Annual Report 2025

KINDEN CORPORATION

A N N U A L

2025

R E P O R T

CONTENTS

1 Message from the President

3 Special Feature: Updating Our Capital Policy under the Medium-term Management Plan

4 Recent Major Projects

6 Review of Operations (Non-Consolidated)

1. Topics

2. Corporate Governance

1. Five-Year Financial Summary

2. Management's Discussion and Analysis

16 Consolidated Balance Sheets

1. Consolidated Statements of Income

2. Consolidated Statements of Comprehensive Income

3. Consolidated Statements of Changes in Net Assets

4. Consolidated Statements of Cash Flows

5. Notes to Consolidated Financial Statements

45 Independent Auditors' Report

1. Non-Consolidated Statements of Income

2. Non-Consolidated Balance Sheets

1. Board of Directors and Audit & Supervisory Board Members

2. Corporate Data

3. Network

Since our establishment in 1944 to undertake the construction of urban and corporate infrastructure, Kinden Corporation has expanded our business as a company established to benefit the public, and we celebrated our 80th anniversary in September 2024. Even amidst the rapid changes of today, Kinden has grown into one of Japan's leading integrated electrical and facility engineering companies with a nationwide business structure by demonstrating a future-oriented entrepreneurial spirit and picking up on the needs of the market. Kinden also expanded overseas in the 1950s ahead of competitors in the industry, and we have built up over 60 years of experience and credentials in a little over 90 countries around the globe, including such locations as Hawaii, Guam, countries in Asia, the Middle East and Africa. In recent years, Kinden has expanded proactively into the installation of social infrastructure, primarily in Southeast Asia.

Kinden will continue our contributions to the power

infrastructure business and the further strengthening of community-focused business activities, while at the same time continuing to strengthen business development in the Greater Metropolitan Area and developing business overseas from a long-term perspective. We will contribute to society by meeting customer needs with high technologies and skills that provide safety, peace of mind and comfort.

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

The future prospects described in this annual report concerning business planning, earnings, and management strategies are based on management views derived from supporting information available to Kinden Corporation at the time such information was prepared. Accordingly, readers are cautioned against relying solely on these forward-looking prospects because actual results and strategies may differ substantially depending on changes in the Company's business environment.

Business Results in the Year Ended March 2025

Sales and profits both reach record highs

During the fiscal year ended March 31, 2025, the Japanese economy showed signs of improvement in corporate earnings due to such factors as the ongoing pass-through of prices and the impact of the weakening yen. In the construction industry, despite persistently high construction costs and other lingering difficulties, construction demand trended firmly, as the willingness of companies to make investments remained strong against a backdrop of favorable business performance.

Under these circumstances, Kinden, which primarily undertakes construction and maintenance work for infrastructure-related equipment such as electrical equipment, made proactive investments for growth and engaged in business activities leveraging the combined strengths of the Group.

As a result, Kinden achieved record highs for both net sales and profits, as consolidated net sales increased 7.7% from the previous year to ¥705,058 million, operating profit increased 42.9%, to ¥60,979 million, and profit attributable to owners of parent increased 40.8%, to ¥47,250 million.

On a non-consolidated basis, net sales increased 6.4%, to ¥595,918 million, operating profit increased 51.7%, to

¥52,386 million, and profit increased 42.3%, to ¥42,374 million. Looking at net sales of completed construction contracts by customers, The Kansai Electric Power Company, Kansai Electric Power Group companies and other general customers accounted for 14.3%, 2.7% and 83.0% of these

sales, respectively.

Looking at net sales of completed construction contracts by the construction sector, sales in the Power Distribution Lining business increased 4.3%, to ¥77,150 million, due to an increase in construction work for Kansai Transmission and Distribution, Inc. Sales in the Electrical business increased

8.5%, to ¥404,667 million, due to an increase in production factories. Sales in the Information & Communications Network business decreased 14.3%, to ¥44,594 million due to a decline in mobile phone-related facilities and CATV facilities. Sales in the Environmental Management Facilities business increased 18.7%, to ¥49,186 million due to an increase in production factories.

Sales in the Electric Power & Others business increased 3.7% year on year, to ¥20,319 million, due to an increase in overhead power transmission work.

Profit attributable to owners of parent per common share increased ¥70.92 year on year on a consolidated basis to ¥236.26. On a non-consolidated basis, profit per common share increased ¥65.14 to ¥211.88.

Return to Shareholders and Dividend Policy

Increased dividends by ¥27.00 and paid a full-year dividend of ¥90.00 per common share

Kinden will actively make growth investments, mainly by leveraging human resources, a source of competitiveness, from a long-term perspective. By doing so, Kinden will seek to achieve sustainable growth and development. We expect that these efforts will contribute to long-term benefits for our stakeholders.

We consider the distribution of profits to shareholders as one of our important management issues in the future as well. Kinden also maintains the fundamental policy of placing top priority on stable and sustainable dividends for shareholders, with a dividend policy that also takes into account business results and financial performance. In addition, we have an interim dividend system in place to increase opportunities to distribute profits and aim to achieve shareholder-focused management by, for example, paying memorial dividends when we reach a milestone or celebrate an anniversary.

We pay interim dividends equal to half the amount of expected annual dividends, which are calculated based on full-year earnings forecasts. Meanwhile, we determine the

amount of year-end dividends by subtracting the amount of interim dividends from the amount of annual dividends, which are calculated based on actual business results confirmed at fiscal year-end.

Based on this policy and on Kinden's Capital Policy, Kinden planned to pay a year-end dividend of ¥42 per share (ordinary dividend of ¥37 and an 80th anniversary commemorative dividend of ¥5) for the fiscal year. However, upon taking into consideration the business performance during the fiscal year, we decided to increase the dividend by ¥8 to ¥50 per share (ordinary dividend of ¥45 and an 80th anniversary commemorative dividend of ¥5). As a result, we paid an annual dividend of ¥90 per share (ordinary dividend of ¥80 and an 80th anniversary commemorative dividend of ¥10), including an interim dividend per share of ¥40 (ordinary dividend of ¥35 and an 80th anniversary commemorative dividend of ¥5).

Kinden plans to pay an annual dividend of ¥100 per share for the fiscal year ending March 31, 2026. This will include an interim dividend of ¥50 and a year-end dividend of ¥50.

Strategy for Enhancing Value on a Medium-term Basis

Accelerating growth strategies to achieve targets

In April 2021, Kinden launched a six-year Medium-term Management Plan with the goal of realizing its 2026 Growth Vision of "management that generates consolidated sales on a scale of ¥700,000 million." Within this plan, the Group is working as one in promoting management strategies consisting of its Business Strategy, Environmental Strategy, Human Resources and Workstyle Strategy, and Corporate Strategy.

During the three-year period of the first half of the plan, Kinden achieved steady progress in establishing its business foundation. We have positioned the final three years as a "period for taking on the challenge of making a great leap forward." Kinden will vigorously promote its core business strategies as well as each strategy for supporting these. During the current fiscal year, which marks the second year of the latter half of the plan, Kinden will accelerate each of its initiatives and further strengthen its profit-generating capabilities toward realizing its Growth Vision.

Regarding its Business Strategy, Kinden is actively pursuing initiatives that will contribute to its sustainable growth and development. To this end, we continue to focus on establishing and expanding the business foundations that will be essential for further broadening our existing business. As one of our strategies to deepen ties with the local community and expand our business, we made KITA KOUDENSHA, Co., Ltd. (an electrical equipment construction company in Hokkaido) a Kinden subsidiary in April 2025. Additionally, we are progressing with the construction of a new metropolitan office (Toyosu, Tokyo) crucial for expanding our existing business in the greater Tokyo area. We aim for completion in fiscal 2025.

One of our key themes is Challenging New Fields.

In this area, we are actively involved with GX- (Green Transformation) related construction projects, including renewable energy-related construction projects such as wind power and power storage plant construction, as we work toward realizing a carbon-neutral society.

Kinden is also actively deploying its Energy Management Service (EMS-AI), which utilizes AI technology for optimal control of air conditioning facilities, storage batteries, and power generation equipment. This EMS-AI is currently undergoing demonstration testing at the 2025 Japan World Expo (Osaka-Kansai Expo) held from April 2025.

Turning to our Environmental Strategy, we established the Carbon Neutral Promotion Committee and are undertaking a variety of activities to achieve our target of reducing CO2 emissions by 50% by fiscal 2030 (compared with fiscal 2020 levels).

