Meidensha : Financials Report 2025

For the year ended March 31, 2025

Contents

Financial Highlights 2

CONSOLIDATED BALANCE SHEETS 3

CONSOLIDATED STATEMENTS OF INCOME / CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 5

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS 6

CONSOLIDATED STATEMENTS OF CASH FLOWS 7

Notes to Consolidated Financial Statements 8

Independent Auditor's Report 36

Forward-Looking Statements

This financial report contains forward-looking statements regarding the future results and performance of the Meiden Group. Such statements are based on information available at the time of preparation of this report, and include various potential risks and uncertainties. As a result, actual results could differ materially from those anticipated by these forward-looking statements.

Financial Highlights

Meidensha Corporation and Consolidated Subsidiaries Years ended March 31

Millions of Yen (except per share data)

Thousands of U.S. Dollars (except per share data)

Notes: 1. The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the prevailing exchange rate on March 31, 2025, which was ¥150 to U.S $1.

1. Figures for employee numbers exclude those employees on temporary contracts.

2. The amount of cash dividends per share for March 31. 2025 is ¥123, which is the total of the interim dividends of ¥35 and the year-end dividends of ¥88.

In the year ended March 31, 2025, although the Japanese economy continued to recover gradually due to improvements in the employment and income environment and strong inbound demand, the outlook remains uncertain due to factors such as the impact of US tariff policy and soaring raw material and energy prices against the backdrop of the weak yen. In markets related to the Company, demand for equipment upgrades is expanding in the domestic electric power market, and demand for products not using SF6 gas is increasing, mainly in developed countries overseas, and these have had a positive impact on the Company's business. Furthermore, while the semiconductor market showed signs of a gradual recovery in supply and demand, the momentum of the shift to EVs in the automotive industry weakened, which had no small impact on the performance of the Company's EV business.

Amid such conditions, during the fiscal year under review, which is the final year of Medium-Term Management Plan 2024, we have been working to achieve our targets by actively capturing market demand, focusing on businesses and products contributing to the environment, and strengthening the earnings base in overseas business. At the same time, we have promoted the implementation of various sustainability management measures, such as green strategies and human capital, and have worked to strengthen our value creation foundations.

As a result, consolidated net sales in the consolidated fiscal year ended March 31, 2025, increased by 4.6% from the previous consolidated fiscal year to ¥301,102 million, operating income increased by 69.0% to ¥21,513 million, and net income attributable to owners of the parent increased by 65.0% to ¥18,487 million.

Net sales

( Millions of yen )

Net income attributable to owners of the parent

( Millions of yen )

Total assets

( Millions of yen )

350,000

300,000

250,000

200,000

150,000

100,000

231,254

255,047

272,579

287,880 301,102

20,000

15,000

10,000

5,000

7,304 6,734

7,129

11,206

18,487

350,000

300,000

250,000

200,000

150,000

100,000

279,059

307,391

290,899

334,788 341,347

50,000 50,000

0

2021 2022 2023 2024 2025

0

2021 2022

2023

2024 2025

0

2021 2022 2023

2024 2025

CONSOLIDATED BALANCE SHEETS

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (as of March 31, 2025 and 2024)

Millions of yen

Thousands of

U.S. dollars (Note1)

See accompanying notes to consolidated financial statements.

CONSOLIDATED BALANCE SHEETS

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (as of March 31, 2025 and 2024)

Millions of yen

Thousands of

U.S. dollars (Note1)

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF INCOME

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2025, 2024 and 2023)

Thousands of

Millions of yen U.S. dollars (Note1)

Yen U.S.dollars(Note1)

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2025, 2024 and 2023)

Thousands of

U.S. dollars

Millions of yen (Note1)

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2025, 2024 and 2023)

Unrealized gains Unrealized gains

Foreign

Remeasure-

Millions of yen

Treasury

(losses) on

(losses) on hedging

currency

ments of defined

Non-

Number of

Common

Capital

Retained

stock, at

securities, net of derivatives, net of

translation benefit plans, net controlling

parent due to transactions with

parent due to transactions with

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES(Years ended March 31, 2025, 2024 and 2023)

Millions of yen

Thousands of U.S.dollars (Note1)

See accompanying notes to consolidated financial statements.

1. Basis of Presenting Consolidated Financial Statements

   The accompanying consolidated financial statements of MEIDENSHA CORPORATION ("the Company") and its consolidated subsidiaries (collectively, "the Group") have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.

   The Company applied The Practical Issues Task Force No. 18 "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements" ("PITF No. 18"), issued by the Accounting Standards Board of Japan ("ASBJ")).PITF No. 18 requires that accounting policies and procedures applied by a parent company and its subsidiaries to similar transactions and events under similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements. The accounts of consolidated overseas subsidiaries are prepared in accordance with either International Financial Reporting Standards or U.S. generally accepted accounting principles with necessary adjustments upon consolidation.

   The accompanying consolidated financial statements have been reformatted and translated into English (with some expanded descriptions) from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese language consolidated financial statements is not presented in the accompanying consolidated financial statements.

   The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate on March 31, 2025, which was ¥150 to U.S. $1. The convenience translations should not be construed as representations of what the Japanese yen amounts have been, could have been, or could be in the future when converted into U.S. dollars at this or any other rate of exchange.

2. Summary of Significant Accounting Policies
   1. Principles of Consolidation

      The accompanying consolidated financial statements include the accounts of the Company and its 40, 39 and 40 consolidated subsidiaries in the fiscal years ended March 31, 2025, 2024 and 2023, respectively.

      Principles of Consolidation for the fiscal years ended March 31, 2025, 2024 and 2023 were as follows: (2025)

      KESENNUMA KANKYOKANRI CORPORATION was included in the scope of consolidation due to the acquisition of its

      shares.

      (2024)

      MEIDEN SHOJI Co.,Ltd. was previously accounted for as consolidated subsidiaries which was dissolved in an absorption-

      type merger with the Company, and hence, excluded from the scope of consolidation.

      (2023)

      MEIDEN O&M CORPORATION was previously accounted for as consolidated subsidiaries which was dissolved in an

      absorption-type merger with the Company, and hence, excluded from the scope of consolidation.

      MEIDEN ELECTRIC (THAILAND) LTD. was liquidated and excluded from the scope of consolidation.

   2. Equity Method

      Investments in affiliated companies (all 20% to 50% owned) are accounted for by the equity method for the fiscal years ended March 31, 2025, 2024 and 2023.

      The equity method was not applicable for the fiscal years ended March 31, 2025, 2024 and 2023, respectively.

      Investments in 4, 4 and 4 unconsolidated subsidiaries and 3, 3 and 3 other affiliated companies, that would not have material effect on the consolidated financial statements, were stated at cost in the fiscal years ended March 31, 2025, 2024 and 2023, respectively.

   3. Securities

      Securities are classified based on the intent of holding as (a) securities held for trading purposes (hereafter, "trading securities"),

      (b) debt securities intended to be held to maturity (hereafter, "held-to-maturity debt securities"), (c) equity securities issued by unconsolidated subsidiaries and affiliated companies, and (d) all other securities that are not classified in any of the above categories (hereafter, "available-for-sale securities").

      The Group does not hold trading securities and held-to-maturity debt securities. Equity securities issued by subsidiaries and affiliated companies which are not consolidated or accounted for using the equity method are stated at the moving-average cost. Available-for-sale securities with no available fair market values are stated at the moving-average cost.

      If the market value of equity securities issued by unconsolidated subsidiaries and affiliated companies and available-for-sale securities declines significantly, such securities are stated at fair market value and the difference between fair market value and the carrying amount is recognized as loss in the period of the decline unless the declines are considered temporary. If the fair market value of equity securities issued by unconsolidated subsidiaries and affiliated companies not accounted for by the equity method and available-for-sale is not readily available, such securities should be written down to net asset value with a corresponding charge in the consolidated statements of income in the event net asset value declines significantly unless the decline is considered as recoverable.

      Available-for-sale securities with available fair market values are stated at fair market value. Unrealized gains and unrealized losses on these securities are reported, net of applicable income taxes, as a separate component of net assets. Realized gains and losses on sale of such securities are computed using the moving-average cost.

   4. Derivatives and Hedge Accounting

      Derivative financial instruments are stated at fair value, and the Group recognizes changes in the fair value as gains or losses unless derivative financial instruments are used for hedging purposes.

