S T : Consolidated Financial Statements for the Year Ended March 31, 2023, and Independent Auditor’s Report（3.2MB）

S.T. Corporation and Subsidiaries

Consolidated Financial Statements

for the Year Ended March 31, 2023,

and Independent Auditor's Report

Consolidated Balance Sheets

S.T.CORPORATION and Consolidated Subsidiaries

As of March 31, 2023 and 2022

Millions of yen

Assets	2023	2022
Current assets:
Cash and time deposits (Notes 8, 12 and 18)	¥ 14,150	¥ 11,888
Notes receivable - trade (Notes 8)	200	82
Accounts receivable - trade (Notes 8)	5,879	5,721
Merchandise and finished goods	5,956	6,617
Work in process	201	187
Raw materials and supplies	1,110	989
Other current assets	692	657
Less - allowance for doubtful accounts	(34)	(34)
Total current assets	28,154	26,106
Property, plant and equipment, at cost:
Land (Notes 11)	3,600	3,594
Buildings and structures	9,014	8,886
Machinery, equipment and vehicles	8,465	8,079
Tools, furniture and fixtures	2,806	2,734
Construction in progress	76	157
Leased assets (Note 19)	894	744
Less - accumulated depreciation	(15,199)	(14,072)
Property, plant and equipment, net	9,655	10,120
Intangible assets, net of accumulated amortization
Other intangible assets	1,359	1,445
Total intangible assets	1,359	1,445
Investments and other assets:
Investments in non-consolidated subsidiaries and affiliates	274	277
Investment securities (Notes 8 and 10)	5,522	5,377
Long-term loans	4	5
Net defined benefit asset (Notes 1 and 14)	6	7
Deferred tax assets other than unrealized revaluation loss on land (Note 13)	557	452
Other assets	585	613
Total investments and other assets	6,948	6,732
Total assets	¥ 46,116	¥ 44,402

Thousands of U.S. dollars (Note 2)

2023

$ 105,965 1,501 44,030 44,606 1,504 8,311 5,183 (253)

210,848

26,958

67,504

63,390

21,017

571

6,692

(113,825)

72,308

10,176

10,176

2,049

41,351

30

48

4,172

4,382

52,033

$ 345,364

1

				Thousands of
	Millions of yen			U.S. dollars (Note 2)
Liabilities and net assets	2023	2022	2023
Current liabilities:
Trade payables	¥ 2,884	¥ 2,195	$ 21,596
Electronically recorded obligations-operating	3,151	2,835	23,598
Short-term borrowings	497	413	3,724
Lease liabilities	62	50	467
Other payables	1,222	1,802	9,154
Accrued expenses	620	685	4,641
Electronically recorded obligations-non-operating	20	179	152
Income taxes payable	646	423	4,841
Consumption taxes payable	209	93	1,565
Other current liabilities	2,082	2,024	15,592
Total current liabilities	11,394	10,701		85,331
Long-term liabilities:
Lease liabilities	79	94	595
Provision for directors' retirement and severance benefits	101	108	754
Provision for executive officers' incentive plan (Note 6)	87	82	649
Net defined benefit liability (Notes 1 and 14)	1,216	1,301	9,110
Deferred tax liabilities - unrealized revaluation gain on land (Note 11)	262	262	1,963
Other non-current liabilities	15	7	114
Total long-term liabilities	1,761	1,854		13,186

Net assets (Note 15):
Shareholders' equity:
Common stock:
Authorized - 96,817,000 shares in 2023 and 2022
Issued and outstanding - 23,000,000 shares in 2023 and 2022	7,066	7,066
Capital surplus	7,047	7,047
Retained earnings	17,929	16,978
Treasury stock, at cost	(1,003)	(1,021)
Total shareholders' equity	31,039	30,070
Accumulated other comprehensive income (loss):
Unrealized holding gain on other securities, net of taxes	1,975	1,867
Unrealized revaluation loss on land, net of taxes (Note 11)	(537)	(537)
Translation adjustments	(120)	(178)
Remeasurements of defined benefit plans	34	52
Total accumulated other comprehensive income (loss)	1,352	1,204
Non-controlling interests	570	573
Total net assets	32,961	31,848
Total liabilities and net assets	¥ 46,116	¥ 44,402

See notes to consolidated financial statements.