Regarding our Human Resources and Workstyle Strategy, we place "Human Resources and Heart" at the core of our management and implement a variety of activities to promote the active roles of our human resources. These activities include recruiting a large number of human resources (hiring over 400 new graduates each year), strengthening human resource development (establishing educational facilities and systems looking ahead to the next 40 to 50 years, including rebuilding Kinden Academy), reducing work hours, and utilizing DX (Digital Transformation).

For our Corporate Strategy, we are working to strengthen compliance and governance while formulating a corporate slogan and statement and are working on a new branding strategy to increase awareness and penetration of the Kinden Brand.

Forecast for the Fiscal Year Ending March 31, 2026

Continue to invest in growth and aim for even greater heights

In the construction industry there are concerns that rising material and labor costs and reciprocal tariffs imposed by the United States will restrain capital investment by companies in the year ending March 31, 2026. Nonetheless, the environment for orders is expected to generally trend firmly against a background of favorable demand.

In this environment, we will continue to invest in growth, centered on our human resources, and strive to reach even greater heights while co-creating value with all stakeholders.

For the fiscal year ending March 31, 2026, we forecast consolidated net sales of ¥730,000 million, an increase

3.5%; operating profit of ¥67,000 million, up 9.9%; and net income attributable to owners of parent of ¥52,000 million, up 10.1%. I would like to ask our shareholders and investors for your continued understanding and support.

June 2025

Takao Uesaka President, Representative Director

Updating Our Capital Policy under the Medium-term Management Plan

Reflecting dialogue with capital markets in our initiatives for increasing corporate value

Within "Growth Investments in the Medium-term Management Plan and Initiatives to Enhance Corporate Value" announced in January 2024, Kinden presented its "Approach to Capital Policy," which stipulates strengthening shareholder returns based on the "Approach to Value Co-creation with Multi-stakeholders" and "Growth Investments Centered on Human Resources." Subsequently, while adhering to our financial policy of firmly maintaining a stable financial base, we will steadily strengthen our medium-to-long-term profit-generating capabilities through growth investments centered on human resources toward attaining sustainable growth and development. Concurrently, Kinden is strengthening shareholder returns and reducing cross-shareholdings, thereby ensuring that ROE exceeds the cost of shareholders' equity. Alongside these initiatives to raise corporate value, we continually consider further initiatives regarding "Kinden's Approach to Capital Policy" based on dialogue with capital markets. To this end, in January 2025 we disclosed our "Capital Policy in the Medium-term Management Plan -Update based on dialogue with the capital markets-," which focuses on reducing cross-shareholdings and improving capital efficiency as initiatives for increasing corporate value.

Aiming for Cross-shareholdings of 10% of Net Assets and ROE of 7% or More

Regarding its cross-shareholdings, Kinden examines the appropriateness of holding each cross-held stock upon considering such factors as stock prices, its trading history with the relevant business partners, the risk and return of holding the shares, and our long-term trading relationship with such partners.

In keeping with this approach, during 2024 we disclosed a plan for reducing cross-shareholdings to 88 cross-held stocks by fiscal 2026 from 117 such stocks held in fiscal 2022 (reduction amount of approximately ¥11 billion). In 2025, we are further accelerating the speed of this reduction and are progressing toward our target of reducing cross-shareholdings to 10% of net assets by fiscal 2026. Kinden is also focusing on capital efficiency. In 2024, Kinden announced it would maintain efforts to improve

capital efficiency from a medium-to- long-term perspective and ensure that ROE exceeds the cost of shareholders' equity. In 2025, we set a target of ROE of 7% or more upon comprehensively considering such factors as the sustainable, long-term growth of our business; necessary internal investments in our business foundation and human capital; securing liquidity on hand; and the level of shareholder returns.

We will continue our fiscal 2026 Growth Vision and shareholder return policy, aiming to attain the respective targets of management with consolidated sales of on a scale of ¥700 billion as well as a dividend payout ratio of 40% and a total payout ratio 50% to 60% on a total basis during the period of our Medium-term Management Plan (FY2023-FY2026: since announcing the capital policy).

Capital policy update (targets during the Medium-term Management Plan)

Here we feature examples of projects that leverage our integrated strengths from across a broad range of sectors.

Installation work on power distribution line of The Kansai Transmission and Distribution, Inc. (Hyogo)

Grand Green Osaka (Osaka)

Expo 2025 Osaka, Kansai, Japan infrastructure sharing work (Sharing Design Inc.) (Osaka)

Mitsui Outlet Park Marine Pia Kobe (Hyogo)

Sujakuno Line improvement work (two sections of conduit line) (Kyoto)

REVIEW OF OPERATIONS (NON-CONSOLIDATED)

The summary by operation is on a non-consolidated basis. Orders received in the fiscal year under review decreased from the previous fiscal year in the Information & Communications Network and the Environmental Management Facilities segments but increased from the previous fiscal year in the Power Distribution Lining, Electrical, and Electric Power & Others segments. Net sales of completed construction contracts decreased from the previous fiscal year in the Information & Communications Network segment, but increased in the Power Distribution Lining, Electrical, Environmental Management Facilities and Electric Power & Others segments. Looking ahead, construction demand is expected to remain solid for the foreseeable future, reflecting redevelopment projects in large cities and capital investments toward digitalization, next-generation technology, and decarbonization, among other factors, despite persistent concerns about the impact of rises in construction costs, including surges in materials and labor costs caused by rising prices, and U.S. reciprocal tariffs. In this environment, Kinden will contribute to society by meeting customer needs with advanced technologies and skills that provide security, safety and comfort.

Construction Orders Net Sales of Completed Construction

Electric Power & Others

4.1%

Information &

Contracts by Operation

Electric Power & Others

3.4%

Information &

Communications Network

7.1%

Environmental Management Facilities

8.0%

Power Distribution Lining

Power Distribution Lining

Orders received increased 7.4% year on year to ¥78,384 million, and net sales of completed construction contracts rose 4.3% year on year to ¥77,150 million. The increase in orders received and net sales of completed construction contracts is mainly attributable to a rise in the amount of construction work for Kansai Transmission and Distribution, Inc. The Power Distribution Lining segment has been one of the Group's stable business platforms, and electric power companies are expected to continue to systematically implement capital investment with the aim to strengthen their power transmission and distribution networks. Moreover, in other power distribution-related works not associated with Kansai Transmission and Distribution, Inc., we are striving to win orders for the removal of roadside utility poles and lay the lines, high-voltage bulk electric power receiving works for apartment buildings, high-voltage electric power receiving works for convenience stores, and electric vehicle quick charger works. In particular, the Group is focusing on strengthening its business in the Kanto area.

Orders and Sales

Millions of yen

23

Orders Sales

24

25

12.7%

Electrical 68.1%

Communications Network

7.5%

Environmental Management Facilities

8.3%

Power Distribution Lining

73,485

70,375

72,957

73,969

78,384

77,150

12.9%

Electrical 67.9%

Electrical

Orders received increased 14.3% year on year to ¥421,762 million, and net sales of completed construction contracts rose 8.5% year on year to ¥404,667 million. The main factors contributing to the increase in orders received included a rise in the number of educational and cultural facilities and factories. The increase in net sales of completed construction contracts is mainly because of an increase in the number of factories. We will continue to step up our marketing activities for data centers and logistics facilities, demand for which remains at high levels, large-scale buildings in the Tokyo Metropolitan Area where development has been underway, factories in which manufacturers are actively investing to strengthen growth areas, and other areas. In terms of overseas works, with long-term business development overseas continuing to be one of our business strategies, we will also make an effort to expand orders received by working closely with communities in countries where economic growth is expected in addition to focusing on Japanese-owned private factories and large-scale commercial facilities mainly in Asia.

Orders and Sales

Millions of yen

23

24

25

364,940

329,873

368,922

372,944

421,762

404,667

Orders Sales

Information & Communications Network

Orders received decreased 2.0% year on year to ¥43,810 million. Net sales of completed construction contracts declined 14.3% from the previous year to ¥44,594 million. The main factors for the decrease in orders received included a decrease in the amount of mobile phone-related work. The drop in net sales of completed construction contracts is mainly due to a decrease in the amount of mobile phone-related work and CATV equipment. Going forward, as mobile carriers are expected to limit capital investment in terms of mobile phone-related work, we will also focus on securing orders for other information infrastructure-related work which includes government and municipal projects, digital wireless activated disaster warning systems and security surveillance equipment as well as the installation of LANs and other local area network.

