FINANCIALS MEIDENSHA REPORT 2020

For the year ended March 31, 2020 Contents

Financial Highlights 02

CONSOLIDATED BALANCE SHEETS 03

CONSOLIDATED STATEMENTS OF INCOME/CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 05

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS 06

CONSOLIDATED STATEMENTS OF CASH FLOWS 07

Notes to Consolidated Financial Statements 08

Independent Auditor’s Report 38

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.

01 Financial Highlights Meidensha Corporation and Consolidated Subsidiaries Years ended March 31

Millions of Yen Thousands of U.S. Dollars (except per share data) (except per share data) 2016 2017 2018 2019 2020 2020 For the year: Order received ¥ 247,747 ¥ 224,137 ¥ 273,568 ¥ 240,310 ¥ 244,181 $ 2,240,193 Net sales 237,404 220,141 241,833 245,033 255,749 2,346,321 Operating income 10,518 8,849 11,381 10,336 12,726 116,752 Net income attributable to owners of the 6,962 5,743 7,057 7,654 8,208 75,303 parent Capital expenditures 8,314 7,355 7,584 7,896 16,043 147,183 Depreciation and amortization 8,574 8,664 8,898 9,204 9,766 89,596 R&D expenses 9,970 9,462 9,403 9,458 10,468 96,037

Per share data (yen and U.S. dollars): Net income 153.42 126.56 155.52 168.68 180.91 1.66 Cash dividends 8.00 8.00 9.00 29.00 50.00 0.46

At year-end: Total assets 255,025 247,647 264,457 265,586 270,411 2,480,835 Total net assets 68,772 74,313 81,229 84,498 90,118 826,771 Number of employees 8,408 8,474 8,995 9,297 9,599 — 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, 2020, which was ¥109 to U.S $1. 2. Figures for employee numbers exclude those employees on temporary contracts. 3. A reverse split of stocks was conducted on October 1.2018 at a ratio of 1-for-5 common stocks. The amount of net income per share was calculated by assuming the reverse split of stocks was conducted at the beginning of the year ended March 31. 2016. 4. The amount of cash dividends per share for March 31. 2020 is ¥50, which is the total of the interim dividends of ¥25 and the year-end dividends of ¥25.

The Group has been steadily implementing the measures under the Medium - Term Management Plan 2020 by conducting strategic investments in three areas: growth businesses, earnings-base businesses and new growth businesses. The impact of the novel coronavirus on consolidated results during the fiscal year under review was relatively minor. As a result, operating income was at a record level, and achieved the operating margin of 5%. Consolidated net sales in the fiscal year ended March 31, 2020, increased by 4.4% under the previous fiscal year to ¥255,748 million, operating income increased by 23.1% to ¥12,725 million, and net income attributable to owners of the parent increased by 7.2% to ¥8,208 million.

Net sales Net income attributable to owners of Total assets ( Millions of yen ) the parent ( Millions of yen ) ( Millions of yen )

300,000 10,000 300,000

264,457 265,586 270,411 255,025 250,000 255,749 250,000 247,647 237,404 241,833 245,033 8,000 8,208 7,654 220,141 6,962 7,057 200,000 200,000 6,000 5,743 150,000 150,000

4,000 100,000 100,000

2,000 50,000 50,000

0 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

02 CONSOLIDATED BALANCE SHEETS MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (as of March 31, 2020 and 2019)

Thousands of Millions of yen U.S. dollars (Note1) Assets 2020 2019 2020 Current assets: Cash and time deposits (Note 18) ¥ 13,272 ¥ 12,688 $ 121,761 Receivables: Trade notes 2,707 5,099 24,835 Electronically recorded monetary claims 7,233 6,508 66,358 Trade accounts 85,830 81,118 787,432 Loans receivable and advances 1,201 1,491 11,018 Due from unconsolidated subsidiaries and affiliates 70 1,293 642 Allowance for doubtful accounts (122) (123) (1,119) Inventories (Note 5) 43,205 42,649 396,376 Other current assets 3,163 3,008 29,018 Total current assets 156,559 153,731 1,436,321

Property, plant and equipment: Land (Note 17) 12,961 12,602 118,908 Buildings and structures (Notes 6 and 17) 91,978 87,891 843,835 Machinery and equipment (Notes 6 and 17) 75,215 72,825 690,046 Right of use assets (Note 13) 2,561 — 23,495 Construction in progress 5,534 1,188 50,771 Accumulated depreciation (116,975) (111,175) (1,073,165) Net property, plant and equipment 71,274 63,331 653,890

Investments and other assets: Investment securities (Notes 4 and 8) 14,012 18,824 128,551 Investments in unconsolidated subsidiaries and affiliates (Note 4) 93 1,325 853 Long-term loans receivable 33 31 303 Deferred tax assets (Note 16) 16,040 15,130 147,156 Software 5,449 5,433 49,991 Goodwill 3,976 4,645 36,477 Other assets 3,013 3,174 27,642 Allowance for doubtful accounts (38) (38) (349) Total investments and other assets 42,578 48,524 390,624 Total assets ¥ 270,411 ¥ 265,586 $ 2,480,835

See accompanying notes to consolidated financial statements.

03 CONSOLIDATED BALANCE SHEETS MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (as of March 31, 2020 and 2019)

Thousands of Million of yen U.S. dollars (Note1) Liabilities and Net assets 2020 2019 2020 Current liabilities: Short-term borrowings (Note 7) ¥ 5,700 ¥ 6,838 $ 52,294 Commercial paper (Note 7) 3,000 — 27,523 Current portion of long-term debt (Note 7) 4,364 3,090 40,037 Payables: Trade notes 5,470 6,041 50,183 Electronically recorded monetary obligations 5,637 5,046 51,716 Trade accounts 30,484 27,212 279,670 Due to unconsolidated subsidiaries and affiliates 12 433 110 Advances received from customers 12,488 14,473 114,569 Accrued income taxes 1,693 1,839 15,532 Accrued bonuses for employees 7,563 7,124 69,385 Provision for product warranties 1,373 1,422 12,596 Provision for loss on orders 934 1,107 8,569 Other current liabilities 22,304 30,154 204,623 Total current liabilities 101,022 104,779 926,807

Long-term liabilities: Corporate bonds (Note 7) 11,000 5,000 100,917 Long-term debt (Note 7) 21,932 24,594 201,211 Net defined benefit liability (Note 9) 41,824 43,145 383,706 Provision for environmental measures 399 426 3,661 Deferred tax liabilities (Note 16) 75 3 688 Other Long-term liabilities 4,041 3,141 37,074 Total Long-term liabilities 79,271 76,309 727,257

Contingent liabilities (Note 12)

Net assets (Note 10): Common stock Authorized − 115,200,000 shares Issued − 45,527,540 shares 17,070 17,070 156,606 Capital surplus 11,402 11,924 104,606 Retained earnings 55,605 49,665 510,137 Less:Treasury stock, at cost (189) (187) (1,734) Unrealized gains (losses) on securities, net of taxes 4,109 6,974 37,697 Unrealized gains (losses) on hedging derivatives, net of taxes 6 6 55 Foreign currency translation adjustment 258 1,086 2,367 Remeasurements of defined benefit plans, net of taxes (1,149) (2,818) (10,541) Non-controlling interests 3,006 778 27,578 Total net assets 90,118 84,498 826,771 Total liabilities and net assets ¥ 270,411 ¥ 265,586 $ 2,480,835

See accompanying notes to consolidated financial statements.

