Anual Report 2025

Year ended March 31, 2025

Asanuma Corporation Consolidated Financial Statements Year ended March 31, 2025

Consolidated Balance Sheet 1

Consolidated Statement of Income 3

Consolidated Statement of Comprehensive Income 4

Consolidated Statement of Changes in Net Assets 5

Consolidated Statement of Cash Flows 7

Notes to Consolidated Financial Statements 9

Asanuma Corporation Consolidated Balance Sheet March 31, 2025

Millions of yen

Thousands of

U.S. dollars (Note 2)

Asanuma Corporation Consolidated Balance Sheet (continued)

March 31, 2025

Millions of yen

Thousands of

U.S. dollars (Note 2)

Common stock:

Authorized - 290,000,000 shares

Issued - 16,157,258 shares in 2024 and

Asanuma Corporation Consolidated Statement of Income Year ended March 31, 2025

Millions of yen

Thousands of

U.S. dollars (Note 2)

Asanuma Corporation

Consolidated Statement of Comprehensive Income

Year ended March 31, 2025

Millions of yen

Thousands of

U.S. dollars (Note 2)

Asanuma Corporation Consolidated Statement of Changes in Net Assets

Year ended March 31, 2025

Common stock

Capital surplus

Millions of yen

Retained earnings

Treasury stock, at cost

Total shareholders' equity

Balance at April 1, 2023 ¥ 9,615 ¥ 2,186 ¥ 30,919 ¥ (74) ¥ 42,646 Profit attributable to owners of

parent - - 4,671 - 4,671

Cash dividends - - (3,091) - (3,091) Purchases of treasury stock - - - (163) (163) Restricted stock compensation - 17 - 172 189

Net change in items other than

shareholders' equity - - - - -

Balance at April 1, 2024 9,615 2,203 32,499 (65) 44,252

Profit attributable to owners of

parent - - 4,692 - 4,692

Cash dividends - - (4,485) - (4,485) Purchases of treasury stock - - - (232) (232) Restricted stock compensation - 2 - 166 168

Change in ownership interest of

parent due to transactions with

non-controlling interests - (1,983) - - (1,983)

Net change in items other than

shareholders' equity - - - - -Balance at March 31, 2025 ¥ 9,615 ¥ 222 ¥ 32,706 ¥(131) ¥ 42,412

Net unrealized

Millions of yen

Total

holding gain on investments in securities

Foreign currency translation adjustments

Retirement benefits liability adjustments

accumulated other comprehensive income

Non-controlling interests

Total net assets

Balance at April 1, 2023 ¥ 1,104 ¥ 486 ¥ (237) ¥ 1,353 ¥ 669 ¥ 44,668 Profit attributable to owners of

parent - - - - - 4,671

Cash dividends - - - - - (3,091) Purchases of treasury stock - - - - - (163) Restricted stock compensation - - - - - 189

Net change in items other than

shareholders' equity 1,294 361 363 2,018 414 2,432

Balance at April 1, 2024 2,398 847 126 3,371 1,083 48,706

Profit attributable to owners of

parent - - - - - 4,692

Cash dividends - - - - - (4,485) Purchases of treasury stock - - - - - (232) Restricted stock compensation - - - - - 168

Change in ownership interest of

parent due to transactions with

non-controlling interests - - - - - (1,983)

Net change in items other than

shareholders' equity (369) 502 (208) (75) (653) (728)

Balance at March 31, 2025 ¥ 2,029 ¥1,349 ¥ (82) ¥ 3,296 ¥ 430 ¥ 46,138

Asanuma Corporation

Consolidated Statement of Changes in Net Assets (continued)

Year ended March 31, 2025

Profit attributable to owners of

Asanuma Corporation Consolidated Statement of Cash Flows

Year ended March 31, 2025

Millions of yen

Thousands of

U.S. dollars (Note 2)

Asanuma Corporation

Consolidated Statement of Cash Flows (Continued)

Year ended March 31, 2025

Millions of yen

Thousands of

U.S. dollars (Note 2)

Asanuma Corporation

Notes to Consolidated Financial Statements

March 31, 2025

1. Basis of Preparation of Consolidated Financial Statements

   The accompanying consolidated financial statements of Asanuma Corporation (the "Company") and its consolidated subsidiaries (the "Group") are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards, and have been 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 and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a format which is more familiar to readers outside Japan.