Orders and Sales

55,747

53,003

44,715

52,032

43,810

44,594

Millions of yen

23 24 25

Orders

Sales

Environmental Management Facilities

Orders received decreased 4.8% year on year to ¥49,618 million, and net sales of completed construction contracts increased 18.7% year on year to ¥49,186 million. The main factors contributing to the decrease in orders received included a decline in the number of office buildings. The increase in net sales of completed construction contracts is mainly attributable to a rise in the number of factories. Going forward, with the Greater Metropolitan Area and the Kansai area being our operational bases, we will focus efforts on securing orders related to data center projects in addition to our traditional focus on health and medical facilities, commercial and entertainment facilities, factories and logistics facilities. We will also attempt to expand orders through proactive proposals to customers related to energy-saving and business continuity planning (BCP) measures.

Orders and Sales

47,843

45,344

52,097

41,421

49,618

49,186

Millions of yen

23 24 25

Orders Sales

Electric Power & Others

16,304

Orders received increased 17.8% year on year to ¥25,585 million. Net sales of completed construction contracts increased 3.7% from the previous year to ¥20,319 million. The main factors for the increase in orders received included an increase in the amount of power stations and substations work, while the increase in net sales of completed construction contracts is attributable to a rise in the amount of overhead power line projects. Going forward, we will strive to secure orders for renewable energy related facilities work such as for wind power generation facilities as well as secure orders for construction work for improving safety such as to replace aging power lines and electrical transmission tower reconstruction. We also aim to receive orders for construction work on power storage stations, as demand is expected to increase.

Orders and Sales

25,636

21,723

19,586

25,585

20,319

Millions of yen

23 24 25

Orders Sales

Net Sales by Customer Net Sales by Region

(excluding sales of Power Distribution Lining)

Overseas 1.0%

Eastern Japan

48.1%

Western Japan 50.9%

nto 1%

Kin 40.

Kansai

Electric Power* 14.3%

Kansai Electric Power

Group Companies 2.7%

Ka ki

31. 0%

Other Customers

83.0%

* Includes Kansai Transmission and Distribution, Inc.

Net Sales by Facility (Electrical)

Interior Constructions Healthcare Facilities 2.5%

Residences

0.5%

Net Sales of Renewal Construction by Operation (excluding sales of Power Distribution Lining)

Electric Power & Others

4.1%

Others 4.9%

Educational and Cultural Facilities

6.2%

Logistics Facilities

7.3%

3.9%

Office Buildings 41.7%

Environmental Management

Facilities 5.0%

Information & Communications

Network 10.1%

Electrical

Commercial and Entertainment Facilities

9.6%

Factories 23.4%

80.8%

Contract Backlog by Operation

Information & Communications Network

3.4%

Electric Power & Others

8.2%

Power Distribution Lining 3.1%

Shareholding Ratio

Individuals/Others

16.3%

Environmental Management

10.7%

Electrical 74.6%

Overseas Corporations, etc.

26.0%

Kansai Electric Power and Kanden Realty & Development 36.9%

Corporations 57.7%

Formulating Our Corporate Slogan "Building Better Futures for All"

Toward spreading awareness and raising recognition of the Kinden brand

Kinden has formulated its corporate slogan/corporate statement Building Better Futures for All, with the aim of communicating the details of its businesses as well as its thinking and our appeal to all stakeholders.

The establishment of the corporate slogan/statement serves as one of our branding strategies to spread awareness and raise recognition of the Kinden brand, which we are implementing under the Medium-term Management Plan, "The Sustainable Growth 2026 - Human Resources, Heart, and Toward the Future."

The concept of our corporate slogan is that all Kinden's businesses are connected to making the future better for its stakeholders and through this concept we seek to have stakeholders recognize Kinden's purpose of existence for society and its future potential. Additionally, by including the word "Building" in the slogan, Kinden expresses its business domains and conveys a dynamic image.

Our corporate statement uses easy-to-understand wording that is closely related to people's daily lives to properly convey the intent of the corporate slogan and the

value and appeal of Kinden. It also incorporates the message that "people and hearts" are at the core of our management. Kinden will share the thoughts encapsulated in its corporate slogan/state-

ment with all members of the Group while undertaking a variety

of communication activities.

Logo mark and corporate slogan

Making KITA KOUDENSHA Corporation a Subsidiary

All shares transferred from Mitsubishi Electric Corporation

Kinden and Mitsubishi Electric Corporation reached an agreement for Mitsubishi Electric to transfer all of its shares in KITA KOUDENSHA, Co., Ltd. to Kinden. The share transfer was completed in April 2025.

Founded in 1951, KITA KOUDENSHA is an electrical equipment construction company in Hokkaido that engages in indoor wiring installation, electric power-related work, and the purchase and sale of industrial equipment. KITA KOUDENSHA has a proven track record of construction projects, a solid customer base, abundant technical personnel, and a robust construction system and has established a top-class position in Hokkaido.

To further expand its existing businesses, Kinden is working to enhance and broaden its business base by extending its business area to include the Tokyo metropolitan area, deepening ties with the local community, and strengthening collaboration among regions.

This recent share transfer is part of these efforts. In the Hokkaido area, strong demand for construction projects, including redevelopment, as well as the revitalization of renewable energy projects are expected to drive future robust market growth in the future.

By welcoming KITA KOUDENSHA into the Kinden Group, Kinden will mutually complement, share, and leverage the management resources of both companies as well as further strengthen its regional ties and enhance its business foundation in the Hokkaido region. This

will enable Kinden to increase the number of orders it receives in the Hokkaido area and establish a strong presence for the entire Group.

President Takao Uesaka (center) shaking hands

with KITA KOUDENSHA President Tomoaki Sato (left) and Director Naoki Mabuchi (right)

Kinden recognizes improving corporate governance as an important management issue for stronger, faster and more precise execution of operations, and to flexibly respond to changes in the business environment. We strive to further reinforce our corporate governance giving priority to improving the transparency of operations and observing absolute compliance.

The Company has adopted the Audit & Supervisory Board Member system. Based on the system shown below, the Company seeks to enhance its monitoring function

over management activities in cooperation with accounting auditors and the internal auditing department.

The Company has introduced a Management Execution Officer system to establish a system where the Board of Directors focuses on oversight, and the executive body concentrates on business execution. The goal is to clarify oversight and execution roles. The Company aims to enhance the supervisory function of the Board of Directors and to speed up the executive body's execution of business operations and strengthen its functions.

Overview of the Corporate Governance System

Corporate Governance Structure

Appointment/ Dismissal

Advisory

Reports

Cooperation/ Reports

Reports

Reports

Delegation of authority

Discussions/Reports

Supervision

Accounting Auditing

Business execution function

Proposal of matters for consideration

Reports

Management Meeting

(Representative Directors, etc.)

Appointment/ Dismissal

Cooperation/

Reports

Reports

Representative Directors

Cooperation/ Reports

Reports

Compliance Committee

Auditing

Superintendence Operations Office

Appointment/Dismissal

Departments, Branch Offices and Group Companies

Board Members Office

Audit & Supervisory

Internal auditing

Board of Directors (chaired by Chairman)

(10 Directors, including six Independent Outside Directors)

Discussions/Reports

Management Execution Meeting

(chaired by President)

Management Execution Officers

Appointment/Dismissal

Reports

Appointment/ Dismissal

Overview of Main Meetings and Committees

The Company has instituted a Compliance Committee to enhance compliance functions. It has also set up a Risk Management Committee in an effort to strengthen risk management functions.

The Audit & Supervisory Board supervises the business execution of the Board of Directors in accordance with policies set by the Audit & Supervisory Board comprising five Audit & Supervisory Board Members including three Outside Audit & Supervisory Board Members. It performs oversight by such means as attending the Board of Directors' meeting and other important meetings, viewing important decision-making documents, receiving business reports from the Board of Directors and examining the business operations of major business sites.

The full-time Audit & Supervisory Board Members report to the Outside Audit & Supervisory Board Members the results of important meetings they attended and their knowledge of circumstances obtained during audits in addition to holding regular meetings with the President and exchanging information with the Business Administration Monitoring Office and accounting auditor. Additionally, they mutually communicate and exchange information

with both directors and auditors of subsidiaries.

