906) 714,992 Changes during the period Dividends (24,384) (24,384) Net income attributable to owners of parent 40,272 40,272 Acquisition of treasury stock (20,010) (20,010) Disposal of treasury stock 0 18 18 Cancellation of treasury stock (19,999) 19,999 – Transfer from retained earnings to capital surplus 19,999 (19,999) – Reversal of revaluation reserve for land 58 58 Change in ownership interest of parent due to transactions with non-controlling interests (0) (0) Changes other than shareholders’ equity, net (Note) Total changes during the period – (0) (4,052) 7 (4,045) Balance as of March 31, 2024 122,742 30,382 558,721 (898) 710,947 Accumulated other comprehensive income Non- controlling interests Total net assets Unrealized gains on available-for- sale securities, net of taxes Unrealized gains (losses) on hedging derivatives, net of taxes Revaluation reserve for land Foreign currency translation adjustments Remeasure- ments of defined benefit plans Total accumulated other comprehensive income Balance as of April 1, 2023 97,090 (6) 1,235 237 15,638 114,194 4,756 833,944 Changes during the period Dividends (24,384) Net income attributable to owners of parent 40,272 Acquisition of treasury stock (20,010) Disposal of treasury stock 18 Cancellation of treasury stock – Transfer from retained earnings to capital surplus – Reversal of revaluation reserve for land (58) (58) – Change in ownership interest of parent due to transactions with non-controlling interests (0) Changes other than shareholders’ equity, net (Note) 57,205 5 2,293 44,747 104,250 26,909 131,160 Total changes during the period 57,205 5 (58) 2,293 44,747 104,192 26,909 127,056 Balance as of March 31, 2024 154,295 (1) 1,176 2,530 60,385 218,387 31,666 961,000 Consolidated fiscal year March 31, 2024 (Thousands of U.S. Dollars) Shareholders’ equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Balance as of April 1, 2023 810,660 200,664 3,716,889 (5,985) 4,722,229 Changes during the period Dividends (161,051) (161,051) Net income attributable to owners of parent 265,986 265,986 Acquisition of treasury stock (132,159) (132,159) Disposal of treasury stock 0 120 120 Cancellation of treasury stock (132,088) 132,088 – Transfer from retained earnings to capital surplus 132,088 (132,088) – Reversal of revaluation reserve for land 387 387 Change in ownership interest of parent due to transactions with non-controlling interests (1) (1) Changes other than shareholders’ equity, net (Note) Total changes during the period – (1) (26,765) 48 (26,718) Balance as of March 31, 2024 810,660 200,663 3,690,123 (5,936) 4,695,511 Accumulated other comprehensive income Non- controlling interests Total net assets Unrealized gains on available-for- sale securities, net of taxes Unrealized gains (losses) on hedging derivatives, net of taxes Revaluation reserve for land Foreign currency translation adjustments Remeasure- ments of defined benefit plans Total accumulated other comprehensive income Balance as of April 1, 2023 641,240 (44) 8,161 1,565 103,286 754,210 31,414 5,507,854 Changes during the period Dividends (161,051) Net income attributable to owners of parent 265,986 Acquisition of treasury stock (132,159) Disposal of treasury stock 120 Cancellation of treasury stock – Transfer from retained earnings to capital surplus – Reversal of revaluation reserve for land (387) (387) – Change in ownership interest of parent due to transactions with non-controlling interests (1) Changes other than shareholders’ equity, net (Note) 377,816 34 15,146 295,536 688,533 177,729 866,262 Total changes during the period 377,816 34 (387) 15,146 295,536 688,145 177,729 839,155 Balance as of March 31, 2024 1,019,056 (9) 7,773 16,711 398,822 1,442,355 209,143 6,347,010 [Marginal Notes to Consolidated Statements of Changes in Net Assets] (Note) Excluding the reversal of revaluation reserve for land. 4) Consolidated Statements of Cash Flows Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Cash flows from operating activities Income before income taxes 68,094 57,093 377,080 Depreciation and amortization 11,478 13,110 86,588 Impairment losses on fixed assets 295 586 3,873 Increase (decrease) in allowance for doubtful accounts 183 173 1,145 Increase (decrease) in provision for losses on construction contracts 33,734 48,281 318,879 Increase (decrease) in net defined benefit liability (24) (855) (5,651) Decrease (increase) in net defined benefit asset 12,354 (67,401) (445,156) Increase (decrease) in remeasurements of defined benefit plans (12,776) 45,087 297,786 Interest and dividend income (5,909) (7,273) (48,040) Interest expenses 861 1,080 7,133 Foreign exchange losses (gains) (1,024) (2,581) (17,052) Loss (gain) on valuation of investment securities 198 25 167 Loss (gain) on sales of investment securities (2,300) (17,895) (118,189) Loss (gain) on sales of investments in capital of subsidiaries and associates (3,925) – – Loss (gain) on sales of fixed assets 329 (589) (3,896) Loss on retirement of fixed assets 246 726 4,800 Investment loss (gain) on equity method (2,054) (4,195) (27,706) Decrease (increase) in trade receivables (112,919) (105,106) (694,185) Decrease (increase) in cost on uncompleted contracts (20,206) (7,322) (48,361) Decrease (increase) in real estate for sale and development projects in progress (13,761) (20,846) (137,680) Decrease (increase) in other inventories (614) (1,002) (6,624) Increase (decrease) in trade payables 52,384 92,137 608,527 Increase (decrease) in advances received and progress billings on uncompleted contracts 20,312 25,503 168,443 Increase (decrease) in deposit received 14,639 24,342 160,775 Increase (decrease) in accounts payable - other 10,552 (7,206) (47,598) Other, net 4,343 (7,833) (51,739) Subtotal 54,491 58,038 383,319 Interest and dividend received 8,123 8,685 57,366 Interest paid (879) (1,020) (6,741) Income taxes paid (31,632) (25,091) (165,721) Net cash provided by (used in) operating activities 30,101 40,611 268,223 Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Cash flows from investing activities Decrease (increase) in time deposits 2,539 (3,864) (25,523) Purchase of tangible and intangible assets (16,163) (122,308) (807,800) Proceeds from sales of tangible and intangible assets 759 1,424 9,410 Purchase of investment securities (13,593) (26,757) (176,720) Proceeds from sales and redemption of investment securities 12,300 40,203 265,525 Purchase of shares of subsidiaries resulting in change in scope of consolidation – *2 (27,365) (180,739) Other, net 99 (79) (522) Net cash provided by (used in) investing activities (14,058) (138,747) (916,370) Cash flows from financing activities Net increase (decrease) in short-term borrowings 584 (1,295) (8,554) Proceeds from long-term borrowings 34,350 94,010 620,896 Repayment of long-term borrowings (37,542) (21,122) (139,505) Proceeds from long-term non-recourse borrowings – 72,830 481,017 Repayment of long-term non-recourse loans payable (15) (11) (74) Proceeds from issuance of bonds – 9,944 65,680 Redemption of bonds (20,000) – – Acquisition of treasury stock (50,007) (20,010) (132,159) Dividends paid (25,722) (24,384) (161,051) Other, net (315) (568) (3,754) Net cash provided by (used in) financing activities (98,668) 109,392 722,494 Effect of exchange rate changes on cash and cash equivalents 1,728 3,633 23,999 Net increase (decrease) in cash and cash equivalents (80,896) 14,890 98,348 Cash and cash equivalents at beginning of year 496,760 415,863 2,746,607 Cash and cash equivalents at end of year *1 415,863 *1 430,754 2,844,955 [Notes to Consolidated Financial Statements] (Significant Matters Providing the Basis of Presenting Consolidated Financial Statements) The accompanying consolidated financial statements of Taisei Corporation (the “Company”) and its consolidated subsidiaries (collectively the “Group”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. The accompanying consolidated financial statements have been translated into English from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Japanese yen are rounded down to the nearest million yen. Similarly, U.S. dollars are rounded down to the nearest thousand U.S. dollars. The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2024, which is ¥151.41 to U.S. $ 1. The translations should not be construed as representations of what the Japanese yen amounts have been, could have been, or could in the future be when converted into U.S. dollars at this or any other rate of exchange. 1. Matters concerning scope of consolidation (1) The number of consolidated subsidiaries: 59 companies TAISEI YURAKU REAL ESTATE Co., Ltd. TAISEI ROTEC CORPORATION P.S. MITSUBISHI CONSTRUCTION Co., Ltd. Of the consolidated subsidiaries, P.S. MITSUBISHI CONSTRUCTION Co., Ltd. and 10 other companies are included in the scope of consolidation due to the acquisition of shares by the Group and TAISEI CLEAN ENERGY CORPORATION and 3 other companies due to new establishment. HOTEL PRECEDE KORIYAMA Co., Ltd. is excluded from the scope of consolidation due to liquidation. (2) Names, etc., of main non-consolidated subsidiaries EHIME HOSPITAL PARTNERS Ltd. OMIYA CROSS POINT Co., Ltd. (The reason for excluding these subsidiaries from consolidation) Non-consolidated subsidiaries are excluded from the scope of consolidation because these companies are small companies and the sums of each of the total assets, net sales, net income (equal to share interest) and retained earnings (equal to share interest) of these companies have not had any significant impacts on the consolidated financial statements. 2. Matters concerning application of equity method (1) The number of non-consolidated subsidiaries accounted for using the equity method: 16 companies Names of main non-consolidated subsidiaries EHIME HOSPITAL PARTNERS Ltd. OMIYA CROSS POINT Co., Ltd. (2) The number of affiliated companies accounted for using the equity method: 47 companies CSCEC-TAISEI CONSTRUCTION, LTD. P.T. INDOTAISEI INDAH DEVELOPMENT From the consolidated fiscal year March 31, 2024, 2 companies newly established and 2 companies whose shares were acquired by the Company are included in the scope of the equity method. In addition, 1 company whose shares were sold by the Company and 2 liquidated companies are excluded from the scope of the equity method. (3) Non-consolidated subsidiaries and affiliates are excluded from scope of the equity method because not only each company’s net income (equal to share interest) and retained earnings (equal to share interest) but also sums of each of these figures have no significant impact on the consolidated financial statements. 3. Matters concerning the fiscal year of consolidated subsidiaries Among the Company’s consolidated subsidiaries, the balance sheet date of VINATA INTERNATIONAL Co., Ltd. and 24 other companies is December 31. Their financial statements as of December 31 are used in preparation of the consolidated financial statements. Significant transactions, if any, in the period from January 1 to March 31 have been adjusted in the consolidated financial statements. All consolidated subsidiaries other than the above have the same balance sheet date, March 31, corresponding with that of the Company. 4. Matters concerning accounting policies (1) Standard and method of valuation of significant assets (a) Securities - Debt securities intended to be held to maturity The amortized cost method using the straight-line method - Available-for-sale securities Other than equity securities without market prices The fair value method based on the market price as of the balance sheet date (Unrealized gains on available-for-sale securities are included directly in the net assets and costs of selling available- for-sale securities is calculated by the moving-average method.) Equity securities without market prices The cost method using the moving-average method (b) Derivatives The fair value method (c) Inventories - Cost on uncompleted contracts The cost method mainly using the specific-identification cost method - Real estate for sale and development project in progress The cost method mainly using the specific-identification cost method (Values on the balance sheet are subject to the book value reduction method based on decreased profitability.) - Other inventories Costs on other projects The cost method mainly using the specific-identification cost method (Values on the balance sheet are subject to the book value reduction method based on decreased profitability.) Raw materials and supplies The cost method mainly using the moving-average method (Values on the balance sheet are subject to the book value reduction method based on decreased profitability.) (2) Depreciation method of significant depreciable assets (a) Buildings and structures Mainly the straight-line method The useful life and residual value are mainly determined on the same basis as that of the method provided in the Corporation Tax Act. (b) Other tangible fixed assets Mainly the declining-balance method The useful life and residual value are mainly determined on the same basis as that of the method provided in the Corporation Tax Act. (c) Intangible fixed assets Mainly the straight-line method The useful life is mainly determined on the same basis as that of the method provided in the Corporation Tax Act. (d) Capitalized leased assets relating to finance lease transactions whose ownership is not transferred to lessee The straight-line method with the lease period being the useful life and the residual value being zero (3) Accounting standards for significant allowances (a) Allowance for doubtful accounts Allowance for doubtful accounts is provided to reserve probable losses from bad debt. It consists of the estimated uncollectible amount of certain identified doubtful receivables and the amount estimated on the basis of the past default ratio for normal receivables. (b) Provision for warranties on completed contracts Provision for warranties on completed contracts is provided for expenses and others required to cure the non-conformity of performance on the grounds of non-conformity with the terms of the contract, in the amount estimated using an actual ratio of related losses during the past certain periods. (c) Provision for losses on construction contracts Provision for losses on construction contracts is provided for future losses on construction contracts, based on the estimated losses on construction contracts in hand as of the end of this consolidated fiscal year, for which losses are expected and the amount of such losses can be reasonably estimated. (d) Allowance for losses on order received Allowance for losses on order received is provided with respect to orders (excluding construction contracts) for which eventual losses are