52,913

52,776

134,268

(7,511)

232,446

14,790

(4,023)

(897)

258

10,128

4,272

246,847 $ 345,364

2

Consolidated Statements of Income

S.T.CORPORATION and Consolidated Subsidiaries

For the Years Ended March 31, 2023 and 2022

		Millions of yen
	2023	2022
Net sales (Note 20)	¥	45,576	¥	45,470
Cost of sales (Notes 17 and 23)		28,621		27,665
Gross profit		16,955		17,805
Selling, general and administrative expenses (Note 17)		14,539		14,554
Operating income		2,416		3,251
Non-operating income (expenses):				6
Interest income		7
Dividend income		114		113
Interest expense		(6)		(5)
Purchase discounts		120		126
Share of loss of entities accounted for using equity method		(11)		(69)
Other, net		91		59
Total non-operating income (expenses)		315		231
Ordinary income		2,731		3,481
Special gains (losses), net:				0
Gain on sale of non-current assets		0
Loss on disposition of property, plant and equipment, net		(8)		(27)
Impairment loss (Note 24)		-		(1,665)
Gain on sales of investment securities, net		17		44
Gain on redemption of investment securities		-		12
Loss on sale of shares of subsidiaries and associates		-		(144)
Gain on reversal of subscription rights to shares		-		0
Loss on disaster		(34)		-
Total special gains (losses), net		(23)		(1,781)
Profit before income taxes		2,707		1,700
Income taxes (Note 13):				837
Current		948
Deferred		(127)		(347)
Total income taxes		820		490
Profit		1,887		1,210
		58		101
	¥	1,829	¥	1,109

See notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income

S.T.CORPORATION and Consolidated Subsidiaries

For the Years Ended March 31, 2023 and 2022

	Millions of yen
	2023	2022
Profit	¥ 1,887	¥	1,210
Other comprehensive income (Note 7)
Unrealized holding gain on other securities, net of taxes	108	(1,019)
Translation adjustments	79		130
Remeasurements of defined benefit plans, net of tax	(18)		41
Share of other comprehensive income (loss) of entities accounted for using equity method	8		70
Total other comprehensive income	177		(779)
Comprehensive income	¥ 2,064	¥	431
Total comprehensive income attributable to:			267
Owners of parent	1,977
Non-controlling interests	87		164

See notes to consolidated financial statements.

Thousands of U.S. dollars (Note 2)

2023

$ 341,317 214,342 126,975 108,881 18,094

53

850

(45)

896

(83)

684

2,356

20,450

3

(58)

-

131

-

-

-

(251)

(175)

20,275

7,096

(951)

6,144

14,131

436 $ 13,695

Thousands of U.S. dollars (Note 2)

2023 $ 14,131

807

594

(132)

