Financial Report 2025

2 0 2 5

Financial Report

For the fiscal year ended March 31, 2025

NS United Kaiun Kaisha, Ltd.

Contents

Financial Information 1

Consolidated Financial Statements and Supplementary Schedules 2

1. Consolidated Financial Statements 2

2. Other 40

Independent Auditor's Report

[Financial Information]

1. Basis of Preparation of Consolidated Financial Statements

   The consolidated financial statements of NS United Kaiun Kaisha, Ltd. (the Company) and its subsidiaries (the Group) are prepared in accordance with the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial

   Statements (Ministry of Finance Order No. 28 of 1976) and the Rules on Financial Statements in the Shipping Industry (Public Notice of the Ministry of Transport No. 431 of 1954).

2. Audit Certification

   The Company's consolidated financial statements for the current fiscal year (from April 1, 2024 to March 31, 2025) were audited by Ernst & Young ShinNihon LLC.

3. Particular Efforts to Ensure the Appropriateness of the Consolidated Financial Statements and Other Financial Reports

The Company is making particular efforts to ensure the appropriateness of the consolidated financial statements and other financial reports. Specifically, the Company has become a member of the Financial Accounting Standards Foundation

(hereinafter, the "Foundation") and participates in seminars and other programs sponsored by the Foundation in order to have an appropriate understanding about the contents of the accounting standards, and establish a system that allows the Company to properly respond to the changes in the accounting standards.

1. Consolidated Financial Statements and Supplementary Schedules

   1. Consolidated Financial Statements

      1. Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Consolidated Statement of Income

         For the previous fiscal year (From April 1, 2023

         to March 31, 2024)

         (Million yen)

         For the current fiscal year (From April 1, 2024

         to March 31, 2025)

         Revenues

         Shipping business revenue and other operating revenue *1 233,100 *1 247,408

         Cost and expenses
         Shipping business expenses and other operating expenses	*2, *3	204,079	*2, *3	219,423
         Gross profit		29,022		27,986
         General and administrative expenses	*4, *5	7,420	*4, *5	7,762
         Operating profit		21,601		20,224
         Non-operating income
         Interest income		12		45
         Dividend income		237		225
         Share of profit of entities accounted for using equity 28 17 method
         Foreign exchange gains		1,907		144
         Gain on derivatives		123		283
         Other		212		30
         Total non-operating income		2,518		744
         Non-operating expenses
         Interest expenses		1,585		1,678
         Loss on derivatives		339		225
         Other		10		50
         Total non-operating expenses		1,934		1,953
         Ordinary profit		22,185		19,015
         Extraordinary income
         Gain on sale of non-current assets	*6	251	*6	2,539
         Gain on sale of investment securities		59		187
         Total extraordinary income		310		2,725
         Profit before income taxes	22,496		21,740
         Income taxes - current	3,684		2,923
         Income taxes for prior periods	*7 989		-
         Income taxes - deferred	(163)		196
         Total income taxes	4,510		3,119
         Profit	17,986		18,621
         Profit attributable to owners of parent	17,986		18,621

         Consolidated Statement of Comprehensive Income		(Million yen)
         	For the previous fiscal year (From April 1, 2023 to March 31, 2024)	For the current fiscal year (From April 1, 2024 to March 31, 2025)
         Profit	17,986	18,621
         Other comprehensive income
         Valuation difference on available-for-sale securities	675	(228)
         Deferred gains or losses on hedges	207	1,121
         Foreign currency translation adjustment	(237)	26
         Remeasurements of defined benefit plans, net of tax	(13)	(205)
         Share of other comprehensive income of entities 44 64 accounted for using equity method

         Total other comprehensive income * 675 * 778

         Comprehensive income: 18,661 19,399

Comprehensive income attributable to owners of parent

18,661 19,399

1. Consolidated Statement of Changes in Net Assets

   For the previous fiscal year (from April 1, 2023 to March 31, 2024)

   (Million yen)

   	Shareholders' equity
   	Share capital	Capital surplus	Retained earnings	Treasury shares	Total shareholders' equity
   Balance at the beginning of the period	10,300	17,181	109,646	(997)	136,129
   Changes during the period
   Dividends of surplus			(6,481)		(6,481)
   Profit attributable to owners of parent			17,986		17,986
   Purchase of treasury shares				(1)	(1)
   Net changes in items other than shareholders' equity
   Total changes during the period	-	-	11,505	(1)	11,504
   Balance at the end of the period	10,300	17,181	121,150	(998)	147,633

   	Accumulated other comprehensive income					Total net assets
   	Valuation difference on available-for-sale securities	Deferred gains or losses on hedges	Foreign currency translation adjustment	Remeasurements of defined benefit plans	Total accumulated other comprehensive income
   Balance at the beginning of the period	1,770	(401)	(32)	(62)	1,276	137,405
   Changes during the period
   Dividends of surplus						(6,481)
   Profit attributable to owners of parent						17,986
   Purchase of treasury shares						(1)
   Net changes in items other than shareholders' equity	675	207	(194)	(13)	675	675
   Total changes during the period	675	207	(194)	(13)	675	12,179
   Balance at the end of the period	2,445	(194)	(226)	(75)	1,951	149,584

   For the current fiscal year (from April 1, 2024 to March 31, 2025)

   (Million yen)

   	Shareholders' equity
   	Share capital	Capital surplus	Retained earnings	Treasury shares	Total shareholders' equity
   Balance at the beginning of the period	10,300	17,181	121,150	(998)	147,633
   Changes during the period
   Dividends of surplus			(6,245)		(6,245)
   Profit attributable to owners of parent			18,621		18,621
   Purchase of treasury shares				(0)	(0)
   Net changes in items other than shareholders' equity
   Total changes during the period	-	-	12,376	(0)	12,376
   Balance at the end of the period	10,300	17,181	133,527	(999)	160,009

   	Accumulated other comprehensive income					Total net assets
   	Valuation difference on available-for-sale securities	Deferred gains or losses on hedges	Foreign currency translation adjustment	Remeasurements of defined benefit plans	Total accumulated other comprehensive income
   Balance at the beginning of the period	2,445	(194)	(226)	(75)	1,951	149,584
   Changes during the period
   Dividends of surplus						(6,245)
   Profit attributable to owners of parent						18,621
   Purchase of treasury shares						(0)
   Net changes in items other than shareholders' equity	(228)	1,121	90	(205)	778	778
   Total changes during the period	(228)	1,121	90	(205)	778	13,154
   Balance at the end of the period	2,217	927	(136)	(279)	2,729	162,738