      If derivative financial instruments are used as hedging instruments and meet certain hedging criteria, the Group defers recognition of gains or losses resulting from changes in fair value of derivative financial instruments until the corresponding losses or gains on the hedged items are recognized.

      However, in cases where forward foreign exchange contracts are used as hedging instruments and meet certain hedging criteria, forward foreign exchange contracts and hedged items are accounted for in the following manner:

      1. If a forward foreign exchange contract is executed to hedge an existing foreign currency receivable or payable,

         1. the difference, if any, between the Japanese yen amount of the hedged foreign currency receivable or payable translated using the spot rate at the inception date of the contract and the book value of the receivable or payable is recognized in the statements of income in the period which includes the inception date, and

         2. The discount or premium on the contract (that is, the difference between the Japanese yen amount of the contract translated using the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recognized over the term of the contract.

      2. If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, the future transaction will be recorded using the contracted forward rate when the future transaction occurs, and no gains or losses on the forward foreign exchange contract are separately recognized. ("Allocation treatment")

      Also, if interest rate swap contracts are used as hedging instruments and meet certain hedging criteria, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract is executed. ("Special treatment")

   5. Inventories

      Inventories of the Group are stated at cost determined principally by the weighted-average method as to materials and supplies, and the specific identification method as to finished products and work-in-process. The carrying amounts stated on the balance sheet are calculated after devaluation reflecting reduced profitability.

   6. Property, Plant and Equipment and Depreciation

      The Group computes depreciation of the assets principally by the declining-balance method at rates based on the useful lives and residual values determined in accordance with the Corporation Tax Law of Japan. However, the Group computes depreciation by the straight-line method for buildings (excluding facilities attached to buildings), which were acquired on or after April 1, 1998, facilities attached to buildings, and structures and machinery of the Company's Real Estate Division (Osaki, Shinagawa Ward, Tokyo), and facilities attached to buildings and structures which were acquired on or after April 1, 2016.

      The estimated useful lives primarily range from 2 to 60 years for buildings and structures and from 2 to 13 years for machinery and equipment.

   7. Intangible Assets

      Amortization of the software for internal use is computed by the straight-line method over the estimated useful lives (3 to 5 years).

      And, other intangible assets (except for software for internal use) are computed by the straight-line method.

      Amortization of the customer relation is computed by the straight-line method based on effected period (mainly 12 years).

   8. Goodwill

      Goodwill is amortized using the straight-line method over mainly 10 years of effective period.

   9. Lease

      Property, plant and equipment capitalized under finance lease arrangements are depreciated over the lease term of the respective assets up to no residual values. However, as permitted, finance leases commencing prior to April 1, 2008, which do not transfer ownership of the leased property to the lessee, are accounted for as operating leases with disclosure of certain "as if capitalized" information.

      Consolidated overseas subsidiaries apply International Financial Reporting Standards and issue financial reports. In principle, lessees are required to recognize almost all leases as assets or liabilities in the balance sheet, and Right-of-Use assets are amortized using the straight-line method.

   10. Allowance for Doubtful Accounts

       The Group provides the allowance for doubtful accounts in an amount sufficient to cover possible losses on collection by estimating individually uncollectible amounts and applying a percentage based on collection experience to the remaining accounts.

   11. Accrued Bonuses for Employees

       The Group provides accruals for the employee bonuses, based on the actual payment in the past.

   12. Provision for Product Warranties

       The Group makes provisions for product warranty by individually estimating the expected expenses.

   13. Provision for Loss on Orders

       The Group makes provision for losses on orders by estimating the expected losses incurred after the balance sheet date.

   14. Provision for Environmental Measures

       The Group makes provision for the expected future amount required to provide for expenditures related to environmental measures such as the processing of hazardous substances as required by laws and regulations.

   15. Accounting for Retirement Benefits

       1. Net defined benefit liability

          To provide severance and retirement benefits to employees, net defined benefit liability is recorded in the amount calculated by subtracting the value of pension plan assets from the amount of retirement benefit obligations estimated.

       2. The method for attributing expected pension benefits to periods of employee service

          Benefit formula is used to attribute expected pension benefits to the period up to the end of the fiscal year.

       3. Actuarial differences and prior service cost

          Past service cost is amortized using the straight-line method over a certain number of years (10 years), which is within the average remaining service periods of employees at the time when the service cost incurred. Actuarial differences are amortized evenly commencing with the following period of calculation using the straight-line method over the average remaining service periods of employees (from 12 to 15 years).

       4. Simplified accounting method used by small-size companies

          For calculation of net defined benefit liability and retirement benefit expenses, certain consolidated subsidiaries use the simplified accounting methods under which retirement benefit obligations being recorded as the amount which would be paid for voluntary retirement as of the balance sheet date.

   16. Significant Accounting Standard for Income and Expenses

       The Company and its subsidiaries elected to adopt "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and "Implementation Guidance on Accounting Standard for Revenue Recognition" (ASBJ Guidance No. 30, March 26, 2021) and apply accounting policy to recognize revenue with the amounts expected to be received in exchange for the promised goods or service as the control of such goods or services is transferred to customers.

       Nature of the performance obligation and a point of time to recognize revenues for respective performance obligations from the major business of the Company are described in "Revenue Recognition" (Note.17).

   17. Changes in Accounting Methods

       (Application of Accounting Standard for Current Income Taxes, etc.)

       The "Accounting Standard for Current Income Taxes" (ASBJ Statement No. 27, October 28, 2022; "2022 Revised Accounting Standard") has been applied from the beginning of the fiscal year ended March 31, 2025. With regard to the revisions concerning the accounting classification of income taxes (taxation on other comprehensive income), these are subject to the provisional treatment set forth in the proviso of paragraph 20-3 of the 2022 Revised Accounting Standard and the provisional treatment set forth 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; "2022 Revised Guidance").

       This change has no impact on the consolidated financial statements. In addition, the Company has adopted the 2022 Revised Guidance for the revisions related to the review of the treatment in consolidated financial statements deferring gains or losses on sales of investments in subsidiaries among consolidated companies for tax purposes, effective from the beginning of the fiscal year ended March 31, 2025.

       The change in accounting policy has been applied retrospectively, and the consolidated financial statements of the previous fiscal year have been prepared on a retrospective basis. This change has no impact on the consolidated financial statements of the previous fiscal year.

   18. Income Taxes

       The provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The Group recognizes tax effects of temporary differences between the carrying amounts of assets and liabilities for tax and financial reporting. The asset and liability approach is used to recognize expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

   19. Amounts per Share of Common Stock

       The computation of net income per share is based on the weighted average number of shares of common stock outstanding during the year.

       For the fiscal years ended March 31, 2025, 2024 and 2023, diluted net income per share was not shown since the Company had no securities with dilutive effect. Cash dividends per share presented in the consolidated statements of income represent actual amounts applicable to the respective years.

   20. Statements of Cash Flows

       In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits, and short-term highly liquid investments with maturities that do not exceed three months at the time of purchase and with insignificant risks of change in value are considered to be cash and cash equivalents.

   21. Translation of Foreign Currency Accounts and Financial Statements

       Cash, receivables and payables denominated in foreign currencies are translated into Japanese yen at the year-end exchange rates. All revenues and expenses in foreign currencies are translated at the exchange rates prevailing when such transactions are recognized. The resulting exchange loss or gain is charged or credited to income.

       Financial statements of consolidated overseas subsidiaries are translated into Japanese yen at the year-end exchange rates.

       Foreign currency translation adjustments resulting from translations of foreign currency financial statements are presented separately in the foreign currency translation adjustment and non-controlling interests in the consolidated balance sheets.

   22. Reclassifications

       Certain prior fiscal years' amounts were reclassified to conform to the current fiscal years' presentation. These reclassifications had no effect on previously reported results of operations or retained earnings.

   23. Accounting Standards issued but not adopted

       Following accounting standards and guidance are those issued but not yet adopted.

       • Accounting Standard for Leases (ASBJ Statement No.34, September 13, 2024, ASBJ)

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

       In addition, revisions to related accounting standards, implementation guidance, practical solution, and transferred guidance.

       1. Overview

          A framework that establishes treatment such as recording assets and liabilities for all leases of lessees, similar to international accounting standards.

       2. Effective date

          The standards and guidance will be effective from the beginning of the fiscal year ending March 31, 2028.

       3. Effects of application of the standards and guidance

          The effects of application of Accounting Standard for Leases, etc. on the consolidated financial statements are currently under evaluation.