Of the five Audit & Supervisory Board Members, one Audit & Supervisory Board Member (full-time) previously served as the Company's Finance & Accounting Department manager and one independent Outside Audit & Supervisory Board Member is a certified tax accountant. Both persons have a high degree of knowledge and judgment regarding finance and accounting.

Internal audits are conducted by the Superintendence Operations Office, a section under the direct control of the President, and they include periodic audits of business operations to assess the status of development and operation of internal control systems (appropriateness and efficiency of work processes, etc.) and audits of specific items as specially instructed. The results are reported to President and Audit & Supervisory Board Members as well as the Board of Directors and the Audit & Supervisory Board.

With respect to Outside Directors Hanroku Toriyama, Keiji Takamatsu, Kazunobu Sagara, Haruko Kokue, Fumi Musashi and Miyuki Ishihara as well as Outside Audit & Supervisory Board Members Masami Yoshioka, Toshimitsu Kamakura and Isamu Osa, there are no personal relationships, capital relationships, business relationships or other

special interests between Kinden and these individuals or the organizations to which they belong. They have been appointed and reported as independent directors in accordance with criteria set forth by the financial instruments exchange, and there is no risk of conflicts of interest with general shareholders.

Reason for Appointment as Outside Directors and an Overview of the Expected Roles

Total amount of remuneration for each executive officer category, total amount of remuneration by remuneration type and number of applicable executive officers

Remuneration paid to PKF Hibiki Audit Corporation in the 111th fiscal term (the fiscal year ended March 31, 2025) for audit and attestation services totaled ¥53 million, and remuneration based on the non-audit services totaled ¥2 million. In addition, remuneration paid to the organization that belongs to the same network of PKF Hibiki Audit Corporation for audit and attestation services at a consolidated subsidiary totaled ¥1 million and remuneration based on the audit attestation services for consolidated subsidiaries totaled ¥3 million and the non-audit services totaled ¥1 million.

Five-Year Financial Summary

For the fiscal years ended March 31

Consolidated Non-Consolidated Millions of yen Millions of yen

*1 Lease assets are included in capital investment amounts.

*2 Number of employees (employees at work in Kinden) = Employees - Employees dispatched outside of Kinden + Workers dispatched by another company to Kinden

Total Net Assets

Net Assets per Common Share

Profit per Common Share

Billions of yen

Yen

Yen

455.0

493.2

471.4

511.8

489.8

532.7

520.7

574.0

533.4

599.7

2,220.21

2,400.90

2,300.32

2,493.25

2,393.25

2,598.73

2,586.84

2,848.11

2,684.14

3,014.06

150.22

156.46

126.00

128.65

135.03

140.15

146.74

165.34

211.88

236.26

21 22 23

24 25

21 22

23 24 25

21 22

23 24 25

Non-Consolidated Consolidated Non-Consolidated Consolidated Non-Consolidated Consolidated

Management's Discussion and Analysis

The Kinden Group recorded a ¥50,542 million, or 7.7%, increase in net sales of completed construction contracts from the previous fiscal year to ¥705,058 million (US$4,715,481 thousand). Reflecting abundant orders received in the previous year, the volume of construction work on hand at the beginning of the current fiscal year exceeded that of the previous fiscal year while orders for the current fiscal year trended firmly and construction work progressed smoothly. As a result, net sales of completed construction contracts increased at the Company and its domestic and overseas subsidiaries.

Gross profit on completed construction contracts increased

¥25,222, or 23.4%, from the previous fiscal year to ¥132,803 million (US$888,196 thousand), mainly due to an increase in completed construction contracts, improved profitability, and efforts to reduce costs.

Selling, general and administrative (SG&A) expenses increased

¥6,919 million, or 10.7%, from the previous fiscal year to ¥71,823 million (US$480,360 thousand). The increase is attributable to higher personnel expenses due to increases in base pay and higher expenses for DX-related information systems.

Operating profit increased ¥18,302 million, or 42.9%, to ¥60,979 million (US$407,835 thousand).

Ordinary profit increased ¥18,564 million, or 40.4%, to ¥64,546 million (US$431,691 thousand).

Profit attributable to owners of parent increased ¥13,697 million, or 40.8%, to ¥ 47,250 million (US$316,017 thousand).

Net sales of completed construction contracts and profits in each category increased from the previous fiscal year.

Assets

Current assets at March 31, 2025 amounted to ¥503,656 million, up

¥21,439 million, or 4.4%, from March 31, 2024.

Non-current assets decreased ¥15,633 million, or 4.7%, from the end of the previous fiscal year, to ¥318,037 million. The main factor was a decrease in investment securities due to the sale of stocks and the fall in stock prices.

As a result, total assets amounted to ¥821,693 million (US$5,495,544 thousand) at the end of the current fiscal year, up ¥5,806 million, or 0.7%, from the end of the previous fiscal year end.

Liabilities

Current liabilities decreased ¥2,892 million, or 1.4%, to ¥202,457 million from the end of the previous fiscal year.

Non-current liabilities decreased ¥16,985 million, or 46.6%, to

¥19,497 million from the end of the previous fiscal year end. This was mainly due to a decrease in retirement benefit liability.

Consequently, total liabilities came to ¥221,955 million (US$1,484,453 thousand), a decrease of ¥19,878 million, or 8.2%, from the end of the previous fiscal year.

Net Assets

Shareholders' equity rose ¥22,653 million, to ¥528,917 million, due to the posting of profit attributable to owners of parent and dividend of surplus and the purchase of treasury shares. Accumulated other comprehensive income increased ¥3,094 million to ¥70,126 million, chiefly due to a decrease in valuation difference on available-for-sale securities and an increase in remeasurements of defined benefit plans. In addition, non-controlling interests were ¥694 million.

As a result, total net assets amounted to ¥599,738 million (US$4,011,091 thousand), an increase of ¥25,685 million, or 4.5%, from the end of the previous fiscal year. The equity ratio stood at 72.9%, an increase of 2.6 percentage points from the end of the previous fiscal year.

Net cash provided by operating activities in the fiscal year under review amounted to ¥24,545 million (US$164,158 thousand), compared with

¥38,520 million in the previous fiscal year. This was due to profit before income taxes, despite income taxes paid.

Net cash provided by investing activities came to ¥3,605 million (US$24,113 thousand), compared with ¥22,179 million used in the previous fiscal year. Despite the purchase of property, plant and equipment (non-current assets), this was due to proceeds from sale and redemption of short-term and long-term investment securities.

Net cash used in financing activities was ¥24,976 million (US$167,045 thousand), compared with ¥15,978 million used in the previous fiscal year, mainly owing to the purchase of treasury shares and dividends paid. As a result, cash and cash equivalents stood at ¥184,662 million (US$1,235,034 thousand), an increase of ¥4,144 million from the end of the previous fiscal year, compared with an increase of ¥1,040 million

in the previous fiscal year.

Gross Profit on Completed Construction Contracts

71.8

Billions of yen

Selling, General and Administrative Expenses

60.0

61.5

64.9

Billions of yen

Operating Profit

60.9

Billions of yen

84.5

99.2

83.0

97.1

82.7

99.0

87.6

107.5

111.3

132.8

47.0

56.2

47.9

50.3

53.1

58.9

37.4

42.9

35.1

37.0

32.4

37.4

34.5

42.6

52.3

21 22 23

24 25

21 22 23

24 25

21 22

23 24 25

Non-Consolidated Consolidated Non-Consolidated Consolidated Non-Consolidated Consolidated

Among matters related to business conditions, accounting conditions, etc., the following are the main risks that management recognizes could have a significant impact on the financial condition, operating results and cash flow conditions of the consolidated company.

The Group has established a risk management system as described in State of Corporate Governance and is working to strengthen its risk management functions.

Those future issues mentioned in this document are those based on the judgment of the Group as of the end of the current consolidated fiscal year.

Economic Conditions

The demand for electrical facility installation work, which is the major source of the Kinden Group's earnings, is influenced by economic conditions in the regions and countries in which the Group receives orders. As written in "1. Management Policy, Business Environment and Issues to Address, etc.," the Group formulated the Medium-term Management Plan," The Sustainable Growth 2026 - Human Resources, Heart, and Toward the Future", positioned "human resources and heart," which are our assets, in the bedrock of our business management and is developing and strengthening operating bases with a focus on human resources to roll out our business strategy, environmental strategy, human resource and workstyle strategy and corporate strategy while also considering ESG issues and the SDGs.