   Certain reclassifications of previously reported amounts have been made to conform the accompanying consolidated financial statements for the year ended March 31, 2025 to the 2025 presentation. Such reclassifications had no effect on consolidated net assets.

2. U.S. Dollar Amounts

   The accompanying consolidated financial statements are stated in yen, the currency of the country in which the company is incorporated and operate. The translation of yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan and has been made at ¥149.52 = U.S.$1.00, the exchange rate prevailing on March 31, 2025. This translation should not be construed as a representation that yen can be converted into

   U.S. dollars at the above or any other rate.

3. Principles of Consolidation

At March 31, 2025 and 2024, the Company had 9 subsidiaries and 2 affiliates. The consolidated financial statements for the years ended March 31, 2025 and 2024 include the accounts of the Company and its 6 subsidiaries for both years.

The Company applied the equity method to its investments in 1 affiliate at March 31, 2025 and 2024 for the purpose of consolidated financial statements for the years then ended.

The accounts of the remaining subsidiaries and affiliate were not consolidated nor the equity method applied because its total assets, net sales, profit or loss and retained earnings were not material to the consolidated financial statements.

1. Principles of Consolidation (continued)

   The balance sheet date of SINGAPORE PAINTS & CONTRACTOR PTE. LTD. and EVERGREEN ENGINEERING & CONSTRUCTION PTE. LTD. is December 31.

   Necessary adjustments were made to the subsidiary's balance sheet to reflect any significant intercompany transactions during the period from January 1 through March 31.

2. Summary of Significant Accounting Policies

   1. Cash and cash equivalents

      Cash and cash equivalents consist of cash on hand, deposits with banks withdrawable on demand, and short-term investments which are readily convertible to cash subject to an insignificant risk of any changes in their value and which were purchased with an original maturity of three months or less.

   2. Investments in securities

      Investments in securities are classified into two categories: held-to-maturity debt securities or other securities. Held-to-maturity debt securities are stated at amortized cost. Quoted securities classified as other securities, the Company uses the market-value method based on the market price, etc. at the consolidated closing date. Valuation differences are included directly in net assets and costs of securities sold are determined by the moving-average method. Unquoted securities classified as other securities are carried at cost determined by the moving average method.

   3. Allowance for doubtful accounts

      The Group provide an allowance for doubtful accounts at an amount calculated based on their historical experience of bad debts on ordinary receivables plus an additional estimate of probable specific bad debts from customers experiencing financial difficulties.

   4. Inventories

      Cost of uncompleted construction contracts are stated at cost determined on an individual project basis. Real estate held for sale is stated at the lower of cost or net selling value, cost being determined on an individual project basis. Raw materials and supplies are stated at the lower of cost or net selling value, cost being determined by the period average method.

      4. Summary of Significant Accounting Policies (continued)

   5. Property and equipment (Other than leased assets)

      Property and equipment is stated on the basis of cost. Depreciation is calculated by the declining-balance method over the estimated useful lives of the respective assets; however, the straight-line method is applied to buildings (except for facilities attached to the buildings) acquired on or after April 1, 1998 and facilities attached to buildings and other non-building structures acquired on or after April 1, 2016.

   6. Intangible assets (Other than leased assets)

      Amortization of intangible assets is calculated by the straight-line method over the estimated useful lives of the respective assets.

      Expenditures related to computer software developed for internal use are charged to income when incurred, except if they are deemed to contribute to the generation of income or to future cost savings. Such expenditures are capitalized as intangible assets and amortized over an estimated useful life of 5 years.

   7. Leases

      Leased assets held under finance leases that transfer ownership are depreciated by the same methods used for owned fixed assets. For finance leases that do not transfer ownership, depreciation expense is calculated based on the straight-line method over the leased period of the lease with a residual value of zero.

   8. Bonds issuance expenses

      Issuance expenses of bonds are charged to income as incurred.

   9. Provision for compensation for completed construction

      A provision for compensation for completed construction is provided for anticipated future costs arising from compensations on completed construction based on the historical data on the compensation cost.