2. Consolidated Balance Sheet

   For the previous fiscal year (As of March 31, 2024)

   (Million yen)

   For the current fiscal year (As of March 31, 2025)

   Assets

   Current assets
   Cash and deposits		37,069		40,793
   Trade receivables and contract assets	*7	35,648	*7	35,155
   Securities		10,000		14,991
   Inventories	*6	13,929	*6	13,775
   Prepaid expenses		5,840		5,988
   Other current assets		4,450		5,481
   Allowance for doubtful accounts		(6)		(11)
   Total current assets		106,930		116,172
   Non-current assets
   Property, plant and equipment
   Vessels, net	*3, *4	164,057	*3, *4	145,085
   Buildings, net		259		57
   Land		397		2
   Construction in progress		1,912		13,535
   Other tangible fixed assets, net		304		280
   Total property, plant and equipment	*1	166,929	*1	158,959
   Intangible assets		1,351		1,562
   Investments and other assets
   Investment securities	*2	5,642	*2	5,506
   Long-term loans receivable		9		8
   Deferred tax assets		3,255		3,363
   Retirement benefit asset		1,673		1,429
   Other long-term assets		555		950
   Total investments and other assets		11,134		11,257
   Total non-current assets		179,414		171,777
   Total assets		286,344		287,948

   For the previous fiscal year (As of March 31, 2024)

   (Million yen)

   For the current fiscal year (As of March 31, 2025)

   Liabilities

   Current liabilities

   Trade notes and accounts payable		14,538		14,091
   Short-term borrowings	*3	21,278	*3	14,579
   Accounts payable - other		881		133
   Accrued expenses		309		240
   Income taxes payable		1,850		1,180
   Contract liabilities		6,075		5,466
   Provision for bonuses		699		797
   Provision for bonuses for directors (and other officers)		80		92
   Other current liabilities	6,719		8,242
   Total current liabilities	52,430		44,820
   Non-current liabilities
   Long-term borrowings	*3	75,817	*3	70,737
   Deferred tax liabilities		971		1,561
   Provision for special repairs		7,379		7,900
   Retirement benefit liability		163		192
   Total non-current liabilities		84,330		80,390
   Total liabilities		136,759		125,210

   Net assets

   Shareholders' equity
   Share capital	10,300	10,300
   Capital surplus	17,181	17,181
   Retained earnings	121,150	133,527
   Treasury shares	(998)	(999)
   Total shareholders' equity	147,633	160,009
   Accumulated other comprehensive income
   Valuation difference on available-for-sale securities	2,445	2,217
   Deferred gains or losses on hedges	(194)	927
   Foreign currency translation adjustment	(226)	(136)
   Remeasurements of defined benefit plans	(75)	(279)
   Total accumulated other comprehensive income	1,951	2,729
   Total net assets	149,584	162,738
   Total liabilities and net assets	286,344	287,948

3. Consolidated Statement of Cash Flows

For the previous fiscal year (From April 1, 2023

to March 31, 2024)

(Million yen)

For the current fiscal year (From April 1, 2024

to March 31, 2025)

Increase (decrease) in provision for bonuses for directors (and other officers)

Increase (decrease) in net defined benefit liability and decrease (increase) in net defined benefit asset

21 12

(34) (14)

[Notes to Consolidated Financial Statements] (Going Concern Assumption)

Not applicable.

(Basis for the Preparation of the Consolidated Financial Statements)

1. Scope of consolidation

   1. Number of consolidated subsidiaries: 56 Names of major consolidated subsidiaries:

      NS United Naiko Kaiun Kaisha, Ltd. NS United Coastal Tanker Kaisha, Ltd.

   2. Names of major non-consolidated subsidiaries Major non-consolidated subsidiaries:

      NS UNITED BULK PTE. LTD.

      (Reason for exclusion from the scope of consolidation)

      The amounts of total assets, revenues, profit or loss (amount corresponding to equity interest), retained earnings (amount corresponding to equity interest) and others of the non-consolidated subsidiaries do not have a material impact on the consolidated financial statements and are all insignificant in general, therefore such subsidiaries are excluded from the

      scope of consolidation.

2. Application of the equity method

   1. Number of equity-method affiliates: 3

      Names of non-consolidated subsidiaries accounted for by the equity method:

      NS UNITED SHIPPING (U.K.) LTD. NS UNITED SHIPPING (U.S.A.) INC.

      NS UNITED SHIPPING (H.K.) CO., LTD.

   2. Amounts such as profit or loss (amount corresponding to equity interest), retained earnings (amount corresponding to equity interest) and others of non-consolidated subsidiaries (NS UNITED BULK PTE. LTD. and others) and affiliates (SHINSHO SENPAKU KAISHA, LTD. and others) do not have a material impact on the consolidated financial statements and are all insignificant in general, therefore such non-consolidated subsidiaries and affiliates are excluded from the scope of equity method.

   3. The fiscal year-end dates of equity-method affiliates differ from the consolidated fiscal year-end date, but the consolidated financial statements are prepared using the financial statements for the respective fiscal years of each equity-method affiliate.

3. Accounting policies

   1. Basis and methods of valuation of significant assets

      1. Securities

         1. Held-to-maturity bonds

            Stated at amortized cost (straight-line method)

         2. Available-for-sale securities

            Securities other than shares that do not have a market price

            Stated at fair value (all valuation differences are included in net assets and costs of securities sold are principally calculated by the moving-average method)

            Shares that do not have a market price

            Stated at cost using the moving-average method

      2. Inventories

         Stated at cost determined primarily by the first-in first-out method (carrying amount in the balance sheet is calculated with consideration of write-downs due to decreased profitability)

   2. Depreciation and amortization method for significant depreciable and amortizable assets

      1. Property, plant and equipment (excluding leased assets)

         1. Vessels

            Primarily calculated using the straight-line method. However, for certain vessels, depreciation is calculated using the declining balance method.

            The useful lives of major vessels range from 13 years to 25 years.

         2. Buildings (excluding facilities attached to buildings) Primarily calculated using the straight-line method.

         3. Other assets

            Calculated using the declining balance method. However, facilities attached to buildings and structures acquired on or after April 1, 2016 are depreciated using the straight-line method.