reasonably estimated. (e) Retirement benefits for directors and corporate auditors At certain consolidated subsidiaries, amount payable at the end of this consolidated fiscal year is recognized in accordance with each company’s regulations to provide for retirement benefits for directors, corporate auditors and executive officers. (f) Provision for share-based remuneration for directors At the Company and some of its consolidated subsidiaries, provision for share-based remuneration for directors (including executive officers in the Company’s certain consolidated subsidiaries) is provided for future provision of the Company’s shares to directors, based on estimated amount of share-based remuneration obligation at the end of this consolidated fiscal year in accordance with the “Officers’ Share Benefit Regulation.” (4) Accounting method for retirement benefit (a) Method of attributing estimated amounts of retirement benefits to the period In calculating projected benefit obligations, the method of attributing estimated amounts of retirement benefits to the period until this consolidated fiscal year is based on the benefit formula basis. (b) Accounting methods for actuarial differences and past service costs Past service costs are amortized using the straight-line method (some consolidated subsidiaries use the declining-balance method) over 1-10 years, which is not longer than an average remaining service period of the employees when the costs are incurred. Actuarial gains and losses are amortized from the subsequent fiscal year (some consolidated subsidiaries amortize actuarial gains and losses from the current fiscal year) using the straight-line method (some consolidated subsidiaries use the declining-balance method) over 1-12 years, which is not longer than an estimated average remaining service period of the employees when the gains or losses are incurred. (5) Recognition criteria for net sales of construction business The main details of performance obligations related to revenue from contracts with customers in the Group’s main projects and the ordinary timing of satisfaction of these performance obligations (i.e., ordinary timing of revenue recognition) are as follows. Since the performance obligations under construction contracts in the Building Construction Business and the Civil Engineering Business are satisfied over time as the construction progress, revenue associated with construction contracts is recognized based on the progress towards satisfaction of performance obligations except that the contract amount is small or the period is very short. The progress is estimated by the percentage-of-completion method and the percentage at the end of the consolidated fiscal year is determined by the percentage of the cost incurred to the estimated total costs, so called “cost- proportional method”. In addition, except the initial stages of the contracts, revenue is recognized by the cost recovery method when it is not possible to reasonably estimate the progress towards satisfaction of performance obligations, but it is probable that the costs incurred will be recovered. Regarding the construction projects of which the contract amount is small or the period is very short, revenue is recognized at the time of completion of construction. In the current consolidated fiscal year, there are no construction contracts with a significant financing component in the transaction price, although the timing of receipt of the consideration for the transaction varies depending on the terms of the contracts. (6) Methods for significant hedge accounting (a) Hedge accounting The deferral accounting method is applied for accounting for hedging transactions. However, interest rate swaps that meet the requirements for special treatment are treated in accordance with such treatment. (b) Hedging instruments and hedged items - Hedging instruments Derivative transactions (interest rate swaps, interest rate options, foreign exchange forward contracts and forward transactions in securities, etc.) - Hedged items Assets or liabilities for which there is a possibility of loss due to market fluctuations, etc., but for which market fluctuations, etc., are not reflected in the valuation and for which the possibility of loss due to market fluctuations, etc., is avoided by fixing the cash flows. (c) Hedging policy In order to mitigate interest rate fluctuation risk, reduce financial expenses and foreign exchange risk, and mitigate price fluctuation risk of securities, the Company implements derivative transactions in accordance with each company’s regulations, which stipulate the authority, responsibilities, and practices related to the execution and management of derivative transactions. (d) Evaluation method for hedge effectiveness The effectiveness is evaluated by the ratio of the change in fair market value of the hedging instrument to that of the hedged item, and the verification of effectiveness is performed every 6 months. Comprehensive fair market value including the time value of options and other factors is used to evaluate the effectiveness. (7) Method and period of amortization of goodwill Goodwill is amortized over the period within 20 years for which the goodwill is expected to contribute to consolidated net income, using the straight-line method, or is charged to income in the year incurred if the amount of goodwill is immaterial. (8) Scope of funds in the consolidated statements of cash flows Funds (cash and cash equivalents) in the consolidated statements of cash flows refer to cash on hand, readily available deposits and short-term highly liquid investments with maturities not exceeding 3 months at the date of purchase and with insignificant risks of change in value. (9) Other significant matters concerning preparation of the consolidated financial statements Accounting policies and procedures adopted in the absence of requirements in relevant accounting standards, etc., that specifically apply The Company and certain consolidated subsidiaries do not recognize the Construction Joint Venture (the “JV”) as an independent accounting unit, but incorporate it into their accounting in the way of recording the amount of revenue and cost of sales associated with construction contracts according to the interests held in the JV. (Significant Accounting Estimates) 1. Net sales of construction business recognized over time (1) Carrying amounts in the consolidated statements of income Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 1,267,930 1,357,698 8,967,031 (2) Information on the nature of significant accounting estimates for identified items Net Sales of construction business recognized over time using the cost-proportional method are based on reasonable estimates of total revenue, total construction costs and the progress towards satisfaction of performance obligations at the end of the consolidated fiscal year. Since the estimates involve a high degree of uncertainty, in the case that estimates need to be revised, net sales of construction business may change and affect the results of following accounting periods. (Accounting standards and guidance not yet applied) Following accounting standards and guidance are those issued but not yet applied. - Accounting Standard for Current Income Taxes (ASBJ Statement No. 27, October 28, 2022) - Accounting Standard for Presentation of Comprehensive Income (ASBJ Statement No. 25, October 28, 2022) - Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, October 28, 2022) 1. Overview These standards provide for the categories in which income taxes applicable to the taxation on other comprehensive income should be recorded, as well as tax effects associated with sales of shares of subsidiaries, etc. when the group taxation regime is applied. 2. Effective date The standards and guidance will be effective from the beginning of the consolidated fiscal year ending March 31, 2025. 3. Effects of application of the standards and guidance The effects of application of Accounting Standard for Current Income Taxes, etc. on the consolidated financial statements are under evaluation at the time of preparing these consolidated financial statements (Changes in Presentation Method) - Consolidated balance sheets 1. Changes in presentation method concerning income taxes payable “Income taxes payable,” which was previously included in “Other current liabilities” under current liabilities, is presented as a separate line item in the consolidated fiscal year ended March 31, 2024, because its amount has become more significant. In order to reflect this change in presentation, the consolidated financial statements for the consolidated fiscal year March 31, 2023 have been reclassified. As a result, ¥60,767 million ($401,343 thousand) of “Other current liabilities” presented under current liabilities in the consolidated balance sheets for the consolidated fiscal year March 31, 2023 is reclassified into “Income taxes payable” of ¥12,628 million ($83,404 thousand) and “Other current liabilities” of ¥48,139 million ($317,938 thousand). - Consolidated statements of cash flows 1. Changes in presentation method concerning decrease (increase) in accounts receivable - other “Decrease (increase) in accounts receivable - other,” which was previously presented as a separate line item under cash flows from operating activities, is included in “Other, net.” in the consolidated fiscal year ended March 31, 2024, because its amount has become less significant. In order to reflect this change in presentation, the consolidated financial statements for the consolidated fiscal year ended March 31, 2023 have been reclassified. As a result, ¥8,562 million ($56,554 thousand) of “Decrease (increase) in accounts receivable - other” presented under cash flows from operating activities in the consolidated statements of cash flows for the consolidated fiscal year ended March 31, 2023 is reclassified as “Other, net.” 2. Changes in presentation method concerning increase (decrease) in remeasurements of defined benefit plans, decrease (increase) in other inventories, and increase (decrease) in accounts payable - other “Increase (decrease) in remeasurements of defined benefit plans,” “Decrease (increase) in other inventories,” and “Increase (decrease) in accounts payable - other,” which were previously included in “Other, net” under cash flows from operating activities, are presented as separate line items in the consolidated fiscal year ended March 31, 2024, because their amounts have become more significant. In order to reflect these changes in presentation, the consolidated financial statements for the consolidated fiscal year ended March 31, 2023 have been reclassified. As a result, ¥(7,058) million ($(46,618) thousand) of “Other, net” presented under cash flows from operating activities in the consolidated statements of cash flows for the consolidated fiscal year ended March 31, 2023 is reclassified into “Increase (decrease) in remeasurements of defined benefit plans” of ¥(12,776) million ($(84,386) thousand), “Decrease (increase) in other inventories” of ¥(614) million ($(4,060) thousand), “Increase (decrease) in accounts payable - other” of ¥10,552 million ($69,697 thousand), and “Other, net” of ¥(4,219) million ($(27,868) thousand). (Additional Information) - Performance-based share remuneration plan for directors 1. Overview of transactions The Company has introduced the performance-based share remuneration plan “Board Benefit Trust (the “BBT”)” for directors. The Company’s common stock are acquired through the BBT with money contributed by the Company (the “Stock”). The directors will have the Stock and the amounts converted at fair value of the Stock which are provided through the BBT when directors retire in accordance with “Officers’ Share Benefit Regulation.” 2. Treasury stock held by the BBT The shares held by the BBT are reported by the book value of the BBT (excluding the incidental expenses) as part of the treasury stock in the net assets. At the end of the previous consolidated fiscal year and this consolidated fiscal year, the book value of treasury stock held by the BBT was ¥385 million and ¥367 million ($2,424 thousand), and the number of shares was 104 thousand shares and 99 thousand shares, respectively. (Matters Related to Consolidated Balance Sheets) *1. The balances of receivables from contracts with customers, contract assets and contract liabilities included in notes and accounts receivable trade and advances received and progress billings on uncompleted contracts Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Notes receivable trade 26,907 31,673 209,193 Accounts receivable trade 661,727 832,823 5,500,454 Of which, receivables from contracts with customers 251,165 311,127 2,054,869 Advances received and progress billings on uncompleted contracts 180,620 214,443 1,416,312 Note: The entire amount of notes receivable trade comprises receivables from contracts with customers. *2. Shares, etc., to non-consolidated subsidiaries and affiliated companies Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 53,826 65,394 431,901 *3. Revaluation of land Some of the domestic consolidated subsidiaries executed revaluation of their land for business use in accordance with the Act on Revaluation of Land (Act No. 34, March 31, 1998), and revaluation reserve for land is recognized in net assets section. - Method of revaluation The revaluation is executed in accordance with the method prescribed in the Article 2, Items 3, 4, and 5 of the Order of Enforcement of the Act on Revaluation of Land (Cabinet Order No. 119, March 31, 1998). - Date of revaluation November 30, 2001 and March 31, 2002 Note: Yuho Building Corporation, which was merged with YURAKU REAL ESTATE CO., LTD. (currently known as TAISEI YURAKU REAL ESTATE Co., Ltd.) on December 1, 2001, executed the revaluation on November 30, 2001. Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 The difference between the fair value of the revalued land at the end of the current consolidated fiscal year and the book value after the revaluation 1,971 3,544 23,409 Of which, the difference related to investment and rental property (212) 263 1,741 Note: Negative sign “()” shows unrealized gain. *4. Pledged assets The following assets were pledged as collateral for borrowings and others of subsidiaries and affiliates. Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Investment securities 1,113 1,110 7,333 Investments and other assets /Other assets 801 659 4,356 Total 1,915 1,769 11,689 *5. Amount of advanced depreciation by the direct write-off method Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Buildings and structures 192 233 1,545 6. Contingent liabilities - Guarantee obligations The Company and its consolidated subsidiaries are contingently liable as the guarantors for borrowings of the following companies that are not consolidated. Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 FUKUSHIMA-KORIYAMA MIRAI ENERGY LLC 2,083 3,783 24,989 KAGA ASCON Co., Ltd. 289 227 1,500 Others 467 546 3,608 Total 2,840 4,557 30,097 *7. Cost on uncompleted contracts corresponding to provision for losses on construction contracts Cost on uncompleted contracts and provision for losses on construction contracts related to construction contracts that are likely to incur losses are separately presented, without being set off. Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 1,713 3,802 25,115 *8. Assets corresponding to non-recourse liabilities Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Land – 91,271 602,808 Lease receivables 192 181 1,201 Other 9 13,859 91,537 *9. Amount of notes receivable and notes payable with maturity on the balance sheet date (the “Date”) and the day before the Date (the bank holidays) Notes receivable and notes payable with maturity on the Date are processed on the clearing date or the settlement date. As the Date and the day before the Date were bank holidays, notes receivable and notes payable maturing on that days could not be settled and were included in the consolidated balance sheets, as follows: Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Notes receivable trade – 199 1,315 Electronically recorded monetary claims – 12,114 80,010 Non-operating notes receivable – 88 582 Non-operating electronically recorded monetary claims – 33 219 Notes payable trade – 4,922 32,511 Electronically recorded obligations – 42,003 277,417 Non-operating electronically recorded obligations – 2 17 *10. Committed line of credit agreement Some of the consolidated subsidiaries have entered into syndicated committed line of credit agreements in order to maintain flexibility for funding needs in the event of emergencies. The agreed credit limit and the balance of unexecuted loans as of March 31, 2023 and 2024 were as follows: Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Credit limit of the committed line – 17,300 114,259 Balance of executed loans – 2,000 13,209 Balance of unexecuted loans – 15,300 101,050 (Matters Related to Consolidated Statements of Income) *1. Revenue from contracts with customers The amount of revenue from contracts with customers is as stated in “1. Consolidated Financial Statements, etc., (1) Consolidated Financial Statements, (Matters Related to Revenue Recognition) 1. Disaggregation of revenue from contracts with customers.” *2. Provision for losses on construction contracts included in cost of sales Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 43,039 63,549 419,714 *3. Research and development expenses included in general and administrative expenses and manufacturing costs Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 16,862 18,646 123,149 *4. Major items and amounts included in selling, general and administrative expenses Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Employees’ salaries and allowances 33,291 34,856 230,211 Retirement benefit expenses 183 1,232 8,136 Research study expenses 10,651 11,996 79,233 *5. Components of loss on sales of fixed assets Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Buildings 111 36 241 Land 373 7 48 Others 1 3 25 Total 485 47 316 *6. Impairment losses on fixed assets Impairment losses on fixed assets consisted of the following: Consolidated fiscal year March 31, 2023 Use Type of assets Location No. of assets Assets for business use Buildings, land and others Fukushima Prefecture and others 10 lots Idle assets Land, buildings and others Chiba Prefecture and others 2 lots The Company and its consolidated subsidiaries grouped their fixed assets based on units, for which decisions for investments were made. As a result, the book value of 12 lots including assets for business use was reduced to recoverable amounts, and the decrease was recorded as impairment losses on fixed assets (¥295 million) under extraordinary losses. The main components of the impairment losses on fixed assets were assets for business use of ¥274 million (buildings: ¥201 million, land: ¥63 million, others: ¥9 million), and idle assets of ¥21 million (land: ¥16 million, buildings: ¥3 million, others: ¥2 million). The recoverable amount of the fixed assets was mainly their net realizable value, such as the estimated sales price. Consolidated fiscal year March 31, 2024 Use Type of assets Location No. of assets Assets for business use Machinery and equipment, land, buildings and others Okayama Prefecture and others 10 lots Rental property Land Tokyo 1 lot Idle assets Land and others Aichi Prefecture and others 3 lots The Company and its consolidated subsidiaries grouped their fixed assets based on units, for which decisions for investments were made. As a result, the book value of 14 lots including assets for business use was reduced to recoverable amounts, and the decrease was recorded as impairment losses on fixed assets (¥586 million ($3,873 thousand)) under extraordinary losses. The main components of the impairment losses on fixed assets were assets for business use of ¥311 million ($2,054 thousand) (machinery and equipment: ¥120 million ($797 thousand), land: ¥120 million ($796 thousand), buildings: ¥60 million ($400 thousand), others: ¥9 million ($59 thousand)), rental property of ¥234 million ($1,551 thousand) (land: ¥234 million ($1,551 thousand)), and idle assets of ¥40 million ($268 thousand) (land: ¥38 million ($257 thousand) , others: ¥1 million ($10 thousand)). The recoverable amount of the fixed assets was mainly their net realizable value, such as the appraisal value calculated according to the Japanese Real Estate Appraisal Standards. *7. Provision of allowance included in other non-operating expenses Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Provision of allowance for doubtful accounts 59 16 110 *8. Provision of allowance included in other extraordinary losses Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Provision of allowance for doubtful accounts 1 – – (Matters Related to Consolidated Statements of Comprehensive Income) *1. Recycling adjustments and tax effects for each component of other comprehensive income Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Unrealized gains on available-for- sale securities Amount incurred 1,562 100,255 662,143 Recycling (2,209) (17,438) (115,174) Before tax effect (646) 82,816 546,968 Tax effect 198 (25,335) (167,328) Unrealized gains on available-for-sale securities, net of taxes (447) 57,481 379,640 Unrealized gains (losses) on hedging derivatives Amount incurred (6) 4 26 Recycling – 2 17 Before tax effect (6) 6 44 Tax effect 2 (2) (13) Unrealized gains (losses) on hedging derivatives, net of taxes (4) 4 30 Foreign currency translation adjustments Amount incurred 2,215 2,267 14,976 Recycling (78) － － Foreign currency translation adjustments 2,136 2,267 14,976 Remeasurements of defined benefit plans Amount incurred (12,295) 68,603 453,097 Recycling (6,120) (3,636) (24,016) Before tax effect (18,415) 64,967 429,081 Tax effect 5,638 (19,879) (131,294) Remeasurements of defined benefit plans, net of taxes (12,776) 45,087 297,786 Share of other comprehensive income of entities accounted for using equity method Amount incurred 337 221 1,462 Total other comprehensive income (10,755) 105,063 693,897 (Matters Related to Consolidated Statements of Changes in Net Assets) Consolidated fiscal year March 31, 2023 1. Matters concerning the type and total number of shares of issued stocks and the type and number of shares of treasury stocks (Thousand shares) Type of stock No. of shares at beginning of the consolidated fiscal year No. of shares increased during the consolidated fiscal year No. of shares decreased during the consolidated fiscal year No. of shares at end of the consolidated fiscal year Issued stock Common stock 200,803 – 12,031 188,771 Treasury stock Common stock 404 12,033 12,031 405 Notes: 1. The decrease of 12,031 thousand shares in issued stock of common stock was due to the cancelation of treasury stock according to the resolution of the Board Meeting held on March 24, 2023. 2. The number of shares in treasury stock of common stock at the end of the consolidated fiscal year includes 104 thousand shares held by the BBT. 3. The increase of 12,033 thousand shares in treasury stock of common stock was due to an increase of 12,031 thousand shares from the acquisition of treasury stock according to the resolution of the Board Meeting held on May 13, 2022, and an increase of 1 thousand shares from the purchase of shares less than one unit. 4. The decrease of 12,031 thousand shares in treasury stock of common stock was due to the cancelation of 12,031 thousand shares of treasury stock according to the resolution of the Board Meeting held on March 24, 2023, and the decrease of 0 thousand shares due to requests for additional purchase of shares less than one unit. 2. Matters concerning dividends (1) Dividends paid Resolution Type of stocks Total amount of dividends (Millions of Yen) Dividends per share (Yen) Record date Effective date June 28, 2022 General Meeting of Shareholders Common stock 13,032 65.00 March 31, 2022 June 29, 2022 November 11, 2022 Board Meeting Common stock 12,689 65.00 September 30, 2022 December 2, 2022 Notes: 1. Total amount of dividends in accordance with the resolution of the General Meeting of Shareholders on June 28, 2022 includes ¥6 million which were dividends for the shares held by the BBT. 2. Total amount of dividends in accordance with the resolution of the Board on November 11, 2022 includes ¥6 million which were dividends for the shares held by the BBT. (2) Dividends of the record date in the consolidated fiscal year ended March 31, 2023, which the effective date comes in the subsequent consolidated fiscal year Resolution Type of stocks Capital for dividends Total amount of dividends (Millions of Yen) Dividends per share (Yen) Record date Effective date June 27, 2023 General Meeting of Shareholders Common stock Retained earnings 12,250 65.00 March 31, 2023 June 28, 2023 Note: Total amount of dividends in accordance with the resolution of the General Meeting of Shareholders on June 27, 2023 includes ¥6 million which were dividends for the shares held by the BBT. Consolidated fiscal year March 31, 2024 1. Matters concerning the type and total number of shares of issued stocks and the type and number of shares of treasury stocks (Thousand shares) Type of stock No. of shares at beginning of the consolidated fiscal year No. of shares increased during the consolidated fiscal year No. of shares decreased during the consolidated fiscal year No. of shares at end of the consolidated fiscal year Issued stock Common stock 188,771 – 3,976 184,795 Treasury stock Common stock 405 3,978 3,981 403 Notes: 1. The decrease of 3,976 thousand shares in issued stock of common stock was due to the cancelation of treasury stock according to the resolution of the Board Meeting held on March 29, 2024. 2. The number of shares in treasury stock of common stock at the end of the consolidated fiscal year includes 99 thousand shares held by the BBT. 3. The increase of 3,978 thousand shares in treasury stock of common stock was due to an increase of 3,976 thousand shares from the acquisition of treasury stock according to the resolution of the Board Meeting held on May 12, 2023, and an increase of 2 thousand shares from the purchase of shares less than one unit. 4. The decrease of 3,981 thousand shares in treasury stock of common stock was due to the cancelation of 3,976 thousand shares of treasury stock according to the resolution of the Board Meeting held on March 29, 2024, the decrease of 4 thousand shares from the delivery of the BBT, and the decrease of 0 thousand shares due to requests for additional purchase of shares less than one unit. 2. Matters concerning dividends (1) Dividends paid Resolution Type of stocks Total amount of dividends (Millions of Yen) Dividends per share (Yen) Record date Effective date June 27, 2023 General Meeting of Shareholders Common stock 12,250 65.00 March 31, 2023 June 28, 2023 November 13, 2023 Board Meeting Common stock 12,134 65.00 September 30, 2023 December 4, 2023 Resolution Type of stocks Total amount of dividends (Thousands of U.S. Dollars) Dividends per share (U.S. Dollars) Record date Effective date June 27, 2023 General Meeting of Shareholders Common stock 80,909 0.43 March 31, 2023 June 28, 2023 November 13, 2023 Board Meeting Common stock 80,142 0.43 September 30, 2023 December 4, 2023 Notes: 1. Total amount of dividends in accordance with the resolution of the General Meeting of Shareholders on June 27, 2023 includes ¥6 million ($44 thousand) which were dividends for the shares held by the BBT. 2. Total amount of dividends in accordance with the resolution of the Board on November 13, 2023 includes ¥6 million ($42 thousand) which were dividends for the shares held by the BBT. (2) Dividends of the record date in the consolidated fiscal year ended March 31, 2024, which the effective date comes in the subsequent consolidated fiscal year Resolution Type of stocks Capital for dividends Total amount of dividends (Millions of Yen) Dividends per share (Yen) Record date Effective date June 20, 2024 General Meeting of Shareholders Common stock Retained earnings 11,991 65.00 March 31, 2024 June 21, 2024 Resolution Type of stocks Capital for dividends Total amount of dividends (Thousands of U.S. Dollars) Dividends per share (U.S. Dollars) Record date Effective date June 20, 2024 General Meeting of Shareholders Common stock Retained earnings 79,201 0.43 March 31, 2024 June 21, 2024 Note: Total amount of dividends in accordance with the resolution of the General Meeting of Shareholders on June 20, 2024 includes ¥6 million ($42 thousand) which were dividends for the shares held by the BBT. (Matters Related to Consolidated Statements of Cash Flows) *1. Relationship between the balance of cash and cash equivalents at the end of the fiscal year and the amount of items stated in the consolidated balance sheets Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Cash and time deposits 415,950 434,711 2,871,091 Time deposits with maturities exceeding three months (86) (3,957) (26,135) Cash and cash equivalents 415,863 430,754 2,844,955 *2. Major breakdown of assets and liabilities of companies made consolidated subsidiaries via acquisition of shares Consolidated fiscal year March 31, 2023 Not applicable. Consolidated fiscal year March 31, 2024 The Breakdown of assets and liabilities of P.S. MITSUBISHI CONSTRUCTION Co., Ltd. at the time of consolidation through the acquisition