   24. Change in presentation

       Not applicable for the fiscal year ended March 31, 2025, 2024 and 2023.

   25. Significant accounting estimates

       Significant accounting estimates for the fiscal years ended March 31,2025 and 2024 were as follows:

       The Company made reasonable accounting estimates based on available information at the time of preparation of the consolidated financial statements. The following is accounting estimates of the amounts reported in the consolidated financial statements for the current fiscal year, that may have a material impact on the consolidated financial statement for the following fiscal year.

       1. Judgement as to whether an impairment loss should be recognized on the asset group in MEIDEN T&D (INDIA) LIMITED

          1. Carrying amounts in the financial statement as of fiscal years ended March 31, 2025 and 2024 were as follows:

             	Millions of yen		Thousands of U.S. dollars
             	2025	2024	2025
             Property, plant and equipment	¥2,225	¥2,261	$14,833
             Goodwill	685	1,283	4,567
             Other intangible fixed assets	41	75	273

          2. Information on the nature of significant accounting estimates for identified items.

             Whenever there is an indication of impairment on the asset group including goodwill, the Company performs an impairment test by comparing undiscounted future cash flows of the related assets group with the carrying amount. If undiscounted future cash flows are less than the carrying amount and the recognition of an impairment loss is deemed necessary, the carrying amount is reduced to the recoverable amount, and the resulting decrease in the carrying amount is recognized as an impairment loss.

             In this fiscal year, there were indications of impairment on the assets group, including goodwill of consolidated subsidiary MEIDEN T&D (INDIA) LIMITED, which runs manufacturing and sale of transformers business in India, and the Company performed an impairment test because of the delayed strategic progress compared with the business plan developed when the Company acquired control, due to weakening demand caused by uncertain economic climate. The estimation of future cash flows was based on net sales, gross profit margin and future growth rate of future business plan, and also, the discount rate used to calculate the recoverable amount of major assets at the end of the economic useful life for the asset group including goodwill.

             Such assumptions are subject to high uncertainties due to changes in business environment and other factors, and may have a significant impact in estimating future cash flows.

       2. An impairment loss in MEIDEN (HANGZHOU) DRIVE TECHNOLOGY CO., LTD.

          1. Carrying amounts in the financial statement as of fiscal years ended March 31, 2025 and 2024 were as follows:

             U.S. dollars

             Millions of yen Thousands of

             	2025	2024	2025
             Property, plant and equipment	¥7,351	¥7,968	$49,007
             Intangible assets	1	0	7
             Investment and other assets	2	9	13

          2. Information on the nature of significant accounting estimates for identified items.

             Whenever there is an indication of impairment on the cash-generating unit, the Company performs an impairment test, if the recoverable amounts are less than the carrying amount, the carrying amount is reduced to the recoverable amount, and the resulting decrease in the carrying amount is recognized as an impairment loss.

             In this fiscal year, there were indications of impairment on the cash-generating units, consolidated subsidiary MEIDEN (HANGZHOU) DRIVE TECHNOLOGY CO., LTD., which runs manufacturing and sale of motor drive units for EV business in China, and the Subsidiary performed an impairment test because of the delayed strategic progress compared with the business plan developed when the Subsidiary started, due to changes in the EV business environment in China market. The Company uses the recoverable amount in the impairment test as the value in use. The future cash flows used to determine value in use was based on the future business plan prepared by the management, and include the expected number of orders received from EV manufacturers, the growth rate of the target market, discount rate as main assumptions.

             Such assumptions are subject to high uncertainties due to changes in business environment and other factors, and may have a significant impact on estimating future cash flows.

       3. Revenue from construction contracts

          1. Carrying amounts in the financial statement as of fiscal years ended March 31, 2025 and 2024 were as follows:

             Millions of yen Thousands of

             U.S. dollars

             	2025	2024	2025
             Net sales	¥64,252	¥64,963	$428,347
             Cost of sales	49,027	51,881	326,847

          2. Information on the nature of significant accounting estimates for identified items.

       Revenue from construction contracts for which the performance obligation is satisfied over a certain period of time is recognized over a certain period of time based on the estimated progress towards satisfaction of the performance obligation. The progress towards satisfaction of the performance obligation is mainly estimated using the input method based on costs incurred.

       As the estimated total construction costs are based on project budgets, judgment of appropriate preparation and timely update of project budgets may have a significant effect on the estimated total construction costs.

       Such assumptions may fluctuate during progress of construction, and as a result, it may have a significant impact on the measurement of revenue from construction contracts.

3. Financial Instruments

   Information on financial instruments for the fiscal years ended March 31, 2025 required pursuant to the accounting standards is as follows:

   1. Items relating to condition of financial instruments

      1. Policies for financial instruments

         It is Meiden Group policy to limit fund management to short-term deposits, and use bank loans and the issue of short-term bonds for financing. Derivatives are used only to hedge the market fluctuation risks described below and are not used for speculative transactions.

      2. Types of financial instruments and risks

         Operating claims such as trade notes, trade accounts receivable and electronically recorded monetary claims are exposed to the credit risk of customers. Operating claims denominated in foreign currencies that arise from our business operations overseas are also exposed to currency rate fluctuation risk. However, in principle, this exposure is hedged through forward exchange contracts, except for cases in which the claims are less than the balance of operating debts denominated in the same foreign currency.

         Securities and investment securities are mainly shares in corporations with which the Group has business or capital alliances. Those are exposed to market price fluctuation risk.

         The majority of operating debts such as trade notes, trade accounts payable and electronically recorded monetary obligations has payment dates within one year. In addition, there are some foreign currency-denominated notes and accounts payable related to raw materials purchases that are exposed to currency rate fluctuation risk. However, in principle, this exposure is hedged through forward exchange contracts, except for cases in which the debts are less than the balance of operating claims denominated in the same foreign currency.

         Short-term borrowings and commercial paper are mainly used for financing operation transactions, corporate bonds payable and long-term debt is used for financing capital investment and operating capital. Borrowings with a floating rate are exposed to interest rate fluctuation risk. However, derivatives transactions are used as instruments to hedge the fluctuation risk for interest paid and to ensure that a fixed interest rate is paid.

         Derivatives transactions consist of forward exchange contracts to hedge currency fluctuation risk associated with foreign currency-denominated operating claims and debts, interest rate swaps to hedge interest rate payment fluctuation risk associated with borrowings and commodity swaps to hedge price fluctuation risk associated with raw materials purchases.

         Refer to the note 2 d) (Derivatives and Hedge Accounting) for information relating to hedge accounting concerning hedge instruments, hedged items and hedge policies.

      3. Risk management structure for financial instruments

         1. Credit risk (risk relating to counterparty not executing contracts, etc.) management

            Operating claim balances are managed based on credit management policies for each counterparty and creditworthiness of major counterparties is regularly assessed.

            When using derivatives transactions, transactions are only conducted with financial institutions with a high credit rating to reduce the credit risk.

         2. Market risk (currency and interest rate fluctuation risk) management

            Forward exchange contracts are used to hedge future currency rate fluctuation risk associated with foreign currency-denominated operating claims and debts. In addition, interest rate swap transactions are used to control interest rate payment risk associated with borrowings, and commodity swap transactions are used to control price fluctuation risk associated with raw materials purchases.

            The fair value of securities and investment securities and financial position of issuers are assessed regularly.

            The purposes, types of transactions, and approvers for derivative transactions are stipulated in derivatives transaction management policies and approval regulations. In addition, the Group has even more specific operation rules for actual transactions.

         3. Management of liquidity risk (risk that payments are not made on payment date) associated with financing

         Although operating debts and borrowings are exposed to liquidity risk, this risk is managed through methods such as preparing and renewing cash flow planning as required.

      4. Supplementary explanation concerning fair value of financial instruments

         The fair values of financial instruments include amounts based on market values and amounts that are reasonably estimated when no market value is available. As the measurements of these amounts incorporate elements subject to fluctuation, the resulting amounts could change if different preconditions are used. Please note that for the contract amounts related to derivatives transactions included in the note "Derivatives and hedge accounting", the amounts themselves do not indicate the market risk associated with derivatives transactions.