58

1,327 $ 15,458

14,806

652

3

Consolidated Statements of Changes in Net Assets

S.T.CORPORATION and Consolidated Subsidiaries

For the Years Ended March 31, 2023 and 2022

									Millions of yen
		Number of shares		Common	Capital	Retained	Treasury stock,	Total
		of common stock		shareholders'
		(Thousands)		stock	surplus	earnings	at cost	equity
Balance at April 1, 2022			23,000				¥ 7,066	¥ 7,047	¥ 16,978	¥ (1,021)	¥ 30,070
Cash dividends paid by distribution of retained earnings									(878)		(878)
Profit attributable to owners of parent									1,829		1,829
Purchases of treasury stock										(0)	(0)
Disposal of treasury stock										18	18
Net changes in items other than those in shareholders' equity
Balance at March 31, 2023			23,000				¥ 7,066	¥ 7,047	¥ 17,929	¥ (1,003)	¥31,039
								Millions of yen
		Unrealized	Unrealized			Remeasurements	Total accumulated
		holding gain on	revaluation loss on	Translation	of	other	Non-controlling	Total net
		other securities,	land, net of taxes	plans	comprehensive
		net of taxes	(Note 11)		adjustments	income	interests	assets
Balance at April 1, 2022		¥ 1,867	¥ (537)				¥ (178)	¥ 52	¥ 1,204	¥ 573	¥ 31,848
Cash dividends paid by distribution of retained earnings											(878)
Profit attributable to owners of parent											1,829
Purchases of treasury stock											(0)
Disposal of treasury stock											18
Net changes in items other than those in shareholders' equity		108	-		58	(18)	148	(3)	145
Balance at March 31, 2023		¥ 1,975	¥ (537)				¥ (120)	¥ 34	¥ 1,352	¥ 570	¥ 32,961
									Millions of yen
		Number of shares		Common	Capital	Retained	Treasury stock,	Total
		of common stock		shareholders'
		(Thousands)		stock	surplus	earnings	at cost	equity
Balance at April 1, 2021			23,000			¥ 7,066	¥ 7,036	¥16,982	¥(1,040)	¥30,044
Cumulative effects of changes in accounting policies									(256)		(256)
Restated balance			23,000				7,066	7,036	16,726	(1,040)	29,787
Cash dividends paid by distribution of retained earnings									(852)		(852)
Profit attributable to owners of parent									1,109		1,109
Purchases of treasury stock										(0)	(0)
Disposal of treasury stock								11	(5)	20	25
Net changes in items other than those in shareholders' equity
Balance at March 31, 2022			23,000			¥ 7,066	¥ 7,047	¥ 16,978	¥ (1,021)	¥ 30,070
							Millions of yen
	Unrealized	Unrealized					Remeasurements	Total accumulated
	holding gain on	revaluation loss on		of	other	Subscription	Non-controlling	Total net
	other securities,	land, net of taxes	Translation		defined benefit	comprehensive
	net of taxes	(Note 11)	adjustments		plans	income	rights	interests	assets
Balance at April 1, 2021	¥ 2,886	¥ (537)	¥ (314)		¥ 11	¥ 2,046	¥ 2	¥ 541	¥ 32,633
Cumulative effects of changes in accounting policies											(256)
Restated balance	2,886	(537)	(314)		11	2,046	2	541	32,376
Cash dividends paid by distribution of retained earnings											(852)
Profit attributable to owners of parent											1,109
Purchases of treasury stock											(0)
Disposal of treasury stock											25
Net changes in items other than those in shareholders' equity	(1,020)	-	137		41	(842)	(2)	33	(812)
Balance at March 31, 2022	¥ 1,867	¥ (537)	¥ (178)		¥ 52	¥ 1,204	¥ -	¥ 573	¥31,848
								Thousands of U.S. dollars (Note 2)
		Number of shares		Common	Capital	Retained	Treasury stock,	Total
		of common stock		shareholders'
		(Thousands)		stock	surplus	earnings	at cost	equity
Balance at April 1, 2022			23,000			$ 52,913	$ 52,776	$ 127,148	$(7,644)	$225,193
Cash dividends paid by distribution of retained earnings									(6,575)		(6,575)
Profit attributable to owners of parent									13,695		13,695
Purchases of treasury stock										(1)	(1)
Disposal of treasury stock										134	134
Net changes in items other than those in shareholders' equity
Balance at March 31, 2023			23,000			$ 52,913	$ 52,776	$ 134,268	$(7,511)	$ 232,446
								Thousands of U.S. dollars (Note 2)
		Unrealized	Unrealized			Remeasurements	Total accumulated
		holding gain on	revaluation loss on	Translation	of	other	Non-controlling	Total net
		other securities,	land, net of taxes	defined benefit	comprehensive
		net of taxes	(Note 11)		adjustments	plans	income	interests	assets
Balance at April 1, 2022		$ 13,980	$(4,023)		$(1,330)	$ 391	$ 9,018	$ 4,294	$ 238,505
Cash dividends paid by distribution of retained earnings											(6,575)
Profit attributable to owners of parent											13,695
Purchases of treasury stock											(1)
Disposal of treasury stock											134
Net changes in items other than those in shareholders' equity		809	-		433	(132)	1,111	(22)	1,088
Balance at March 31, 2023		$ 14,790	$(4,023)		$(897)	$ 258	$ 10,128	$ 4,272	$ 246,847

See notes to consolidated financial statements.