of shares and the relationship between the share acquisition cost and acquisition expenses (net cost) were as follows. Current assets ¥89,146 million ($588,778 thousand) Fixed assets ¥25,772 million ($170,217 thousand) Current liabilities ¥(48,647) million ($(321,299) thousand) Long-term liabilities ¥(16,225) million ($(107,165) thousand) Gain on negative goodwill ¥(1,094) million ($(7,226) thousand) Non-controlling interests ¥(24,923) million ($(164,606) thousand) Share acquisition cost ¥24,028 million ($158,698 thousand) Cash and cash equivalents ¥(9,229) million ($(60,957) thousand) Net: acquisition expenses ¥14,798 million ($97,740 thousand) (Matters Related to Lease Transactions) 1. Operating leases Future minimum lease payments related to non-cancellable operating lease transactions Lessee Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Due within one year 2,281 2,005 13,246 Due after one year 7,733 6,072 40,109 Total 10,014 8,078 53,355 Lessor Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Due within one year 3,058 2,428 16,038 Due after one year 16,696 10,991 72,591 Total 19,755 13,419 88,629 (Matters Related to Financial Instruments) 1. Matters concerning status of financial instruments (1) Policies for using financial instruments The Group restricts investments to low risk assets such as short-term deposits, and raises funds by indirect finance such as borrowings from banks as well as by direct finance such as issuing straight bonds or commercial paper. Derivative transactions are employed mainly for hedging fluctuation risks in interest rates and foreign currency exchange, not for speculation. (2) Detail and risks of financial instruments and risk management system (Notes and accounts receivable trade) Notes and accounts receivable trade are trade receivables and are exposed to the credit risks of customers. In order to reduce such risks, the Group conducts strict credit examinations when orders are received, and afterward manages the receivables individually and makes an effort to detect concerns about collection early until the collection is completed. (Investment securities) Investment securities are mainly debt securities intended to be held to maturity and shares in the companies with business relationships, and they are exposed to the fluctuation risk of market prices. The Group regularly monitors the fair value or financial positions of the invested companies, and revises the portfolio in a timely manner (except for debt securities intended to be held to maturity) considering the relationship with them. (Notes and accounts payable trade) Notes and accounts payable trade are trade payables, and they are debts mostly due within one year. (Borrowings, non-recourse loans payable, commercial paper, and straight bonds) Borrowings, non-recourse loans payable, commercial paper, and straight bonds are primarily for working capital, and the Group is working to diversify the timing of refinancing by adjusting the balance of long-term and short-term funding in consideration of the market environment. Long-term borrowings and straight bonds have maturity dates of five years or less in principle, some of which have floating interest rates and are exposed to interest rate fluctuation risk; however, the risk is hedged by derivative transactions (interest rate swap contracts). (Derivative transactions) The Group primarily utilizes derivative transactions related to interest rates in order to mitigate the fluctuation risk in interest rates or to reduce financing expenses, and derivative transactions related to currency in order to mitigate the foreign exchange risk. These transactions are exposed to the fluctuation risk in interest rates and the foreign exchange. However, the Group is exposed to limited risk, because the transactions are conducted for hedging. The Group considers the credit risk to be low, because it conducts derivative transactions solely with reliable international financial institutions. The Group executes and manages derivative transactions in accordance with internal rules that stipulate authority, responsibility, and details of practices. Its finance departments are responsible for conducting and evaluating transactions as well as managing related risks. (3) Supplementary explanation of matters concerning fair value, etc., of financial instruments The contract amounts of derivative transactions in the notes of “Matters Related to Derivative Transactions” do not in themselves indicate the magnitude of risk involved in derivative transactions. 2. Matters concerning fair value of financial instruments Book value of the financial instruments included in the consolidated balance sheets, the fair value of said items, and their differences as of March 31, 2023 and 2024 were as follows. (Millions of Yen) As of March 31, 2023 As of March 31, 2024 Book value Fair value Difference Book value Fair value Difference [Assets] Notes and accounts receivable trade 688,768 688,768 – 864,694 864,694 – Investment securities Debt securities intended to be held to maturity 236 238 1 198 198 0 Available-for-sale securities 289,012 289,012 – 362,886 362,886 – [Liabilities] Short-term borrowings 81,965 82,051 (85) 110,530 110,658 (127) Short-term non-recourse loans payable 11 11 (0) 261 262 (1) Straight bonds 40,000 39,708 292 50,000 49,505 495 Long-term borrowings 79,606 79,916 (310) 142,787 143,092 (305) Long-term non-recourse loans payable 117 124 (7) 72,686 73,932 (1,245) [Derivative transactions] (6) (6) – – – – (Thousands of U.S. Dollars) As of March 31, 2024 Book value Fair value Difference [Assets] Notes and accounts receivable trade 5,710,945 5,710,945 – Investment securities Debt securities intended to be held to maturity 1,307 1,311 3 Available-for-sale securities 2,396,712 2,396,712 – [Liabilities] Short-term borrowings 730,010 730,854 (844) Short-term non-recourse loans payable 1,724 1,734 (9) Straight bonds 330,229 326,959 3,269 Long-term borrowings 943,048 945,068 (2,019) Long-term non-recourse loans payable 480,065 488,293 (8,227) [Derivative transactions] – – – *1 Description of Cash and time deposits, Notes and accounts payable trade and deposit received are omitted because these financial instruments are cash and the fair values of them are almost equivalent to their book value due to the short term settlements. *2 Equity securities without market prices and investments in partnerships for which equity interests are recorded on a net basis are not included in the above “[Assets], Investment securities, Available-for-sale securities.” The book values of those financial instruments in the consolidated balance sheets were as follows: Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Unlisted equity securities, etc. 93,653 109,267 721,663 Investments in partnerships for which equity interests are recorded on a net basis 4,004 5,840 38,574 *3. Net receivables or payables arising from derivative transactions are presented in net. Items resulting in net payables in total are indicated by ( ). Note 1: Scheduled redemption amounts after the consolidated balance sheet date for monetary claims and securities with period of maturities (Millions of Yen) As of March 31, 2023 As of March 31, 2024 Due within one year Due after one year but within five years Due after five years but within ten years Due within one year Due after one year but within five years Due after five years but within ten years Cash and time deposits Time deposits 415,636 – – 434,370 – – Notes and accounts receivable trade 688,768 – – 864,694 – – Investment securities Debt securities intended to be held to maturity Government bonds, etc. 38 198 – 189 9 – Available-for-sale securities with maturity date Debt securities Government bonds, etc. 211 – – 113 – – Total 1,104,654 198 – 1,299,367 9 – (Thousands of U.S. Dollars) As of March 31, 2024 Due within one year Due after one year but within five years Due after five years but within ten years Cash and time deposits Time deposits 2,868,835 – – Notes and accounts receivable trade 5,710,945 – – Investment securities Debt securities intended to be held to maturity Government bonds, etc. 1,248 59 – Available-for-sale securities with maturity date Debt securities Government bonds, etc. 749 – – Total 8,581,779 59 – Note 2: Scheduled repayments of straight bonds, long-term borrowings and other interest-bearing debt after the consolidated balance sheet date (Millions of Yen) As of March 31, 2023 As of March 31, 2024 Due within one year Due after one year but within two years Due after two years but within three years Due after three years but within four years Due after four years but within five years Due after five years Due within one year Due after one year but within two years Due after two years but within three years Due after three years but within four years Due after four years but within five years Due after five years Short-term borrowings 60,943 – – – – – 70,291 – – – – – Straight bonds – – 10,000 10,000 10,000 10,000 – 10,000 10,000 10,000 10,000 10,000 Long-term borrowings 21,022 22,693 16,745 14,747 25,420 – 40,239 38,291 35,195 42,800 26,500 – Long-term non- recourse loans payable 11 18 15 15 15 53 261 490 15 15 72,124 42 Total 81,976 22,712 26,760 24,762 35,435 10,053 110,792 48,781 45,210 52,815 108,624 10,042 (Thousands of U.S. Dollars) As of March 31, 2024 Due within one year Due after one year but within two years Due after two years but within three years Due after three years but within four years Due after four years but within five years Due after five years Short-term borrowings 464,245 – – – – – Straight bonds – 66,045 66,045 66,045 66,045 66,045 Long-term borrowings 265,765 252,899 232,451 282,676 175,021 – Long-term non- recourse loans payable 1,724 3,236 99 99 476,353 277 Total 731,735 322,181 298,596 348,821 717,420 66,323 3. Fair value information of financial instruments by level of inputs The fair values of financial instruments are categorized into the following three levels based on the observability and significance of the inputs used to calculate fair values. Level 1 fair value: The fair values which are calculated by using observable inputs that reflect the quoted market prices for identical assets or liabilities in active markets Level 2 fair value: The fair values which are calculated by using observable inputs that are not included in Level 1 Level 3 fair value: The fair values which are calculated by using unobservable inputs If multiple inputs that have significant impact on calculation of fair values are used, the fair values are categorized in the lowest priority level in calculation of fair values among the levels to which these inputs belong. (1) Financial instruments of which fair value is recognized in the consolidated balance sheets As of March 31, 2023 As of March 31, 2024 Fair value (Millions of Yen) Fair value (Millions of Yen) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total [Assets] Investment securities Available-for-sale securities Equity securities 286,817 – – 286,817 360,147 – – 360,147 Government bonds, etc. – 211 – 211 – 113 – 113 Others 363 1,619 – 1,982 389 2,235 – 2,625 Derivative transactions Currency-related – 7 – 7 – – – – [Liabilities] Derivative transactions Currency-related – 14 – 14 – – – – As of March 31, 2024 Fair value (Thousands of U.S. Dollars) Level 1 Level 2 Level 3 Total [Assets] Investment securities Available-for-sale securities Equity securities 2,378,622 – – 2,378,622 Government bonds, etc. – 749 – 749 Others 2,575 14,764 – 17,340 Derivative transactions Currency-related – – – – [Liabilities] Derivative transactions Currency-related – – – – (2) Financial instruments of which fair value is not recognized in the consolidated balance sheets As of March 31, 2023 As of March 31, 2024 Fair value (Millions of Yen) Fair value (Millions of Yen) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total [Assets] Notes and accounts receivable trade – 688,768 – 688,768 – 864,694 – 864,694 Investment securities Debt securities intended to be held to maturity Government bonds, etc. 238 – – 238 198 – – 198 [Liabilities] Short-term borrowings – 82,051 – 82,051 – 110,658 – 110,658 Short-term non-recourse loans payable – 11 – 11 – 262 – 262 Straight bonds – 39,708 – 39,708 – 49,505 – 49,505 Long-term borrowings – 79,916 – 79,916 – 143,092 – 143,092 Long-term non-recourse loans payable – 124 – 124 – 73,932 – 73,932 As of March 31, 2024 Fair value (Thousands of U.S. Dollars) Level 1 Level 2 Level 3 Total [Assets] Notes and accounts receivable trade – 5,710,945 – 5,710,945 Investment securities Debt securities intended to be held to maturity Government bonds, etc. 1,311 – – 1,311 [Liabilities] Short-term borrowings – 730,854 – 730,854 Short-term non-recourse loans payable – 1,734 – 1,734 Straight bonds – 326,959 – 326,959 Long-term borrowings – 945,068 – 945,068 Long-term non-recourse loans payable – 488,293 – 488,293 (Note) Description of the valuation techniques and inputs used to measure fair value - Notes and accounts receivable trade The fair values of these financial instruments are almost equivalent to the book value, due to the short term settlements; although, the fair value of notes and accounts receivable, trade due over one year are based on the present value of discounted cash flows using the interest rate determined by the factors of the estimated collection terms and credit risks, with respect to each receivable categorized by collection terms. These financial instruments are classified as Level 2. - Investment securities The fair values of the stocks are based on the quoted market prices, and the stocks are traded in active markets. Therefore, these financial instruments are classified as Level 1. The bonds based on the quoted market prices are classified as Level 1, and the bonds based on the net asset value or the present value of discounted future cash flows are classified as Level 2. - Short-term borrowings The fair values of these financial instruments are almost equivalent to the book value, due to the short term settlements; although the fair value of long-term borrowings due within one year are based on the same method for long-term borrowings. - Short-term non-recourse loans payable, long-term borrowings, and long-term non-recourse loans payable The fair values of these loans and borrowings are based on the present value of discounted cash flows using the supposed interest rate which may be applicable to the same kind of loans and borrowings. These financial instruments are classified as Level 2. - Straight bonds The fair values of the marketable bonds are based on the quoted market prices, otherwise the fair values of the bonds without the quoted market prices are based on the present value of discounted cash flows