   10. Provision for loss on construction contracts

       A provision for loss on construction contracts is provided for uncompleted construction projects when a future loss is expected, and a reasonable estimate of the amount can be made at the end of the current fiscal year.

       4. Summary of Significant Accounting Policies (continued)

   11. Retirement benefits

       The retirement benefit obligation for employees is attributed to each period by the benefit formula method.

       Actuarial gain or loss is amortized commencing in the year following the year in which the gain or loss is recognized by the straight-line method over a period of principally 10 years, which is within the average remaining years of service of the eligible employees.

       Prior service cost is charged to income when incurred.

   12. Income taxes

       Deferred tax assets and liabilities have been recognized in the consolidated financial statements with respect to the differences between the financial reporting and tax bases of the assets and liabilities, and the amounts were measured using the enacted tax rates and laws which will be in effect when the differences are expected to reverse.

   13. Goodwill

       Goodwill is being amortized on a straight-line basis over the estimated period of benefit. The goodwill resulting from the acquisition of SINGAPORE PAINTS & CONTRACTOR PTE. LTD. and EVERGREEN ENGINEERING & CONSTRUCTION PTE. LTD. is

       being amortized over periods of 7 years and 8 years, respectively.

   14. Significant revenue and expenses

       Regarding the construction business in which the Group is mainly engaged, the Group has a performance obligation to complete construction and transfer objects based on a construction contract with a customer. In such a contract, when control of goods or services is transferred to customers over time, revenue is recognized as the Group satisfies the performance obligation over time. Progress toward satisfaction of a performance obligation is measured based on the percentage of construction cost incurred up to the end of the reporting period to the estimated total construction cost since the amount of construction cost incurred is considered to represent the degree of progress toward satisfaction of a performance obligation. If progress toward satisfaction of a performance obligation cannot be reasonably estimated, but the Group expects to recover all costs incurred, revenue is recognized on a cost recovery basis.

       For construction contracts with a very short period of time between the commencement date of the transaction and the point in time when the Group expects the performance obligation to be fully satisfied, an alternative approach applies, whereby revenue is recognized at the point in time when a performance obligation is fully satisfied rather than over time.

       1. Summary of Significant Accounting Policies (continued)

   15. Applicable accounting principles and procedures in cases where directly relevant accounting standards are not available

Accounting for constructions involving joint venture, the Company recognize their share of the jointly controlled assets, the jointly responsible liabilities, the income and expenses resulting from the joint venture.

1. Significant Accounting Estimates

   Estimate of total construction costs when revenue is recognized as the Group satisfies its performance obligation over time

   1. Amounts recorded in the consolidated financial statements

      Net sales of construction contracts accounted for as the Group satisfies its performance obligation over time amounted to ¥161,450 million ($1,079,789 thousand) and

      ¥147,269 million for the years ended March 31, 2025 and 2024, respectively.

   2. Information on the components of identified significant accounting estimate

      1. Calculation method

         For construction contracts in which control of goods or service is transferred to customers over time, revenue is recognized as the Group satisfies the performance obligation over time. Progress toward satisfaction of the performance obligation is measured based on the percentage of construction cost incurred up to the end of the reporting period to the estimated total construction cost.

      2. Significant assumptions

         Significant assumptions used for estimation of total construction cost are such as unit price of building material and labor unit price, which are calculated based on each project condition such as scale, specification and construction period.

      3. Effect on consolidated financial statements for the following fiscal year

   Significant assumptions expect to have effect on net sales of construction contracts for each reporting period due to uncertainty in estimates. The amount of net sales of construction contracts in the consolidated financial statements for the following fiscal year may fluctuate when there are fluctuations in significant assumptions such as unit price of building material or labor unit price, which were used for estimating total construction cost and which are calculated based on each project condition such as scale, specifications and construction period.