1. Price-based competition for private-sector construction orders The most crucial factor in obtaining orders becomes pricing, which encourages intense price-based competition. If demand for construction declines or shrinks, price competition would become even more severe, and this may lead to a negative impact on the Group's results and financial position.

2. Restrained construction investment through national and local government policy

   Based on policies of the national government and local government bodies to restrain construction investment, public works orders have declined and the Kinden Group has felt the impact of these policies. If, in the future, policies are implemented that further restrain construction investment, resulting in a significant drop in orders compared with the current level, this may lead to a negative impact on the Group's results and financial position.

   Capital Investment

   Millions of yen

3. Changes in overseas economic conditions and regulatory environment

   The Kinden Group is active in overseas construction markets, particularly in infrastructure-related construction. If changes occur in the economic situation or regulatory environment of countries or regions in which the Group operates, this may lead to a negative impact on the Group's results and financial position.

4. Increased materials costs and outsourcing costs

   A sharp surge to higher levels than forecast in the price of raw materials as well as in outsourced labor unit costs may decrease the profitability of construction work, and could negatively affect the Group's results and financial position and may lead to a negative impact on the Group's results and financial position.

5. Restrained capital investment by Kansai Electric Power Group The Kinden Group receives orders and carries out power distribution lining, electric power and other work from Kansai Electric Power Group, Incorporated, a major customer. In the performance of this work, the Kinden Group faces a range of fixed costs, including labor costs and costs associated with vehicles, machinery, equipment and the maintenance of operations centers. If, in the future, capital investment by electric power companies becomes further restrained, resulting in a significant imbalance between the level of orders received and the operational infrastructure maintained by the Group, this may lead to a negative impact on the Group's results and financial position.

Exposure to Bad Debts Due to Customer Bankruptcies and Other Factors

The Kinden Group undertakes work based on contracts concluded with customers. Contracts are performed and payment is received according to contract conditions. The Group has strengthened its credit control systems in recent years; however, if a customer falls into bankruptcy, the Group would likely face exposure to bad debts. Depending on the size of the bad debts if a large amount of bad debts occur, this may lead to a negative impact on the Group's results and financial position.

Impact of Large-Scale Natural Disasters and the Outbreak of Infectious Diseases

If a large-scale natural disaster or an infectious disease pandemic occurs and Group facilities (buildings, cars, construction equipment, etc.) and employees suffer damages, or if the domestic economy is disrupted as a result of a natural disaster or outbreak of infectious diseases, this may lead to a negative impact on the Group's results and financial position.

Leakage of Confidential Information

The Kinden Group possesses confidential information such as customer information and personal information through its business activities. The Group appropriately manages each category of information in accordance with laws and regulations and is also building a system and raising employee awareness for assuring information security. However, any leak of confidential information due to cyberattacks from outside the Company and other factors may adversely affect the Group's business results and financial position due to a decline in social trust and compensation for damages.

4,417

5,935

21 22

29,480

25,953

10,176

23 24 25

Climate Change

Recognizing that responding to climate change and other environmental issues is one of its most important management issues, the Kinden Group expressed its support for the Task Force on Climate-related Financial Disclosures (TCFD) recommendations in May 2022. At the same time, the Kinden Group has identified risks related to climate change in its information disclosure based on the TCFD framework. However, in the event these risks materialize, this may lead to a negative impact on the Kinden Group's business results and financial position.

Consolidated

Consolidated Balance Sheets

KINDEN CORPORATION AND SUBSIDIARIES

March 31, 2024 and 2025

Millions of yen

Thousands of

U.S. dollars

See the accompanying notes to consolidated financial statements.

NET ASSETS:

SHAREHOLDERS' EQUITY:

Share capital

Authorized: 600,000,000 shares

Consolidated Statements of Income

KINDEN CORPORATION AND SUBSIDIARIES

For the fiscal years ended March 31, 2024 and 2025

Millions of yen

Thousands of

U.S. dollars

Yen U.S. dollars

2024 2025 2025

Amounts per common share:

Profit attributable to owners of parent ...................................................... ¥165.34 ¥236.26 $1.58 Cash dividends............................................................................................... 63.00 90.00 0.60

See the accompanying notes to consolidated financial statements.

See the accompanying notes to consolidated financial statements.

Consolidated Statements of Changes in Net Assets

KINDEN CORPORATION AND SUBSIDIARIES

For the fiscal years ended March 31, 2024 and 2025

Thousands Millions of yen

Valuation

Foreign

Remeasure-

difference

Deferred

currency

ments

Shares of on avaiable- gains or translation of defined Non-con-

common stock

Capital stock

Capital surplus

Retained earnings

Treasury stock

for-sale securities

losses on hedges

adjustment

benefit plans

trolling interests

Total net assets

Thousands Thousands of U.S. dollars

Valuation Foreign Remeasure-

difference

Deferred

currency

ments

Shares of on avaiable- gains or translation of defined Non-con-

common stock

Capital stock

Capital surplus

Retained earnings

Treasury stock

for-sale securities

losses on hedges

adjustment

benefit plans

trolling interests

Total net assets

Balance at April 1, 2024 202,641 $176,641 $195,047 $3,033,808 $(19,566) $382,186 $- $21,879 $44,245 $5,064 $3,839,306

Dividends of surplus .................. (111,410) (111,410)

Profit attributable to owners

See the accompanying notes to consolidated financial statements.

Consolidated Statements of Cash Flows

KINDEN CORPORATION AND SUBSIDIARIES

For the fiscal years ended March 31, 2024 and 2025

Millions of yen

Thousands of

U.S. dollars

2024 2025 2025

CASH FLOWS FROM OPERATING ACTIVITIES:

Notes to Consolidated Financial Statements

1. Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements have been prepared from the accounts and records maintained by KINDEN CORPORATION ("the Company") and its consolidated subsidiaries ("the Group"). The Company and its consolidated subsidiaries maintain their accounts and records in accordance with the provisions set forth in the Financial Instruments and Exchange Law of Japan and in conformity with principles and practices generally accepted in Japan, which are different in certain respects from the accounting and disclosure requirements of international accounting standards.

   The consolidated financial statements are prepared from the financial statements of the Company and its consolidated subsidiaries, which are filed with the Ministry of Finance as required by the Financial Instruments and Exchange Law of Japan.

   The amounts stated in the accompanying consolidated financial statements are in Japanese yen. U.S. dollar amounts included in the accompanying consolidated financial statements and the notes to consolidated financial statements represent the arithmetic result of translating Japanese yen to U.S. dollar amounts on a basis of

   ¥149.52 to US$1, the fixed-market rate on March 31, 2025. U.S. dollar amounts are rounded down to the nearest thousand dollars. Such U.S. dollar amounts are not intended to imply that Japanese yen amounts have been converted, realized or settled in U.S. dollars, at that or any other rate.

2. Basis of Consolidation and Accounting of Investments in Affiliated Companies

   1. Consolidated subsidiaries: 21

   2. The names of the principal consolidated subsidiaries are as reported in Network on p.54-55 of the Annual Report.

3. Major Affiliates Accounted for by the Equity Method

   1. Number of affiliate accounted for by the equity method: 1

   2. Name of affiliate accounted for by the equity method Kinka Corporation

   3. Names of affiliates not accounted for by the equity method Sanyu Co., Ltd. and three other companies

   The four non-equity method affiliates are excluded from the application of the equity method owing to their having no material effect on profit (proportionate to equity holdings) and retained earnings (proportionate to equity holdings) and due to their having little significance in relation to the Company's overall position.

4. Fiscal Year-End of Consolidated Subsidiaries

   Among the consolidated subsidiaries, the account closing date for US Kinden Corporation, Wasa Electrical Services, Inc., P.T. Kinden Indonesia, Kinden Phils Corporation, Kinden Vietnam Co., Ltd., Kinden (Thailand) Co., Ltd. and International Electro-Mechanical Services Co. (L.L.C.) is December 31. The financial statements as of the account closing date are used in the preparation of the consolidated financial statements. The necessary adjustments are made to the consolidated financial statements for significant transactions that occur during the period from January 1 to March 31.

   The fiscal year-end for consolidated subsidiaries other than those listed above is the same as the Company.

5. Summary of Significant Accounting Policies

1. Standards and Methods for Valuing Assets

   Securities

   1. Held-to-maturity debt securities

      Amortized cost method (Straight-line method)

   2. Available-for-sale securities

      Securities other than securities without quoted market values

      Market value method (Net unrealized gains and losses on available-for-sale securities are reported directly to net assets. The costs of these securities are calculated based on the moving-average cost method.)