using the interest rate determined by the factors of the estimated redemption terms and issuer’s credit risk. These financial instruments are classified as Level 2. - Derivative transactions The fair values of foreign currency forward contracts are based on the prices quoted by the financial institutions regarding the transactions. These financial instruments are classified as Level 2. (Matters Related to Securities) 1. Debt securities intended to be held to maturity Millions of Yen Thousands of U.S. Dollars Type As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Book value Fair value Difference Book value Fair value Difference Book value Fair value Difference (1) Securities with fair value exceeding book value Government bonds, etc. 236 238 1 198 198 0 1,307 1,311 3 Subtotal 236 238 1 198 198 0 1,307 1,311 3 (2) Securities with fair value not exceeding book value Government bonds, etc. – – – – – – – – – Subtotal – – – – – – – – – Total 236 238 1 198 198 0 1,307 1,311 3 2. Available-for-sale securities Millions of Yen Thousands of U.S. Dollars Type As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Book value Acquisition cost Difference Book value Acquisition cost Difference Book value Acquisition cost Difference (1) Securities with book value exceeding acquisition costs Equity securities 243,734 99,350 144,383 357,427 132,735 224,691 2,360,657 876,664 1,483,993 Debt securities Government bonds, etc. 211 208 3 113 108 4 749 717 32 Others 1,982 1,479 503 2,025 1,479 546 13,377 9,771 3,606 Subtotal 245,928 101,037 144,890 359,566 134,323 225,242 2,374,785 887,152 1,487,632 (2) Securities with book value not exceeding acquisition costs Equity securities 43,083 48,094 (5,010) 2,720 3,264 (544) 17,964 21,560 (3,596) Debt securities Government bonds, etc. – – – – – – – – – Others – – – 600 600 – 3,962 3,962 – Subtotal 43,083 48,094 (5,010) 3,320 3,864 (544) 21,927 25,523 (3,596) Total 289,012 149,132 139,879 362,886 138,188 224,697 2,396,712 912,676 1,484,036 3. Total sales of available-for-sale securities and the related gains and losses for the consolidated fiscal years ended March 31, 2023 and 2024 (Millions of Yen) Type Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Total amount of available- for-sale securities sold Gains on sales of available- for-sale securities Losses on sales of available- for-sale securities Total amount of available- for-sale securities sold Gains on sales of available- for-sale securities Losses on sales of available- for-sale securities Equity securities 3,864 2,168 98 30,121 17,908 13 Others 537 236 – – – – Total 4,401 2,405 98 30,121 17,908 13 (Thousands of U.S. Dollars) Type Consolidated fiscal year March 31, 2024 Total amount of available- for-sale securities sold Gains on sales of available- for-sale securities Losses on sales of available- for-sale securities Equity securities 198,940 118,280 90 Others – – – Total 198,940 118,280 90 4. Impairment losses on securities Millions of Yen Thousands of U.S. Dollars Classification Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Write-down of marketable and investment securities 198 25 167 (Matters Related to Derivative Transactions) 1. Derivative financial instruments which were not accounted for by hedge accounting Not applicable. 2. Derivative financial instruments which were accounted for by hedge accounting (1) Currency-related transactions As of March 31, 2023 (Millions of Yen) Method of hedge accounting Type of transaction Main items hedged Contract amount Contract amount due after one year Fair value Deferred hedging for forward foreign exchange Forward foreign exchange contract (short commitment) Accounts payable trade to buy U.S. dollars 115 – 7 to sell U.S. dollars 187 – (13) As of March 31, 2024 Not applicable. (2) Interest rate-related derivatives As of March 31, 2023 (Millions of Yen) Method of hedge accounting Type of transaction Main items hedged Contract amount Contract amount due after one year Fair value Special treatment of swap Interest rate swaps Long-term borrowings Receive floating rate, pay fixed rate 13,000 12,800 – Note: Fair value of interest rate swaps is included in the corresponding hedged long-term borrowings (long-term borrowings due within one year was considered as short-term borrowings) as those interest rate swaps are recorded as an adjustment to the corresponding hedged long-term borrowings under special treatment. As of March 31, 2024 (Millions of Yen) Method of hedge accounting Type of transaction Main items hedged Contract amount Contract amount due after one year Fair value Special treatment of swap Interest rate swaps Long-term borrowings Receive floating rate, pay fixed rate 17,100 5,100 – (Thousands of U.S. Dollars) Method of hedge accounting Type of transaction Main items hedged Contract amount Contract amount due after one year Fair value Special treatment of swap Interest rate swaps Long-term borrowings Receive floating rate, pay fixed rate 112,938 33,683 – Note: Fair value of interest rate swaps is included in the corresponding hedged long-term borrowings (long-term borrowings due within one year was considered as short-term borrowings) as those interest rate swaps are recorded as an adjustment to the corresponding hedged long-term borrowings under special treatment. (Matters Related to Retirement Benefits) 1. Overview of pension plans adopted The Company and its main consolidated subsidiaries have adopted the defined-benefit pension plans and defined- contribution pension plans. The defined-benefit pension plans adopted consist of defined-benefit corporate pension plans and lump-sum payment plans. The Company, upon the retirement of employees, may also pay additional retirement benefits which are not subject to retirement benefit obligations through actuarial calculation in accordance with retirement benefit accounting. The Company and some of its consolidated subsidiaries have established retirement benefit trusts. 2. Defined-benefit pension plans (1) Adjustments between balances at beginning and end of the year of retirement benefit obligations Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Balance at beginning of the year 131,827 125,326 827,728 Current service cost 6,490 6,523 43,085 Interest cost 728 1,208 7,984 Actuarial loss (gain) (4,036) (3,799) (25,095) Retirement benefits paid (10,054) (10,012) (66,126) Past service costs (3) (47) (315) Increase (decrease) resulting from change in scope of consolidation – 12,188 80,502 Other 374 328 2,170 Balance at end of the year 125,326 131,716 869,932 Notes: 1. Some of the consolidated subsidiaries use the simplified method for the calculation of retirement benefit obligations. 2. Retirement benefit expenses in the consolidated subsidiaries applying the simplified method are recorded in current service cost. (2) Adjustments between balances at beginning and end of the year of plan assets Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Balance at beginning of the year 140,003 121,164 800,241 Expected return on plan assets 2,996 2,491 16,455 Actuarial loss (gain) (16,335) 64,755 427,686 Contributions paid by the employer 849 837 5,528 Retirement benefits paid (4,550) (4,698) (31,032) Increase (decrease) resulting from change in scope of consolidation – 10,016 66,155 Other (1,799) (952) (6,290) Balance at end of the year 121,164 193,614 1,278,743 (3) Adjustments between the balances of retirement benefit obligations and plan assets at end of the year and net defined benefit liability and net defined benefit asset in the consolidated balance sheets Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Funded retirement benefit obligations 120,875 125,893 831,476 Plan assets (121,164) (193,614) (1,278,743) (289) (67,720) (447,266) Unfunded retirement benefit obligations 4,451 5,822 38,455 Net total in the consolidated balance sheets at end of the year 4,161 (61,898) (408,810) Net defined benefit liability 15,037 18,417 121,643 Net defined benefit asset (10,875) (80,316) (530,454) Net total in the consolidated balance sheets at end of the year 4,161 (61,898) (408,810) (4) Retirement benefit expenses and their components Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Current service cost 6,490 6,523 43,085 Interest cost 728 1,208 7,984 Expected return on plan assets (2,996) (2,491) (16,455) Net actuarial loss amortization (5,037) (3,457) (22,836) Past service costs amortization (1,083) (178) (1,179) Other 34 7 50 Total retirement benefit expenses related to defined-benefit pension plans for the year (1,863) 1,612 10,647 (5) Remeasurements of defined benefit plans Items recorded in remeasurements of defined benefit plans (before deducting tax effect) were as follows: Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Past service costs (1,079) (130) (863) Actuarial loss (gain) (17,336) 65,097 429,944 Total balance (18,415) 64,967 429,081 (6) Accumulated remeasurements of defined benefit plans Items recorded in accumulated remeasurements of defined benefit plans (before deducting tax effect) were as follows: Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Unrecognized past service costs (778) (647) (4,277) Unrecognized actuarial loss (gain) (21,729) (86,827) (573,460) Total balance (22,508) (87,475) (577,737) (7) Matters concerning plan assets (a) Major components of plan assets The ratio of each major category to total plan assets is as follows: (%) As of March 31, 2023 As of March 31, 2024 Equity securities 59 49 Debt securities 13 8 General accounts 15 11 Special accounts 2 1 Short-term assets 1 25 Other 10 6 Total 100 100 Note: The retirement benefit trust established for corporate pension plans accounted for 56% and 70% of total plan assets for the consolidated fiscal years ended March 31, 2023 and 2024, respectively. (b) Method for determining the long-term expected rate of return Current and target asset allocations, as well as current and long-term target rate of return on various categories of plan assets have been considered in determining the rate of long-term expected return on plan assets. (8) Matters concerning actuarial assumptions Principal actuarial assumptions (%) Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Discount rate - The Company and its consolidated domestic subsidiaries 0.4–1.5 0.4–1.5 - Consolidated overseas subsidiaries 6.5–7.5 6.1–7.0 Long-term expected rate of return 1.0–3.0 0.0–3.0 3. Defined-contribution pension plans Amount payable for defined-contribution pension plans of the Company and its consolidated subsidiaries were ¥2,606 million and ¥2,570 million ($16,978 thousand) for the consolidated fiscal years ended March 31, 2023 and 2024, respectively. (Matters Related to Tax Effect Accounting) 1. Major components of deferred income tax assets and deferred income tax liabilities Millions of Yen Thousands of U.S. Dollars As of March 31, 2023 As of March 31, 2024 As of March 31, 2024 Deferred income tax assets: Disallowed portion of expenses and losses: Inventories 20,375 38,782 256,144 Net defined benefit liability 26,994 35,318 233,262 Accrued bonuses 6,622 7,298 48,205 Fixed assets 3,235 4,154 27,441 Advances received 740 2,212 14,612 Enterprise taxes payable 1,139 2,074 13,699 Others 5,220 6,922 45,717 Tax loss carryforward 695 585 3,865 Unrealized profits 7,687 7,807 51,563 Subtotal of deferred income tax assets 72,712 105,156 694,513 Valuation allowance (4,939 ) (6,688) (44,173 ) Total of deferred income tax assets 67,773 98,468 650,340 Deferred income tax liabilities: Unrealized gains on available- for-sale securities (42,772 ) (68,668) (453,526 ) Net defined benefit asset (3,345 ) (24,538) (162,066 ) Gains on securities contribution to employee retirement benefit trust (16,463 ) (10,895) (71,959 ) Others (984) (1,814) (11,982) Total of deferred income tax liabilities (63,566 ) (105,916) (699,534 ) Net total of deferred income tax assets (liabilities) 4,206 (7,448) (49,194 ) Note: In addition to the deferred income taxes shown above, deferred income tax liabilities concerning revaluation presented in the consolidated balance sheets 3,274 4,480 29,590 2. Breakdown by major components causing the difference between the statutory tax rate and the effective income tax rate (%) As of March 31, 2023 As of March 31, 2024 Statutory tax rate – 30.6 (Adjustments) Permanently non-deductible expenses – 2.4 Permanently non-taxable income – (1.1) Per capita inhabitant tax – 1.0 Change in valuation allowance – (0.1) Investment gain on equity method – (1.0) Tax credit for Tax Measure to Promote Wage Increases – (2.7) Others – (1.5) Effective tax rate – 27.6 Note: Notes concerning the reconciliations for the fiscal year ended March 31, 2023 are not presented because the difference between the statutory tax rate and the effective income tax rate is less than or equal to 5% of the statutory tax rate. 3. Accounting for corporate tax, local corporate tax and tax effect accounting The Company and some of its domestic consolidated subsidiaries have applied the Group Tax Sharing System, and corporate tax and local corporate tax, as well as their tax effects, are accounted for and disclosed under the “Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System” (PITF No. 42, August 12, 2021). (Matters Related to Business Combinations) Business combination through acquisition 1. Overview of business combination (1) Name and business description of acquired company Name of acquired company P.S. MITSUBISHI CONSTRUCTION Co., Ltd. Businesses - Contract, planning, design and construction management of prestressed concrete construction works - Contract, planning, design and construction management of civil engineering and building construction works - Business concerning maintenance and repair of civil engineering and building structures - Manufacture and sales of prestressed concrete products, pre-cast concrete products, production and sales of their manufacturing tools and attachments - Purchase, sales, leasing, brokerage, ownership and management of real estate (2) Main reason for the business combination By building capital relationships with the acquired company that has high technological capabilities in the fields of expressway renewal, prestressed concrete and pre-cast concrete and bringing new approaches, we expect to achieve “preparing environment to establish the solid foundation in the domestic civil engineering business", “establishing the competitive advantage in the domestic construction business” (they are the key priorities in the Medium-Term Management Plan (2021- 2023)), and enhancing the corporate value of both companies, therefore we acquired the shares of the acquired company through the takeover bid. (3) Date of the business combination December 18, 2023 (deemed acquisition date: December 31, 2023) (4) Legal form of the business combination Acquisition of shares with cash as consideration (5) Name of the acquired company after the business combination PS CONSTRUCTION Co., Ltd. (scheduled to change on July 1, 2024) Note: Changing the name is subject to approval of the General Meeting of Shareholders of the acquired company scheduled to be held in June 2024. (6) Ratio of voting rights acquired Before the acquisition: –% After the acquisition: 50.20% (7) Main grounds for determining the acquirer The Company acquired the shares with cash as consideration. 