2. Accounting Standards Issued but Not Yet Effective

   The Accounting Standards Board of Japan ("ASBJ") issued the following accounting standard and implementation guidance:

   Accounting Standard for Leases (ASBJ Statement No. 34, September 13, 2024) Implementation Guidance on Accounting Standard for Leases (ASBJ Guidance No. 33, September 13, 2024)

   1. Overview

      As part of the efforts taken by the ASBJ to align Japanese accounting standards with international standards, discussions have been held regarding the development of accounting standards for leases that require the recognition of assets and liabilities for all lessee leases, taking international accounting standards into consideration. The guiding principle is to base these standards on a single accounting model for lessees as outlined in IFRS 16; however, rather than adopting all the provisions of IFRS 16, the aim is to primarily incorporate the key provisions. This approach seeks to create a lease accounting standard that is simple, convenient, and, in principle, does not require modifications when applying the provisions of IFRS 16 to unconsolidated financial statements. For the accounting treatment of lessees concerning lease expense allocation, a single accounting model is applied for all leases, regardless of whether they are finance leases or operating leases, as outlined in IFRS 16. This model requires the recording of depreciation expense related to the right-of-use assets and interest expense related to the lease liability.

   2. Scheduled date of adoption

      The Company expects to adopt the accounting standard and related implementation guidance from the beginning of the fiscal year ending March 31, 2028.

   3. Impact of adoption

      The Company is currently evaluating the effect of the adoption of the Accounting Standard for Leases and related implementation guidance on its consolidated financial statements.

3. Contract Assets and Liabilities

   Receivables from contracts with customers, contract assets, and contract liabilities as of March 31, 2025 and 2024, consisted of the following:

   1. Receivables from contracts with customers and contract assets

      Millions of yen

      Thousands of

      U.S. dollars

      			At March 31,
      	2025		2024		2025
      Notes receivable	¥ 57		¥ 1,324		$ 382
      Electronically recorded monetary
      claims	7,529		2,983		50,354
      Accounts receivable on
      completed construction contracts	23,236		30,044		155,404
      Contract assets	42,766		30,426		286,022
      Total	¥ 73,588		¥ 64,777		$ 492,162

   2. Contract liabilities

   Millions of yen

   At March 31,

   Thousands of

   U.S. dollars

   Advances received on uncompleted construction contracts

   Total

   2025 2024 2025

   ¥ 8,569	¥ 4,197		$ 57,310
   ¥ 8,569		¥ 4,197		$ 57,310

4. Cash and Cash Equivalents

   A reconciliation of cash and deposits in the accompanying consolidated balance sheets at March 31, 2025 and 2024 and cash and cash equivalents in the accompanying consolidated statements of cash flows for the years then ended are as follows:

   Millions of yen

   Thousands of

   U.S. dollars

   			At March 31,
   	2025		2024		2025
   Cash and cash deposits	¥ 16,833		¥ 13,031		$112,580
   Time deposits with a deposit term of more than 3 months	-		-		-
   Cash and cash equivalents	¥ 16,833		¥ 13,031		$112,580

5. Impairment Losses

   Impairment losses for the years ended March 31, 2025 and 2024 are as follows:

   Millions of yen

   Thousands of

   U.S. dollars

   Location Main use Class 2025 2025

   Osaka Prefecture Idle asset Software in

   progress ¥ 183 $ 1,224

   Millions of yen

   Location Main use Class 2024

   Saitama Prefecture Idle assets Buildings, etc. ¥ 32 Osaka Prefecture Telephone

   subscription right Intangible assets 52

   The Group principally group the assets in association with the business operations at each regional office whereas leased properties and idle assets are grouped individually and fixed assets of the Group and investments for which the equity method is applied are grouped per subsidiary or investment.

   For the fiscal year ended March 31, 2025, the Company recognized impairment loss of ¥183 million ($1,224 thousand) for Software in progress, which comprises of the expenditures for developing internal-use software, because some planned functions are no longer expected to be used and was classified as an idle asset.

   For the fiscal year ended March 31, 2024, due to the sale of an equipment center, assets on the premises of the facility were classified as idle and the carrying value of these assets was written down to memorandum value and impairment losses in the amount of ¥32 million were recognized.

   The telephone subscription right, which is classified as an intangible asset, impairment losses in the amount of ¥52 million were recognized because it was determined that there was no prospect of future use, considering the prevalence and usage of IP phones.