      Securities without quoted market values

      Securities without quoted market values are stated on a cost basis using the moving-average method.

      Derivatives

      Market value method

      Inventories

      1. Costs on construction contracts in progress

         Costs on construction contracts in progress are stated at actual cost.

      2. Raw materials and supplies

      Raw materials and supplies are principally stated at the most moving-average method. (The balance sheet amounts are determined by writing down the book value based on the decrease in profitability.)

2. Method of Depreciation of Material Depreciable Assets

   1. Tangible fixed assets (Excluding leased assets)

      The Company and its domestic consolidated subsidiaries mainly compute depreciation of property, plant and equipment based on the declining-balance method, except that buildings and structures (excluding attached structures) acquired on or after April 1, 1998 and facilities attached to buildings and structures acquired on or after April 1, 2016 are depreciated by the straight-line method. The overseas consolidated subsidiaries mainly compute depreciation of property, plant and equipment using the straight-line method.

      Useful lives of principal assets are as follows: Buildings and structures 10 to 50 years Machinery and vehicles 3 to 22 years

   2. Intangible assets (Excluding leased assets)

      Straight-line method

      Amortization of internal-use software is calculated by the straight-line method over the useful life of the asset in the Company (five years).

   3. Leased assets

      Leased assets related to finance leases that do not transfer ownership are depreciated using the straight-line method, with zero residual values and useful lives equal to lease terms.

3. Accounting Basis for Allowances

   1. Allowance for doubtful accounts

      To make allowance for possible losses on receivables, including loans receivable and accounts receivable, the Company provided an amount to cover possible losses on collection. It consists of the estimated uncollectible amount calculated by applying the percentage of actual losses on collection to the remaining receivables experienced in the past and the identified doubtful receivables determined by management.

   2. Provision for loss on construction contracts

      To provide for future losses on construction orders, the Company makes allowance provisions for uncompleted construction contracts at year-end based on projected losses. The provision amount is determined by a rational estimate of the likely loss amount.

   3. Provision for warranties for completed construction

      To provide for possible future expenses for non-compliance with contracts for completed construction contracts, the Company makes allowance provisions for construction contracts completed during the fiscal year. The provision amount is determined based on estimates of claims on construction contracts for which the Company has liability for non-compliance with contracts.

   4. Provision for bonuses for directors (and other officers)

      To provide for the payment of bonuses for directors (and other officers), the Company makes allowance provisions for bonuses for directors (and other officers) based on the expected amount applicable to the fiscal year.

   5. Provision for retirement benefits for directors (and other officers)

      To provide for the payment of retirement benefits for directors (and other officers), some of the domestic consolidated subsidiaries record provisions for benefits for retired directors in an actual amount equal to the need at the end of the consolidated fiscal year under review calculated based on company regulations.

4. Retirement Benefits

   1. Method of attributing expected benefit to period

      To calculate retirement benefit obligation, the Company calculates the estimated amount of retirement benefits attributed to the consolidated fiscal year under review according to the benefit formula, while consolidated subsidiaries employ the straight-line attribution method.

   2. Amortization of actuarial differences and prior service cost Actuarial differences are amortized and allocated proportionately beginning with the year following the year in which the difference was incurred. Amortization is performed using the straight-line method over a set number of years (mainly 15 years), which falls within the average remaining years of service of the employees when the difference was incurred for each consolidated fiscal year.

      Prior service cost is amortized using the straight-line method over a set number of years (15 years) falling within the average remaining years of service when such liabilities are incurred.

   3. Accounting treatment of unrecognized actuarial gains and losses and unrecognized prior service costs

      Unrecognized actuarial gains or losses and unrecognized prior service costs, net of tax effects, are recorded in accumulated other comprehensive income (remeasurements of defined benefit plans) under net assets.

   4. Application of simplified methods for small companies Certain of the Company's consolidated subsidiaries apply the simplified method to calculate retirement benefit obligations and retirement benefit costs, stating retirement benefit obligations at the necessary payment amounts for voluntary retirement as of the end of the fiscal year.

5. Recognition of Revenues and Costs of Construction Contracts

   The Kinden Group engages in electrical systems work (distribution work, general electrical work for buildings and plants, power transmission line work, power generation and transformer station work, etc.), information-communication work (telecommunications work, instrumentation work, etc.), and environment-related work (air conditioning pipes). interior systems work as well as civil engineering and other ancillary businesses.

   As the main content of its performance obligations, the Kinden Group has obligations to construct and deliver the abovementioned ordered works received through contracts with customers.

   Regarding performance obligations that are satisfied over a certain period of time, if the progress of the performance obligation can be reasonably estimated, the revenue is recognized over a certain period based on the progress (progress is estimated using the input method based on incurred costs). When progress cannot be reasonably estimated, but the costs incurred in fulfilling the performance obligation are expected to be recovered, the cost recovery standard is applied until the progress of fulfillment of performance obligations can be reasonably estimated.

   Additionally, construction contracts for which there is a very short period from the transaction start date in the contract to the time when the performance obligation is expected to be fully satisfied recognize the revenue at the time the performance obligation is fully satisfied.

6. Accounting for Hedging

   1. Method for hedge accounting

      Hedging activities are principally accounted for under the deferral hedge accounting method. If the criteria for appropriation are met, gains and losses on foreign exchange forward contracts are appropriated, and if the criteria for special cases are met, gains and losses on interest rate swaps are accounted for in a non-standard way.

   2. Hedging instruments and hedged items

      Hedging instruments

      Foreign exchange forward contracts and interest rate swaps are used.

      Hedged items

      Loans, transactions expected to be denominated in foreign currencies, and accounts payable denominated in foreign currencies related to the importation of raw materials.

   3. Hedging policy

      Based on internal regulations that stipulate items such as the authority for derivative trading and the scope of transactions, exchange-rate risks and interest-rate risks related to the hedged items are hedged to a certain degree.

   4. Method for evaluating the effectiveness of hedges

      A comparison of the accumulative changes in cash flows of the hedged items or the changes in exchange rates and the accumulative changes in cash flows of the hedging instruments or the changes in exchange rates are made every six months, and the effectiveness of hedges is evaluated based on the factors such as the amount of changes.

      The evaluation of the effectiveness of the interest rate swaps accounted for using the non-standard method has been omitted.

7. Amortization of Goodwill

   Goodwill is amortized on a straight-line basis over the period of benefit up to 20 years. However, when the amount is immaterial, it is written off as an expense in the accounting period in which it was incurred.

8. Scope of Cash on Consolidated Statements of Cash Flows

Cash and cash equivalents in the statements of cash flows consist of vault cash, deposits that can be withdrawn on demand, and short-term investments generally with maturities of 3 months or less, that are readily convertible to known amounts of cash and present insignificant risk of change in value.

SIGNIFICANT ACCOUNTING ESTIMATES

1. Net sales of completed construction contracts using

   a method that recognizes revenue over a certain time period

   1. Amount recorded on the consolidated financial statements for the current consolidated fiscal year

      	For the fiscal year ended March 31, 2024	For the fiscal year ended March 31, 2025
      Net sales of completed construction contracts based on a method that recognizes revenue over a certain period of time	¥410,045 million	¥457,608 million $3,060,519 thousand

   2. Information concerning details of significant accounting estimates for recognized items

      As listed in 5. Summary of Significant Accounting Policies (5) Recognition of Revenues and Costs of Construction Contracts, if the progress of the performance obligation can be reasonably estimated for the performance obligation that is satisfied over a certain period of time, the Kinden Group applies a method that recognizes revenue over a certain period of time based on the progress of the said obligation (progress is estimated using the input method based on the costs incurred). In applying this method of recognizing revenue over a certain period of time, total construction revenue, total construction costs, and progress of the work on the settlement date are reasonably estimated and the sales of completed construction contracts are calculated accordingly. The Group is continuously reviewing these estimates as work progresses. However, these are

      accompanied by constant uncertainties and therefore these could have a significant impact on the amount recognized in the consolidated financial statements for the following consolidated fiscal year and thereafter.