2. Period for which the business results of the acquired company are included in the consolidated financial statements From January 1, 2024 to March 31, 2024 3. Acquisition cost of the acquired company and breakdown by type of consideration Consideration for the acquisition Cash ¥24,028 million ($158,698 thousand) Acquisition cost ¥24,028 million ($158,698 thousand) 4. Major acquisition-related costs Advisory fees, etc.: ¥605 million ($4,000 thousand) 5. Amount and cause of gain on negative goodwill (1) Amount of gain on negative goodwill: ¥1,094 million ($7,226 thousand) (2) Cause Since the acquisition cost fell below the fair value of net assets at the date of the business combination, the difference was recognized as gain on negative goodwill. 6. Amount of assets acquired and liabilities assumed on the date of business combination and their major breakdown Current assets ¥89,146 million ($588,778 thousand) Fixed assets ¥25,772 million ($170,217 thousand) Total assets ¥114,919 million ($758,995 thousand) Current liabilities ¥48,647 million ($321,299 thousand) Long-term liabilities ¥16,225 million ($107,165 thousand) Total liabilities ¥64,873 million ($428,465 thousand) 7. Effect of the business combination on the consolidated statement of income for the current consolidated fiscal year assuming the business combination had been completed on the first day of the consolidated fiscal year: Net sales ¥90,068 million ($594,862 thousand) Operating income ¥5,336 million ($35,243 thousand) Ordinary income ¥5,245 million ($34,644 thousand) Income before income taxes ¥5,238 million ($34,600 thousand) Net income attributable to owners of parent ¥1,753 million ($11,583 thousand) (Method of calculating the estimated amount) The difference between the net sales and profit/loss information calculated as if the business combination had been completed on the first day of the consolidated fiscal year and the net sales and profit/loss information of the acquired company in the consolidated statement of income for the current consolidated fiscal year is the estimated amount of impact. This note is unaudited. (Matters Related to Investment and Rental Property) The Company and certain consolidated subsidiaries hold some office buildings for rent in Tokyo and other areas. The rental income on office buildings for rent was ¥3,710 million and ¥3,433 million ($22,675 thousand) for the years ended March 31, 2023 and 2024, respectively. Rental income is mainly booked under net sales of development projects, and rental cost is mainly booked under cost of sales development projects. The amounts of investment and rental property which are booked in consolidated balance sheets, the amounts of increase or decrease, and fair value as of March 31, 2023 and 2024 are as follows: Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Book value Balance at beginning of the year 92,157 93,703 618,873 Decrease (increase) during the year 1,546 101,183 668,271 Balance at end of the year 93,703 194,886 1,287,145 Fair value at end of the year 130,004 225,308 1,488,071 Notes: 1. The book value is the amount after accumulated depreciation and impairment losses on fixed assets are deducted from the cost of acquisition. 2. The main reasons of increase for the consolidated fiscal year ended March 31, 2024 was acquisition of fixed assets ¥106,906 million ($706,072 thousand). The main reasons of decrease for the consolidated fiscal year ended March 31, 2024 was transfer to real estate for sale and development projects in progress of ¥5,381 million ($35,544 thousand). There was no significant increase or decrease for the consolidated fiscal year ended March 31, 2023. 3. The book value as of March 31, 2023 and 2024 included asset retirement obligations of ¥170 million and ¥360 million ($2,381 thousand), respectively. 4. The fair value of investment and rental property as of March 31, 2023 and 2024 is mainly calculated by the Company according to the Japanese Real Estate Appraisal Standards (it may include adjustments using official indices). (Matters Related to Revenue Recognition) 1. Disaggregation of revenue from contracts with customers Consolidated fiscal year March 31, 2023 (Millions of Yen) Reportable segments Others (Note) Total Civil engineering Building construction Real estate development Subtotal Domestic Overseas Domestic Overseas Revenue from contracts with customers 411,570 11,592 1,022,213 70,511 99,354 1,615,244 10,751 1,625,996 Other revenue – – – – 15,994 15,994 722 16,716 Sales on third party 411,570 11,592 1,022,213 70,511 115,349 1,631,238 11,474 1,642,712 Note: “Others” includes the incidental business of construction business such as cooperative research, technical service, environmental measurement, and logistics business, and also, leisure-related business and other service business, which are not included in reportable segments. Consolidated fiscal year March 31, 2024 (Millions of Yen) Reportable segments Others (Note) Total Civil engineering Building construction Real estate development Subtotal Domestic Overseas Domestic Overseas Revenue from contracts with customers 483,812 21,692 1,053,074 64,205 112,457 1,735,242 11,813 1,747,055 Other revenue – – – – 17,269 17,269 698 17,967 Sales on third party 483,812 21,692 1,053,074 64,205 129,726 1,752,511 12,512 1,765,023 (Thousands of U.S. Dollars) Reportable segments Others (Note) Total Civil engineering Building construction Real estate development Subtotal Domestic Overseas Domestic Overseas Revenue from contracts with customers 3,195,376 143,268 6,955,120 424,049 742,735 11,460,551 78,025 11,538,576 Other revenue – – – – 114,054 114,054 4,612 118,667 Sales on third party 3,195,376 143,268 6,955,120 424,049 856,790 11,574,606 82,637 11,657,244 Note: “Others” includes the incidental business of construction business such as cooperative research, technical service, environmental measurement, and logistics business, and also, leisure-related business and other service business, which are not included in reportable segments. 2. Information related to the relationship between the satisfaction of performance obligations based on contracts with customers and the cash flows resulting from such contracts, as well as the amounts and timing of revenue from contracts with customers that existed as of March 31, 2024, which is expected to be recognized in or after the consolidated fiscal year ending March 31, 2025 (1) Balances, etc. of contract assets and contract liabilities (Millions of Yen) (Thousands of U.S. Dollars) Balance as of April 1, 2022 Balance as of March 31, 2023 Balance as of March 31, 2024 Balance as of March 31, 2024 Receivables from contracts with customers 212,792 278,072 342,801 2,264,062 Contract assets 362,648 410,562 521,696 3,445,585 Contract liabilities 160,252 180,620 214,443 1,416,312 Contract assets are unbilled rights to the consideration for revenue recognized as construction progresses and are transferred to receivables from contracts with customers when the rights to the consideration become billable. Contract liabilities consist mainly of advances received from customers, which are reversed as revenue is recognized as construction progresses. Balance of the contract liability at the beginning of the previous consolidated fiscal year is mostly recognized as revenue in the previous consolidated fiscal year, and therefore the amount carried forward to the subsequent consolidated fiscal years is not material. In addition, the amount of revenue recognized in the previous consolidated fiscal year for performance obligations that were satisfied (or partially satisfied) in the past consolidated fiscal years is not material. Balance of the contract liability at the beginning of the current consolidated fiscal year is mostly recognized as revenue in the current consolidated fiscal year, and therefore the amount carried forward to the subsequent consolidated fiscal years is not material. In addition, the amount of revenue recognized in the current consolidated fiscal year for performance obligations that were satisfied (or partially satisfied) in the past consolidated fiscal years is not material. (2) Transaction price allocated to the remaining performance obligations The total transaction price allocated to the remaining performance obligations in the previous consolidated fiscal year is ¥2,763,645 million. These remaining performance obligations are expected to be recognized as revenue generally within 5 years. The total transaction price allocated to the remaining performance obligations in the current consolidated fiscal year is ¥3,160,556 million ($20,874,161 thousand). These remaining performance obligations are expected to be recognized as revenue generally within 5 years. (Segment Information, etc.) [Segment Information] 1. General information on reportable segments Each reportable segment of the Company is a business unit in the Company, whose discrete financial information is available. Reportable segments are reviewed periodically at the Board of Directors Meeting in order to determine distribution of management resources and evaluate business results of each reportable segment. The Company has established headquarters at the head office for each product of construction and service. Each headquarter, along with consolidated subsidiaries, proposes comprehensive domestic and overseas strategies with respect to products and services, and operates its business activities. The Company consists of segments identified by products and services based on the headquarters, and identifies the three segments, “Civil engineering,” “Construction contracts,” and “Real estate development” as reportable segments. “Civil engineering” refers to construction of civil engineering, etc., “Construction contracts” refers to construction of buildings and housing, etc., and “Real estate development” refers to purchase, sale, lease, management, and brokerage of land and buildings, etc. 2. Basis of measurement of net sales, profit or loss, and other material items in reportable segment The accounting method for each reportable segment is the same as that set forth in the “Significant Matters Providing the Basis of Presenting Consolidated Financial Statements.” The profit (loss) of a reportable segment is based on the operating income (loss) before amortization of goodwill in the consolidated statements of income. In addition, conditions of intersegment transactions and transfers are determined by considering market prices as in the case of other general transactions. Assets of the Company are not allocated to the segments. However, the corresponding depreciation and amortization are allocated to the segments according to the rational basis such as the usage of assets. 3. Information of net sales, profit or loss, and other material items by reportable segment Consolidated fiscal year March 31, 2023 (Millions of Yen) Reportable segments Others (Note 1) Total Adjustments (Note 2) Book value in consolidated financial statements (Note 3) Civil engineering Construction contracts Real estate development Subtotal Net sales: Sales on third party customers 423,163 1,092,725 115,349 1,631,238 11,474 1,642,712 – 1,642,712 Intersegment transactions or transfers 29,690 24,501 10,052 64,243 3,851 68,095 (68,095) – Total 452,854 1,117,227 125,401 1,695,482 15,325 1,710,808 (68,095) 1,642,712 Segment operating income (loss) 47,834 (6,670) 16,968 58,132 1,636 59,769 (5,028) 54,740 Other items Depreciation and amortization 4,049 4,747 2,596 11,393 189 11,583 (104) 11,478 Increase (decrease) in provision for losses on construction contracts 292 33,441 – 33,734 – 33,734 – 33,734 Notes: 1. “Others” includes the incidental business of construction business such as cooperative research, technical service, environmental measurement, and logistics business, and also, leisure-related business and other service business, which are not included in reportable segments. 2. Adjustments of segment operating income (loss) of ¥(5,028) million includes intersegment transaction elimination amounting to ¥(4,985) million and amortization of goodwill amounting to ¥(43) million. 3. Segment operating income (loss) is adjusted against operating income of the consolidated statements of income. Consolidated fiscal year March 31, 2024 (Millions of Yen) Reportable segments Others (Note 1) Total Adjustments (Note 2) Book value in consolidated financial statements (Note 3) Civil engineering Construction contracts Real estate development Subtotal Net sales: Sales on third party customers 505,504 1,117,280 129,726 1,752,511 12,512 1,765,023 – 1,765,023 Intersegment transactions or transfers 34,834 23,694 8,556 67,085 3,856 70,941 (70,941) – Total 540,338 1,140,974 138,282 1,819,596 16,368 1,835,965 (70,941) 1,765,023 Segment operating income (loss) 61,454 (56,143) 23,369 28,680 1,852 30,532 (4,052) 26,480 Other items Depreciation and amortization 4,787 5,894 2,322 13,005 200 13,205 (95) 13,110 Increase (decrease) in provision for losses on construction contracts 4,031 44,250 – 48,281 – 48,281 – 48,281 (Thousands of U.S. Dollars) Reportable segments Others (Note 1) Total Adjustments (Note 2) Book value in consolidated financial statements (Note 3) Civil engineering Construction contracts Real estate development Subtotal Net sales: Sales on third party customers 3,338,645 7,379,170 856,790 11,574,606 82,637 11,657,244 – 11,657,244 Intersegment transactions or transfers 230,067 156,492 56,510 443,070 25,471 468,541 (468,541) – Total 3,568,713 7,535,662 913,300 12,017,676 108,109 12,125,785 (468,541) 11,657,244 Segment operating income (loss) 405,881 (370,803) 154,344 189,422 12,234 201,656 (26,765) 174,890 Other items Depreciation and amortization 31,621 38,932 15,338 85,892 1,324 87,217 (629) 86,588 Increase (decrease) in provision for losses on construction contracts 26,625 292,253 – 318,879 – 318,879 – 318,879 Notes: 1. “Others” includes the incidental business of construction business such as cooperative research, technical service, environmental measurement, and logistics business, and also, leisure-related business and other service business, which are not included in reportable segments. 