      2. Intangible assets (excluding leased assets)

         Calculated using the straight-line method. Software for internal use is amortized over the estimated internal useful life (five years) and contract-related intangible assets are amortized over the contract period.

      3. Leased assets

         1. Leased assets under finance lease transactions which transfer ownership

            The same depreciation method as applied to self-owned non-current assets is used.

         2. Leased assets under finance lease transactions which do not transfer ownership

            Calculated using the straight-line method over the useful life of the lease term, with no residual value.

   3. Accounting basis for significant allowances and provisions

      1. Allowance for doubtful accounts

         To provide for bad debt expenses arising from trade receivables, loans receivable, and other credits, the estimated uncollectible amount is recognized based on actual bad debt rates for general receivables, and individual collectability for specified debts including possible bad debts.

      2. Provision for bonuses

         Provision for bonuses is established to cover bonus payments to employees and is provided in the amount based on the estimated amount of payment.

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

         Provision for bonuses for directors (and other officers) is established to cover bonus payments to directors and officers and is provided in the amount based on the estimated amount of payment.

      4. Provision for special repairs

         Provision for special repairs is established to provide for special repairs (regular inspections) of vessels and is provided in the amount estimated based on the actual cost of regular inspections and others.

   4. Method of accounting for retirement benefit plans

      1. Method of attributing estimated retirement benefits to periods

         In calculating retirement benefit obligations, the benefit formula basis is applied to attribute estimated retirement benefits to the period up to the end of the current fiscal year.

      2. Method of amortization of actuarial gains and losses and prior service costs

         Prior service cost is amortized using the straight-line method over a fixed number of years (8 to 10 years) within the estimated average remaining service years of the employees at the time of cost incurrence.

         Actuarial gains and losses for each fiscal year are amortized proportionally from the following fiscal year using the straight-line method over a fixed number of years (8 to 10 years) within the estimated average remaining service years of employees at the time of incurrence.

      3. Adoption of simplified method at small-scale companies

         Certain consolidated subsidiaries use the simplified method, which uses the benefits payable assuming the voluntary retirement of all employees at the fiscal year-end as the retirement benefit obligations, to calculate net retirement benefit liability and retirement benefit expenses.

   5. Standards for translation of significant foreign currency-denominated assets or liabilities into Japanese yen

      Foreign currency-denominated monetary claims and liabilities are translated into Japanese yen at the spot exchange rates prevailing on the fiscal year-end date, and the resulting exchange differences are recorded as exchange gains or losses. Foreign currency-denominated claims and liabilities hedged by forward exchange contracts and currency swaps eligible for the allocation method are translated into the Japanese yen amount of such forward exchange contracts and currency swaps. Assets and liabilities of overseas subsidiaries are translated into Japanese yen at the spot exchange rates prevailing on the fiscal year-end date, and revenue and expenses are translated into Japanese yen at the average exchange rates prevailing over the period, with the differences resulting from such translations recorded as foreign currency translation adjustment under net assets.

   6. Standards for recording significant revenue and expenses

      The details of the main performance obligations related to revenue from contracts with the Group's customers and the

      timing at which the Group typically satisfies these performance obligations (when it typically recognizes revenue) are as follows:

      In the international shipping business and coastal shipping business, the Group mainly concludes cargo shipping

      contracts. The Group adopts a daily pro rata basis based on the number of voyage days in which performance obligations for these contracts are deemed to be satisfied over time, since customers simultaneously receive and consume the benefits provided by the Company's and its consolidated subsidiaries' performance as they perform the obligations under the

      contracts with their customers, and revenue and expenses are recognized based on progress toward complete satisfaction of a performance obligation. Progress is measured based on the proportion of the number of voyage days completed to the total estimated number of voyage days. The Group includes an estimate of variable consideration such as demurrage and dispatch fees in the transaction price as it is highly probable that a significant reversal in the amount of cumulative

      revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

      Furthermore, for charter contracts, revenue is recognized based on the completed charter period, as performance obligations are satisfied over time.

   7. Primary method of hedge accounting

      1. Method of hedge accounting

         Deferred hedge accounting is applied primarily, while some interest rate swap transactions meeting the requirements for the special treatment are accounted for using the special treatment, and some forward exchange contracts and currency swaps are accounted for using the allocation method.

      2. Hedging instruments and hedged items

         Hedging instruments and hedged items to which hedge accounting is applied are as follows:

         1. Hedging instruments: Interest rate swaps Hedged items: Interest on borrowings

         2. Hedging instruments: Currency swaps

            Hedged items: Borrowings in foreign currencies

         3. Hedging instruments: Forward exchange contracts

            Hedged items: Forecasted transactions in foreign currencies

         4. Hedging instruments: Fuel oil swaps Hedged items: Fuel oil prices

         5. Hedging instruments: Futures transactions Hedged items: Freight rates, charter rates

      3. Hedging policy

         Regarding the execution and management of derivative transactions at the Company, transactions involving interest rate swaps, currency swaps, and forward exchange contracts are managed by the Finance and Accounting Group;

         transactions involving fuel oil swaps are managed by the Energy Group; and futures transactions on freight and charter rates are managed by each sales division group. All transactions are executed upon receiving approval of related items including purposes, notional principal amounts, contract terms, and structures by the director in charge each time derivative transactions are entered into.

         Regarding derivative transactions conducted by Group companies based on guarantee or reservation of guarantee by the Company, transactions are managed by each Group company, as well as by the Finance and Accounting Group of the Company in an integrated manner after the prior approval of the transaction terms by the Company. Other

         derivative transactions are executed and managed by the General Manager or other senior staff of the Accounting

         Department of each company upon receiving the approval of the director in charge in accordance with the Accounting Rules and others and are reported to the Company. In entering into derivative transactions, the Company conducts transactions only with highly creditworthy financial institutions to minimize credit risk.

      4. Method of assessing hedging effectiveness

         The Company verifies the hedging effectiveness of individual transactions under the risk management system in accordance with the Accounting Rules and others and regularly reports the results to authorities including the Board of Executive Officers.

   8. Scope of funds in the consolidated statement of cash flows

      Funds (cash and cash equivalents) in the consolidated statement of cash flows consist of cash on hand, deposits in banks which can be withdrawn at any time, and short-term investments with a maturity of three months or less from the date of acquisition which can easily be converted to cash and are subject to little risk of change in value.