   2. Fair value of financial instruments

      Book values and fair values of the financial instruments on the consolidated balance sheet on March 31, 2025 and 2024 were as follows:

      			Millions of yen
      2025	Book value	Fair value	Difference
      Investment securities	22,676	22,676	-
      Long-term loans receivable	39	39	(0)
      Total assets	¥22,715	¥22,715	¥(0)
      Corporate bonds	-	-	-
      Long-term debt	34,610	34,265	(345)
      Total liabilities	¥34,610	¥34,265	¥(345)
      Derivatives transactions	¥(24)	¥(24)	¥－
      			Millions of yen
      2024	Book value	Fair value	Difference
      Investment securities	25,738	25,738	-
      Long-term loans receivable	40	40	0
      Total assets	¥25,778	¥25,778	¥0
      Corporate bonds	6,000	5,993	(7)
      Long-term debt	30,031	29,987	(44)
      Total liabilities	¥36,031	¥35,980	¥(51)
      Derivatives transactions	¥(76)	¥(76)	¥－
      Thousands of U.S. dollars
      2025	Book value	Fair value	Difference
      Investment securities	151,173	151,173	-
      Long-term loans receivable	260	260	(0)
      Total assets	$151,433	$151,433	$(0)
      Corporate bonds	-	-	-
      Long-term debt	230,733	228,433	(2,300)
      Total liabilities	$230,733	$228,433	$(2,300)
      Derivatives transactions	$(160)	$(160)	$－

      (Note)

      ・"Long-term loans receivable" include current portion of long-term loans receivable, "Corporate bonds" include current portion of corporate bonds, and "Long-term debt" includes current portion of long-term debt.

      ・Net receivables and payables, which were derived from derivative transactions, are presented in net amounts.

      ・Information on "Cash and time deposits", "Trade notes(Receivables)", "Trade accounts(Receivables) and contract assets", "Electronically recorded monetary claims", "Trade notes and Trade accounts(Payables)", "Electronically recorded monetary obligations", "Short-term borrowings", "Commercial paper" and "Accrued income taxes" have been omitted because those are cash and are settled within the short term and the fair value is approximately equal to the carrying value.

   3. Breakdown of fair value in each level

      Fair value is classified into 3 levels depending on the observability and the importance of input which is used for the calculation of

      fair value.

      Level 1: Fair value: the fair value measured by quoted prices of identical assets or liabilities in active markets.

      Level 2: Fair value: the fair value measured using observable inputs other than Level 1. Level 3: Fair value: fair values measured using unobservable inputs.

      In case there are few inputs that have a significant impact on calculation of fair value, fair value is categorized in the level which has the lowest priority.

      1. Financial instruments reflected on the consolidated balance sheet with fair value

         2025	Fair Value (millions of yen)
         	Level 1	Level 2	Level 3	Total
         Investment securities Other Securities Stock	¥22,676	-	-	¥22,676
         Derivative Transactions Currency Rate	-	5	-	5
         Total Assets	¥22,676	5	-	¥22,681
         Derivative Transactions Currency Rate Interest Rate	- -	- 28	- -	- 28
         Total Liabilities	-	¥28	-	¥28

         2024	Fair Value (millions of yen)
         	Level 1	Level 2	Level 3	Total
         Investment securities Other Securities Stock	¥25,738	-	-	¥25,738
         Total Assets	¥25,738	-	-	¥25,738
         Derivative Transactions Currency Rate Interest Rate	- -	46 30	- -	46 30
         Total Liabilities	-	¥76	-	¥76

         2025	Fair Value (Thousands of U.S. dollars)
         	Level 1	Level 2	Level 3	Total
         Investment securities Other Securities Stock	$151,173	-	-	$151,173
         Derivative Transactions Currency Rate	-	$34	-	$34
         Total Assets	$151,173	$34	-	$151,207
         Derivative Transactions Currency Rate Interest Rate	- -	- 187	- -	- 187
         Total Liabilities	-	$187	-	$187

      2. Financial instruments except financial instruments reflected on the consolidated balance sheet with fair value

         2025	Fair Value (millions of yen)
         	Level 1	Level 2	Level 3	Total
         Long-term Loans Receivable	-	¥39	-	¥39
         Total Assets	-	¥39	-	¥39
         Corporate Bonds Long-term Debt	- -	- ¥34,265	- -	- ¥34,265
         Total Liabilities	-	¥34,265	-	¥34,265

         2024	Fair Value (millions of yen)
         	Level 1	Level 2	Level 3	Total
         Long-term Loans Receivable	-	¥40	-	¥40
         Total Assets	-	¥40	-	¥40
         Corporate Bonds Long-term Debt	- -	¥5,993 29,987	- -	¥5,993 29,987
         Total Liabilities	-	¥35,980	-	¥35,980

         2025	Fair Value (Thousands of U.S. dollars)
         	Level 1	Level 2	Level 3	Total
         Long-term Loans Receivable	-	$260	-	$260
         Total Assets	-	$260	-	$260
         Corporate Bonds Long-term Debt	- -	- $228,433	- -	- $228,433
         Total Liabilities	-	$228,433	-	$228,433

         (*)Description of the valuation methodologies and input used for fair value calculation.

         -Investment securities

         The valuation for listed securities is based upon adjusted quoted prices.

         The listed securities are traded in an active market, therefore they are grouped in Level 1.

         -Long-term Loans Receivable

         The fair value of long-term loans receivable is grouped in Level 2, and is calculated by discounting the amount by using interest rate, based on the assumption of new loans of same total principal amount.

         -Corporate Bonds

         The fair value of bonds issued by the Company is based on market price. The fair value is grouped in Level 2, since there is market price, but not in active market.

         -Long-term Debts

         The fair value of long-term debts is grouped in Level 2, and is calculated by discounting the amount by using interest rate, based on the assumption of new debts of same total principal amount.

         -Derivative Transactions

         The fair value of interest rate swaps and exchange contract are group in Level 2, and are calculated by discounting to present value at an observable input, such as interest and exchange rate.

   4. Derivatives and hedge accounting

   1. Derivative transactions not subject to hedge accounting

      1. Currency related

         Not applicable for the fiscal year ended on March 31, 2025 and 2024.

      2. Interest rate related

         Derivative transactions not subject to hedge accounting which is interest rate related on March 31, 2025 and 2024 were as follows:

         2025 Millions of yen

         Transaction except for

         Types of derivative transactions

         Interest rate swap transactions payable at

         Amount of contracts

         Amount of contracts over one year

         Fair value

         Unrealized gain (loss)

         market transaction

         fixed rate and receivable at floating rate

         ¥634 ¥431 ¥(28) ¥(28) 2024 Millions of yen

         Transaction except for

         Types of derivative transactions

         Interest rate swap transactions payable at

         Amount of contracts

         Amount of contracts over one year

         Fair value

         Unrealized gain (loss)

         market transaction

         fixed rate and receivable at floating rate

         ¥642 ¥642 ¥(30) ¥(30)

         2025 Thousands of U.S. dollars

         Types of derivative transactions

         Amount of contracts

         Amount of contracts over one year

         Fair value

         Unrealized gain (loss)

         Interest rate swap Transaction except for transactions payable at
         market transaction fixed rate and	$4,227	$2,873	$(187)	$(187)
         receivable at floating
         rate

   2. Derivative transactions subject to hedge accounting

      1. Currency related

         Derivative transactions subject to hedge accounting which is currency related on March 31, 2025 and 2024 were as follows:

         2025 Millions of yen

         Hedge accounting method Types of derivative transactions Major hedged items

         Amount of contracts

         Amount of contracts over one year

         Fair value

         Basic accounting USD-denominated forward method exchange contracts (sell)	Accounts receivable	¥154	¥－	¥5
         Basic accounting SGD-denominated forward method exchange contracts (sell)	Accounts receivable	175	-	(0)
         2024				Millions of yen

         Hedge accounting method Types of derivative transactions Major hedged items

         Amount of contracts

         Amount of contracts over one year

         Fair value

         Basic accounting method

         USD-denominated forward exchange contracts (sell)

         Accounts receivable ¥929 ¥－ ¥(47)

         2025 Thousands of U.S. dollars

         Hedge accounting method Types of derivative transactions Major hedged items

         Amount of contracts

         Amount of contracts over one year

         Fair value

         Basic accounting USD-denominated forward Accounts receivable	$1,027	$－	$33
         Basic accounting SGD-denominated forward Accounts receivable	1,167	-	(0)

         method exchange contracts (sell)

         method exchange contracts (sell)

      2. Interest rate related

   Not applicable for the fiscal year ended on March 31, 2025 and 2024.

4. Securities

   1. The following tables summarize acquisition costs and book values of securities with fair values as of March 31, 2025 and 2024.