6. Investments in Securities

At March 31, 2025 and 2024, marketable securities classified as other securities are as follows:

Millions of yen

Carrying value

Acquisition costs

Unrealized gain (loss)

Carrying value

Acquisition costs

Unrealized gain (loss)

Thousands of U.S. dollars

Carrying value

Acquisition costs

Unrealized gain (loss)

The proceeds from sales of, and gross realized gain on investments in securities for the years ended March 31, 2025 and 2024 are summarized as follows:

1. Investments in Securities (continued)

   For the fiscal year ended March 31, 2025, the Company did not recognize any impairment loss on equity securities classified as other securities, while an impairment loss of ¥15 million was recognized for the fiscal year ended March 31, 2024.

   Stocks with market prices are recognized as impairment losses when the market price falls by 30% or more from the acquisition cost.

   For stocks without a market price, if the real value drops significantly due to a deterioration in financial conditions, impairment losses are recorded for the amount deemed necessary in consideration of the possibility of recovery.

2. Short-Term Bank Loans and Long-Term Debt

Short-term bank loans had average interest rates of 1.74% and 1.31% at March 31, 2025 and 2024, respectively.

Long-term debt at March 31, 2025 and 2024 are summarized as follows:

Millions of yen

Thousands of

U.S. dollars

The aggregate annual maturities of long-term debt including bonds subsequent to March 31, 2025 are summarized as follows:

Thousands of

Assets pledged at March 31, 2025 and 2024 as collateral for lines of credit of the Company are summarized as follows:

Millions of yen

Thousands of

U.S. dollars

All assets of the consolidated subsidiaries engaged in the Private Finance Initiative business were pledged as collateral for their loans under the project finance agreements. Assets pledged at March 31, 2025 and 2024 amounted to ¥2,159 million ($14,440 thousand) and

¥2,499 million as collateral for loans of ¥1,539 million ($10,293 thousand) and ¥1,861 million, respectively.

Assets of the Company pledged at March 31, 2025 and 2024 as collateral for loans of subsidiaries engaged in the PFI business are summarized as follows:

Millions of yen

Thousands of

U.S. dollars

Shares of subsidiaries and Long-term loans receivable due from subsidiaries in the table above have been eliminated in full.

In order to achieve more efficient financing, the Company has concluded line-of-credit agreements with certain financial institutions. The status of these lines of credit at March 31, 2025 and 2024 are as follows:

Millions of yen

Thousands of

U.S. dollars

Income taxes applicable to the Group comprise corporation, inhabitants' and enterprise taxes which, in the aggregate, resulted in a statutory tax rate of approximately 30.4% for the years ended March 31, 2025 and 2024.

A reconciliation of the statutory tax rate and the effective tax rates for the years ended March 31, 2025 and 2024 as a percentage of profit before income taxes are summarized as follows:

The significant components of deferred tax assets and liabilities of the Group at March 31, 2025 and 2024 are summarized as follows:

Millions of yen

Thousands of

U.S. dollars

1. Income Taxes (continued)

   Revision of deferred income taxes due to changes in tax rates

   On March 31, 2025, the "Act for Partial Revision of the Income Tax Act, etc. (Act No. 13 of 2025)" was enacted by the National Diet of Japan. As a result, the "Special Defense Corporate Tax" will be imposed from the fiscal year beginning April 1, 2026. Accordingly, deferred tax assets and liabilities related to temporary differences expected to be reversed on or after April 1, 2026 have been recalculated using the revised statutory effective tax rate, which was changed from 30.4% to 31.4%. As a result of this tax rate change, deferred income taxes in investments and other assets (the amount of deferred tax assets after deducting deferred tax liabilities) increased by ¥2 million ($15 thousand), and income taxes - deferred in the consolidated statement of income decreased by ¥31 million ($213 thousand).

2. Retirement Benefits

1. Outline of retirement benefits for employees

   The Company has funded or unfunded defined benefit pension plans and defined contribution plans in order to allocate for employees' retirement benefits. In addition to these retirement benefit plans, the Company may pay additional retirement benefits when employees retire.

   Asanuma Tatemono K.K., a consolidated subsidiary of the Company, participates in the Smaller Enterprise Retirement Allowance Mutual Aid Scheme (the "SERAMA Scheme") as defined contribution plan.

   The other consolidated subsidiaries do not have any retirement pension plans.

   Under the defined benefit plans, the Company pays lump-sum or pension payments, the amounts of which are determined by reference to employees' ranks and length of service.