   9. Other significant items for the preparation of consolidated financial statements Method of recording interest expenses paid on loans for ship construction

Of the interest expenses paid on loans for ship construction, interest expenses incurred during the period up until completion are included in the acquisition cost.

(Significant Accounting Estimates)

Total number of voyage days to be used in the daily pro-rata calculation of the number of voyage days

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

   Amount of shipping business revenue for voyages not completed by the end of the current fiscal year and other operating revenue

   (Million yen)

   Previous fiscal year	Current fiscal year
   18,375	17,743

2. Information regarding significant accounting estimates for identified items

Shipping business revenue for voyages not completed by the end of the current fiscal year is calculated based on total estimated freight rates and the progress of the voyages.

When calculating total estimated freight rates, the total number of voyage days, which consists of the number of voyage days between ports and the number of days in ports, is estimated. The progress of voyages is calculated based on the ratio of number of voyage days completed by the end of the current fiscal year to the total estimated number of voyage days. The total number of voyage days changes depending on variables such as weather conditions and port congestion, and these changes may affect the total estimated freight rates and voyage progress.

(Changes in Accounting Policies)

(Application of Accounting Standard for Current Income Taxes)

The Company has applied the Accounting Standard for Current Income Taxes (Accounting Standards Board of Japan ("ASBJ") Statement No. 27, October 28, 2022; hereinafter, the "Revised Accounting Standard of 2022") since the beginning of the current fiscal year.

For the revision of classifications of income taxes (taxation on other comprehensive income), the Company follows the provisional treatment set forth in the proviso to paragraph 20-3 of the Revised Accounting Standard of 2022 and the provisional treatment set forth in the proviso to paragraph 65-2 (2) of the Implementation Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, October 28, 2022; hereinafter, the "Revised Implementation Guidance of 2022"). The change in accounting policies has no effect on the consolidated financial statements.

For the revision related to the review of treatments on consolidated financial statements in the case where gains or losses on intercompany sales of subsidiary shares, etc. are deferred for tax purposes, the Company has applied the Revised Guidance of 2022 since the beginning of the current fiscal year. The change in accounting policies was applied retrospectively, to the

consolidated financial statements for the previous fiscal year. The change in accounting policies has no effect on the consolidated financial statements for the previous fiscal year.

(Accounting Standards Not Yet Applied) Accounting Standards for Leases

• 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. Overview

   As part of efforts to make Japanese standards consistent with international accounting standards, the ASBJ conducted discussions based on international accounting standards to work toward the development of lease-related accounting standards that recognize assets and liabilities for all leases of lessees. The basic policy is to build on the single accounting model of IFRS 16, adopting only major provisions of IFRS 16, but not all provisions. As a result, the ASBJ released simple and convenient lease accounting standards that are designed so that no revisions are required if provisions of IFRS 16 are applied to non-consolidated financial statements.

   For cost allocation for leases of lessees, as accounting treatment on lessees, a single accounting model where depreciation of right-of-use assets and interest equivalents on lease liabilities are recorded for all leases, whether leases are finance leases or operating leases, is applied as is the case with IFRS 16.

2. Scheduled date of application

   The accounting standards and guidance are scheduled to be applied from the beginning of the fiscal year ending March 31, 2028.

3. Impact of applying the accounting standards, etc.

   The impact of applying the "Accounting Standard for Leases" and other standards on the consolidated financial statements is currently under evaluation.

   (Consolidated Statement of Income)

   *1 Revenue from contracts with customers

   The Company does not disaggregate revenue from contracts with customers and revenue from other sources. The amount of revenue from contracts with customers is as presented in "1. Information on disaggregation of revenue from contracts with customers under [Notes to Consolidated Financial Statements], (Revenue Recognition)" in the consolidated financial statements.

   *2 The amounts of provisions recorded for the items below are as follows:

   Previous fiscal year (From April 1, 2023

   to March 31, 2024)

   Current fiscal year (From April 1, 2024

   to March 31, 2025)

   Provision for bonuses 275 million yen 319 million yen

   Retirement benefit expenses 83 98

   Provision for special repairs 4,949 5,647

   *3 Gain or loss on valuation of inventories based on the write-down method (reversal) is as follows:

   Previous fiscal year (From April 1, 2023

   to March 31, 2024)

   Current fiscal year (From April 1, 2024

   to March 31, 2025)

   Write-down of inventories (reversal of write-downs) (382) million yen 317 million yen

   *4 Major items of general and administrative expenses are as follows:

   Previous fiscal year (From April 1, 2023

   to March 31, 2024)

   Current fiscal year (From April 1, 2024

   to March 31, 2025)

   Remuneration for directors (and other officers) and employee salaries	3,831 million yen 3,813 million yen
   Depreciation	218	232
   Provision of allowance for doubtful accounts	(8)	5
   Provision for bonuses	424	478
   Provision for bonuses for directors (and other officers)	80	92
   Retirement benefit expenses	163	201

   *5 Research and development expenses included in general and administrative expenses are as follows:

   Previous fiscal year (From April 1, 2023

   to March 31, 2024)

   Current fiscal year (From April 1, 2024

   to March 31, 2025)

   Research and development expenses 29 million yen 10 million yen

   *6 Breakdown of gain on sales of non-current assets is as follows:

   Previous fiscal year

   Current fiscal year

   		(From April 1, 2023 to March 31, 2024)	(From April 1, 2024 to March 31, 2025)
   Vessels		239 million yen	2,075 million yen
   Land		-	653
   Buildings		-	(188)
   Other		12	(2)
   	Total	251	2,539

   Note: Gains and losses on sales of non-current assets resulting from the same sales contract are offset and stated as gains on sales of non-current assets on the consolidated statement of income.

   *7 Income taxes for prior periods

   Previous fiscal year (from April 1, 2023 to March 31, 2024)

   The Company recorded 989 million yen of income taxes for the fiscal years ended March 31, 2020 through 2023 based on a tax audit conducted by the Tokyo Regional Taxation Bureau.

   Current fiscal year (from April 1, 2024 to March 31, 2025) Not applicable.