      2025 Acquisition cost	Book value	Difference
      Securities with book value (fair value) exceeding acquisition cost: ¥6,264	¥22,441	¥16,177
      Sub-total 6,264	22,441	16,177
      Securities with book value (fair value) not exceeding acquisition cost: 261	235	(26)
      Sub-total 261	235	(26)
      Total ¥6,525	¥22,676	¥16,151
      2024 Acquisition cost	Book value	Millions of yen Difference
      Securities with book value (fair value) exceeding acquisition cost: ¥6,448	¥25,543	¥19,095
      Sub-total 6,448	25,543	19,095
      Securities with book value (fair value) not exceeding acquisition cost: 224	195	(29)
      Sub-total 224	195	(29)
      Total ¥6,672	¥25,738	¥19,066
      Thousands of U.S. dollars 2025 Acquisition cost Book value Difference
      Securities with book value (fair value) exceeding acquisition cost: $41,760	$149,607	$107,847
      Sub-total 41,760	149,607	107,847
      Securities with book value (fair value) not exceeding acquisition cost: 1,740	1,566	(174)
      Sub-total 1,740	1,566	(174)
      Total $43,500	$151,173	$107,673

      Millions of yen

      Equity securities

      Equity securities

      Equity securities

      Equity securities

      Equity securities

      Equity securities

   2. The following tables summarize book values of securities with no fair value as of March 31, 2025 and 2024.

      1. Available-for-sale securities;

         	Millions of yen	T	housands of U.S. dollars
         	2025	2024	2025
         Non-listed equity securities	¥546	¥544	$3,640

         Book value

      2. Equity securities issued by subsidiaries and affiliated companies;

         Book value

         U.S. dollars

         Millions of yen Thousands of

         	2025	2024	2025
         Investments in unconsolidated subsidiaries	¥20	¥20	$133
         Investments in affiliated companies	256	256	1,707
         Total	¥276	¥276	$1,840

   3. The following table summarizes total sales amounts of available-for-sale securities sold, gains and losses, in the fiscal years ended March 31, 2025 and 2024.

      Millions of yen Thousands of

      U.S. dollars

      	2025	2024	2025
      Sales amount	¥1,422	¥67	$9,480
      Gains	1,274	64	8,493
      Losses	-	-	-

   4. The amount of impairment of securities.

   There were no applicable items under this category for the fiscal year ended March 31, 2025 and 2024.

5. Inventories

   Inventories as of March 31, 2025 and 2024 were as follows:

   U.S. dollars

   Millions of yen Thousands of

   	2025	2024	2025
   Finished products	¥8,730	¥10,807	$58,200
   Work-in-process	46,040	41,717	306,933
   Materials and supplies	13,041	14,701	86,940
   Total	¥67,811	¥67,225	$452,073

6. Trade Notes, Trade Accounts Receivable and Contract Assets

   The amounts of receivables and contract assets from the contract with customers among trade notes, trade accounts receivable, and contract assets were respectively as follows:

   Millions of yen Thousands of

   U.S. dollars

   	2025	2024	2025
   Trade Notes	¥2,143	¥2,564	$14,287
   Trade Accounts Receivable	71,839	72,276	478,926
   Contract Assets	30,559	31,522	203,727

7. Subsidies Received from the Japanese Government and local Governments, etc

   The Group received a portion of acquisition costs of certain tangible fixed assets from the Japanese Governments and local Governments. The aggregated amounts of the subsidies deducted from the acquisition costs of the tangible fixed assets as of March 31, 2025 and 2024, were ¥3,391 million ($22,607 thousand) and ¥3,390 million, respectively.

8. Insurance Claim Income

   Insurance received from Noto Peninsula Earthquake that occurred on January 1st, 2024. It is the compensation towards earthquake-related loss and the accident of wind turbines for the fiscal year ended March 31, 2025.

   Insurance received from the fire incident at Numazu works that occurred on October 4th, 2023 for the fiscal year ended March 31, 2024.

9. Loss on Fire

   Not applicable for the fiscal year ended March 31, 2025.

   The Company accounted the loss for the fire incident at Numazu works that occurred on October 4th, 2023.The loss includes the estimated loss which reflects the best currently available estimates for the fiscal year ended March 31, 2024.

10. Loss on Disaster

    The Company accounted the loss for Noto Peninsula Earthquake that occurred on January 1st , 2024.The loss includes the earthquake-related restoration costs of wind turbines and the costs related to suspension of operations for the fiscal year ended March 31, 2025 and 2024.

11. Impairment Loss

    Not applicable for the fiscal year ended March 31, 2025.

    Impairment loss of following assets on March 31, 2024 was as follows:

    Location	Purpose	Category	Millions of yen
    Numazu city of Shizuoka Prefecture	Business Assets	Construction in progress	¥373
    Shinagawa ward of Tokyo	Business Assets	Software	98

    The Group, in principle, is grouped by offices and divisions and subsidiaries are grouped by the companies.

    The Company and the subsidiary in the above locations recognized impairment loss of ¥471 million in total under other expenses, due to reviewing the business plan, by writing down the carrying amounts to the recoverable amounts.

    The recoverable value which used for calculation of impairment loss was measured based on the value in use and valued based on the memorandum value, because the future cash flow was not expected.

12. Short-Term Borrowings, Commercial Paper, Corporate Bonds and Long-Term Debt

    1. Short-term Borrowings

       1. Weighted average interest rates on short-term borrowings were 5.3% and 4.3% as of March 31, 2025 and 2024. Short-term borrowings as of March 31, 2025 and 2024 were as follows:

          U.S. dollars

          Millions of yen Thousands of

          	2025	2024	2025
          Bank loans	¥3,956	¥8,649	$26,373

       2. Commitment Line Agreement

       The Company renewed an agreement with a syndicate of 14 Japanese banks to set up a commitment line for the Company. The unexecuted balances of lending commitments for the Company as of March 31, 2025 and 2024 were as follows:

       Millions of yen Thousands of

       U.S. dollars

       	2025	2024	2025
       Total lending commitments	¥40,000	¥35,000	$266,667
       Less amounts currently executed	-	3,000	-
       Unexecuted balance	¥40,000	¥32,000	$266,667

    2. Commercial Paper

    Interest rate on commercial paper was 0.6% as of March 31, 2025. Commercial papers as of March 31, 2025 and 2024 were as follows:

    Millions of yen Thousands of

    U.S. dollars

    	2025			2024	2025
    Commercial paper	¥6,000			¥10,000	$40,000
    3. Corporate Bonds
    Interest rate on 2nd unsecured bonds was 0.26%. Millions of yen Thousands of U.S. dollars
    Corporate Bonds	Issued date	Redemption periods	2025	2024	2025
    1st Unsecured bonds	July 20, 2017	July 20, 2022	¥－	¥－	$－
    2nd Unsecured bonds	July 23, 2019	July 23, 2024	-	6,000	-
    Total			¥－	¥6,000	$－

    4. Long-Term Debt

    Weighted average interest rates on Long-term debts were 1.1% and 1.0% as of March 31, 2025 and 2024. Long-term debts as of March 31, 2025 and 2024 were as follows:

    Millions of yen Thousands of

    U.S. dollars

    	2025	2024	2025
    Loans from banks and insurance companies	¥34,610	¥30,030	$230,733
    Less: Current portion	7,140	1,263	47,600
    Total	¥27,470	¥28,767	$183,133

    The annual maturities of long-term debts as of March 31, 2025 were as follows:

    U.S. dollars

    Year ending March 31 Millions of yen Thousands of

    2026	¥7,140	$47,600
    2027	9,065	60,433
    2028	5,270	35,133
    2029	8,810	58,733
    2030	4,310	28,733
    2031 and thereafter	15	100

13. Pledged Assets

    Investment securities of ¥2 million ($13 thousand) as of March 31, 2025 and 2024 were pledged as collateral for borrowing of an affiliate from financial institutions.

14. Employees' Severance and Retirement Benefits
    1. Overview of Employees' Severance and Retirement Benefit Plan

       The Group provides funded/unfunded defined benefit corporate pension plans, and defined contribution pension plans.

       Under the unfunded defined benefit corporate pension plan (i.e. a lump-sum payment plan), all eligible employees are entitled to a lump-sum payment based on the level of wages and salaries at the time of retirement or termination, length of service, and other factors.

       Since some consolidated subsidiaries which adopt a multi-employer welfare pension fund plan are not able to estimate their value of the plan assets reasonably, they account for it in the same way as the defined contribution plan.