2. Defined benefit plans

   1. The changes in retirement benefit obligation for the years ended March 31, 2025 and 2024 are as follows:

      Millions of yen

      Thousands of

      U.S. dollars

      	2025			2024		2025
      Balance at the beginning of the year	¥ 9,355		¥	9,676		$ 62,567
      Service cost	327			335		2,187
      Interest cost	94			97		629
      Actuarial loss (gain)	30			(6)		201
      Benefit paid	(553)			(747)		(3,699)
      Balance at the end of the year	¥ 9,253		¥	9,355		$ 61,885

      13. Retirement Benefits (continued)

      2. Defined benefit plans (continued)

   2. The changes in plan assets for the years ended March 31, 2025 and 2024 are as follows:

      Thousands of

      Millions of yen U.S. dollars

      	2025		2024		2025
      Balance at the beginning of the year	¥ 7,026		¥ 6,604		$ 46,990
      Expected return on plan assets	141		122		943
      Actuarial gain (loss)	(255)		506		(1,705)
      Contributions by the employer	211		215		1,411
      Benefit paid	(360)		(431)		(2,408)
      Balance at the end of the year	¥ 6,763		¥ 7,026		$ 45,231

   3. The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets at March 31, 2025 and 2024 for the Company's and the consolidated subsidiary's defined benefit plans:

      Millions of yen

      Thousands of

      U.S. dollars

      	2025		2024		2025
      Funded retirement benefit obligation	¥ 5,054		¥ 5,187		$ 33,801
      Plan assets at fair value	(6,763)		(7,026)		(45,231)
      	(1,709)		(1,839)		(11,430)
      Unfunded retirement benefit obligation 4,199		4,168		28,083
      Net assets and liabilities recognized on the consolidated balance sheet ¥ 2,490		¥ 2,329		$ 16,653

   4. The components of retirement benefit expense for the years ended March 31, 2025 and 2024 are as follows:

      Millions of yen

      Thousands of

      U.S. dollars

      	2025		2024		2025
      Service cost	¥ 327		¥ 335		$ 2,187
      Interest cost	94		97		629
      Expected return on plan assets	(141)		(132)		(943)
      Amortization of actuarial loss (gain)	(15)		10		(101)
      Retirement benefit expense	¥ 265		¥ 310		$ 1,772

      13. Retirement Benefits (continued)

      2. Defined benefit plans (continued)

   5. The components of retirement benefits liability and asset adjustments included in other comprehensive income (before tax effect) for the years ended March 31, 2025 and 2024 are as follows:

      Millions of yen

      Thousands of

      U.S. dollars

      2025 2024 2025

      Actuarial gain (loss) ¥(301) ¥ 522 $(2,013)

   6. The components of retirement benefits liability and asset adjustments included in accumulated other comprehensive income (before tax effect) at March 31, 2025 and 2024 are as follows:

      Millions of yen

      Thousands of

      U.S. dollars

      	2025		2024		2025
      Unrecognized actuarial gain (loss)	¥ 119		¥(181)		$ 796

   7. The fair value of plan assets, by major category, as a percentage of total plan assets at March 31, 2025 and 2024 are as follows:

      	2025		2024
      Debt securities	52%		54%
      Equity securities	21		20
      Multi-asset	26		24
      Cash and cash deposits	1		2
      Total	100%		100%

      The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation at present and in the future, and the expected long-term rate of return from multiple plan assets at present and in the future.

      1. Retirement Benefits (continued)

         1. Defined benefit plans (continued)

   8. The assumptions used in accounting for the defined benefit plans are as follows:

(Note) Estimated rate of salary increase is an expected rate of the increase of the retirement benefit points.

1. Defined contribution pension plan

Information on contributions to the defined contribution pension plan for the years ended March 31, 2025 and 2024 are as follows:

Millions of yen

Thousands of

U.S. dollars

Contributions to the defined

contribution pension plan ¥ 142 ¥ 146 $ 950

1. Asset Retirement Obligations

   The Company estimates the cost of restoration obligations based on property lease agreements of the headquarters in Osaka, Tokyo office, Kyusyu office and Hokkaido office. As the cost of the restoration obligations is immaterial, the information on asset retirement obligations is omitted.

   Regarding certain restoration obligations, the Company estimated non-recoverable amounts of deposits for those premises and charged the portion attributable to the years ended March 31, 2025 and 2024, instead of recording asset retirement obligations.