04 CONSOLIDATED STATEMENTS OF INCOME MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2020, 2019 and 2018)

Thousands of Millions of yen U.S. dollars (Note1) 2020 2019 2018 2020 Net sales (Note 15) ¥ 255,749 ¥ 245,033 ¥ 241,833 $ 2,346,321 Cost of sales (Notes 13 and 14) 192,642 185,027 181,430 1,767,358 Selling, general and administrative expenses (Notes 13 and 14) 50,381 49,670 49,022 462,211 Operating income (Note 15) 12,726 10,336 11,381 116,752

Other income (expenses): Interest and dividend income 625 612 556 5,734 Interest expense (621) (625) (478) (5,697) Equity in net income of unconsolidated subsidiaries and affiliates 18 152 — 165 Equity in net loss of unconsolidated subsidiaries and affiliates — — (902) — Gain on sales of fixed assets 7 239 17 64 Gain on acquisition of subsidiaries achieved in stages 366 — — 3,358 Loss on disposal of fixed assets (49) (21) (33) (450) Gain on sales of investment securities (Note 4) 1 201 481 9 Loss on valuation of investment securities (367) — (0) (3,367) Litigation expenses (657) (485) (401) (6,028) Compensation for damage — (282) (200) — Others (608) 146 (149) (5,577) Income before income taxes and non-controlling interests 11,441 10,273 10,272 104,963 Income taxes : Current 3,574 3,504 4,351 32,789 Deferred (511) (679) (1,143) (4,688) Total 3,063 2,825 3,208 28,101 Net income 8,378 7,448 7,064 76,862 Net income (loss) attributable to non-controlling interests 170 (206) 7 1,559 Net income attributable to owners of the parent (Note 20) ¥ 8,208 ¥ 7,654 ¥ 7,057 $ 75,303

Yen U.S. dollars (Note1) 2020 2019 2018 2020 Amounts per share of common stock (Note 20): Net income ¥ 180.91 ¥ 168.68 ¥ 155.52 $ 1.66 Cash dividends applicable to the year 50.00 29.00 9.00 0.46 See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2020, 2019 and 2018)

Thousands of Millions of yen U.S. dollars (Note1) 2020 2019 2018 2020 Net income ¥ 8,378 ¥ 7,448 ¥ 7,064 $ 76,862 Other comprehensive income Unrealized gains (losses) on securities, net of taxes (2,864) (1,285) 826 (26,276) Unrealized gains (losses) on hedging derivatives, net of taxes (1) 1 23 (9) Foreign currency translation adjustment (839) (627) 360 (7,697) Remeasurements of defined benefit plans 1,669 362 1,276 15,312 Share of other comprehensive income of unconsolidated subsidiaries and affiliates accounted for using equity method — — 60 — Total other comprehensive income (Note 11) (2,035) (1,549) 2,545 (18,670) Comprehensive income 6,343 5,899 9,609 58,193 Comprehensive income attributable to: Owners of the parent 6,184 6,094 9,578 56,734 Non-controlling interests 159 (195) 31 1,459 See accompanying notes to consolidated financial statements.

05 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2020, 2019 and 2018)

Millions of yen Unrealized Unrealized Remeasure- gains gains (losses) Foreign ments of Treasury (losses) on on hedging currency defined Non- Number of Common Capital Retained stock, at securities, derivatives, translation benefit plans, controlling shares issued stock surplus earnings cost net of taxes net of taxes adjustment net of taxes interests Total Net assets at April 1, 2017 227,637,704 ¥17,070 ¥13,197 ¥38,861 ¥(177) ¥7,432 ¥(17) ¥1,326 (¥4,455) ¥1,076 ¥74,313 Net income (loss) attributable to owners of the parent 7,057 7,057 Cash dividends paid (1,815) (1,815) Purchase of treasury stock (5) (5) Disposal of treasury stock — Change in ownership interest of parent due to transactions with non-controlling interests (762) (762) Others, net 826 23 397 1,275 (80) 2,441 Balance at March 31, 2018 227,637,704 ¥17,070 ¥12,435 ¥44,103 ¥(182) ¥8,258 ¥6 ¥1,723 ¥(3,180) ¥996 ¥81,229 Net assets at April 1, 2018 227,637,704 ¥17,070 ¥12,435 ¥44,103 ¥(182) ¥8,258 ¥6 ¥1,723 (¥3,180) ¥996 ¥81,229 Net income (loss) attributable to owners of the parent 7,654 7,654 Cash dividends paid (2,042) (2,042) Purchase of treasury stock (6) (6) Disposal of treasury stock 1 1 Change of merger (50) (50) Change in ownership interest of parent due to transactions with non-controlling interests (511) (511) Others, net (1,284) (637) 362 (218) (1,777) Balance at March 31, 2019 45,527,540 ¥17,070 ¥11,924 ¥49,665 ¥(187) ¥6,974 ¥6 ¥1,086 ¥(2,818) ¥778 ¥84,498 Net assets at April 1, 2019 45,527,540 ¥17,070 ¥11,924 ¥49,665 ¥(187) ¥6,974 ¥6 ¥1,086 (¥2,818) ¥778 ¥84,498 Net income (loss) attributable to owners of the parent 8,208 8,208 Cash dividends paid (2,268) (2,268) Purchase of treasury stock (2) (2) Disposal of treasury stock 0 0 0 Change in ownership interest of parent due to transactions with non-controlling interests (522) (522) Others, net (2,865) (0) (828) 1,669 2,228 204 Balance at March 31, 2020 45,527,540 ¥17,070 ¥11,402 ¥55,605 ¥(189) ¥4,109 ¥6 ¥258 ¥(1,149) ¥3,006 ¥90,118 Thousands of U.S. dollars (Note 1) Unrealized Unrealized Remeasure- gains gains (losses) Foreign ments of Treasury (losses) on on hedging currency defined Non- Number of Common Capital Retained stock, at securities, derivatives, translation benefit plans, controlling shares issued stock surplus earnings cost net of taxes net of taxes adjustment net of taxes interests Total Net assets at April 1, 2019 45,527,540 $156,606 $109,394 $455,642 $(1,716) $63,982 $55 $9,963 $(25,853) $7,138 $775,211 Net income (loss) attributable to owners of the parent 75,303 75,303 Cash dividends paid (20,808) (20,808) Purchase of treasury stock (18) (18) Disposal of treasury stock 0 0 0 Change in ownership interest of parent due to transactions with non-controlling interests (4,788) (4,788) Others, net (26,285) (0) (7,596) 15,312 20,440 1,871 Balance at March 31, 2020 45,527,540 $156,606 $104,606 $510,137 $(1,734) $37,697 $55 $2,367 $(10,541) $27,578 $826,771 See accompanying notes to consolidated financial statements. A reverse split of stocks was conducted on October 1.2018 at a ratio of 1-for-5 common stocks.

06 CONSOLIDATED STATEMENTS OF CASH FLOWS MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (Years ended March 31, 2020, 2019 and 2018)

Thousands of Millions of yen U.S.dollars (Note1) 2020 2019 2018 2020 Operating activities: Income before income taxes and non-controlling interests ¥ 11,441 ¥ 10,273 ¥ 10,272 $ 104,963 Adjustments to reconcile income before income taxes and non- controlling interests to net cash provided by operating activities: Depreciation and amortization 9,201 8,623 8,673 84,414 Amortization of goodwill 565 581 225 5,183 Increase(decrease) in provisions 275 218 1,369 2,523 Increase(decrease) in net defined benefit liability 1,021 600 1,176 9,367 Interest and dividend income (625) (612) (556) (5,734) Interest expense 621 625 478 5,697 Equity in net loss(income) of unconsolidated subsidiaries and affiliates (18) (152) 902 (165) Loss on valuation of investment securities 367 — 0 3,367 Gain on acquisition of subsidiaries achieved in stages (366) — — (3,358) Decrease(increase) in trade receivables (4,407) 821 (12,209) (40,431) Decrease(increase) in inventories (649) (965) (309) (5,954) Increase(decrease) in trade payables (4,708) (1,204) 7,701 (43,193) Others 1,451 447 2,601 13,312 Sub-total 14,169 19,255 20,323 129,991 Interest and dividend received 675 648 608 6,193 Interest expense paid (619) (625) (482) (5,679) Income taxes paid (3,809) (4,913) (2,474) (34,945) Net cash provided by operating activities 10,416 14,365 17,975 95,560 Investing activities: Purchase of property, plant and equipment, and intangible assets (14,909) (7,831) (7,083) (136,780) Proceeds from sales of investment securities 287 — 648 2,633 Purchase of stocks of unconsolidated subsidiaries and affiliates (10) — (587) (92) Proceeds from purchase of investment in consolidated subsidiaries in resulting change in scope of consolidation 1,649 — — 15,128 Others (717) (243) (560) (6,577) Net cash used in investing activities (13,700) (8,074) (7,582) (125,688) Financing activities: Net increase (decrease) in short-term borrowings (649) 985 (1,916) (5,954) Increase (decrease) in commercial paper 3,000 (6,000) (9,000) 27,523 Proceeds from long-term debt 1,727 7,249 — 15,844 Repayment of long-term debt (3,097) (2,586) (3,438) (28,413) Proceeds from issuance of corporate bonds 6,000 — 5,000 55,046 Proceeds from share issuance to non-controlling shareholders 13 — — 119 Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation (522) — — (4,789) Cash dividends paid (2,268) (2,043) (1,814) (20,807) Cash dividends paid to non-controlling interests (3) (8) (18) (28) Others (465) (698) (44) (4,266) Net cash provided by (used in) financing activities 3,736 (3,101) (11,230) 34,275 Changes in exchange rates on cash and cash equivalents (264) 5 25 (2,422) Net increase (decrease) in cash and cash equivalents 188 3,195 (812) 1,725 Cash and cash equivalents at beginning of year 12,433 9,237 10,009 114,064 Increase in cash and cash equivalents due to addition of consolidated subsidiaries — — 40 — Increase in cash and cash equivalents resulting from merger — 1 — — Cash and cash equivalents at end of the year (Note 18) ¥ 12,621 ¥ 12,433 ¥ 9,237 $ 115,789 07 See accompanying notes to consolidated financial statements. Notes to Consolidated Financial Statements MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES

1. Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements of MEIDENSHA CORPORATION (“the Company”) and its consolidated subsidiaries 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, 2020, which was ¥109 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 a) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its 40, 37 and 37 consolidated subsidiaries in the years ended March 31, 2020, 2019 and 2018, respectively. Principles of Consolidation for the years ended March 31, 2020, 2019 and 2018 were as follows:

(2020) An affiliated company EAML ENGINEERING CO.,Ltd. was added to the scope of consolidation due to purchase of additional shares and acquiring a controlling interest. MEIDEN HANGZHOU DRIVE TECHNOLOGY CO., LTD., and Meiden Master Partners Corporation were newly established this fiscal year and were added to the scope of consolidation.

(2019) Not applicable.

(2018) SADO MEIDEN SERVICE CORPORATION was newly established in fiscal year 2018 and added to the scope of consolidation. Furthermore, Prime Meiden Ltd. was added to the scope of consolidation, due to its increasing significance. MEIDEN EUROPE LTD. and MEIDENSHA (SHANGHAI) CORPORATE MANAGEMENT CO., LTD. were liquidated and excluded from the scope of consolidation in fiscal year 2018. The consolidated subsidiary MEIDEN AMERICA, INC. merged another consolidated subsidiary MEIDEN TECHNICAL CENTER NORTH AMERICA LLC, and it was excluded from the scope of consolidation.

All significant inter-company accounts and transactions are eliminated in consolidation. The number of unconsolidated subsidiaries, whose total assets, sales, net income (loss), and retained earnings are not significant in the aggregate in relation to the comparable figures in the consolidated financial statements, are 5, 5, and 6 in the years ended March 31, 2020, 2019 and 2018, respectively.

In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to non-controlling shareholders, are evaluated using the fair value when the Group acquired controls over the respective subsidiaries.

08 The closing date of following companies are December 31. MEIDENSHA (SHANGHAI) CORPORATE MANAGEMENT CO.,LTD., MEIDEN ZHENGZHOU ELECTRIC CO., LTD., MEIDEN HANGZHOU DRIVE SYSTEMS CO., LTD., DONGGUAN MEIDEN PACIFIC ELECTRICAL ENGINNERING COMPANY LIMITED, SHANGHAI MEIDENSHA CHANGCHENG SWITCHGEAR CO., LTD., MEIDEN HANGZHOU DRIVE TECHNOLOGY CO., LTD. For the consolidation purposes, provisional settlement of accounts as of the year end of March is used.

b) Equity Method Investments in affiliated companies (all 20% to 50% owned) are accounted for by the equity method for the years ended March 31, 2020, 2019 and 2018. The equity method was applied to one affiliate during the years ended March 31, 2019, 2018. Not applicable for the fiscal year ended March 31, 2020. Investments in 5, 5 and 6 unconsolidated subsidiaries and 2, 3 and 3 other affiliated companies, that would not have material effect on the consolidated financial statements, were stated at cost in the years ended March 31, 2020, 2019 and 2018, respectively.

c) 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.

d) 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, (a) 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 (b) 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”)

09 e) 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 a devaluation reflecting reduced profitability. f) 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. g) Intangible Assets Amortization of the software for internal use is computed by the straight-line method over the estimated useful lives (three to five 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 twelve years). h) Goodwill Goodwill is amortized using the straight-line method over mainly 10 years of effective period. i) 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. However, as described in v) Change in Accounting Policies, consolidated overseas subsidiaries started to apply International Financial Reporting Standard No.16 (hereafter, IFRS No.16) from this fiscal year. In principle, leesees are required to recognize almost all lease as assets or liabilities in the balance sheet, and Right-of-Use assets are amortized using the straight-line method. j) 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. k) Accrued Bonuses for Employees The Group provides accruals for the employee bonuses, based on the actual payment in the past. l) Provision for Product Warranties The Group makes provision for product warranty by individually estimating the expected expenses. m) Provision for Loss on Orders The Group makes provision for losses on orders by estimating the expected losses incurred after the balance sheet date. n) 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. o) 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.

10 (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 is recorded as the amount which would be paid for voluntary retirement as of the balance sheet date.

The Company and certain consolidated subsidiaries changed retirement allowance policy and extended the retirement age to 65 from 60 on April 2020. Due to this change, retirement benefit liabilities decreased for ¥2,295 million ($21,055 thousand), and the same amount was recognized as in past service cost. The past service cost was amortized using the straight-line method, based on certain years (10 years) within employees average remaining service periods.

p) Revenue Recognition of Construction Contracts The Group applies the percentage-of-completion method when the outcome of individual contracts can be reliably estimated. The percentage/stage of completion at the end of the reporting period is measured by the proportion of the cost incurred to the estimated total cost.

q) 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. The Company and some consolidated domestic subsidiaries adopted consolidated tax return system. Having regard to paragraph 3 of “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (PITF No.39, March 31, 2020), the Company and its certain domestic consolidated subsidiaries did not follow paragraph 44 of “Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018) but applied provisions of pre-amended tax laws when calculating the amounts of deferred tax assets and liabilities that relate to transitioning to the group taxation system and related amendments of tax laws for transitioning to the single tax payment system.

r) 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 years ended March 31, 2020, 2019 and 2018, 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.

s) 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.

t) 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.

11 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. u) Reclassifications Certain prior years’ amounts were reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or retained earnings. v) Change in Accounting Policies Consolidated subsidiaries using International Financial Reporting Standards started to apply IFRS Statement No.16 Lease (hereafter “IFRS16”) from the current fiscal year. In accordance with IFRS16, lessees are required to recognize almost all leases as assets or liabilities in the balance sheet. In applying this standard, the method of recognizing the cumulative effect of the application of the standard, which is recognized as a transitional treatment, is adopted at the date of initial application. As a result, in the consolidated balance sheet of the current consolidated fiscal year, “Right-of-use-assets” increased by ¥1,174 million ($10,771 thousand) in tangible fixed asset. In addition, “Others” classified as current liabilities increased by ¥391 million ($3,587 thousand) and “Other” classified as Long-term liabilities increased by ¥803 million ($ 7,367 thousand). The effects on the consolidated statement of income for the current consolidated fiscal year were inconsequential. w) Accounting Standards issued but not adopted Accounting Standards issued but not adopted as of March 31, 2020.

–“Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020) –“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30, March 31, 2020)

(1) Overview The above standard and guidance provide comprehensive principles for revenue recognition. 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.