2. Recording of provision for loss on construction contracts

   1. Amount recorded in the consolidated financial statements for the current consolidated fiscal year

      	For the fiscal year ended March 31, 2024	For the fiscal year ended March 31, 2025
      Provision for loss on construction contracts	¥6,396 million	¥7,281 million $48,697 thousand

   2. Information concerning details of significant accounting estimates for recognized items

      As listed in 5. Summary of Significant Accounting Policies (3) Accounting Basis for Allowances, to prepare for future losses on construction orders, the Group estimates the expected amount of loss and records the Provision for loss on construction contracts based on this for work on hand at the end of the current consolidated fiscal year that is expected to incur losses and for which the amount can be reasonably estimated. The Group continually reviews estimates and the underlying assumptions such as the construction material costs and outsourcing expenses. However, these are accompanied by constant uncertainties and therefore in the event the actual loss amount differs from the estimates, this could have a significant impact on the amount recognized in the consolidated financial statements for the following consolidated fiscal year and thereafter.

3. Valuation of Goodwill and Customer-related Assets

   1. Amounts recorded in the consolidated financial statements for the current consolidated fiscal year

      	For the fiscal year ended March 31, 2024	For the fiscal year ended March 31, 2025
      Goodwill	¥2,175 million	¥1,875 million $12,544 thousand
      Customer-related Assets	¥1,556 million	¥1,341 million $8,974 thousand

   2. Information concerning details of significant accounting estimates for recognized items

      The Kinden Group records goodwill and customer-related assets of the business combination that resulted from the acquisition. The said assets are generated from the excess earnings power that is expected from future business development. At the end of the current consolidated fiscal year, we decide whether it is necessary to record an impairment loss after confirming the presence or absence of signs of impairment, mainly based on assumptions about future cash flows and discount rates in accordance with the business plan.

      This assumption is accompanied by certain uncertainties. Should it become necessary to revise this assumption, this could have a significant impact on the consolidated financial statements from the following consolidated fiscal year.

4. Retirement benefit obligations

   1. Amount recorded on the consolidated financial statements for the current consolidated fiscal year

      	For the fiscal year ended March 31, 2024	For the fiscal year ended March 31, 2025
      Retirement benefit liability	¥21,661 million	¥4,593 million $30,721 thousand
      Retirement benefit asset	¥14,571 million	¥24,967 million $166,982 thousand

   2. Information concerning details of significant accounting estimates for recognized items

As listed in 5. Summary of Significant Accounting Policies (4) Retirement Benefits, to allocate for employee retirement benefits, retirement benefit liabilities and retirement benefit assets are recorded based on various actuarial assumptions. These assumptions include discount rates, long-term expected rates of return on pension assets, retirement rates, mortality rates, and the Group has determined that the actuarial assumptions used are reasonable. However, in the event it becomes necessary to revise these assumptions due to uncertain future changes in economic conditions, this could have a significant impact on the amount recognized in the consolidated financial statements for the following consolidated fiscal year and thereafter.

CHANGE IN ACCOUNTING POLICY

Application of the "Accounting Standard for Current Income Taxes," Etc. The Group has applied the "Accounting Standard for Current Income Taxes" (Accounting Standards Board of Japan (ASBJ) Statement No. 27, October 28, 2022; the "Revised Accounting Standard of

2022"), etc. from the beginning of the fiscal year under review.

Revisions to categories for recording current income taxes (taxation on other comprehensive income) conform to the transitional treatment in the proviso of paragraph 20-3 of the Revised Accounting Standard of 2022 and to the transitional treatment in the proviso of paragraph 65-2(2) of the "Guidance on Accounting Standard for Tax Effect Accounting" (ASBJ Guidance No. 28, October 28, 2022; the "Revised Guidance of 2022"). This change in accounting policy has no impact on the consolidated financial statements.

In addition, for changes related to the revised treatment in consolidated financial statements when a gain or loss on sale arising from the sale of shares of subsidiaries, etc. among consolidated companies is deferred for tax purposes, the Revised Guidance of 2022 has been applied from the beginning of the fiscal year under review. This change in accounting policy has been applied retrospectively, and is reflected in the consolidated financial statements for the previous fiscal year. There are no related items accompanying this change in accounting policies, and there is no impact on the consolidated financial statements for the previous fiscal year.

ACCOUNTING STANDARDS NOT YET ADOPTED

"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), etc.

1. Summary

   As part of efforts to make Japanese GAAP standards consistent with international standards, the Accounting Standards Board of Japan

   (ASBJ) considered international accounting standards to develop accounting standards for leases that recognize assets and liabilities for all leases of lessees. The basic policy is to use the single accounting model of IFRS 16 as a basis, but adopting only the main provisions of IFRS 16 rather than all provisions. This will result in simple and convenient lease accounting standards that basically do not require any revisions when the provisions of IFRS 16 are used in non-consolidated financial statements.

   As for the accounting treatment of lessees, the single accounting model will be applied to the method of allocating lease expenses to lessees in the same way as IFRS 16 in which depreciation expenses for right-of-use assets and an amount equivalent to interest expenses on lease liabilities are recorded for all leases regardless of whether the lease is a finance lease or an operating lease.

2. Scheduled date of application

   Shall be applied from the beginning of the fiscal year ending March 31, 2028.

3. Impact of application of relevant accounting standards, etc. We are currently evaluating the impact of the application of the Accounting Standard for Leases on the consolidated financial statements.

CHANGE OF THE PRESENTATION METHOD

(Consolidated statements of income)

"Foreign exchange gains" under "Non-operating income," which was presented as a separate item in the previous consolidated fiscal year, was ¥0 in the consolidated fiscal year under review and is included in "Other" under "Non-operating income" for the current consolidated fiscal year. To reflect this change in presentation, the consolidated financial statements for the previous consolidated fiscal year have been reclassified.

As a result, in the consolidated statements of income for the previous consolidated fiscal year, "Foreign exchange gains" of ¥666 million and "Other" of ¥779 million under "Non-operating income" are reclassified as "Other" of ¥1,446 million under "Non-operating income".

"Gain on sales of non-current assets," which was included in "Other" under "Extraordinary income" in the previous consolidated fiscal year, is presented as a separate item in the consolidated fiscal year under review because this exceeded 10% of "Extraordinary income." To reflect these changes in presentation, the Consolidated Statements of Income for the previous consolidated fiscal year have been reclassified.

As a result, "Other" of ¥154 million presented under "Extraordinary income" in the Consolidated Statements of Income for the previous consolidated fiscal year are reclassified as "Gain on sales of non-cur-rent assets" of ¥136 million and "Other" of ¥17 million under "Extraordinary income."

"Impairment losses," which was included in "Other" under "Extraordinary losses" in the previous consolidated fiscal year, is presented as a separate item in the consolidated fiscal year under review because this exceeded 10% of "Extraordinary losses." To reflect these changes in presentation, the Consolidated Statements of Income for the previous consolidated fiscal year have been reclassified.

As a result, "Other" of ¥72 million presented under "Extraordinary losses" in the Consolidated Statements of Income for the previous consolidated fiscal year is reclassified as "Impairment losses" of ¥2 million and "Other" of ¥70 million under "Extraordinary losses."

NOTES TO CONSOLIDATED BALANCE SHEETS

1. Among notes receivable, accounts receivable from completed construction contracts and other, the amounts of receivables and contract assets arising from contracts with customers are as follows:

   March 31

   Thousands of

   Millions of yen U.S. dollars

   6. Commitment line contracts

   The Company has concluded commitment line contracts with two banks to procure working capital in a stable and efficient manner. The unexecuted loan balance concerning the commitment line contracts at the end of the consolidated fiscal year based on these contracts is as follows:

   March 31

   Thousands of

   2024 2025 2025

   Millions of yen

   U.S. dollars

   Notes receivable..........................	¥ 29,465 ¥ 23,313	$155,919		2024	2025		2025
   Accounts receivable from completed construction contracts ..	139,380 127,514	852,826	Total amount of commitment line contracts...................................	¥35,500	¥21,000		$140,449
   Contract assets ...........................	82,892 105,664	706,692	Executed loan balance ................	7,500	4,500		30,096
   			Differential amount.....................	28,000	16,500		110,353

2. Among advances received on construction contracts in progress, the amount of contract liabilities is as follows:

   March 31

   Thousands of

   Millions of yen U.S. dollars

   2024 2025 2025

   Contract liabilities ....................... ¥25,948 ¥37,324 $249,630

3. The amounts of investment securities for non-consolidated subsidiaries and associates are as follows:

   7. Costs on construction contracts in progress and provision for loss on construction contracts for which losses are expected are presented as is and are not offset.