       Certain small consolidated subsidiaries in defined benefit corporate pension plans and unfunded lump-sum payment plans adopt the simplified accounting method to calculate net defined benefit liability and retirement benefit expenses.

    2. Defined benefit corporate pension plan

       1. Reconciliation of retirement benefit obligations (excluding pension plans using the simplified accounting method)

          U.S. dollars

          Millions of yen Thousands of

          	2025	2024	2025
          Balance of severance and retirement benefit liabilities as of April 1	¥49,272	¥48,013	$328,480
          Service cost	1,887	1,894	12,580
          Interest cost	414	403	2,760
          Actuarial gain/ (loss)	(136)	220	(907)
          Retirement benefit payment	(1,757)	(1,624)	(11,713)
          Transfer due to change from the simplified method to the principle method	-	256	-
          Increase due to change from the simplified method to the principle method	-	110	-
          Balance of severance and retirement benefit liabilities as of March 31	¥49,680	¥49,272	$331,200

       2. Reconciliation of plan assets (excluding pension plans using the simplified accounting method)

          U.S. dollars

          Millions of yen Thousands of

          	2025	2024	2025
          Balance as of April 1	¥4,820	¥5,082	$32,133
          Expected return on plan assets	72	76	480
          Actuarial gain / (loss)	(176)	142	(1,173)
          Contribution from employer	99	102	660
          Retirement benefit payment	(507)	(582)	(3,380)
          Balance as of March 31	¥4,308	¥4,820	$28,720

       3. Reconciliation of net defined benefit liability for the pension plans using the simplified accounting method

          U.S. dollars

          Millions of yen Thousands of

          	2025	2024	2025
          Balance as of April 1	¥2,993	¥3,065	$19,953
          Retirement benefit cost	362	369	2,414
          Retirement benefit payment	(128)	(170)	(853)
          Contribution to the plans	(19)	(15)	(127)
          Transfer due to change from the simplified method to the principle method	-	(256)	-

          Balance as of March 31 ¥3,208 ¥2,993 $21,387

       4. Reconciliation from retirement benefit obligations and plan assets to net defined benefit liability/asset in the consolidated balance sheets

          U.S. dollars

          Millions of yen Thousands of

          	2025	2024	2025
          Retirement benefit obligations in funded plans	¥4,123	¥4,570	$27,487
          Plan assets	(4,618)	(5,111)	(30,787)
          Sub total	¥(495)	¥(541)	$(3,300)
          Retirement benefit obligations in unfunded plans	49,075	47,986	327,167
          Net defined benefit liability in the consolidated balance sheets	¥48,580	¥47,445	$323,867
          Defined benefit liability	48,580	47,445	323,867
          Net defined benefit liability in the consolidated balance sheets	¥48,580	¥47,445	$323,867

       5. Retirement benefit costs

          U.S. dollars

          Millions of yen Thousands of

          	2025	2024	2025
          Service cost	¥1,887	¥1,894	$12,580
          Interest cost	414	403	2,760
          Expected return on plan assets	(72)	(76)	(480)
          Amortization of actuarial gains and losses	419	509	2,794
          Amortization of prior service cost	(187)	(194)	(1,247)
          Retirement benefit cost calculated using the simplified methods	362	369	2,413
          Retirement benefit expenses	¥2,823	¥2,905	$18,820

       6. Remeasurements of defined benefit plans

          Components of remeasurements of defined benefit plans (before deducting tax effects)

          Millions of yen Thousands of

          U.S. dollars

          	2025	2024	2025
          Prior service cost	¥(187)	¥(194)	$(1,247)
          Actuarial gains and losses	380	431	2,534
          Total	¥193	¥237	$1,287

       7. Cumulative remeasurements of defined benefit plans

       Components of remeasurements of defined benefit plans (before deducting tax effects)

       Millions of yen Thousands of

       U.S. dollars

       2025		2024	2025
       Unrecognized prior service cost	¥(869)	¥(1,056)	$(5,793)
       Unrecognized actuarial gains and losses	1,046	1,426	6,973
       Total	¥177	¥370	$1,180
       (8) Plan assets (i) Main components of plan assets	2025		2024
       Corporate Bonds	62%		63%
       Equity securities	15%		17%
       Life insurance general account	23%		20%
       Total	100%		100%

       (ii) Long-term expected rate of return on plan assets

       Current and target asset allocations, current and expected returns on various categories of plan assets are considered in determining the long-term expected rate of return.

       (9) Actuarial assumptions

       Principal actuarial assumptions used as of March 31, 2025 and 2024 (in weighted average)
       	2025	2024
       Discount rate	0.8%	0.8%
       Long-term expected rate of return on plan assets	1.5%	1.5%

    3. Defined contribution pension plan

    The contribution of the Company and its certain consolidated subsidiaries to the defined contribution pension plans totaled ¥803 million ($5,353 thousand) as of March 31, 2025 and ¥819 million as of March 31, 2024, respectively.

15. Net Assets

    Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the prices of the new shares as additional paid-in capital, which is included in capital surplus.

    Under Japanese Corporation Law ("the Law"), in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets.

    Under the Law, generally legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit or could be capitalized by a resolution of the shareholders' meeting.

    Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, however generally, all additional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends.

    The maximum amount that the Company can distribute as dividends is calculated based on the unconsolidated financial statements of the Company in accordance with Japanese laws and regulations.

    1. Stock Information

       Changes in number of shares issued and outstanding during the fiscal years ended March 31, 2025 and 2024 are as follows:

       Treasury stock outstanding Thousands of shares

       2025 2024

       Balance at beginning 161 159

       Increase due to purchase of odd-lot stocks Decrease due to reverse split of stocks and sales of odd-lot stocks	1 -	2 -
       Balance at end	162	161

    2. Dividend Information

    share

    Resolution Record date	Effective date	Millions of yen	Thousands of U.S. dollars	Yen
    Shareholders' meeting March 31, 2024	June 26, 2024	¥2,268	$15,120	¥50
    Board of Directors' meeting September 30, 2024	November 29, 2024	¥1,588	$10,587	¥35

    Dividends paid during the fiscal year ended March 31, 2025 Amount of dividends Dividends per

    on June 25, 2024

    on October 28, 2024

    Dividends whose record date is attributable to the fiscal years ended March 31, 2025 but to be effective after March 31, 2025

    Amount of dividends Dividends per

    share

    Resolution Record date Effective date Millions of yen Thousands of

    U.S. dollars

    Yen

    Shareholders' meeting on June 25, 2025

    March 31, 2025 June 26, 2025 ¥3,992 $26,613 ¥88

    Dividends paid during the fiscal year ended March 31, 2024 Amount of dividends Dividends per

    Resolution Record date	Effective date	Millions of yen	Yen
    Shareholders' meeting March 31, 2023	June 29, 2023	¥998	¥22
    Board of Directors' meeting September 30, 2023	December 1, 2023	¥1,134	¥25

    share

    on June 28, 2023

    on October 30, 2023

    Dividends whose record date is attributable to the year ended March 31, 2024 but to be effective after March 31, 2024

    Amount of dividends Dividends per

    share

    Resolution Record date Effective date Millions of yen Yen

    Shareholders' meeting on June 25, 2024

    March 31, 2024 June 26, 2024 ¥2,268 ¥50

16. Reclassification Adjustments and Tax Effects for Other Comprehensive Income

    Amounts reclassified to net income (loss) in the current fiscal year that were recognized in other comprehensive income in the current or previous fiscal year and tax effects for each component of other comprehensive income as of March 31, 2025 and 2024, were as follows:

    	Millions of yen		Thousands of U.S. dollars
    	2025	2024	2025
    Unrealized gains (losses) on securities
    Increase(decrease) during the year	¥(1,624)	¥9,782	$(10,827)
    Reclassification adjustments	(1,275)	(63)	(8,500)
    Sub-total, before tax	(2,899)	9,719	(19,327)
    Tax (expense) or benefit	683	(2,946)	4,554
    Sub-total, net of tax	(2,216)	(6,773)	(14,773)
    Unrealized gains (losses) on hedging derivatives
    Increase(decrease) during the year	-	-	-
    Reclassification adjustments	-	(6)	-
    Sub-total, before tax	-	(6)	-
    Tax (expense) or benefit	-	-	-
    Sub-total, net of tax	-	(6)	-

    Foreign currency translation adjustment Increase(decrease) during the year	(151)	2,534	(1,007)
    Reclassification adjustments	-	-	-
    Sub-total, before tax	(151)	2,534	(1,007)
    Remeasurements of defined benefit plans Increase(decrease) during the year	(39)	(78)	(260)
    Reclassification adjustments	232	315	1,547
    Sub-total, before tax	193	237	1,287
    Tax (expense) or benefit	(64)	(86)	(427)
    Sub-total, net of tax	129	151	$860
    Total other comprehensive income	¥(2,238)	¥9,452	$(14,920)

17. Contingent Liabilities

    Contingent liabilities as of March 31, 2025 and 2024 were as follows:
    	Millions of yen		Thousands of U.S. dollars
    	2025	2024	2025
    MEIDEN INDIA PVT. LTD.	18	56	120
    MEIDEN KOREA CO., LTD.	-	6	-
    Total	¥18	¥62	$120

18. Lease Information

    Lease transaction under International Financial Reporting Standards Right-of-use assets mainly consist of lease offices and land.