(2) Effective date Effective from the beginning of the fiscal year ending March 31, 2022.

(3) Effects of application of the Standards The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards on the consolidated financial statements.

–“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) –“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4, 2019) –“Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019) –“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019) –“Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Statement No. 19, March 31, 2020)

(1) Overview In order to enhance comparability with internationally recognized accounting standards, “Accounting Standard for Fair Value Measurement” and “Implementation Guidance on Accounting Standard for Fair Value Measurement” (together, hereinafter referred to as “Fair Value Accounting Standards”) were developed and guidance on methods measuring fair value was issued. Fair Value Accounting Standards are applicable to the fair value measurement of the following items:

–Financial instruments in “Accounting Standard for Financial Instruments” –“Inventories held for trading purposes in “Accounting Standard for Measurement of Inventories”

12 In addition, following “Guidance on Disclosures about Fair Value of Financial Instruments” was revised, Notes for breakdowns of each levels of fair value of financial instruments were settled.

(2) Effective date Fair value Accounting Standards and guidance will be effective from the beginning of the consolidated fiscal year ending March 31, 2022.

(3) Effects of application of the standards The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards on the consolidated financial statements.

–“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ Statement No.24, March 31, 2020)

(1) Overview The revised standard requires disclosure of accounting principles and procedures for disclosure when the provisions of related accounting standards are not clear.

(2) Effective date Effective from the ending of the fiscal year ending March 31, 2021.

–“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No.31, March 31, 2020)

(1) Overview The purpose of the above accounting standard is to disclose information that contributes to the understanding of users of financial statements regarding the content of accounting estimates for items that have a risk of having a significant impact on the financial statements of the following year.

(2) Effective date Effective from the ending of the fiscal year ending March 31, 2021.

x) Change in presentation Not applicable for the fiscal year ended March 31, 2020. Changes in presentation for the year ended March 31, 2019 were as follows:

(Partial amendments to Accounting Standard for Tax Effect Accounting)

“Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018 (hereinafter, “Statement No.28”)) became applicable for the consolidated financial statements from the fiscal year ended March 31,2019. As a result, the Company and its domestic subsidiaries adopted Statement No.28 and changed the presentation and related notes of deferred tax assets and deferred tax liabilities, such that deferred tax assets and deferred tax liabilities are classified as part of ‘investments and other assets’ and ‘non-current liabilities’, respectively. As a result, in the consolidated balance sheet of the fiscal year ended March 31,2018, “deferred tax assets” of ¥4,348 million classified in “current assets” were presented in “investments and other assets” of ¥14,088 million. The notes related to tax effect accounting additionally included those described in notes 8 (excluding total amount of valuation reserves) and 9 of “Accounting Standard for Tax Effect Accounting”, which are required in paragraphs 3 to 5 of Statement No.28. However, those additional information corresponding to the fiscal year ended March 31,2018 is not disclosed, following the transitional treatments prescribed in paragraph 7 of Statement No.28.

13 3. Financial Instruments Information on financial instruments for the year ended March 31, 2020 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 are 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

(i) 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.

(ii) 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.

(iii) Management of liquidity risk (risk that payment 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.

14 (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. Items related to the calculation of fair values of financial instruments and securities and derivatives transactions Assets

(1) Cash and time deposits, (2) Trade notes and trade accounts receivable (3) Electronically recorded monetary claims These assets are settled in short-term and fair value is nearly equivalent to book value, therefore the book value is used. (4) Securities and investment securities The fair value of stocks is price at capital markets and fair value of debt securities is price at capital markets or price presented by correspondent financial institutions and similar institutions. For the details, please refer to the Note 4 (Securities). (5) Long-term loans receivable The fair value of long-term loans is calculated by discounting relevant cash flows with the interest rate assumed for a new loan of the same type.

Liabilities

(1) Trade notes and trade accounts payable, (2) Electronically recorded monetary obligations, (3) Short-term borrowings, (4) Commercial paper, (5) Accounts payable - other, (6) Accrued income taxes These liabilities are settled in short-term and fair value is nearly equivalent to book value, therefore the book value is used. (7) Corporate Bonds The fair value of corporate bonds is calculated on the basis of market price. (8) Long-term debt The fair value of long-term debt is calculated by discounting relevant cash flows with interest rate assumed for a new loan of the same type. For the fair value of long-term debt with floating rate interest subject to “special treatment” of interest rate swaps, the total of principal and interest, which is treated together with the interest rate swap is discounted with the interest reasonably expected to be applied for a similar type of debt.

Derivative transactions

As the “special treatment” of interest rate swaps is treated together with the hedged long-term borrowings, the fair value is stated with the fair value of the relevant long-term borrowings. As the “allocation treatment” of forward exchange contracts is treated together with the hedged foreign currency-denominated account receivable, the fair value is stated with the fair value of the relevant foreign currency-denominated account receivable. Please refer to Note 4 “Derivatives and hedge accounting”.

15 3. Fair value of financial instruments Book values and fair values of the financial instruments on the consolidated balance sheet at March 31, 2020 and 2019 were as follows:

Millions of yen 2020 Book value Fair value Difference Cash and time deposits ¥ 13,272 ¥ 13,272 ¥ — Trade notes and trade accounts receivable (Note) 88,567 88,567 — Electronically recorded monetary claims 7,233 7,233 — Securities and Investment securities 13,614 13,614 — Long-term loans receivable 35 36 1 Total assets ¥ 122,721 ¥ 122,722 ¥ 1 Trade notes and trade accounts payable (Note) ¥ 35,966 ¥ 35,966 ¥ — Electronically recorded monetary obligations 5,637 5,637 — Short-term borrowings 5,700 5,700 — Commercial paper 3,000 3,000 — Accounts payable - other 5,745 5,745 — Accrued income taxes 1,693 1,693 — Corporate bonds 11,000 10,962 (38) Long-term debt 26,296 26,450 154 Total liabilities ¥ 95,037 ¥ 95,153 ¥ 116 Derivatives transactions ¥ 2 ¥ 2 ¥ —

Millions of yen 2019 Book value Fair value Difference Cash and time deposits ¥ 12,688 ¥ 12,688 ¥ — Trade notes and trade accounts receivable (Note) 87,452 87,452 — Electronically recorded monetary claims 6,508 6,508 — Securities and Investment securities 18,324 18,324 — Long-term loans receivable 36 37 1 Total assets ¥ 125,008 ¥ 125,009 ¥ 1 Trade notes and trade accounts payable (Note) ¥ 33,686 ¥ 33,686 ¥ — Electronically recorded monetary obligations 5,046 5,046 — Short-term borrowings 6,838 6,838 — Accounts payable - other 13,490 13,490 — Accrued income taxes 1,839 1,839 — Corporate bonds 5,000 5,018 18 Long-term debt 27,684 27,676 (8) Total liabilities ¥ 93,583 ¥ 93,593 ¥ 10 Derivatives transactions ¥ 0 ¥ 0 ¥ —

16 Thousands of U.S. dollars 2020 Book value Fair value Difference Cash and time deposits $ 121,761 $ 121,761 $ — Trade notes and trade accounts receivable (Note) 812,542 812,542 — Electronically recorded monetary claims 66,358 66,358 — Securities and Investment securities 124,899 124,899 — Long-term loans receivable 321 330 9 Total assets $ 1,125,881 $ 1,125,890 $ 9 Trade notes and trade accounts payable (Note) $ 329,963 $ 329,963 $ — Electronically recorded monetary obligations 51,716 51,716 — Short-term borrowings 52,294 52,294 — Commercial paper 27,523 27,523 — Accounts payable - other 52,706 52,706 — Accrued income taxes 15,532 15,532 — Corporate bonds 100,917 100,569 (348) Long-term debt 241,248 242,660 1,412 Total liabilities $ 871,899 $ 872,963 $ 1,064 Derivatives transactions $ 18 $ 18 $ — (Note) For receivables from and payables to unconsolidated subsidiaries and affiliates are included in those items.