   (Consolidated Statement of Comprehensive Income)

   * Amounts of reclassification adjustments and income taxes and tax effects relating to other comprehensive income

   	Previous fiscal year	Current fiscal year
   	(From April 1, 2023	(From April 1, 2024
   	to March 31, 2024)	to March 31, 2025)
   Valuation difference on available-for-sale securities: Gains (losses) incurred during the year	1,027 million yen	(122) million yen
   Reclassification adjustments to profit	(59)	(187)
   Amount before income taxes and tax effects	967	(309)
   Income taxes and tax effects	(292)	81
   Valuation difference on available-for-sale securities	675	(228)
   Deferred gains or losses on hedges:
   Gains (losses) incurred during the year	552	1,115
   Reclassification adjustments to profit	(42)	265
   Adjustments of asset acquisition cost	(220)	191
   Amount before income taxes and tax effects	290	1,571
   Income taxes and tax effects	(83)	(450)
   Deferred gains or losses on hedges	207	1,121
   Foreign currency translation adjustment: Gains (losses) incurred during the year	(237)	26
   Reclassification adjustments to profit	-	-
   Foreign currency translation adjustment	(237)	26
   Remeasurements of defined benefit plans, net of tax:
   Gains (losses) incurred during the year	7	(279)
   Reclassification adjustments to profit	(22)	(9)
   Amount before income taxes and tax effects	(15)	(288)
   Income taxes and tax effects	2	84
   Remeasurements of defined benefit plans, net of tax	(13)	(205)
   Share of other comprehensive income of entities
   accounted for using equity method: Gains (losses) incurred during the year	44	64
   Total other comprehensive income	675	778

   (Consolidated Statement of Changes in Net Assets)

   Previous fiscal year (from April 1, 2023 to March 31, 2024)

   1. Class and total number of issued shares and class and number of treasury shares

      	Number of shares at the beginning of the year (Thousand shares)	Increase during the year (Thousand shares)	Decrease during the year (Thousand shares)	Number of shares at the end of the year (Thousand shares)
      Issued shares
      Common stock	23,971	-	-	23,971
      Total	23,971	-	-	23,971
      Treasury shares
      Common stock (Note 1)	405	0	-	405
      Total	405	0	-	405

      Notes: 1. The increase in the number of treasury shares of common stock is due to the purchase of shares less than one unit.

   2. The number of shares is rounded down to the nearest thousand shares.

1. Dividends

   1. Amount of dividends paid

      (Resolution)	Class of shares	Total amount of dividends (Million yen)	Dividend per share (Yen)	Record date	Effective date
      Ordinary general
      meeting of shareholders held on	Common stock	4,595	195	March 31, 2023	June 29, 2023
      June 28, 2023
      The Board of
      Directors meeting held on October 31,	Common stock	1,885	80	September 30, 2023	December 4, 2023
      2023

   2. Dividends whose record date falls in the current fiscal year but whose effective date falls in the following fiscal year

Current fiscal year (from April 1, 2024 to March 31, 2025)

1. Class and total number of issued shares and class and number of treasury shares

   	Number of shares at the beginning of the year (Thousand shares)	Increase during the year (Thousand shares)	Decrease during the year (Thousand shares)	Number of shares at the end of the year (Thousand shares)
   Issued shares
   Common stock	23,971	-	-	23,971
   Total	23,971	-	-	23,971
   Treasury shares
   Common stock (Note 1)	405	0	-	405
   Total	405	0	-	405

   Notes: 1. The increase in the number of treasury shares of common stock is due to the purchase of shares less than one unit.

2. The number of shares is rounded down to the nearest thousand shares.

   1. Dividends

      1. Amount of dividends paid

         (Resolution)	Class of shares	Total amount of dividends (Million yen)	Dividend per share (Yen)	Record date	Effective date
         Ordinary general
         meeting of shareholders held on	Common stock	3,535	150	March 31, 2024	June 27, 2024
         June 26, 2024
         The Board of
         Directors meeting held on October 31,	Common stock	2,710	115	September 30, 2024	December 2, 2024
         2024

      2. Dividends whose record date falls in the current fiscal year but whose effective date falls in the following fiscal year The Company will refer the following matter for deliberation as a proposal at the ordinary general meeting of

shareholders to be held on June 25, 2025.

(Consolidated Balance Sheet)

*1 Accumulated depreciation of property, plant and equipment

Accumulated depreciation of property, plant and

Previous fiscal year (As of March 31, 2024)

Current fiscal year (As of March 31, 2025)

equipment

167,136 million yen 175,856 million yen

*2 Assets or liabilities related to non-consolidated subsidiaries and affiliates included in each account are as follows:

Previous fiscal year (As of March 31, 2024)

Current fiscal year (As of March 31, 2025)

Investment securities (shares) 1,102 million yen 1,350 million yen

*3 Assets pledged as collateral

Previous fiscal year (As of March 31, 2024)

Current fiscal year (As of March 31, 2025)

Vessels 101,058 million yen 91,088 million yen

Liabilities corresponding to the aforementioned assets pledged as collateral are as follows:

Previous fiscal year (As of March 31, 2024)

Current fiscal year (As of March 31, 2025)

Short-term borrowings 18,682 million yen 8,981 million yen

Long-term borrowings 62,455 62,673

*4 Amount of tax purpose reduction entry due to national subsidies, etc.

Previous fiscal year (As of March 31, 2024)

Current fiscal year (As of March 31, 2025)

Vessels 432 million yen 432 million yen

5 Contingent liabilities

The Company has guaranteed the borrowings of unconsolidated companies from financial institutions. The guarantee obligations cover funds for purchasing vessels by affiliated companies.

Guarantee obligations

Previous fiscal year (As of March 31, 2024)

Current fiscal year (As of March 31, 2025)

SHINSHO SENPAKU KAISHA, LTD. 184 million yen 161 million yen

*6 Inventories

The breakdown of inventories is as follows:

Previous fiscal year (As of March 31, 2024)

Current fiscal year (As of March 31, 2025)

Raw materials and supplies 13,929 million yen 13,775 million yen

*7 Trade receivables and contract assets

The amount of trade receivables and contract assets from contracts with customers is as presented in "3. (1) Balances of contract assets and contract liabilities under [Notes to Consolidated Financial Statements], (Revenue Recognition)."