   The amount of costs on construction contracts in progress corresponding to provision for loss on construction contracts on construction contracts

   March 31

   Thousands of

   March 31

   Millions of yen

   U.S. dollars

   Millions of yen

   Thousands of

   U.S. dollars

   2024 2025 2025

   ¥63 ¥236 $1,583

   2024 2025 2025

   Investment securities-equity ........ ¥2,512 ¥2,542 $17,005

4. Assets pledged as collateral

   The assets below are pledged as collateral for the loans of Kinden's investment company, which operates the PFI business.

   March 31

   Thousands of

   NOTES TO CONSOLIDATED STATEMENTS OF INCOME

   1. Revenue generated from contracts with customers

      Revenue generated from contracts with customers and other revenue are not classified separately for the amount of net sales of completed construction contracts. The amount of revenue generated from con-

      Millions of yen

      U.S. dollars

      tracts with customers is described "Notes (Revenue Recognition) 1.

      2024 2025 2025

      Investment securities-equity ........ ¥11 ¥11 $73

      Investments and other assets-

      long-term loans receivable .......... 4 3 26

5. Reduction entry

The reduction entry amounts deducted from the acquisition cost of property, plant and equipment due to state subsidies are as follows:

Information that breaks down the revenue generated from contracts with customers" in the consolidated financial statements.

1. The fiscal year-end balance of inventories is the written down book value based on decline in profitability, and the following loss (gain) on valuation of inventories is included in cost of sales of completed construction contracts.

   For the fiscal years ended March 31

   March 31

   Millions of yen

   Thousands of

   U.S. dollars

   Millions of yen

   Thousands of

   U.S. dollars

   2024 2025 2025

   Buildings and structures,

   2024 2025 2025

   ¥1 ¥29 $199

   machinery and vehicles ............. ¥5,151 ¥5,151 $34,451

2. Provision for loss on construction contracts included in cost of sales of completed construction contracts is as follows:

   For the fiscal years ended March 31

   Millions of yen

   Thousands of

   U.S. dollars

   2024	2025		2025
   ¥5,172	¥961		$6,430

3. The principal expenses and amounts in selling, general and administrative expenses are as follows:

   For the fiscal years ended March 31

   Thousands of

   9. The breakdown of loss on sales of non-current assets included in other (extraordinary losses) is as follows:

   For the fiscal years ended March 31

   Thousands of

   Millions of yen

   U.S. dollars

   Millions of yen

   U.S. dollars

   	2024 2025		2025			2024 2025		2025
   Employees' salaries .....................	¥29,736 ¥33,558		$224,439		Buildings and structures ..............	¥ 6 ¥0		$ 1
   Retirement benefit expenses .......	1,515	1,075	7,196	Machinery and vehicles ...............		0	0	0
   Provision of allowance for				Tools, furniture and fixtures.........		6	1	9

   doubtful accounts ..................... 312 18 122

4. Research and development expenses

   The total amount of research and development expenses included in selling, general and administrative expenses is as follows:

   For the fiscal years ended March 31

   Thousands of

   Land ........................................... 9 - -

   Total ........................................... ¥22 ¥1 $10

   10. Impairment losses

   For the fiscal years ended March 31, 2024 and 2025, the Group recorded the following impairment losses for asset groups.

   Millions of yen

   U.S. dollars

   For the fiscal year ended March 31, 2024

   2024	2025		2025
   ¥649	¥705		$4,720

   Application Location Type Millions of yen

5. The breakdown of gain on sales of noncurrent assets is as follows:

   Idle assets

   Kinki region: 2 properties Other: 1 property

   Land ¥1

   Land 0

   For the fiscal years ended March 31

   Millions of yen

   Thousands of

   U.S. dollars

   The Group determines operating asset impairment losses for individual branches and subsidiaries based on management accounting categories. Impairment losses for idle assets are determined for individual

   2024 2025 2025

   Buildings and structures .............. ¥ 76 ¥ - $ -

   Machinery and vehicles ............... 14 29 194

   Tools, furniture and fixtures......... 7 0 0

   Land ........................................... 37 467 3,123

   Total ........................................... ¥136 ¥496 $3,318

6. The principal breakdown of other in extraordinary income are

   asset groups.

   Idle asset book values were written down to recoverable values in light of ongoing land price declines. Impairment losses were recorded in Extraordinary losses.

   The recoverable amounts of said assets, all of which are determined by net selling price, are mainly calculated by performing reasonable adjustments to appraised values based on real estate appraisal standards.

   For the fiscal year ended March 31, 2025

   as follows:

   For the fiscal years ended March 31

   Thousands of

   Millions of yen

   Application Location Type

   Kinki region: 3

   Millions of yen

   Thousands of

   U.S. dollars

   	2024	2025	2025
   Gain on sale of memberships ......	¥15	¥8	$56

   U.S. dollars

   Idle assets properties Land

   Other: 3 properties Land

   ¥302

   3

   $2,023

   21

7. The principal breakdown of other in extraordinary losses are as follows:

For the fiscal years ended March 31

Thousands of

Millions of yen U.S. dollars

The Group determines operating asset impairment losses for individual branches and subsidiaries based on management accounting categories. Impairment losses for idle assets are determined for individual asset groups.

Idle asset book values were written down to recoverable values in light of ongoing land price declines. Impairment losses were recorded in Extraordinary losses.

The recoverable amounts of said assets, all of which are determined by net selling price, are mainly calculated by performing reasonable adjustments to appraised values based on real estate appraisal standards.

NOTES TO CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Reclassification Adjustments and Tax Effects Relating to Other Comprehensive Income

For the fiscal years ended March 31

Thousands of

NOTES TO CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

For the fiscal year ended March 31, 2024

1. Matters related to class and number of issued shares and class and number of treasury shares

   Millions of yen U.S. dollars

   Valuation difference on available-for-sale securities

   Amount recorded during

   2024 2025 2025

   the period.............................. ¥28,137 ¥(5,221) $(34,923)

   Reclassification adjustments..... (3,300) (2,157) (14,429)

   Amount before tax effect

   adjustments........................ 24,836 (7,379) (49,352)

   Tax effect.............................. (7,518) 1,585 10,603

   Valuation difference on available-for-sale securities..	17,317	(5,793)		(38,748)
   Deferred gains or losses on hedges
   Amount recorded during the period....................................	12	-		-
   Reclassification adjustments.....	-	-		-
   Amount before tax effect
   adjustments........................	12	- -
   Tax effect..............................	(3)	- -
   Deferred gains or losses on hedges ...............................	8	-		-
   Foreign currency translation adjustment
   Amount recorded during the period..............................	1,158	2,184		14,608
   Reclassification adjustments.....	-	-		-
   Foreign currency translation adjustment .........................	1,158	2,184		14,608

   the period..............................	7,210	10,829		72,429
   Reclassification adjustments.....	198	(903)		(6,039)
   Amount before tax effect adjustments........................	7,408	9,926		66,389
   Tax effect..............................	(2,261)	(3,150)		(21,070)
   Remeasurements of defined benefit plans, net of tax......	5,147	6,776		45,319
   Total other comprehensive income ...............................	¥23,632	¥ 3,166		$ 21,179

   Remeasurements of defined benefit plans, net of tax Amount recorded during

   (Note) A decrease of 2,500 thousand shares in the number of common stocks issued is due to the cancellation of treasury shares based on a resolution by the Board of Directors. An increase of 3,405 thousand shares in the number of common stock treasury shares resulted from the purchases of 3,404 thousand shares of common treasury shares based on a resolution by the Board of Directors and the purchases of 1 thousand shares constituting shares less than one trading unit. A decrease of 2,520 thousand shares in the number of common stock treasury shares is due to a decrease of 2,500 thousand shares due to the cancellation of treasury shares based on a resolution by the Board of Directors and a decrease of 20 thousand shares due to the disposal of treasury shares under the restricted stock compensation plan.

2. Matters related to dividends

1. Dividend payment

   Resolution	Class of shares	Total dividends	Dividends per share	Record date	Effective date
   General Meeting of Shareholders on June 27, 2023	Common stock	¥4,400 million	¥21.5	March 31, 2023	June 28, 2023
   General Meeting of Shareholders on October 30, 2023	Common stock	¥4,058 million	¥20.0	September 30, 2023	November 27, 2023

2. Dividends with a date of record during the fiscal year ended March 31, 2024 and an effective date during the next fiscal year