4. Derivatives and hedge accounting (1) Derivative transactions not subject to hedge accounting (i) Currency related

2020 Millions of yen Types of derivative Amount of Amount of contracts Unrealized gain Fair value transactions contracts over one year (loss) Transaction except for JPY-denominated forward ¥ 59 ¥ — ¥ 1 ¥ 1 market transaction exchange contracts (buy) Transaction except for SGD-denominated forward 115 — (0) (0) market transaction exchange contracts (buy) Transaction except for EUR-denominated forward 93 — 1 1 market transaction exchange contracts (buy)

2019 Millions of yen Types of derivative Amount of Amount of contracts Unrealized gain Fair value transactions contracts over one year (loss) Transaction except for JPY-denominated forward ¥ 9 ¥ 4 ¥ (0) ¥ (0) market transaction exchange contracts (buy) Transaction except for SGD-denominated forward 159 55 (0) (0) market transaction exchange contracts (buy)

2020 Thousands of U.S. dollars Types of derivative Amount of Amount of contracts Unrealized gain Fair value transactions contracts over one year (loss) Transaction except for JPY-denominated forward $ 541 $ — $ 9 $ 9 market transaction exchange contracts (buy) Transaction except for SGD-denominated forward 1,055 — (0) (0) market transaction exchange contracts (buy) Transaction except for EUR-denominated forward 853 — 9 9 market transaction exchange contracts (buy) (Notes) 1. Fair value calculation Fair values are determined based on prices presented by financial institutions.

17 (2) Derivative transactions subject to hedge accounting (i) Currency related

2020 Millions of yen Amount of Types of derivative Amount of Hedge accounting method Major hedged items contracts Fair value transactions contracts over one year Allocation treatment of SGD-denominated forward Accounts receivable ¥ 167 ¥ — ¥ (*2) forward exchange contracts exchange contracts (sell) Allocation treatment of EUR-denominated forward Accounts payable 33 — (0) forward exchange contracts exchange contracts (buy)

2019 Millions of yen Amount of Types of derivative Amount of Hedge accounting method Major hedged items contracts Fair value transactions contracts over one year Allocation treatment of SGD-denominated forward Accounts receivable ¥ 139 ¥ — ¥ (*2) forward exchange contracts exchange contracts (sell) US dollar-denominated Allocation treatment of forward exchange contracts Accounts payable 5 — (0) forward exchange contracts (buy) Allocation treatment of EUR-denominated forward Accounts payable 20 — (0) forward exchange contracts exchange contracts (buy) Allocation treatment of GBP-denominated forward Accounts payable 138 — 1 forward exchange contracts exchange contracts (buy) Chinese yuan-denominated Allocation treatment of forward exchange contracts Accounts payable 27 — (0) forward exchange contracts (buy) Chinese yuan -denominated Allocation treatment of forward exchange contracts Accounts payable 146 — (*2) forward exchange contracts (buy)

2020 Thousands of U.S. dollars Amount of Types of derivative Amount of Hedge accounting method Major hedged items contracts Fair value transactions contracts over one year Allocation treatment of SGD-denominated forward Accounts receivable $ 1,532 $ — $ (*2) forward exchange contracts exchange contracts (sell) Allocation treatment of EUR-denominated forward Accounts payable 303 — (0) forward exchange contracts exchange contracts (buy) (Notes) 1. Fair value calculation Fair values are determined based on prices presented by financial institutions and other entities. *2. The fair value is treated together with the fair value of the relevant account receivable as the “allocation treatment” of forward exchange contracts is treated together with the hedged account receivable.

18 (ii) Interest rate related

2020 Millions of yen Amount of Types of derivative Amount of Hedge accounting method Major hedged items contracts Fair value transactions contracts over one year Special treatment for interest Interest rate swap Long-term debt ¥ 700 ¥ 700 ¥ (*2) rate swaps transactions

2019 Millions of yen Amount of Types of derivative Amount of Hedge accounting method Major hedged items contracts Fair value transactions contracts over one year Special treatment for interest Interest rate swap Long-term debt ¥ 700 ¥ 700 ¥ (*2) rate swaps transactions

2020 Thousands of U.S. dollars Amount of Types of derivative Amount of Hedge accounting method Major hedged items contracts Fair value transactions contracts over one year Special treatment for interest Interest rate swap Long-term debt $ 6,422 $ 6,422 $ (*2) rate swaps transactions (Notes) 1. Fair value calculation Fair values are determined based on prices presented by financial institutions. *2. The fair value is treated together with the fair value of the relevant long-term debts as the “special treatment” of interest rate swaps is treated together with the hedged long-term borrowings.

19 4. Securities A. The following tables summarize acquisition costs and book values of securities with fair values as of March 31, 2020 and 2019.

Millions of yen 2020 Acquisition cost Book value Difference Securities with book value (fair value) exceeding acquisition cost: ¥ 4,818 ¥ 11,511 ¥ 6,693 Equity securities Sub-total 4,818 11,511 6,693 Securities with book value (fair value) not exceeding acquisition cost: 2,796 2,003 (793) Equity securities Others 100 100 — Sub-total 2,896 2,103 (793) Total ¥ 7,714 ¥ 13,614 ¥ 5,900

Millions of yen 2019 Acquisition cost Book value Difference Securities with book value (fair value) exceeding acquisition cost: ¥ 5,632 ¥ 16,470 ¥ 10,838 Equity securities Sub-total 5,632 16,470 10,838 Securities with book value (fair value) not exceeding acquisition cost: 2,458 1,837 (621) Equity securities Others 17 17 — Sub-total 2,475 1,854 (621) Total ¥ 8,107 ¥ 18,324 ¥ 10,217

Thousands of U.S. dollars 2020 Acquisition cost Book value Difference Securities with book value (fair value) exceeding acquisition cost: $ 44,202 $ 105,606 $ 61,404 Equity securities Sub-total 44,202 105,606 61,404 Securities with book value (fair value) not exceeding acquisition cost: 25,652 18,376 (7,276) Equity securities Others 917 917 — Sub-total 26,569 19,293 (7,276) Total $ 70,771 $ 124,899 $ 54,128

B. The following tables summarize book values of securities with no fair value as of March 31, 2020 and 2019.

(a) Available-for-sale securities;

Book value Thousands of Millions of yen U.S. dollars 2020 2019 2020 Non-listed equity securities ¥ 497 ¥ 517 $ 4,560

(b) Equity securities issued by subsidiaries and affiliated companies;

Book value Thousands of Millions of yen U.S. dollars 2020 2019 2020 Investments in unconsolidated subsidiaries ¥ 24 ¥ 24 $ 220 Investments in affiliated companies 69 1,301 633 Total ¥ 93 ¥ 1,325 $ 853

20 C. The following table summarizes total sales amounts of available-for-sale securities sold, gains and losses, in the years ended March 31, 2020 and 2019. Thousands of Millions of yen U.S. dollars 2020 2019 2020 Sales amount ¥ 56 ¥ 255 $ 514 Gains 20 201 183 Losses (19) — (174)

D. The amounts of impairment of securities in the years ended March 31, 2020 and 2019. There were no applicable items under this category for the year ended March 31, 2019. The impairment loss recognized in the year ended March 31 2020, was ¥367 million ($3,367 thousand).

5. Inventories Inventories as of March 31, 2020 and 2019 were as follows: Thousands of Millions of yen U.S. dollars 2020 2019 2020 Finished products ¥ 4,445 ¥ 4,479 $ 40,780 Work-in-process 33,291 32,694 305,422 Materials and supplies 5,469 5,476 50,174 Total ¥ 43,205 ¥ 42,649 $ 396,376

6. 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, 2020 and 2019, were ¥3,174 million ($29,119 thousand) and ¥3,134 million, respectively. The deducted amounts from acquisition costs of acquired fixed assets based on certain tax regulations in the current term are ¥59 million ($541 thousand) for Building and ¥0 million ($0 thousand) for Structures.