19. Revenue Recognition
    1. Breakdown of revenue from contracts with customers

       Year ended March 31, 2025 (April 1, 2024 - March 31, 2025)

       Millions of yen

       	Power Infrastructure	Public, Industrial & Commercial Sector	Mobility & Electrical Components	Field Service Engineering	Real Estate	Sub Total	Others (*1)	Total
       Sales Japan	¥33,695	¥72,403	¥54,436	¥46,841	¥－	¥207,375	¥3,334	¥210,709
       Asia	35,608	18,198	7,179	659	-	61,644	283	61,927
       Others	16,114	17	8,859	180	-	25,170	99	25,269
       Revenue from Contracts with Customers	85,417	90,618	70,474	47,680	-	294,189	3,716	297,905
       Other Revenue (*2)	-	-	-	-	3,197	3,197	-	3,197
       Sales to External Customers	¥85,417	¥90,618	¥70,474	¥47,680	¥3,197	¥297,386	¥3,716	¥301,102

       Year ended March 31, 2024 (April 1, 2023 - March 31, 2024)

       Millions of yen

       	Power Infrastructure	Public, Industrial & Commercial Sector	Mobility & Electrical Components	Field Service Engineering	Real Estate	Sub Total	Others (*1)	Total
       Sales Japan	¥32,389	¥68,288	¥59,307	¥39,690	¥－	¥199,674	¥4,760	¥204,433
       Asia	28,992	15,998	5,207	776	-	50,973	434	51,407
       Others	16,412	-	12,242	193	-	28,847	1	28,848
       Revenue from Contracts with Customers	77,793	84,286	76,756	40,659	-	279,494	5,195	284,689
       Other Revenue (*2)	-	-	-	-	3,191	3,191	-	3,191
       Sales to External Customers	¥77,793	¥84,286	¥76,756	¥40,659	¥3,191	¥282,685	¥5,195	¥287,880

       Year ended March 31, 2025 (April 1, 2024 - March 31, 2025)

       Thousands of U.S. dollars

       	Power Infrastructure	Public, Industrial & Commercial Sector	Mobility & Electrical Components	Field Service Engineering	Real Estate	Sub Total	Others (*1)	Total
       Sales Japan	$224,633	$482,687	$362,907	$312,273	$－	$1,382,500	$22,227	$1,404,727
       Asia	237,387	121,320	47,860	4,393	-	410,960	1,887	412,847
       Others	107,427	113	59,060	1,200	-	167,800	660	168,460
       Revenue from Contracts with Customers	569,447	604,120	469,827	317,866	-	1,961,260	24,774	1,986,034
       Other Revenue (*2)	-	-	-	-	21,313	21,313	-	21,313
       Sales to External Customers	$569,447	$604,120	$469,827	$317,866	$21,313	$1,982,573	$24,774	$2,007,347

       (*1) "Others" comprises business operations that are not included in the reportable segments, including other product sales, employee welfare and benefit services, and the provision of chemical and other products.

       (*2) "Other Revenue" is lease revenue based on the Accounting Standard for Lease Transactions (ASBJ Statement No.13).

    2. Basic information for understanding revenue from contracts with customers

       Under the standard and guidance, revenue is recognized by applying the following 5 steps. Step1: Identify contracts with customers.

       Step2: Identify the performance obligations in the contract. Step3: Determine the transaction price.

       Step4: Allocate the transaction price to the performance obligations in the contract. Step5: Recognize revenue when the entity satisfies a performance obligation.

       In recognizing revenue, the Group identifies performance obligations based on contracts with customers for the sales of products, services, and other sales in its core business of Power Infrastructure, Public, Industrial & Commercial Sector, Mobility & Electrical Components, Field Service Engineering, and generally recognizes revenue at the following times when the performance obligations are satisfied:

       1. Revenue from Sales of Products

          With respect to the provision of products and services for which the Group is not responsible for installation and on-site adjustment of equipment, revenue is recognized upon delivery of products and the provision of services, when the Group satisfies performance obligations.

          With respect to the provision of products and services for which the Group is responsible for installation and on-site adjustment of equipment, delivery of products, and installation and on-site adjustment of equipment are identified as a single performance obligation, and the revenue is recognized at the time the installation and adjustment are completed.

          Revenue from construction contracts for which the performance obligation is satisfied over a certain period of time is recognized over a certain period of time based on the estimated progress towards satisfaction of the performance obligation. The progress towards satisfaction of the performance obligation is mainly estimated using the input method based on costs incurred. However, for construction contracts for which the period from the commencement date of the contract to the date when it is expected that the performance obligation will be fully satisfied is very short, revenue is not recognized over a certain period of time, but is recognized at the time the performance obligation is fully satisfied.

          Revenue from domestic sales of standard mass-produced products is recognized at the time of delivery, when, the Group determines, control over the product is transferred to the customer. Revenue from export sales is recognized based on the judgment that the customer has assumed the risk of the products after they have been transferred, mainly under the trade terms stipulated by Incoterms and other regulations based on which, the Group determines, the risk is transferred to the customer.

       2. Revenue from services and other sales

          Revenue from services and other sales mainly includes revenues from warranty, repair, and maintenance related to products.

          Revenue is recognized at the time service is completed if performance obligations are satisfied at a point in time, and based on a straight-line basis or on progress over the service period if performance obligations are satisfied over time.

          Revenue is recognized in an amount that reflects the consideration to which the Group expects to be entitled by transferring the products or services. For the contracts which consist of any combination of products, equipment, installation and maintenance, each element is treated as a separate performance obligation and revenue is allocated to each element in proportion to its stand-alone selling price when the good or service provided has a stand-alone value as a separate product. Moreover, the consideration for those performance obligations is received within approximately four months after the performance obligations are satisfied according to payment terms separately determined, and does not include a significant financial component.

    3. Information for understanding the amount of revenue for the fiscal year ended March 31, 2025 and thereafter.

       1. Ending balance of contract assets and liabilities

          U.S. dollars

          Millions of yen Thousands of

          2025 2024 2025

          Receivables from the contracts with customers at the beginning of the year	¥84,181	¥78,115	$561,207
          Receivables from the contracts with customers at the end of the year	82,079	84,181	547,193
          Contract assets at the beginning of the year	31,522	30,001	210,147
          Contract assets at the end of the year	30,559	31,522	203,727
          Contract liabilities at the beginning of the year	19,462	16,534	129,747
          Contract liabilities at the end of the year	21,559	19,462	143,727

          The amount of revenue recognized in the prior fiscal year that was included in the opening balance of the contract liabilities at April 1, 2023 was ¥11,777 million.

          The amount of revenue recognized in the prior fiscal year from performance obligations satisfied (or partially satisfied) in previous periods (mainly due to changes in transaction price) was not significant.

          The amount of revenue recognized in the current fiscal year that was included in the opening balance of the contract liabilities at April 1, 2024 was ¥17,561 million ($117,073 thousand).

          A contract asset is the Group's right to obtain consideration for performance obligations that have been completed but not yet billed concerning contracts with customers as of the end of the fiscal year. Contract assets are reclassified to receivables arising from contracts with customers when the Company and its subsidiaries' rights to the consideration become unconditional. Consideration for such products and services is billed when it becomes billable based on the terms of the contract and is collected on the expected date.

          Contract liabilities are advances received from customers based on payment terms for contracts with customers for which revenue is recognized when performance obligations are satisfied. Contract liabilities are reclassified into revenue as revenue is recognized.