(Consolidated Statement of Cash Flows)

* The relationship between cash and cash equivalents at the end of the period and cash and deposits in the consolidated balance sheet

Previous fiscal year (From April 1, 2023

to March 31, 2024)

Current fiscal year (From April 1, 2024

to March 31, 2025)

Cash and deposits 37,069 million yen 40,793 million yen

Securities with a maturity of three months or less from the date of acquisition

10,000 14,991

Cash and cash equivalents 47,069 55,784

(Lease Transactions)

1. Finance lease transactions Not applicable.

2. Operating lease transactions

   Future lease payments for non-cancellable operating lease transactions

   (Million yen)

   	Previous fiscal year (As of March 31, 2024)	Current fiscal year (As of March 31, 2025)
   Due within one year	579	675
   Due after one year	198	1,585
   Total	777	2,259

   (Financial Instruments)

   1. Status of financial instruments

      1. Policy for financial instruments

         The Group obtains necessary funds through borrowings from financial institutions, by primarily taking into consideration its capital investment plan for conducting the marine transportation services and related businesses. In addition, the Group also procures short-term working capital through borrowings from financial institutions. The Group invests its funds in short-term deposits and the like, as well as in safe and secure financial assets. The Group uses derivative transactions to hedge the risks described below, and does not enter into any speculative transactions.

      2. Content and risks of financial instruments

         Trade notes and accounts receivable, which are trade receivables, are exposed to the credit risk of customers. Shares are investment securities, primarily constituted of shares of companies with which the Group has business relationships, and are exposed to the risk of market price fluctuations.

         Trade notes and accounts payable, which are trade payables, mostly have payment due dates within one year. Borrowings are mainly for the purpose of obtaining funds required for capital investment. Of these, borrowings with floating interest rates are exposed to the risk of interest rate fluctuations. Trade payables and borrowings are exposed to liquidity risk (risk of not being able to make payments when due).

         The Group companies, which are primarily engaged in the international shipping business, are required to hedge foreign exchange risk since most of their operating revenue and expenses are denominated in foreign currencies. In addition, the Company is required to hedge the risk of price fluctuations of fuel oil for the operation of vessels. For these purposes, the Group enters into derivative transactions.

         Specifically, the Group enters into interest rate swaps to hedge the risk of interest rate fluctuations related to borrowings, forward exchange contracts and the like to hedge exchange rate fluctuation risk related to revenue and expenses in foreign

         currencies, and fuel oil swap transactions to hedge fuel oil price fluctuation risk. In addition, the Group conducts currency swap transactions to hedge exchange rate fluctuation risk related to certain foreign currency-denominated borrowings. Further, the Group sometimes enters into in futures contracts to hedge the risk of fluctuations in freight and charter rates.

      3. Risk management system for financial instruments

         The Group monitors the collection of trade receivables, manages their balance by customer, and promptly grasps and addresses concerns about collection of trade receivables due to reasons such as deterioration of customers' financial position. Regarding securities, the Group invests in bonds and the like with high credit ratings in accordance with internal rules, and therefore is

         exposed to minimal credit risk. Regarding shares of which are investment securities, the Group periodically reports on reviews of their fair value to the Board of Directors.

         The liquidity risk of trade payables and borrowings is managed by each Group company by means such as creating a monthly cash flow plan.

         Regarding the execution and management of derivative transactions at the Company, transactions involving interest rate swaps, currency swaps, and forward exchange contracts are managed by the Finance and Accounting Group; transactions involving fuel oil swaps are managed by the Energy Group; and futures transactions on freight and charter rates are managed by each sales

         division group. All transactions are executed upon receiving approval of related items including purposes, notional principal amounts, contract terms, and structures by the director in charge each time derivative transactions are entered into.

         Regarding derivative transactions conducted by the Group companies based on guarantee or reservation of guarantee by the

         Company, transactions are managed by each Group company, as well as by the Finance and Accounting Group of the Company in an integrated manner after the prior approval of the transaction terms by the Company. Other derivative transactions are executed and managed by the General Manager or other senior staff of the Accounting Department of each company upon receiving the approval of the director in charge in accordance with the Accounting Rules and others and are reported to the Company. In entering into derivative transactions, the Company conducts transactions only with highly creditworthy financial institutions to minimize credit risk.

      4. Supplementary explanation on matters related to the fair value of financial instruments

      Fair value of financial instruments is calculated based on certain assumptions, and the fair value might differ if different assumptions are used. In addition, the contract amount and other amounts of derivative transactions described below in "2. Fair value of financial instruments" does not itself represent the market risk of the derivative transactions.

   2. Fair value of financial instruments

      The carrying amount on the consolidated balance sheet, fair value, and the difference between them are as follows.

      Previous fiscal year (as of March 31, 2024)

      	Carrying amount on the consolidated balance sheet (*2) (Million yen)	Fair value (*2) (Million yen)	Difference (Million yen)
      (1) Investment securities (*3)	4,515	4,515	-
      (2) Long-term borrowings	[96,565]	[96,220]	345
      (3) Derivative transactions (*4)	[293]	[294]	(1)

      Current fiscal year (as of March 31, 2025)

      	Carrying amount on the consolidated balance sheet (*2) (Million yen)	Fair value (*2) (Million yen)	Difference (Million yen)
      (1) Investment securities (*3)	4,131	4,131	-
      (2) Long-term borrowings	[85,016]	[84,205]	811
      (3) Derivative transactions (*4)	1,203	1,203	-

      (*1) "Cash and deposits," "trade notes and accounts receivable," "securities," "trade notes and accounts payable," and "short-term borrowings" are not presented as these items are cash and settled within a short period of time and their fair values are approximately equal to the carrying amounts.

      (*2) Figures in square brackets indicate financial instruments classified as liabilities.

      (*3) Shares that do not have a market price are not included in (1) Investment securities. These financial instruments are recorded on the consolidated balance sheet as follows:

      (Million yen)

      Classification	Previous fiscal year (As of March 31, 2024)	Current fiscal year (As of March 31, 2025)
      Shares of subsidiaries and affiliates	1,102	1,350
      Other unlisted shares	24	24
      Total	1,127	1,375

      (*4) Receivables and payables arising from derivative transactions are presented as net amounts. Figures in square brackets represent net liabilities.