7. 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 1.8% and 2.1% as of March 31, 2020 and 2019, respectively. Short-term borrowings as of March 31, 2020 and 2019 were as follows: Thousands of Millions of yen U.S. dollars 2020 2019 2020 Bank loans ¥ 5,700 ¥ 6,838 $ 52,294

(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, 2020 and 2019 were as follows: Thousands of Millions of yen U.S. dollars 2020 2019 2020 Total lending commitments ¥ 25,000 ¥ 25,000 $ 229,358 Less amounts currently executed — — — Unexecuted balance ¥ 25,000 ¥ 25,000 $ 229,358

21 2. Commercial Paper Interest rate on commercial paper was 0.0% as of March 31, 2020. Commercial papers as of March 31, 2020 and 2019 were as follows: Thousands of Millions of yen U.S. dollars 2020 2019 2020 Commercial paper ¥ 3,000 ¥ — $ 27,523

3. Corporate Bonds Interest rate on corporate bonds was 0.26% and 0.38% as of March 31, 2020 and 2019, respectively. Thousands of Millions of yen U.S. dollars 2020 2019 2020 Corporate Bonds ¥ 11,000 ¥ 5,000 $ 100,917

Corporate bonds increased from previous year by issuing unsecured public bonds.

The annual maturities of corporate bonds as of March 31, 2020 is as follows: Thousands of Year ending March 31 Millions of yen U.S. dollars 2021 ¥ — $ — 2022 — — 2023 5,000 45,871 2024 — — 2025 6,000 55,046

4. Long-Term Debt Weighted average interest rates on Long-term debts were 0.5% as of March 31, 2020 and 2019. Long-term debts as of March 31, 2020 and 2019 were as follows: Thousands of Millions of yen U.S. dollars 2020 2019 2020 Loans from banks and insurance companies ¥ 26,296 ¥ 27,684 $ 241,248 Less: Current portion 4,364 3,090 40,037 Total ¥ 21,932 ¥ 24,594 $ 201,211

The annual maturities of long-term debts as of March 31, 2020 were as follows: Thousands of Year ending March 31 Millions of yen U.S. dollars 2021 ¥ 4,364 $ 40,037 2022 9,273 85,073 2023 463 4,248 2024 9,053 83,055 2025 1,214 11,138 2026 and thereafter 1,929 17,697

22 8. Pledged Assets Investment securities of ¥2 million ($18 thousand) as of March 31, 2020 and 2019 were pledged as collateral for borrowing of an affiliate from financial institutions.

9. 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. The Company and certain consolidated subsidiaries changed retirement allowance policy and the Company extended the retirement age to 65 from 60 on April 2020. Due to this change, retirement benefit liabilities decreased for ¥2,295 million ($21,055 thousand), and the same amount was recognized as past service cost. The past service cost was amortized using the straight-line method, based on certain years (10 years) within employees average remaining service periods.

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

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Balance of severance and retirement benefit liabilities as of April 1 ¥ 49,075 ¥ 49,567 $ 450,229 Service cost 2,009 1,954 18,431 Interest cost 412 416 3,780 Actuarial gain 147 85 1,349 Retirement benefit payment (2,764) (3,433) (25,358) Transfer due to changing from simplified method to principle method — 281 — Increase due to changing from simplified method to principle method — 205 — Prior service cost (2,295) — (21,055) Balance of severance and retirement benefit liabilities as of March 31 ¥ 46,584 ¥ 49,075 $ 427,376

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

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Balance as of April 1 ¥ 7,821 ¥ 8,333 $ 71,752 Expected return on plan assets 235 250 2,156 Actuarial gain / (loss) (542) (150) (4,972) Contribution from employer 70 71 642 Retirement benefit payment (802) (859) (7,358) Transfer due to changing from simplified methods to principle methods — 176 — Others 43 — 395 Balance as of March 31 ¥ 6,825 ¥ 7,821 $ 62,615

23 (3) Reconciliation of net defined benefit liability for the pension plans using the simplified accounting method

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Balance as of April 1 ¥ 1,892 ¥ 1,827 $ 17,358 Retirement benefit cost 314 384 2,881 Retirement benefit payment (144) (123) (1,321) Contribution to the plans (105) (92) (963) Transfer due to changing from simplified methods to principle methods — (105) — Increase due to changing the scope of consolidation 66 — 606 Others 43 1 393 Balance as of March 31 ¥ 2,066 ¥ 1,892 $ 18,954

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

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Retirement benefit obligations in funded plans ¥ 9,787 ¥ 10,319 $ 89,789 Plan assets (7,863) (8,749) (72,138) Sub total ¥ 1,924 ¥ 1,570 $ 17,651 Retirement benefit obligations in unfunded plans 39,900 41,575 366,055 Net defined benefit liability in the consolidated balance sheets ¥ 41,824 ¥ 43,145 $ 383,706 Defined benefit liability 41,824 43,145 383,706 Net defined benefit liability in the consolidated balance sheets ¥ 41,824 ¥ 43,145 $ 383,706

(5) Retirement benefit costs

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Service cost ¥ 2,009 ¥ 1,954 $ 18,431 Interest cost 412 416 3,780 Expected return on plan assets (235) (250) (2,156) Amortization of actuarial gains and losses 805 758 7,385 Amortization of prior service cost (23) (4) (211) Increase due to changing from simplified methods to principle methods — 205 — Retirement benefit cost calculated using the simplified methods 314 384 2,881 Retirement benefit expenses ¥ 3,282 ¥ 3,463 $ 30,110

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

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Prior service cost ¥ 2,272 ¥ (4) $ 20,844 Actuarial gains and losses 116 523 1,064 Total ¥ 2,388 ¥ 519 $ 21,908

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

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Unrecognized prior service cost ¥ (2,326) ¥ (54) $ (21,339) Unrecognized actuarial gains and losses 4,019 4,135 36,871 Total ¥ 1,693 ¥ 4,081 $ 15,532

(8) Plan assets (i) Main components of plan assets

2020 2019 Corporate Bonds 56% 59% Equity securities 28% 26% Life insurance general account 16% 15% Cash and time deposits 0% 0% 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, 2020 and 2019 (in weighted average)

2020 2019 Discount rate 0.8% 0.8% Long-term expected rate of return on plan assets 3.0% 3.0%

3. Defined contribution pension plan The contribution of the Company and its certain consolidated subsidiaries to the defined contribution pension plans totaled ¥802 million ($7,358 thousand) as of March 31, 2020, and ¥804 million as of March 31, 2019, respectively.

10. 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.

25 1. Stock Information Changes in number of shares issued and outstanding during the years ended March 31, 2020 and 2019 are as follows:

Treasury stock outstanding Thousands of shares 2020 2019 Balance at beginning 156 767 Increase due to purchase of odd-lot stocks 1 9 Decrease due to reverse split of stocks and sales of odd-lot stocks (0) (620) Balance at end 157 156

The reverse split of stocks was conducted on October 1.2018 at a ratio of 1-for-5 common stocks.

2. Dividend Information

Dividends paid during the year ended March 31, 2020 Amount of dividends Dividends per share Thousands of Resolution Record date Effective date Millions of yen Yen U.S. dollars Shareholders’ meeting March 31, 2019 June 26, 2019 ¥1,134 $10,404 ¥25 on June 25, 2019 Board of Directors’ meeting on October September 30, 2019 November 28, 2019 ¥1,134 $10,404 ¥25 30, 2019

Dividends whose record date is attributable to the year ended Amount of dividends Dividends per share March 31, 2020 but to be effective after March 31, 2020 Thousands of Resolution Record date Effective date Millions of yen Yen U.S. dollars Shareholders’ meeting March 31, 2020 June 29, 2020 ¥1,134 $10,404 ¥25 on June 26, 2020

Dividends paid during the year ended March 31, 2019 Amount of dividends Dividends per share Resolution Record date Effective date Millions of yen Yen Shareholders’ meeting March 31, 2018 June 28, 2018 ¥1,134 ¥5 on June 27, 2018

The dividends per share includes 1 yen for 120th foundation anniversary.

Board of Directors’ meeting on October September 30, 2018 November 28, 2018 ¥907 ¥4 26, 2018

The reverse split of stocks was conducted on October 1, 2018, at a ratio of 1-for-5 common stocks. The record date is September 30, 2018, therefore the amount of dividends per share is before conducting the reverse split of stocks.

