Oriental Shiraishi : Consolidated Financial Statements ending on March 31, 2023(FY2022)

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Consolidated Statement of Income

From April 1, 2022

To March 31, 2023

(Figures are rounded down the nearest million yen.)

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Consolidated Statement of Changes in Equity

From April 1, 2022

To March 31, 2023

(Millions of yen)

Shareholders' equity

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Notes to Consolidated Financial Statements

I. Significant Matters for the Preparation of Consolidated Financial Statements

1. Matters on the scope of consolidation

1. Number and names of consolidated subsidiaries

1. 1. Names of non-consolidated subsidiaries, etc. Not applicable.
2. Matters on application of the Equity Method Not applicable.
3. Matters on accounting policies
4. 1. Valuation standards and methods for significant assets
   2. 1. Securities

1. Depreciation and amortization methods for significant depreciable and amortizable assets
2. 1. Property, plant and equipment (excluding leased assets)

Depreciation of property, plant and equipment is provided using the declining-balance method. However, depreciation of buildings (excluding facilities attached to buildings) acquired on or after April 1, 1998 and facilities attached to buildings and structures acquired on or after April 1, 2016 is

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To prepare for the payment of employees' bonuses, the amount to be charged in the current consolidated fiscal year out of the amount estimated to be paid is recorded.

3) Provision for losses on construction contracts

To prepare for losses related to construction contracts, the amount of estimated losses is recorded for the uncompleted construction contracts at the end of the current consolidated fiscal year when losses are probable to occur and such losses can be reasonably estimated.

4) Provision for warranties for completed construction

To prepare for repair expenses for defects of completed construction, the estimated amount of future repair is recorded.

5) Provision for stock-based compensation

To prepare for the future issuance of the Company's shares to Directors (excluding Directors serving as Audit and Supervisory Committee Members and Outside Directors) and Executive Officers of the Company and the Group, the amount required is recorded based on the internal share issuance rules.

6) Provision for special repairs

To prepare for regular repair of owning vessels, the estimated amount of future repair is recorded.

(4) Recognition methods for significant revenue and expenses

The details of the main performance obligations in the major businesses related to revenue from contracts with customers of the Company and consolidated subsidiaries and the timing at which the Company typically satisfies these performance obligations (when it typically recognizes revenue) are as follows:

1) Contracts for construction work

As for contracts for construction work, since control of a good or service is transferred to a customer over time, revenue of performance obligations is recognized over time based on the estimated progress related to satisfaction of the performance obligations, except for constructions with extremely short period. The progress related to the satisfaction of performance obligations is estimated by calculating the ratio of cost incurred to total estimated cost (input method) in general. In constructions with extremely short period from the date when the work is started on the contract to the time when performance obligations are completely satisfied, revenue is recognized at the time when the performance obligations are completely satisfied.

The Company charges and receives consideration for transactions related to contracts for construction work by measuring the progress toward complete satisfaction of that performance obligation based on contract payment terms, and significant financing components are not included in the consideration.

2) Products, etc.

For contracts of manufacturing and sales of civil engineering and construction products, and design, fabrication, sales, etc. of construction materials, the Company recognizes revenue at the time of their delivery in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those products or materials because the customer acquires control of the products or materials and the performance obligation is satisfied when they are delivered to the customer.

(5) Recognition methods for retirement benefit liability

In determining retirement benefit obligations, straight-line basis is used to allocate projected retirement benefits to periods of service until the end of consolidated fiscal year.

Actuarial gains and losses for each consolidated fiscal year are recognized in expenses using the straight- line method over a certain period (10 years) within the average remaining service years of employees, beginning from the following consolidated fiscal year of occurrence.

Some consolidated subsidiaries apply the simplified method which assumes the Company's benefit obligation to be equal to the benefits payable assuming the voluntary retirement of all employees at fiscal year-end for the calculation of retirement benefit liability and retirement benefit expenses.

(6) Goodwill amortization method and period

Goodwill is amortized by the straight-line method over a period of 10 years by calculating the reasonable period for the return of investment.

1. Other significant matters for the preparation of consolidated financial statements Accounting adopted when the provisions of relevant accounting standards, etc. are not clear
   Joint venture for construction works (hereinafter referred to as the "JV") is accounted for using the method of recording in the accounts in proportion to the shares of the JV's member companies.

4. Matters on the fiscal year, etc. of consolidated subsidiaries

The closing dates of consolidated subsidiaries' fiscal year is the same as the consolidated closing date.