4

Consolidated Statements of Cash Flows

S.T.CORPORATION and Consolidated Subsidiaries

For the Years Ended March 31, 2023 and 2022

						Thousands of
		Millions of yen				U.S. dollars (Note 2)
		2023		2022			2023
Cash flows from operating activities:
Profit before income taxes	¥	2,707	¥	1,700		$	20,275
Adjustments to reconcile profit before income taxes to net cash
provided by operating activities:		1,407		1,197			10,538
Depreciation and amortization
Amortization of goodwill		-		97			-
Impairment loss		-		1,665			-
Loss on disaster		34		-		251
Gain on reversal of subscription rights to shares		-		(0)			-
Loss on sales of property, plant and equipment		7		27			55
Loss (gain) on sales and valuation of investment securities		(17)		(44)			(131)
Loss (gain) on redemption of investment securities		-		(12)			-
Loss (gain) on sale of shares of subsidiaries and associates		-		144			-
Increase (decrease) in allowance for doubtful receivables		(1)		(0)			(5)
Increase (decrease) in net defined benefit asset and liability		(94)		(44)			(706)
Increase (decrease) in provision for directors' retirement and severance benefits		(7)		-		(51)
Increase (decrease) in provision for executive officers' incentive plan		5		13			35
Interest and dividends received		(121)		(119)			(903)
Interest expenses		6		5			45
Foreign exchange losses (gains)		3		10			22
Share of (profit) loss of entities accounted for using equity method		11		69			83
Changes in operating assets and liabilities:		(238)		(312)			(1,780)
Receivables
Inventories		575		640			4,305
Payables and accrued expenses		1,000		(1,100)			7,486
Accrued consumption taxes		116		(305)			867
Increase (decrease) in lease and guarantee deposits		18		5			136
Other, net		(440)		99			(3,296)
Subtotal		4,971		3,736			37,225
Interest and dividends received		120		119			897
Interest paid		(6)		(5)			(42)
Income taxes paid		(722)		(1,184)			(5,409)
Net cash provided by operating activities		4,362		2,666			32,670
Cash flows from investing activities:
Payments into deposits (more than three months)		(106)		(0)			(790)
Purchases of property, plant and equipment		(877)		(864)			(6,569)
Proceeds from sales of property, plant and equipment		0		0			3
Purchase of intangible assets		(266)		(895)			(1,995)
Purchases of investment securities		(21)		(54)			(154)
Proceeds from sales of investment securities		25		62			189
Proceeds from redemption of investment securities		-		78			-
Proceeds from sale of shares of subsidiaries and associates		-		3			-
Other investments, net		1		1			9
Net cash used in investing activities		(1,243)		(1,670)			(9,308)
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings		39		(50)			295
Purchases of treasury stock		(0)		(0)			(1)
Proceeds from disposal of treasury stock		18		23			134
Payments of dividends		(878)		(852)			(6,575)
Payments of dividends to non-controlling interests		(90)		(131)			(674)
Other finance, net		(73)		(65)			(547)
Net cash used in financing activities		(984)		(1,076)			(7,369)
Effect of exchange rate changes on cash and cash equivalents		26		90			193
Net increase (decrease) in cash and cash equivalents		2,161		11			16,187
Cash and cash equivalents at beginning of year		11,843		11,832			88,692
Cash and cash equivalents at end of year (Note 18)	¥	14,005	¥	11,843		$	104,879

See notes to consolidated financial statements.

5

Notes to Consolidated Financial Statements

S.T.CORPORATION and Consolidated Subsidiaries

March 31, 2023

1 Summary of Significant Accounting Policies

(a) Basis of presentation

S.T. CORPORATION (the "Company") and its domestic subsidiaries maintain their books of account in conformity with accounting principles generally accepted in Japan, and its overseas subsidiaries maintain their books of account in conformity with those of their countries of domicile. Effective April 1, 2008, the Company adopted the "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements" (PITF No. 18, issued by the Accounting Standards Board of Japan (ASBJ) on May 17, 2006).

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of IFRS, and are compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan.

In preparing the accompanying consolidated financial statements, certain reclassifications have been made to the consolidated financial statements issued domestically for readers outside Japan. The notes to the consolidated financial statements include information which is not required under accounting principles generally accepted in Japan but is presented herein as additional information. Furthermore, certain amounts in the prior year's financial statements have been reclassified to conform to the current year's presentation.

As permitted by Financial Instruments and Exchange Act, amounts are rounded to the nearest million. Consequently, the totals shown in the accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily agree with the sum of the individual amounts.