Dividends whose record date is attributable to the year ended Amount of dividends Dividends per share March 31, 2019 but to be effective after March 31, 2019 Resolution Record date Effective date Millions of yen Yen Shareholders’ meeting March 31, 2019 June 26, 2019 ¥1,134 ¥25 on June 25, 2019

26 11. Reclassification Adjustments and Tax Effects for Other Comprehensive Income Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive income in the current or previous periods and tax effects for each component of other comprehensive income as of March 31, 2020 and 2019, were as follows: Thousands of Millions of yen U.S. dollars 2020 2019 2020 Unrealized gains (losses) on securities Increase(decrease) during the year ¥ (4,482) ¥ (1,640) $ (41,119) Reclassification adjustments 367 (201) 3,367 Sub-total, before tax (4,115) (1,841) (37,752) Tax (expense) or benefit 1,251 556 11,476 Sub-total, net of tax (2,864) (1,285) (26,276)

Unrealized gains (losses) on hedging derivatives Increase(decrease) during the year (0) 1 (0) Reclassification adjustments (1) 0 (9) Sub-total, before tax (1) 1 (9) Tax (expense) or benefit 0 (0) 0 Sub-total, net of tax (1) 1 (9)

Foreign currency translation adjustment Increase(decrease) during the year (839) (627) (7,697) Reclassification adjustments — — — Sub-total, before tax (839) (627) (7,697)

Remeasurements of defined benefit plans Increase(decrease) during the year 1,606 (235) 14,734 Reclassification adjustments 782 754 7,174 Sub-total, before tax 2,388 519 21,908 Tax (expense) or benefit (719) (157) (6,596) Sub-total, net of tax 1,669 362 15,312

Total other comprehensive income ¥ (2,035) ¥ (1,549) $ (18,670)

12. Contingent Liabilities Contingent liabilities as of March 31, 2020 and 2019 were as follows: Thousands of Millions of yen U.S. dollars 2020 2019 2020 MEIDEN INDIA PVT. LTD. ¥ 45 ¥ 84 $ 413 MEIDEN KOREA CO., LTD. 13 14 119 Employees 5 6 46 Total ¥ 63 ¥ 104 $ 578

27 13. Lease Information 1. Finance lease Finance leases commenced prior to April 1, 2008, which do not transfer ownership of properties to lessees, were not capitalized and were accounted for in the same manner as operating leases. Certain related information is summarized as follows:

(1) Assumed amounts (inclusive of interest) of acquisition cost, accumulated depreciation and net book value as of March 31, 2020 and 2019 were summarized as follows:

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Assumed acquisition cost Machinery and equipment ¥ 570 ¥ 570 $ 5,229 Accumulated depreciation (551) (513) (5,055) Net book value ¥ 19 ¥ 57 $ 174

(2) The amounts of future minimum lease payments calculated by the interest-inclusive method as of March 31, 2020 and 2019 totaled ¥19 million ($174 thousand) and ¥57 million, including ¥19 million ($174 thousand) and ¥38 million that were due within one year, respectively. (3) Lease payments, which are equal to assumed depreciation charges for the years ended March 31, 2020, 2019 and 2018 were ¥38 million ($349 thousand), ¥38 million and ¥38 million, respectively. (4) Assumed depreciation charges are computed using the straight-line method over lease terms assuming no residual value. (5) Mainly, house power generation, NAS batteries system for energy efficient PR (Machinery and equipment) which are placed at Numazu office of the Company.

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

14. Research and Development Expenses Research and development expenses are charged to income as incurred. The amounts charged to income for the years ended March 31, 2020, 2019 and 2018 were ¥10,468 million ($96,037 thousand), ¥9,458 million and ¥9,403 million, respectively.

15. 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 “Social Infrastructure Systems,” “Industrial Systems,” “Maintenance and Servicing,” and “Real Estate.”

Description of business of each reportable segment is as follows:

Reportable segments Description of business Social Infrastructure Systems This segment includes businesses that provide products and services related to social infrastructure such as power generation and transmission systems. Industrial Systems This segment includes businesses that provide products and services such as industrial components, dynamometer systems, and automatic guided vehicles to businesses in the general manufacturing industry. Maintenance and Servicing This segment includes the maintenance business. Real Estate This segment includes businesses related to the rental of real estates.

28 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. Information relating to reported segment profit or loss, segment assets, segment liabilities and other material items Segment information for the year ended March 31, 2020, was as follows:

Millions of yen Social Maintenance Year ended Infrastructure Industrial and March 31, 2020 Systems Systems Servicing Real Estate Sub total Others Total Adjustments Consolidated Net sales: External customers ¥142,979 ¥62,486 ¥36,977 ¥3,219 ¥245,661 ¥10,088 ¥255,749 ¥— ¥255,749 Inter-segment 3,096 3,399 1,880 263 8,638 9,223 17,861 (17,861) — Total ¥146,075 ¥65,885 ¥38,857 ¥3,482 ¥254,299 ¥19,311 ¥273,610 ¥(17,861) ¥255,749 Operating income ¥3,655 ¥3,272 ¥5,655 ¥1,353 ¥13,935 ¥891 ¥14,826 ¥(2,100) ¥12,726 Identifiable assets ¥128,254 ¥50,071 ¥28,242 ¥14,009 ¥220,576 ¥8,154 ¥228,730 ¥41,681 ¥270,411 Other items Depreciation and amortization 3,694 1,814 344 928 6,780 158 6,938 2,263 9,201 (excluding goodwill) Amortization amount 565 — — — 565 — 565 — 565 of goodwill Capital expenditures 3,193 8,254 671 52 12,170 309 12,479 3,564 16,043

Thousands of U.S. dollars Social Maintenance Year ended Infrastructure Industrial and March 31, 2020 Systems Systems Servicing Real Estate Sub total Others Total Adjustments Consolidated Net sales: External customers $1,311,734 $573,266 $339,239 $29,532 $2,253,771 $92,550 $2,346,321 $— $2,346,321 Inter-segment 28,404 31,184 17,247 2,412 79,247 84,615 163,862 (163,862) — Total $1,340,138 $604,450 $356,486 $31,944 $2,333,018 $177,165 $2,510,183 $ (163,862) $2,346,321 Operating income $33,532 $30,018 $51,881 $12,413 $127,844 $8,174 $136,018 $ (19,266) $116,752 Identifiable assets $1,176,642 $459,367 $259,101 $128,523 $2,023,633 $74,807 $2,098,440 $382,395 $2,480,835 Other items Depreciation and amortization 33,890 16,642 3,156 8,514 62,202 1,450 63,652 20,761 84,413 (excluding goodwill) Amortization amount 5,183 — — — 5,183 — 5,183 — 5,183 of goodwill Capital expenditures 29,293 75,725 6,156 477 111,651 2,835 114,486 32,697 147,183

(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 ¥(2,100) million ($(19,266) thousand) include eliminations of inter-segment transactions of ¥604 million ($5,541 thousand), adjustments for Inventories of ¥(10) million ($(92) thousand), and corporate operating expenses of ¥(2,694) million ($(24,715) 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 ¥41,681 million ($382,395 thousand) include eliminations of inter-segment receivables and other assets of ¥(34,141) million ($(313,220) thousand), and corporate assets of ¥75,822 million ($695,615 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 ¥3,564 million ($32,697 thousand) include mainly capital investments for the information system of the Company.