2. Adjustments of segment operating income (loss) of ¥(4,052) million ($(26,765) thousand) includes intersegment transaction elimination amounting to ¥(3,920) million ($(25,891) thousand) and amortization of goodwill amounting to ¥(132) million ($(874) thousand). 3. Segment operating income (loss) is adjusted against operating income of the consolidated statements of income. [Related Information] Consolidated fiscal year March 31, 2023 1. Information about products and services See “[Segment Information], 3. Information of net sales, profit or loss, and other material items by reportable segment.” 2. Information about geographic areas (1) Net sales The information about net sales is not presented for the consolidated fiscal year March 31, 2023 since net sales to unaffiliated customers in Japan accounted for more than 90% of net sales on the consolidated statements of income. (2) Tangible fixed assets The information about tangible fixed assets is not presented for the consolidated fiscal year March 31, 2023 since the amounts of tangible fixed assets that are located in Japan accounted for more than 90% of the amounts of tangible fixed assets on the consolidated balance sheets. 3. Information about major customers In net sales to unaffiliated customers, there is no customer that accounts for 10% or more of the amounts of net sales on the consolidated statements of income. Consolidated fiscal year March 31, 2024 1. Information about products and services See “[Segment Information], 3. Information of net sales, profit or loss, and other material items by reportable segment.” 2. Information about geographic areas (1) Net sales The information about net sales is not presented for the consolidated fiscal year March 31, 2024 since net sales to unaffiliated customers in Japan accounted for more than 90% of net sales on the consolidated statements of income. (2) Tangible fixed assets The information about tangible fixed assets is not presented for the consolidated fiscal year March 31, 2024 since the amounts of tangible fixed assets that are located in Japan accounted for more than 90% of the amounts of tangible fixed assets on the consolidated balance sheets. 3. Information about major customers In net sales to unaffiliated customers, there is no customer that accounts for 10% or more of the amounts of net sales on the consolidated statements of income. [Information about Impairment Losses on Fixed Assets of Reportable Segment] Consolidated fiscal year March 31, 2023 (Millions of Yen) Reportable segments Others Elimination and/or corporate Total Civil engineering Construction contracts Real estate development Subtotal Impairment losses on fixed assets 12 14 123 149 146 – 295 Consolidated fiscal year March 31, 2024 (Millions of Yen) Reportable segments Others Elimination and/or corporate Total Civil engineering Construction contracts Real estate development Subtotal Impairment losses on fixed assets 443 106 36 586 – – 586 (Thousands of U.S. Dollars) Reportable segments Others Elimination and/or corporate Total Civil engineering Construction contracts Real estate development Subtotal Impairment losses on fixed assets 2,931 702 240 3,873 – – 3,873 [Information about Amortization and Unamortized Balance of Goodwill of Reportable Segment] Consolidated fiscal year March 31, 2023 (Millions of Yen) Reportable segments Others Elimination and/or corporate Total Civil engineering Construction contracts Real estate development Subtotal Amortization of goodwill – 43 – 43 – – 43 Unamortized balance of goodwill – – – – – – – Consolidated fiscal year March 31, 2024 (Millions of Yen) Reportable segments Others Elimination and/or corporate Total Civil engineering Construction contracts Real estate development Subtotal Amortization of goodwill 4 127 – 132 – – 132 Unamortized balance of goodwill 45 8,537 – 8,583 – – 8,583 (Thousands of U.S. Dollars) Reportable segments Others Elimination and/or corporate Total Civil engineering Construction contracts Real estate development Subtotal Amortization of goodwill 32 841 – 874 – – 874 Unamortized balance of goodwill 303 56,387 – 56,691 – – 56,691 [Information about Gains on Negative Goodwill of Reportable Segment] Consolidated fiscal year March 31, 2023 Not applicable. Consolidated fiscal year March 31, 2024 Gains on negative goodwill of ¥1,094 million ($7,226 thousand) was recorded in “Civil engineering” and “Construction contracts” segments as the Company acquired shares of P.S. MITSUBISHI CONSTRUCTION Co., Ltd. and made it a consolidated subsidiary. (Related Party Information) 1. Related party transactions (1) Related party transactions by the Company Not applicable. (2) Related party transactions by the Company’s consolidated subsidiaries - The Company’s directors, major shareholders, etc. (limited to individuals) Consolidated fiscal year March 31, 2023 Attribution Name Location Capital (Millions of Yen) Description of business or occupation Equity ownership percentage of the Company Relationship with the related party Description of transaction Amount (Millions of Yen) Account Balance at end of the year (Millions of Yen) An officer and his/her close relative Takashi Yamauchi – – Director of the Company Direct: 0.03% of the Company’s shares House renovation contract House renovation by Taisei Housing Co., Ltd. 11 – – An officer and his/her close relative Takafumi Tanigawa – – Child of an Executive Officer of the Company None House building contract House building by Taisei Housing Co., Ltd. 36 Advances received and progress billings on uncompleted contracts 1 Notes: Transaction conditions and policies to decide transaction conditions: The transaction price of the house renovation and house building is determined properly on an arm’s length basis through negotiation as in the case of other general transactions. The amount of transaction above represents the contract price on the construction contract. Consolidated fiscal year March 31, 2024 Not applicable. 2. Information on parent company and significant affiliated companies - Information on parent company The Company does not have a parent company. - Summary financial information of significant affiliated companies Not applicable. (Per Share Data) Yen U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Net assets per share 4,402.01 5,039.98 33.28 Net income per share 241.24 215.75 1.42 Diluted net income per share Diluted net income per share was not presented because the Company had no shares with dilutive effects such as bonds with share acquisition rights. Same as on the left Same as on the left Notes: 1. The treasury shares held by the BBT in the net assets are included in the number of treasury stock, which is excluded from the number of outstanding shares at the end of the consolidated fiscal year and the average number of shares during the period for calculating the net assets per share and the net income per share. The number of treasury stock held by the BBT at the end of the consolidated fiscal year excluded for calculation of net assets per shares for the consolidated fiscal years ended March 31, 2023 and 2024 was 104 thousand shares and 99 thousand shares, respectively, and the number of treasury stock held by the BBT during the period excluded for the calculation of net income per shares for the consolidated fiscal years ended March 31, 2023 and 2024 was 104 thousand shares and 100 thousand shares, respectively. 2. Calculation basis for net income per share is as follows: Millions of Yen Thousands of U.S. Dollars Consolidated fiscal year March 31, 2023 Consolidated fiscal year March 31, 2024 Consolidated fiscal year March 31, 2024 Net income attributable to owners of parent 47,124 40,272 265,986 Net income not attributable to common stockholders – – – Net income attributable to owners of parent related to common stock 47,124 40,272 265,986 Average number of common stock during the period (Thousand shares) 195,346 186,667 – (Significant Subsequent Events) Acquisition of treasury stock The Company resolved the item related to the acquisition of treasury stock at the Board of Directors Meeting held on April 26, 2024, in accordance with the Article 156 of the Companies Act, which is applicable as the replacement of Article 165, Paragraph 3 of the said Act, as detailed below. (1) Reason of acquisition of treasury stock The Company decided to acquire its treasury stock in order to enhance the shareholders’ value per share and to improve the capital efficiency. (2) Type of stock to be acquired Common stock of the Company (3) Number of stocks to be acquired Up to 2,500 thousand shares (1.36% of the total outstanding shares excluding treasury stock) (4) Total cost of acquisition Up to ¥10,000 million ($66,045 thousand) (5) Period of acquisition From May 14, 2024 to September 30, 2024 (6) Other All shares of common stock to be repurchased in accordance with this resolution are expected to be canceled by a resolution of the Board of Directors based on the provision of Article 178 of the Companies Act. Conversion to an Equity-method Affiliate through Share Acquisition At the Board of Directors Meeting held on June 7, 2024, the Company resolved to execute a capital and business alliance agreement with HEIWA REAL ESTATE Co., Ltd. (the "Counterparty") and to make the Counterparty an Equity-method Affiliate of the Company through the additional acquisition of shares (the "Share Acquisition") of the Counterparty from SIMPLEX ASSET MANAGEMENT Co., Ltd., SIMPLEX ASSET MANAGEMENT (HK) Company Limited (collectively, "SIMPLEX") and MITSUBISHI ESTATE Co., Ltd. ("MITSUBISHI ESTATE"), and executed the capital and business alliance agreement and the share transfer agreement on the same day. After the share transfer procedures on June 10, 2024, the percentage of voting rights held by the Company was 20.24%, the Company became the largest shareholder of the Counterparty and the Counterparty became an Equity-method Affiliate of the Company. (1) Purpose of Share Acquisition The Company acquired the Counterparty’s shares in order to enhance mutual corporate value by leveraging our development capabilities for the Counterparty’s real estate to create investment opportunities in the development business and achieve the vision, “Contribution to high value-added urban development by making the most of our development know-how and technological capabilities as a general contractor,” has set forth for the Group Domestic Real Estate Development Business by FY2030 in “ TAISEI VISION 2030 Achievement Plan”. (2) Overview of the Counterparty (a) Name HEIWA REAL ESTATE Co., Ltd. (b) Address 1-10, Nihonbashi Kabutocho, Chuo-ku, Tokyo (c) Title and name of representative Representative Executive Officer, President and CEO Kiyoyuki Tsuchimoto (d) Description of business Building Business and Asset Management Business (e) Share capital ¥21,492 million (As of March 31, 2024) (f) Date of establishment July 15, 1947 (3) Number of shares to be acquired, acquisition cost and status of shares before and after Share Acquisition (a) Number of shares held before Share Acquisition 532,600 shares (Percentage of voting rights: 1.49 ％ ) (b) Number of shares to be acquired From SIMPLEX 5,829,000 shares (Percentage of voting rights: 16.30 ％ ) From MITSUBISHI ESTATE 388,500 shares (Percentage of voting rights: 1.09 ％ ) (c) Acquisition cost From SIMPLEX ¥27,396 million ($180,941 thousand) From MITSUBISHI ESTATE ¥1,826 million ($12,059 thousand) (d) Number of shares held after Share Acquisition 6,750,100 shares (Percentage of voting rights: 18.88 ％ ) Notes: 1. The percentage of voting rights is calculated based on the total number of voting rights held by all shareholders as of March 31, 2024 (357,527 shares) as the denominator. 2. As a result of the acquisition of treasury stock by the Counterparty on June 10, 2024, the percentage of voting rights held by the Company after the acquisition was 20.24%. 5) Consolidated Supplementary Schedules [Schedule of Straight Bonds] Company name Name of bonds Date of issue Balance at beginning of the year (Millions of Yen) Balance at end of the year (Millions of Yen) (Note 1) Balance at end of the year (Thousands of U.S. Dollars) Interest rate (%) Collateral Date of maturity The Company The 37th Unsecured Bond July 24, 2017 10,000 10,000 66,045 0.38 None July 23, 2027 The Company The 38th Unsecured Bond June 16, 2020 10,000 10,000 66,045 0.18 None June 16, 2025 The Company The 39th Unsecured Bond June 16, 2020 10,000 10,000 66,045 0.37 None June 14, 2030 The Company The 40th Unsecured Bond December 9, 2021 10,000 10,000 66,045 0.10 None December 9, 2026 The Company The 41st Unsecured Bond December 7, 2023 – 10,000 66,045 0.654 None December 7, 2028 Total – 40,000 50,000 330,229 – – – Note: The scheduled redemption amount within five years after the consolidated balance sheet date is as follows: (Millions of Yen) Classification Due within one year Due after one year but within two years Due after two years but within three years Due after three years but within four years Due after four years but within five years Straight bonds – 10,000 10,000 10,000 10,000 (Thousands of U.S. Dollars) Classification Due within one year Due after one year but within two years Due after two years but within three years Due after three years but within four years Due after four years but within five years Straight bonds – 66,045 66,045 66,045 66,045 [Schedule of Borrowings, etc.] Classification Balance at beginning of the year (Millions of Yen) Balance at end of the year (Millions of Yen) Balance at end of the year (Thousands of U.S. Dollars) Average interest rate (%) Period of repayment Short-term borrowings 60,943 70,291 464,245 0.6 – Long-term borrowings due within one year 21,022 40,239 265,765 0.5 – Long-term non-recourse loans payable due within one year 11 261 1,724 1.1 – Lease obligations due within one year 347 731 4,832 – – Long-term borrowings (excluding those due within one year) 79,606 142,787 943,048 0.6 From 2025 to 2029 Long-term non-recourse loans payable (excluding those due within one year) 117 72,686 480,065 0.9 From 2025 to 2031 Lease obligations (excluding those due within one year) 716 1,533 10,127 – From 2025 to 2037 Total 162,763 328,530 2,169,809 – – Notes: 1. “Average interest rate” is the weighted average interest rate on the balance of borrowings at the end of the fiscal year. The “average interest rate” for lease obligations is not stated because lease obligations are recorded on the consolidated balance sheets before the deduction of the amount equivalent to interest included in total lease payments. 