      	Due within one year (Million yen)
      Cash and deposits	37,068
      Trade notes and accounts receivable	32,065
      Securities
      Held-to-maturity bonds (others)	10,000
      Total	79,133

      (Note 1) Scheduled redemption amounts of monetary receivables and securities with maturity dates after the fiscal year-end date Previous fiscal year (as of March 31, 2024)

      Current fiscal year (as of March 31, 2025)

      	Due within one year (Million yen)
      Cash and deposits	40,791
      Trade notes and accounts receivable	27,911
      Securities
      Held-to-maturity bonds (others)	14,991
      Total	83,692

      		Due after	Due after	Due after	Due after
      	Due within	one year but	two years but	three years but	four years but	Due after
      	one year	within two	within three	within four	within five	five years
      	(Million yen)	years	years	years	years	(Million yen)
      		(Million yen)	(Million yen)	(Million yen)	(Million yen)
      Short-term borrowings	530	-	-	-	-	-
      Long-term borrowings	20,748	13,394	23,173	8,450	7,002	23,798
      Total	21,278	13,394	23,173	8,450	7,002	23,798

      (Note 2) Scheduled repayment amounts of short-term borrowings and long-term borrowings after the fiscal year-end date Previous fiscal year (as of March 31, 2024)

      Current fiscal year (as of March 31, 2025)

      		Due after	Due after	Due after	Due after
      	Due within	one year but	two years but	three years but	four years but	Due after
      	one year	within two	within three	within four	within five	five years
      	(Million yen)	years	years	years	years	(Million yen)
      		(Million yen)	(Million yen)	(Million yen)	(Million yen)
      Short-term borrowings	300	-	-	-	-	-
      Long-term borrowings	14,279	23,986	14,032	7,066	12,163	13,489
      Total	14,579	23,986	14,032	7,066	12,163	13,489

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

      Fair value of financial instruments is classified into the following three levels, according to the observability and significance of the inputs used for determining the fair value.

      Level 1 fair value: Fair value determined by (unadjusted) market price of the identical assets or liabilities in active markets

      Level 2 fair value: Fair value determined by using directly or indirectly observable inputs other than the inputs used for Level 1 fair value

      Level 3 fair value: Fair value determined by using significant but unobservable inputs

      With the use of multiple inputs with significant impacts on fair value determination, such fair value is classified as the lowest priority level in determining the fair value of all levels to which each input belongs.

      1. Financial instruments measured at fair value Previous fiscal year (March 31, 2024)

         (Million yen)

         Classification	Fair value
         	Level 1	Level 2	Level 3	Total
         Investment securities
         Available-for-sale securities
         Shares	4,515	-	-	4,515
         Derivatives
         Interest-related transactions	-	(232)	-	(232)
         Currency-related transactions	-	(151)	-	(151)
         Fuel oil-related transactions	-	111	-	111
         Freight rate-related transactions	-	(22)	-	(22)

         Current fiscal year (March 31, 2025)

         (Million yen)

         Classification	Fair value
         	Level 1	Level 2	Level 3	Total
         Investment securities
         Available-for-sale securities
         Shares	4,131	-	-	4,131
         Derivatives
         Interest-related transactions	-	307	-	307
         Currency-related transactions	-	993	-	993
         Fuel oil-related transactions	-	(103)	-	(103)
         Freight rate-related transactions	-	7	-	7

      2. Financial instruments other than those measured at fair value Previous fiscal year (March 31, 2024)

(Million yen)

Current fiscal year (March 31, 2025)

(Million yen)

Note: A description of the valuation technique(s) and inputs used in the fair value measurements Investment securities

Fair value of listed shares is based on quoted prices. As listed shares are traded in active markets, their fair value is classified as Level 1.

Derivative transactions

Fair value of derivative transactions is calculated based on amounts such as prices quoted by the counterparty financial institution, and is classified as Level 2.

Long-term borrowings

Fair value of long-term borrowings with fixed interest rates is determined by discounting the total amount of principal and interest using the interest rates assumed to be applied if similar loan were newly made. Fair value of long-term borrowings with

floating interest rates is based on the carrying amount, as the fair value is approximately equal to the carrying amount considering that floating interest rates reflect the market rate in the short term and the credit standing of the Group has not changed

significantly after the execution of borrowings. Please note that long-term borrowings include the current portion of long-term borrowings.

(Securities)

1. Held-to-maturity bonds

   Previous fiscal year (as of March 31, 2024)

   	Type	Carrying amount on the consolidated balance sheet (Million yen)	Fair value (Million yen)	Difference (Million yen)
   		-	-	-
   Bonds whose fair value exceeds their carrying amount on the		-	-	-
   consolidated balance sheet		-	-	-
   	Subtotal	-	-	-
   		-	-	-
   Bonds whose fair value does not exceed their carrying amount on		-	-	-
   the consolidated balance sheet		10,000	10,000	-
   	Subtotal	10,000	10,000	-
   Total		10,000	10,000	-

   1. Government bonds/ local government bonds

   2. Corporate bonds

   3. Others

   1. Government bonds/ local government bonds

   2. Corporate bonds

   3. Others

   Current fiscal year (as of March 31, 2025)

   	Type	Carrying amount on the consolidated balance sheet (Million yen)	Fair value (Million yen)	Difference (Million yen)
   		-	-	-
   Bonds whose fair value exceeds their carrying amount on the		-	-	-
   consolidated balance sheet		-	-	-
   	Subtotal	-	-	-
   		-	-	-
   Bonds whose fair value does not exceed their carrying amount on		-	-	-
   the consolidated balance sheet		14,991	14,991	-
   	Subtotal	14,991	14,991	-
   Total		14,991	14,991	-

   1. Government bonds/ local government bonds

   2. Corporate bonds

   3. Others

   1. Government bonds/ local government bonds

   2. Corporate bonds

   3. Others

2. Available-for-sale securities

   Previous fiscal year (as of March 31, 2024)

   	Type	Carrying amount on the consolidated balance sheet (Million yen)	Acquisition cost (Million yen)	Difference (Million yen)
   	(1) Shares	4,411	1,275	3,136
   Securities whose carrying amount	(2) Bonds	-	-	-
   on the consolidated balance sheet exceeds their acquisition cost	(3) Others	-	-	-
   	Subtotal	4,411	1,275	3,136
   	(1) Shares	104	120	(16)
   Securities whose carrying amount on the consolidated balance sheet	(2) Bonds	-	-	-
   does not exceed their acquisition cost	(3) Others	-	-	-
   	Subtotal	104	120	(16)
   Total		4,515	1,395	3,120