(b) Scope of consolidation

(1) Number of consolidated subsidiaries:

7 companies

(2) Names of consolidated subsidiaries:

S.T. PRO Co., Ltd., S.T. Business Support Co., Ltd., S.T. MYCOAL CO., LTD., S.T. (Thailand) Co., Ltd., Family Glove Co., Ltd. (Taiwan), S.T. Korea Corporation (South Korea), and Shaldan (Thailand) Co., Ltd.

(3) Name of non-consolidated subsidiary:

JAPAN AROMA LABORATORY CO., LTD.

(Reasons for exclusion from scope of consolidation)

The non-consolidated subsidiary has been excluded from the scope of consolidation because the total amounts of its assets, net sales, profit or loss (amount equivalent to equity interests), retained earnings (amount equivalent to equity interests) and other amounts are limited, and the effect on the consolidated financial statements as a whole is not significant.

(c) Scope of application of equity-method accounting

(1) Number of affiliated companies accounted for by the equity method: 2 companies

(2) Names of companies accounted for by the equity method: Aekyung S.T. Co., Ltd., and NS FaFa Japan Co., Ltd.

We sold all the shares we owned for Shaldan (Philippines), Inc., which was the affiliated company accounted for by the equity method, as of March 31, 2023 and therefore it is excluded from the scope of consolidation.

(3) Name of non-consolidated subsidiary for which equity method is not applied

The non-consolidated subsidiary to which the equity method does not apply (JAPAN AROMA LABORATORY CO., LTD) is accounted for using the cost method rather than the equity method because the total amounts of its profit or loss (amount equivalent to equity interests), retained earnings (amount equivalent to equity interests) and other amounts are limited, and the effect on the consolidated financial statements as a whole is not significant.

(d) Accounting period

The accounting period of the Company begins on April 1 and ends on March 31 of the following year. The four overseas subsidiaries have fiscal years ending on December 31. The necessary adjustments for significant transactions, if any, during the intervening period are made on consolidation.

(e) Translation of foreign currency transactions and financial statements

Monetary assets and liabilities denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance sheet date and the accounts of the overseas consolidated subsidiaries are translated into yen at the rates of exchange in effect at the balance sheet date. Foreign exchange gains and losses are credited or charged to income and translation adjustments are included in net assets.

(f) Securities

Other securities having market value available are recorded at market value with fluctuations in unrealized gains and losses after deducting the associated deferred tax assets or liabilities contained in net assets. Other securities having no market value available are stated at cost determined by the moving average method, and the cost of other securities sold is calculated based on the moving average method. During the years ended March 31, 2023 and 2022, the Company and its consolidated subsidiaries did not have any trading securities.

(g) Inventories

Inventories are stated at the lower of cost or net selling value, cost being determined by the average method.

(h) Property, plant and equipment, except for leased assets, and

depreciation
Property, plant and equipment are stated at cost. Depreciation of property,
plant and equipment of the Company and its domestic subsidiaries,
except for buildings (excluding structures attached to the buildings)
acquired on or after April 1, 1998, and facilities attached to the buildings
and structures acquired on or after April 1, 2016, is computed by the
declining-balance method in conformity with the Corporation Tax Law of
Japan. Depreciation of property and equipment of overseas subsidiaries
and buildings (excluding structures attached to the buildings) acquired on
or after April 1, 1998 and facilities attached to the buildings and structures
acquired on or after April 1, 2016 of the Company and domestic
subsidiaries is computed by the straight-line method.
The estimated useful lives of the major depreciable assets are as follows:
Buildings and structures	3 to 50 years
Machinery, equipment and vehicles	2 to 17 years
Tools, furniture and fixtures	2 to 20 years

(i) Intangible assets, except for leased assets, and amortization

Intangible assets, except for leased assets, are amortized by the straight-line method. Cost of software purchased for internal use is amortized by the straight-line method over a period of mainly 5 years, the useful life applicable to commercially available software.

(j) Leases

Non-cancelable lease transactions that transfer substantially all the risks and rewards associated with the ownership of the leased assets are accounted for as finance leases. All other lease transactions are accounted for as operating leases and related payments are charged to income as incurred.

Depreciation is computed by the straight-line method over the respective lease terms assuming a nil residual value.