2. The scheduled repayment amounts of long-term borrowings, long-term non-recourse loans payable, and lease obligations (excluding those due within one year) within five years after the consolidated balance sheet date were as follows: (Millions of Yen) Classification Due after one year but within two years Due after two years but within three years Due after three years but within four years Due after four years but within five years Long-term borrowings 38,291 35,195 42,800 26,500 Long-term non-recourse loans payable 490 15 15 72,124 Lease obligations 616 304 183 108 (Thousands of U.S. Dollars) Classification Due after one year but within two years Due after two years but within three years Due after three years but within four years Due after four years but within five years Long-term borrowings 252,899 232,451 282,676 175,021 Long-term non-recourse loans payable 3,236 99 99 476,353 Lease obligations 4,074 2,013 1,209 717 [Schedule of Asset Retirement Obligations] As amounts of asset retirement obligations at the beginning and the end of the consolidated fiscal year March 31, 2024 are less than or equal to 1% of total liabilities and net assets, the preparation of this schedule is omitted. (Unaudited) Reference Information Details of audit fees a. Fees paid to the certified public accountants, etc. Category Previous consolidated fiscal year Current consolidated fiscal year Fees for audit services (Millions of Yen) Fees for non-audit services (Millions of Yen) Fees for audit services (Millions of Yen) Fees for non-audit services (Millions of Yen) The Company 98 1 100 180 Consolidated subsidiaries 84 9 102 11 Total 182 10 203 192 Category Current consolidated fiscal year Fees for audit services (Thousands of U.S. Dollars) Fees for non-audit services (Thousands of U.S. Dollars) The Company 663 1,192 Consolidated subsidiaries 678 78 Total 1,342 1,271 b. Fees for member firms of certified public accountants, etc. (KPMG Group) (excluding a.) Category Previous consolidated fiscal year Current consolidated fiscal year Fees for audit services (Millions of Yen) Fees for non-audit services (Millions of Yen) Fees for audit services (Millions of Yen) Fees for non-audit services (Millions of Yen) The Company – 0 – 2 Consolidated subsidiaries 13 11 13 11 Total 13 11 13 13 Category Current consolidated fiscal year Fees for audit services (Thousands of U.S. Dollars) Fees for non-audit services (Thousands of U.S. Dollars) The Company – 13 Consolidated subsidiaries 91 76 Total 91 90 © 2024 KPMG AZSA LLC, a limited liability audit corporation incorporated under the Japanese Certified Public Accountants Law and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Independent auditors report To the Board of Directors ofTaisei Corporation: Report on the Audit of the Consolidated Financial Statements Opinion We have audited the accompanying consolidated financial statements of Taisei Corporation ( its consolidated subsidiaries ), which comprise the consolidated balance sheets as at March 31, 2024 and 2023, the consolidated statements of income and comprehensive income, changes in net assets and cash flows for the years then ended, and notes, 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, 2024 and 2023, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance 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 Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in 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 these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide 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 the context 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. progress towards satisfaction of performance obligations related to net sales of construction business recognized over time The key audit matter 1,602,000 million recognized in the consolidated statement of income of the Company for the current consolidated fiscal year included the Revenue recognized over time of ¥1,357,698 million, representing 85 % of the Revenue in the consolidated financial statements. Statements, 4. Matters concerning accounting policies, (5) Recognition criteria for net sales of nts, most of the Revenue is recognized based on the progress towards satisfaction of performance obligations. The amount of the Revenue recognized on the progress is calculated based on the reasonably estimated amount of total revenue, the reasonably estimated amount of total construction costs, and the reasonably estimated the progress towards satisfaction of performance obligations, using the following formula: The amount of total construction costs is estimated based on the budget for the execution of construction (the "Budget"). Since the Budget is prepared by taking into account the construction site, condition of construction and others for each construction contract, and is composed of a wide variety of cost items, the estimate of the Budget involves a high degree of uncertainty and complexity. In addition, the Budget needs to be revised in a timely and appropriate manner when there is a difference between the estimated amount and the actual amount of each cost item, or when cost items needing a new estimate occur, depending on the progress of construction. Since the cost-proportional method is adopted as the method of estimating the progress towards satisfaction of performance obligations, the percentage of completion is also estimated as the ratio of the amount of construction costs incurred for the construction carried out by the end of the current consolidated fiscal year to the amount of total construction costs. Therefore, if the amount of total construction costs is underestimated (or overestimated) or if the amount of construction costs incurred is compiled excessively (or insufficiently), the progress towards satisfaction of performance obligations may be overestimated (or underestimated). amount of total construction costs and the progress towards satisfaction of performance obligations related to the Revenue recognized over time was of most significance in our audit of the consolidated financial statements for the current consolidated fiscal year, and accordingly, a key audit matter. How the matter was addressed in our audit construction costs and the progress towards satisfaction of performance obligations related to the Revenue recognized over time was reasonable included the following: (1) Internal control testing to the process of preparing the Budget which is the basis for estimating the amount of total construction costs, and the process of estimating the progress towards satisfaction of performance obligations. In this assessment, we focused our testing on the following controls: controls to appropriately reflect construction prices such as material costs, labor costs, and outsourcing costs, details of work, and other individual assumptions within the Budget; and controls to revise the Budget depending on the progress of construction in a timely and appropriate manner. (2) Assessment of the reasonableness of the estimated amount of total construction costs The primary procedures we performed for large-scale constructions mainly that were judged to have a significant impact on the consolidated financial statements to total construction costs was reasonable included the following: We examined whether all the contents of the work necessary to complete the construction were reflected as cost items in the Budget by comparing the cost items included in the Budget with the contents of the construction specified in the construction contract and inquiring of the construction manager about the correspondence between them. In addition, we agreed the estimated amount of each cost item included in the Budget with the amounts of related materials such as quotations from professional contractors. We agreed the construction costs incurred by the end of the current consolidated fiscal year and the construction costs whose amounts were determined by the conclusion of a contract with a professional contractor, which were included in the latest Budget, with related materials such as the contract or invoices from the professional contractor. We evaluated the accuracy of the estimate of the amount of cost items by inquiring of the construction manager about the cause of the difference between the estimated amount of the cost items in the initial Budget and the actual amount. Moreover, we examined whether the effects of such differences were reflected in a timely and appropriate manner in estimating the amount of cost items in the latest Budget for which contracts with professional contractors had not been concluded. We identified the constructions for which the construction profit ratio calculated using the following formula at the end of the current consolidated fiscal year fluctuated to a certain extent in comparison with that at the end of the previous consolidated fiscal year since the construction profit ratio calculated fluctuates when the Budget is revised, and inquired of the construction manager about the content and factors of the revisions to the Budget. In addition, we examined related materials, such as contracts for specification changes, and assessed whether changes in the construction profit ratio were based on reasonable factors, by taking into account the results of the observations of construction sites which includes remote observations, for works for which the amount of total construction costs may not have been appropriately estimated. (3) Assessment of the reasonableness of the estimated progress towards satisfaction of performance obligations In order to assess the reasonableness of the estimated progress towards satisfaction of performance obligations, we performed the procedures describe -scale constructions mainly that were judged to have a significant impact on the consolidated financial statements included the following: We found a certain correlation between the percentage of elapsed time by the end of the current consolidated fiscal year under the construction contract (the "Period Progress Percentage") and the progress towards satisfaction of performance obligations at the end of the current consolidated fiscal year by the cost-proportional method (the "Cost Progress Percentage"), and also found a certain similarity in the correlation in each type of construction, such as civil engineering works and building works. Therefore, after classifying constructions for which the Revenue was recognized over time in the current consolidated fiscal year for each type of construction, we engaged specialists with expertise in data analysis, and identified constructions with abnormalities in the progress towards satisfaction of performance obligations by using the technique for analyzing data as described below for each classification. Note : Overview of the technique for analyzing data *1. We estimate a Percentage of constructions completed and delivered over the past several years. *2. We set a deviation range to determine that the construction is not abnormal even if it deviates from the Average Progress Curve based on the past constructions that deviated from the Average Progress Curve. *3. We check the deviation from the Average Progress Curve for the constructions for which the Revenue was recognized over time at the end of the current consolidated fiscal year *4. We identify the constructions that exceed the deviation range set in the second step as the constructions with abnormalities in the progress towards satisfaction of performance obligations. We inquired of the construction manager about the progress toward completion of the specified constructions, and examined whether the answers to the inquiries were consistent with the construction timeline and the status of the construction costs incurred. We examined whether the progress towards satisfaction of performance obligations was consistent with the status of the construction sites ascertained through the observations of construction sites, which included remote observations, with respect to the specified constructions whose progress towards satisfaction of performance obligations may be overestimated due to underestimation of the amount of total construction costs or excessive compilation of the amount of construction costs incurred. Other Information The other information comprises the information included in the disclosure documents, but does not include the consolidated financial statements, the financial statements, s thereon. Management is responsible for the preparation and presentation of the other information. 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 reporting process for the other information. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 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 t ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Corporate auditors and the board of corporate auditors performance of their duties with regard to financial reporting process. ents Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee 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 to influence 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, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the objective of the audit is not to express an opinion on the effec Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or we conclude that a materi report 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 cease to continue as a going concern. Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with accounting standards generally accepted in Japan, the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business 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 remain solely responsible for our audit opinion. We communicate with corporate auditors and the board of corporate auditors regarding, among other matters, 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 have complied 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 where applicable, actions taken to eliminate threats or safeguards applied. 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 atter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Fee-related Information Fees paid or payable to our firm and to other firms within the same network as our firm for audit and non-audit services provided to the Group are described . Convenience Translation The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2024 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note to the consolidated financial statements. Interest required to be disclosed by the Certified Public Accountants Act of Japan Our firm and its designated engagement partners 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. Kensuke Sodekawa Designated Engagement Partner Certified Public Accountant Takafumi Maeda Designated Engagement Partner Certified Public Accountant Tadashi Shibata Designated Engagement Partner Certified Public Accountant KPMG AZSA LLC Tokyo Office, Japan June 20, 2024 Electronic Signature - validation