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2. Assets pledged as collateral and liabilities associated with collateral

1. Assets pledged as collateral

Buildings and structures

Land

Total

1. Liabilities associated with collateral Not applicable.
   (Note) The maximum amount related to revolving mortgage of the assets is 600 million yen.

1. Guarantee of obligations Not applicable.
2. The amounts of contract liabilities of advances received on uncompleted construction contracts are as follows: Current consolidated
   fiscal year
   (March 31, 2023)

2,300 million yen

V. Notes to the Consolidated Statement of Income

1. Revenue from contracts with customers

As for net sales, the Company does not disaggregate revenue from contracts with customers and other sources of revenue. The amount of revenue from contracts with customers is presented in "VIII. Notes on Revenue Recognition, 1. Disaggregation of revenue from contracts with customers."

VI. Notes to the Consolidated Statement of Changes in Equity

1. Class and number of outstanding shares as of the consolidated fiscal year end

2. Dividends

1. Dividends paid

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1. Dividends whose record date is attributable to the fiscal year ended March 31, 2023 but to be effective after the following consolidated fiscal year

VII. Notes on Financial Instruments

1. Matters on the conditions of financial instruments

1. The policy on dealing in financial instruments
   The Group will limit financial management to short-term deposits, held-to-maturity bonds, etc., and finance operating capital and equipment fund through bank loans. The Group concluded syndicated commitment line agreements worth 6 billion yen in total in order to procure operating capital flexibly and stably with five banks. The Group will stick to the real demand principle and will not conduct financial instrument transaction for speculation or trading.
2. Contents of financial instruments and their risks

Notes receivable, accounts receivable from completed construction contracts and other that are operating receivables are exposed to customers' credit risk.

Investment securities mainly represent held-to-maturity bonds and shares of companies with business relations, and are exposed to market price fluctuation risk. Investments in partnerships have following risks as the investments are made mainly to unlisted companies.

1. 1. There is no guarantee of acquiring capital gain through investments.
   2. There is a risk of generating capital loss through investments.
   3. Investments are to be made to companies which are likely to be listed, sell off shares or take other steps during the fund's management period, but the timing of listing, sale of shares, etc. may vary significantly from the estimation.
   4. Shares, etc. of unlisted companies have significantly lower liquidity than those of listed companies. Notes payable, accounts payable for construction contracts that are operating payables are due within a year.
      Of borrowings, short-term borrowings are mainly for operating capital and long-term loans payable are mainly for acquiring shares of subsidiaries.
2. Risk management system for financial instruments

For the risk of notes receivable, accounts receivable from completed construction contracts and other, the Company sets transaction limits and carries out credit management in accordance with the internal risk management rules, order management rules and others.

As for the risks of investment securities, investments in held-to-maturity bonds are made only in those with high credit ratings, and their credit risk is minimal. The information on shares including periodic analysis of fair values is reported to the Board of Directors for deliberation.

Of borrowings, the risks of borrowings with fluctuating interest rates are discussed in the Board of Directors to consider the adoption of a derivative transaction (interest rate swap) for each contract.

(4) Supplementary explanation on fair values, etc. of financial instruments

Fair values of financial instruments include values based on market prices as well as rationally calculated values in the case where market prices are not available. As factors that may result in fluctuations in the value are taken into account in its calculation, the value may differ if different assumptions, etc. are used.

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1. Those recorded in liabilities are in ( ).

1. Cash and deposits, notes receivable, accounts receivable from completed construction contracts and other, advances paid, notes payable, accounts payable for construction contracts, short-term borrowings, current portion of long-term loans payable, other payables and deposits received are omitted because they are settled in a short time and their fair value approximates the book value.
2. Shares, etc. without market value and investments to partnerships and other equivalent business entities whose net amount equivalent to equity are recorded in the consolidated balance sheet are not included in

"1) Investment securities." The amount recorded in the consolidated balance sheet are as follows:

(Million yen) Amount in the

Categoryconsolidated balance sheet

3. Fair value information by level within the fair value hierarchy

The fair value of financial instruments is classified into the following three levels according to the observability and materiality of inputs used to measure fair value.

Level 1 fair value: Fair value measured using observable inputs, i.e. quoted prices in active markets for assets or liabilities that are the subject of the measurement.

Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.

Level 3 fair value: Fair value measured using unobservable inputs.

If multiple inputs are used that are significant to the fair value measurement, the fair value measurement is categorized in its entirety in the level of the lowest level input that is significant to the entire measurement.

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