2. Shareholders' Equity

The Companies Act (the "Act") provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if certain conditions are met.

Under the Act, upon the issuance and sale of new shares of common stock, the entire amount of the proceeds is required to be accounted for as common stock, although a company may, by resolution of the Board of Directors, account for an amount not exceeding one-half of the proceeds of the sale of new shares as additional paid-in capital included in capital surplus.

Movements in shares of common stock in issue and treasury stock during the years ended March 31, 2025 and 2024 are summarized as follows:

Number of shares

April 1, 2024 Increase Decrease March 31, 2025

Shares of common stock

in issue 16,157,258 64,629,032 - 80,786,290

Treasury stock 20,286 336,306 178,957 177,635

The increase in shares of common stock of 64,629,032 is due to the stock split that the company conducted at a ratio of five-for one effective August 1, 2024.

The increase in treasury stock of common stock of 336,306 shares is due to the acquisition of 60,000 shares of treasury stock by the resolution of the Board of Directors held on June 27, 2024, the increase of 276,132 shares due to the stock split, and the acquisition of 174 fractional shares of less than one unit. The decrease in treasury stock of common stock of 178,957 shares is due to the disposal of treasury shares under restricted stock remuneration plan.

Number of shares 2024

April 1, 2023 Increase Decrease March 31, 2024

Shares of common

stock in issue 16,157,258 - - 16,157,258 Treasury stock 31,182 47,618 58,514 20,286

The increase in treasury stock of common stock of 47,618 shares is due to the acquisition of 46,800 shares of treasury stock by the resolution of the Board of Directors held on June 23, 2023, and the acquisition of 818 fractional shares of less than one unit. The decrease in treasury stock of common stock of 58,514 shares is due to the disposal of treasury shares under restricted stock remuneration plan.

Restricted stock awards

1. Outline, scale and movement

(1) Outline

Restricted stock awards 2024 plan Individuals covered by the plan 5 directors

Type of shares Common stock

Number of shares 18,900 shares

Granted date July 26, 2024

Vesting period From July 26, 2024 (allocation date) to the date when an individual ceases to be a director of the Company

Restricted stock awards 2023 plan Individuals covered by the plan 5 directors

Type of shares Common stock

Number of shares 35,305 shares

Granted date July 21, 2023

Vesting period From July 21, 2023 (allocation date) to the date when an individual ceases to be a director of the Company

Restricted stock awards 2022 plan Individuals covered by the plan 6 directors

Type of shares Common stock

Number of shares 51,830 shares

Granted date July 19, 2022

Vesting period From July 19, 2022 (allocation date) to the date when an individual ceases to be a director of the Company

Restricted stock awards 2021 plan Individuals covered by the plan 6 directors

Type of shares Common stock

Number of shares 71,300 shares

Granted date July 20, 2021

Vesting period From July 20, 2021 (allocation date) to the date when an individual ceases to be a director of the Company

Restricted stock awards (continued)

1. Outline, scale and movement (continued)

   1. Outline (continued)

      The number of shares in the tables above represents the Company's splitting its common stock as follows:

      ・One share into two shares effective on August 1, 2022

      ・One share into five shares effective on August 1, 2024 Conditions for release of transfer restriction are as follows:

      The Company shall release transfer restriction for all of the allocated shares upon the end of the vesting period provided that a covered person continues to be director of the Company during the "Service Period" (from the allocation date to the end of the ordinary general meeting of shareholders for the fiscal year ended March 31, 2025). However, in the event that a covered person ceases to be a director during the Service Period due to death or other reasons that the Board of Directors deem as justifiable, the Company shall release transfer restrictions for the specified number of allocated shares at the end of the vesting period. The specified number of allocated shares is calculated by multiplying the number of months from the allocation date to the month when a covered person ceases to be a director divided by 12 (if the number exceeds 1, it shall be deemed to be 1) by the number of allocated shares (it shall be rounded down).

   2. Scale and movement

      Scale and movement of restricted stocks that have not yet been released for the fiscal years ended March 31, 2025 and 2024 are as follows.

      1. Amount of expenses and account name

Thousands of yen U.S. dollars

Stock compensation expense in general and administrative expenses