   Current fiscal year (as of March 31, 2025)

   	Type	Carrying amount on the consolidated balance sheet (Million yen)	Acquisition cost (Million yen)	Difference (Million yen)
   	(1) Shares	4,131	1,321	2,811
   Securities whose carrying amount	(2) Bonds	-	-	-
   on the consolidated balance sheet exceeds their acquisition cost	(3) Others	-	-	-
   	Subtotal	4,131	1,321	2,811
   	(1) Shares	-	-	-
   Securities whose carrying amount on the consolidated balance sheet	(2) Bonds	-	-	-
   does not exceed their acquisition cost	(3) Others	-	-	-
   	Subtotal	-	-	-
   Total		4,131	1,321	2,811

3. Sales of available-for-sale securities

Previous fiscal year (from April 1, 2023 to March 31, 2024)

Current fiscal year (from April 1, 2024 to March 31, 2025)

(Derivative Transactions)

1. Derivative transactions for which hedge accounting is not applied

   1. Currency-related transactions

      Previous fiscal year (as of March 31, 2024) Not applicable.

      Current fiscal year (as of March 31, 2025) Not applicable.

   2. Other transactions

      Previous fiscal year (as of March 31, 2024)

      Classification	Transaction type	Contract amount (Million yen)	Of contract amount, transactions due over one year (Million yen)	Fair value (Million yen)	Gain or loss on valuation (Million yen)
      Transactions other than market transactions	Freight rates (futures transactions on charter rates) Short position	184	-	(22)	(22)
      Total		184	-	(22)	(22)

      Current fiscal year (as of March 31, 2025)

      Classification	Transaction type	Contract amount (Million yen)	Of contract amount, transactions due over one year (Million yen)	Fair value (Million yen)	Gain or loss on valuation (Million yen)
      Transactions other than market transactions	Freight rates (futures transactions on charter rates) Short position	339	-	7	7
      	Fuel oil swap transactions Paying fixed interest/Receiving floating interest	2,808	1,079	(103)	(103)
      Total		3,147	1,079	(97)	(97)

2. Derivative transactions for which hedge accounting is applied

   1. Currency-related transactions

      Previous fiscal year (as of March 31, 2024)

      Hedge accounting method	Transaction type	Major hedged item	Contract amount (Million yen)	Of contract amount, transactions due over one year (Million yen)	Fair value (Million yen)
      Principle method	Forward exchange contracts Short position U.S. dollar U.S. dollar	Trade receivables Vessel sale proceeds	442 4,570	- -	(5) (146)
      Total			5,012	-	(151)

      Current fiscal year (as of March 31, 2025)

      Hedge accounting method	Transaction type	Major hedged item	Contract amount (Million yen)	Of contract amount, transactions due over one year (Million yen)	Fair value (Million yen)
      Principle method	Forward exchange contracts Long position U.S. dollar	Vessel purchase fund	49,657	46,562	993
      Total			49,657	46,562	993

   2. Interest-related transactions

      Previous fiscal year (as of March 31, 2024)

      Hedge accounting method	Transaction type	Major hedged item	Contract amount (Million yen)	Of contract amount, transactions due over one year (Million yen)	Fair value (Million yen)
      Principle method	Interest rate swap transactions Paying fixed interest/Receiving floating interest	Interest on borrowings	35,274	30,678	(231)
      Special treatment for interest rate swaps	Interest rate swap transactions Paying fixed interest/Receiving floating interest	Interest on borrowings	4,913	-	(1)
      Total			40,187	30,678	(232)

      Current fiscal year (as of March 31, 2025)

      Hedge accounting method	Transaction type	Major hedged item	Contract amount (Million yen)	Of contract amount, transactions due over one year (Million yen)	Fair value (Million yen)
      Principle method	Interest rate swap transactions Paying fixed interest/Receiving floating interest	Interest on borrowings	30,649	26,250	307
      Total			30,649	26,250	307

   3. Other transactions

Previous fiscal year (as of March 31, 2024)

Current fiscal year (as of March 31, 2025) Not applicable.

(Retirement Benefits)

1. Outline of adopted retirement benefit plans

   The Company and its domestic consolidated subsidiaries have established a lump-sum retirement payment plan as a defined benefit plan. The Company has established a retirement benefit trust for its lump-sum retirement payment plan.

   The Company and certain consolidated subsidiaries have adopted a contract-type defined benefit corporate pension plan, and certain other consolidated subsidiaries have adopted the Smaller Enterprise Retirement Allowance Mutual Aid Scheme.

   Certain employees may be entitled to additional special retirement benefits.

2. Defined benefit plan

   	Previous fiscal year	Current fiscal year
   	(From April 1, 2023	(From April 1, 2024
   	to March 31, 2024)	to March 31, 2025)
   Beginning balance of retirement benefit obligations	4,246 million yen	4,420 million yen
   Service cost	269	270
   Interest cost	29	33
   Actuarial gains or losses	208	105
   Retirement benefits paid	(369)	(154)
   Prior service cost	37	-
   Ending balance of retirement benefit obligations	4,420	4,674

   1. Reconciliation between the beginning and ending balances of retirement benefit obligations (excluding plans for which the simplified method is applied)

      	Previous fiscal year	Current fiscal year
      	(From April 1, 2023	(From April 1, 2024
      	to March 31, 2024)	to March 31, 2025)
      Beginning balance of pension assets	5,864 million yen	6,070 million yen
      Expected return on plan assets	55	57
      Actuarial gains or losses	252	(175)
      Contributions by business owners	249	269
      Retirement benefits paid	(350)	(144)
      Ending balance of pension assets	6,070	6,078

   2. Reconciliation between the beginning and ending balances of pension assets (excluding plans for which the simplified method is applied)

      	Previous fiscal year	Current fiscal year
      	(From April 1, 2023	(From April 1, 2024
      	to March 31, 2024)	to March 31, 2025)
      Beginning balance of retirement benefit liability	125 million yen	139 million yen
      Retirement benefit expenses	39	63
      Retirement benefits paid	(8)	(16)
      Contributions to the plans	(17)	(18)
      Ending balance of retirement benefit liability	139	168

   3. Reconciliation between the beginning and ending balances of retirement benefit liability of the plans for which the simplified method is applied