          The amount of revenue recognized in the current fiscal year from performance obligations satisfied (or partially satisfied) in previous periods (mainly due to changes in transaction price) was not significant.

       2. Remaining performance obligations

    The aggregate amounts of transaction price allocated to the remaining performance obligations and the duration of the remaining performance obligations are as follows:

    U.S. dollars

    Millions of yen Thousands of

    2025 2024 2025

    Within 1 year	¥203,675	¥156,052	$1,357,833
    1 to 2 years	94,121	83,021	627,473
    After 2 years	76,567	51,732	510,447
    Total	¥374,363	¥290,805	$2,195,753

20. Research and Development Expenses

    Research and development expenses are charged to income as incurred. The amounts charged to income for the fiscal years ended March 31, 2025, 2024 and 2023 were ¥11,235 million ($74,900 thousand), ¥10,099 million and ¥10,257 million, respectively.

21. Segment Information

1. General information relating to reportable segments

   Each reportable segment of the Group consists of business units within the Group, for which separate financial information is available.

   Reportable segments are reviewed periodically at the Board of Directors' Meeting in order to determine distribution of management resources and evaluate business results.

   The Group has business units based on products and services, and each unit plans its comprehensive strategy and operates business activities.

   The Group's reportable segments are identified by products and services, including "Power Infrastructure," "Public, Industrial and Commercial Sector," "Mobility and Electrical Components," "Field Service Engineering" and "Real Estate."

   Description of business of each reportable segment is as follows:

   Reportable segments	Description of business
   Power Infrastructure	This segment includes businesses that provide products and services such as heavy electrical machinery and systems for generating and transmitting electricity, to electric power companies.
   Public, Industrial and Commercial Sector	This segment includes businesses that provide products and services such as heavy electrical machinery and systems to businesses in the public offices, railway and commercial sectors.
   Mobility and Electrical Components	This segment includes businesses that provide products and services such as industrial components, dynamometer systems, and research and development system to businesses in the semiconductor, electrical vehicles and general manufacturing industry.
   Field Service Engineering	This segment includes the maintenance business.
   Real Estate	This segment includes businesses related to the rental of real estate.

2. Basis of measurement relating to reported segment profit or loss, segment assets, segment liabilities and other material items

   Accounting policies for each reportable segment are the same as "Summary of Significant Account Policies."

   The operating income for each reportable segment is reconciled with the operating income of consolidated statements of income. Inter-segment sales and transfers are based on market prices.

3. Changes in reportable segments

   In the previous fiscal year, the Company conducted an absorption-type merger with MEIDEN SHOJI.,LTD.

   Accordingly, MEIDEN SHOJI's business, which was included in "Other" until the previous fiscal year, has been split according to the content of business and included in "Power Infrastructure", "Public, Industrial & Commercial Sector" , and "Mobility & Electrical Components" segment from the year ended March 31.2025.

   "Information relating to reported segments' net sales and profit or loss" for the year ended March 31, 2024 and 2023 has been reclassified to reflect the new amounts.

4. Information relating to reported segment profit or loss, segment assets, segment liabilities and other material items

   Segment information for the fiscal year ended March 31, 2025, was as follows:

   Year ended March 31, 2025

   Power Infrastructure

   Public, Industry & Commercial Sector

   Mobility & Electrical Components

   Field Service Engineering

   Millions of yen

   Real Sub total Others Total Adjustments Consolidated Estate

   Net sales:
   External customers	¥85,417	¥90,618	¥70,474	¥47,680	¥3,197	¥297,386	¥3,716	¥301,102	¥－	¥301,102
   Inter-segment	1,020	5,706	1,605	1,888	38	10,257	4,956	15,213	(15,213)	-
   Total	¥86,437	¥96,324	¥72,079	¥49,568	¥3,235	¥307,643	¥8,672	¥316,315	¥(15,213)	¥301,102
   Operating income	¥7,988	¥3,035	¥1,133	¥9,932	¥1,443	¥23,531	¥478	¥24,009	¥(2,496)	¥21,513
   Identifiable assets	¥91,676	¥84,446	¥58,563	¥39,542	¥10,296	¥284,523	¥8,746	¥293,269	¥48,078	¥341,347
   Other items
   Depreciation and amortization	3,042	1,175	2,930	363	552	8,062	233	8,295	2,168	10,463
   (excluding goodwill)
   Amortization amount of goodwill	698	2	-	-	-	700	-	700	-	700
   Capital expenditures	5,394	1,370	1,420	199	75	8,458	224	8,682	3,271	11,953

   Public,

   Thousands of U.S. dollars

   Field

   Year ended March 31, 2025

   Net sales:

   Power Infrastructure

   Industry & Commercial Sector

   Mobility & Electrical Components

   Service Engineering

   Real Sub total Others Total Adjustments Consolidated Estate

   External $569,447 customers Inter-segment 6,800	$604,120 38,040	$469,827 10,700	$317,866 12,587	$21,313 253	$1,982,573 68,380	$24,774 33,040	$2,007,347 101,420	$－ (101,420)	$2,007,347 -
   Total $576,247	$642,160	$480,527	$330,453	$21,566	$2,050,953	$57,814	$2,108,767	$ (101,420)	$2,007,347
   Operating income $53,253	$20,233	$7,553	$66,213	$9,620	$156,872	$3,188	$160,060	$ (16,640)	$143,420
   Identifiable assets $611,174	$562,973	$390,420	$263,613	$68,640	$1,896,820	$58,307	$1,955,127	$320,520	$2,275,647
   Other items Depreciation and amortization 20,281	7,833	19,533	2,420	3,680	53,747	1,553	55,300	14,453	69,753
   (excluding goodwill) Amortization amount 4,654	13	-	-	-	4,667	-	4,667	-	4,667
   of goodwill Capital expenditures 35,960	9,133	9,467	1,327	500	56,387	1,493	57,880	21,807	79,687

   (Notes)

   1. "Others" segment comprises business operations that are not included in the reportable segments, including other product sales, employee welfare and benefit services, and the provision of chemical and other products.

   2. Segment operating income is reconciled with operating income reported on the consolidated financial statements.

   3. "Adjustments" for segment operating income of ¥ (2,496) million ($(16,640) thousand) include eliminations of inter-segment transactions of

      ¥589 million ($3,927 thousand), adjustments for Inventories of ¥(96) million ($(640) thousand), and corporate operating expenses of ¥ (2,989) million ($(19,927) thousand) that are not allocated to the reportable segments. The corporate operating expenses mainly include R&D expenses incurred at the fundamental research laboratory and other facilities that are not affiliated with the reportable segments.

   4. "Adjustments" for segment assets of ¥48,078 million ($320,520 thousand) include eliminations of inter-segment receivables and other assets of ¥(43,964) million ($(293,093) thousand), and corporate assets of ¥92,042 million ($613,613 thousand) that are not allocated to the reportable segments. Corporate assets mainly include cash and time deposits, investment securities, and the assets related to the fundamental research laboratory and other facilities that are not affiliated with the reportable segments.

   5. "Adjustments" for capital expenditures of ¥3,271 million ($21,807 thousand) include mainly capital investments for the information system of the Company.

Segment information for the fiscal years ended March 31, 2024 and 2023 were as follows:

Millions of yen

Year ended March 31, 2024

Power Infrastructure

Public, Industry & Commercial Sector

Mobility & Electrical Components

Field Service Engineering

Real Sub total Others Total Adjustments Consolidated Estate

(Notes)

1. "Others" segment comprises business operations that are not included in the reportable segments, including other product sales, employee welfare and benefit services, and the provision of chemical and other products.

2. Segment operating income is reconciled with operating income reported on the consolidated financial statements.

3. "Adjustments" for segment operating income of ¥ (1,787) million include eliminations of inter-segment transactions of ¥832 million, adjustments for Inventories of ¥32 million, and corporate operating expenses of ¥ (2,651) million that are not allocated to the reportable segments. The corporate operating expenses mainly include R&D expenses incurred at the fundamental research laboratory and other facilities that are not affiliated with the reportable segments.

4. "Adjustments" for segment assets of ¥50,269 million include eliminations of inter-segment receivables and other assets of ¥ (39,181) million, and corporate assets of ¥89,450 million that are not allocated to the reportable segments. Corporate assets mainly include cash and time deposits, investment securities, and the assets related to the fundamental research laboratory and other facilities that are not affiliated with the reportable segments.

5. "Adjustments" for capital expenditures of ¥2,640 million include mainly capital investments for the information system of the Company.