(k) Allowance for doubtful receivables

The allowance for doubtful receivables is provided based on past experience for normal receivables and on an estimate of the collectability of receivables from companies in financial difficulty.

6

Notes to Consolidated Financial Statements

1. Provision for directors' retirement and severance benefits The Company has accrued provision for directors' retirement and severance benefits at the amount which would be required to be paid if all directors resigned from their positions and left the Company as of the balance sheet date in accordance with its internal regulations.
2. Provision for executive officers' incentive plan

The Company has established an executive officers' incentive plan trust and a provision is made at the amount required for stock awards based on the Company's internal regulations for awarding stock.

(n) Employees' retirement and severance benefits

1. Method of attributing expected benefit payments to the period In calculating the retirement benefit obligation, the method of attributing expected benefit payments to periods is based on the benefit formula.
2. Amortization method of actuarial gains/losses
   Actuarial gain or loss is amortized in the year following the year in which the gain or loss is recognized by the straight-line method over a period of a certain number of years (5 years) which is shorter than the average remaining years of service of the employees.
3. Adoption of a simplified method in some consolidated subsidiaries Some consolidated subsidiaries adopt the simplified method which assumes retirement benefit obligation to be equal to the benefits payable if all eligible employees voluntarily terminated their employment at the end of fiscal year for the calculation of net defined benefit liability and retirement benefit expenses.

(o) Standards for recording important income and expenses

The Company and domestic consolidated subsidiaries have recognized revenue at the time the control of promised goods or services is transferred to the customer at the amount expected to be received upon exchange of said goods or services. The time when the customer gains control of the

product is determined to be the time when the product arrives at the customer in domestic sales and the time when the product arrives at the point agreed with the customer in export sales.

These revenues are measured by deducting rebates and returns from the consideration promised in the contract with the customer.

The promised consideration is collected within approximately two months from the time the performance obligation is fulfilled. The amount of consideration does not include important financial factors.

1. Accounting for significant hedges
   (1) Hedge accounting
   The Company mainly applies the deferred hedged accounting method. Foreign exchange contracts have applied the appropriation process.

1. Hedging instrument and risk hedged
   Hedging instrument: Forward exchange contracts
   Risk hedged: Foreign currency-denominated forecasted transactions
2. Hedging policy
   The Company mainly applies forward exchange contracts to avoid the risk of short-term exchange fluctuations on foreign currency-denominated forecasted transactions.

(q) Cash and cash equivalents

Cash and cash equivalents in the accompanying consolidated statements of cash flows consist of cash on hand, demand deposits and liquid short-term investments with a maturity of three months or less from their respective dates of acquisition.

2 Basis of Translation

The consolidated financial statements presented herein are expressed in yen and, solely for the convenience of the reader, have been translated into U.S. dollars at ¥133.53 = U.S.$1.00, the approximate exchange rate prevailing on the Tokyo Foreign Exchange Market on March 31, 2023. This

translation should not be construed as a representation that all amounts shown could have been, or could in the future be, converted into U.S. dollars at that or any other rate.

3 Significant Accounting Estimates

(Years ended March 31, 2023) Not applicable

(Years ended March 31, 2022) Not applicable

7

4 Change in Accounting Policies

(Application of Implementation Guidance on Accounting Standard for Fair Value Measurement)

As of the beginning of the current consolidated fiscal year under review, we applied the Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Statement No. 31, June 17, 2021, hereinafter, "Implementation Guidance on Fair Value Measurement Accounting Standard"). In accordance with transitional treatment as prescribed in

Section 27-2 of the Implementation Guidance on Fair Value Measurement Accounting Standard prospectively. As such, there is no significant impact on financial statements for the current consolidated fiscal year under review.

5 Accounting Standards Issued but not yet Effective

･Accounting standards for Current Income Taxes (Statement No.27, October 28, 2022 issued by the Accounting Standards Board of Japan (ASBJ)) ･Accounting Standard for Presentation of Comprehensive Income (Statement No.25, October 28, 2022 issued by the Accounting Standards Board

of Japan (ASBJ))

･Guidance on Accounting Standard for Tax Effect Accounting (Guidance No.28, October 28, 2022 issued by the ASBJ)

(1) Summary

When ASBJ Statement No. 28, "Partial Amendments to Accounting Standards for Tax Effective Accounting" , etc. (hereinafter ASBJ Statement No. 28, etc.) was issued in February 2018 in order to transfer practical guidance for tax effective accounting issued by the Japanese institute of Certified Public Accountants to ASBJ Statements, discussions about following two issues were ongoing. The Accounting Standards were updated to reflect the results of the discussions.

･Classification of tax expenses (taxation on other comprehensive income) ･Tax effect on the sale of subsidiary shares, etc. (subsidiary shares or

affiliated company shares) under Japanese Group Relief System

(2) Scheduled date of application

The accounting standards and guidance will be applied from the beginning of the fiscal year ending March 31, 2025.

(3) Impact of application

The impact of applying the accounting standards and guidance on the accompanying consolidated financial statements is under evaluation.

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Notes to Consolidated Financial Statements

6 Additional Information

(Transactions of Delivering the Company's Own Stock to Employees etc. through Trusts)

(a) Board Benefit Trust (BBT)

The Company introduced a "Board Benefit Trust" with the goal of increasing awareness of the importance of contributing to further enhancing the Company's corporate value and performance over the medium-to-long-term.

1. Summary
   The Company awards the Company's stock to the executive officers who satisfy certain requirements based on predetermined regulations for awarding stocks. Executive officers are granted a certain number of points depending on the financial results, and upon their retirement, the officers will receive stock depending on the number of points they have accumulated.
   The Company has established the Trust by contributing funds to be used for the acquisition of the Company's stock on behalf of executive officers. The Trust will acquire the Company's stock to be awarded to the executive officers in the future, and the shares are managed as trust assets.
2. The Company's stock in the Trust
   The Company's own stock in the Trust is recorded in treasury shares under net assets based on the book value of the shares in the Trust (excluding ancillary expenses). The book value and the number of these treasury shares in the Trust as of March 31, 2023 were ¥96 million (U.S. $1,468 thousand) and 150,400 shares, respectively.

(b) Employee Stock Ownership Plan (ESOP) Trust

The Company introduced an Employee Stock Ownership Plan (ESOP) Trust as an employee incentive plan with the aim of raising awareness of the Company's share price and strengthening financial performance.

1. Summary
   The Company awards the Company's stock to the employees who satisfy certain requirements based on predetermined regulations for awarding stocks.
   If the Company's profit is higher than a pre-determined standard, the Company awards a certain number points to employees. Upon their retirement, employees will receive the Company's stock depending on the number of points they have accumulated.
   The Company has established the Trust by contributing funds to be used for the acquisition of the Company's stock on behalf of participating employees. The Trust will acquire the Company's stock to be awarded to employees in the future, and the shares are managed as trust assets.
2. The Company's stock in the Trust
   The Company's own stock in the Trust is recorded in treasury shares under net assets based on the book value of the shares in the Trust (excluding ancillary expenses). The book value and the number of these treasury shares in the Trust as of March 31, 2023 were ¥126 million (U.S. $941 thousand) and 120,000 shares, respectively.

7 Consolidated Statements of Comprehensive Income

The amount of recycling and amount of income tax effect associated with other comprehensive income for the years ended March 31, 2023 and 2022 were as follows:

	Thousands of
Millions of yen	U.S. dollars

	2023	2022
Unrealized holding gain (loss) on other securities, net of taxes		¥ (1,440)
Amount recognized in the year	¥ 149
Reclassification adjustments included in the statement of income	(17)	(55)
Before income tax effect adjustment	132	(1,495)
Amount of income tax effect	(24)	475
Unrealized holding gain (loss) on other securities, net of taxes	108	(1,019)
Translation adjustments
Amount recognized in the year	79	130
Remeasurements of defined benefit plans, net of tax
Amount recognized in the year	(14)	59
Reclassification adjustments included in the statement of income	(12)	0
Before income tax effect adjustment	(26)	59
Amount of income tax effect	8	(18)
Remeasurements of defined benefit plans, net of tax	(18)	41

2023

$ 1,119 (131) 989 (181) 807

594

(103)

(89)

(192)

59

(132)

Other comprehensive income (loss) on equity method companies	8		5	58
Amount recognized in the year
Reclassification adjustments included in the statement of income	-		65		-
Other comprehensive income (loss) on equity method companies	8		70		58
Total other comprehensive income	¥ 177	¥	(779)		$ 1,327

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