29 Segment information for the year ended March 31, 2019 and 2018 were as follows:

Millions of yen Social Maintenance Year ended Infrastructure Industrial and March 31, 2019 Systems Systems Servicing Real Estate Sub total Others Total Adjustments Consolidated Net sales: External customers ¥134,770 ¥61,376 ¥35,701 ¥3,219 ¥235,066 ¥9,967 ¥245,033 ¥— ¥245,033 Inter-segment 2,763 3,724 1,273 263 8,023 8,635 16,658 (16,658) — Total ¥137,533 ¥65,100 ¥36,974 ¥3,482 ¥243,089 ¥18,602 ¥261,691 ¥(16,658) ¥245,033 Operating income ¥(107) ¥5,623 ¥4,343 ¥1,419 ¥11,278 ¥798 ¥12,076 ¥(1,740) ¥10,336 Identifiable assets ¥127,587 ¥44,448 ¥27,316 ¥14,849 ¥214,200 ¥8,291 ¥222,491 ¥43,095 ¥265,586 Other items Depreciation and amortization 3,347 1,473 283 937 6,040 166 6,206 2,417 8,623 (excluding goodwill) Amortization amount 581 — — — 581 — 581 — 581 of goodwill Capital expenditures 2,787 1,745 193 44 4,769 190 4,959 2,937 7,896

(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 ¥(1,740) million include eliminations of inter-segment transactions of ¥757 million, adjustments for Inventories of ¥(5) million, and corporate operating expenses of ¥(2,492) 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 ¥43,095 million include eliminations of inter-segment receivables and other assets of ¥(36,903) million, and corporate assets of ¥79,998 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 ¥2,937 million include mainly capital investments for the information system of the Company.

Millions of yen Social Maintenance Year ended Infrastructure Industrial and March 31, 2018 Systems Systems Servicing Real Estate Sub total Others Total Adjustments Consolidated Net sales: External customers ¥144,136 ¥51,784 ¥32,869 ¥3,200 ¥231,989 ¥9,844 ¥241,833 ¥— ¥241,833 Inter-segment 2,913 4,217 1,094 263 8,487 8,484 16,971 (16,971) — Total ¥147,049 ¥56,001 ¥33,963 ¥3,463 ¥240,476 ¥18,328 ¥258,804 ¥(16,971) ¥241,833 Operating income ¥4,080 ¥4,386 ¥3,587 ¥1,337 ¥13,390 ¥497 ¥13,887 ¥(2,506) ¥11,381 Identifiable assets ¥126,052 ¥45,163 ¥25,598 ¥15,696 ¥212,509 ¥7,633 ¥220,142 ¥44,315 ¥264,457 Other items Depreciation and amortization 3,330 1,458 268 936 5,992 164 6,156 2,517 8,673 (excluding goodwill) Amortization amount 225 — — — 225 — 225 — 225 of goodwill Capital expenditures 2,509 1,903 318 61 4,791 121 4,912 2,672 7,584

(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 ¥(2,506) million include eliminations of inter-segment transactions of ¥672 million, adjustments for Inventories of ¥(4) million, and corporate operating expenses of ¥(3,174) 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 ¥44,315 million include eliminations of inter-segment receivables and other assets of ¥(32,178) million, and corporate assets of ¥76,493 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 ¥2,672 million include mainly capital investments for the information system of the Company.

30 Related information 1. Related information relating to geographic areas Information about geographic areas for the year ended March 31, 2020, 2019 and 2018 was as follows:

Millions of yen Year ended March 31, 2020 Japan Asia Other Areas Total Net sales ¥185,338 ¥44,068 ¥26,343 ¥255,749 Tangible fixed assets 62,142 7,129 2,003 71,274

Millions of yen Year ended March 31, 2019 Japan Asia Other Areas Total Net sales ¥173,308 ¥44,245 ¥27,480 ¥245,033 Tangible fixed assets 55,518 5,835 1,978 63,331

Millions of yen Year ended March 31, 2018 Japan Asia Other Areas Total Net sales ¥167,679 ¥55,719 ¥18,435 ¥241,833 Tangible fixed assets 57,029 6,044 1,927 65,000

Thousands of U.S dollars Year ended March 31, 2020 Japan Asia Other Areas Total Net sales $1,700,349 $404,293 $241,679 $2,346,321 Tangible fixed assets 570,110 65,404 18,376 653,890

2. Information relating to impairment loss of the assets by reportable segments Not applicable for the fiscal year ended March 31, 2020, 2018 respectively. The amount of impairment loss of the fix assets for the year ended March 31, 2019 were ¥6 million. The amount belonged to Maintenance and Servicing segment.

3. Information relating to amortization and ending balance of goodwill by reportable segments The amounts of amortization of goodwill for the years ended March 31, 2020, 2019 and 2018, were ¥565 million ($5,183 thousand), ¥581 million, and ¥225 million respectively. The amounts of ending balance of goodwill as of March 31, 2020 and 2019 were ¥3,976 million ($36,477 thousand) and ¥4,645 million, respectively. The amounts belonged to Social Infrastructure Systems segment.

4. Information relating to gain on negative goodwill by reportable segments: There were no applicable items under this category for the years ended March 31, 2020, 2019 and 2018.

31 16. Income Taxes The Company is subject to a number of taxes based on income, which in aggregate, resulted in normal statutory tax rates of approximately 30.31%, 30.31% and 30.54% for the years ended March 31, 2020, 2019 and 2018, based on Japan’s corporate tax, inhabitant tax and business tax.

1. The significant differences between the statutory tax rate and the Group’s effective tax rate for financial statement purposes for the years ended March 31, 2020, 2019 and 2018 are as follows:

2020 2019 2018 Statutory tax rate 30.31% 30.31% 30.54% Permanent difference (social expenses, etc.) 0.42 0.45 0.51 Inhabitant tax on per capital basis 1.26 1.37 1.35 Net changes in valuation reserve (0.24) (0.41) 0.05 Equity in income (losses) of affiliated companies (0.05) (0.45) 2.68 Tax credits (7.34) (7.42) (6.00) Statutory tax rates variance of overseas subsidiaries 1.72 0.38 0.28 Amortization of goodwill 1.50 1.71 0.67

Other-net (0.81) 1.56 1.15 Effective tax rate 26.77% 27.50% 31.23%

2. Significant components of deferred tax assets and liabilities of the Group as of March 31, 2020 and 2019 (1) Deferred tax assets and deferred tax liabilities based on the major sources of temporary differences

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Deferred tax assets: Carryforward tax loss ¥ 2,618 ¥ 3,224 $ 24,018 Net defined benefit liability 12,644 13,016 116,000 Accrued bonuses 2,148 2,083 19,706 Allowance for doubtful accounts 22 24 202 Loss from inventory revaluation and provision for loss on order received 592 517 5,431 Loss from securities and other 1,200 1,197 11,009 Provision for product warranties 336 353 3,083 Provision for environmental measures 121 129 1,110 Land assessed value due to merger 268 268 2,459 Elimination of unrealized profit 238 259 2,183 Others 1,349 1,589 12,377 Gross deferred tax assets 21,536 22,659 197,578 Less: Valuation reserve for carryforward tax loss(A) (1,343) (1,862) (12,321) Less: Valuation reserve for deductible temporary differences(B) (1,478) (1,483) (13,560) Less: Valuation reserve (2,821) (3,345) (25,881) Total deferred tax assets 18,715 19,314 171,697 Deferred tax liabilities: Differences between book and tax basis of property, plant and equipment (61) (61) (560) Reserve for accelerated depreciation — (7) — Unrealized gains on securities (1,798) (3,048) (16,495) Retirement benefit obligation adjustment (747) (778) (6,853) Others (144) (293) (1,321) Total deferred tax liabilities (2,750) (4,187) (25,229) Net deferred tax assets ¥ 15,965 ¥ 15,127 $ 146,468

(Note) The main reason for the decrease in valuation reserve by ¥524 million ($4,807 thousand) was a decrease in valuation reserve for carryforward tax loss due to changes in the tax rate of certain overseas subsidiaries.

32 (2) Carryforward tax loss and deferred tax assets by expiration periods

Year ended March 31, 2020 Millions of yen 2026 and 2021 2022 2023 2024 2025 Total beyond Carryforward tax loss(a) ¥ 45 ¥ 81 ¥ 29 ¥ 128 ¥ 1,228 ¥ 1,107 ¥ 2,618 Valuation reserve (45) (81) (26) — (1,072) (119) (1,343) Net deferred tax assets — — 3 128 156 988 (b)1,275

Year ended March 31, 2020 Thousands of U.S. dollars 2026 and 2021 2022 2023 2024 2025 Total beyond Carryforward tax loss(a) $ 413 $ 743 $ 266 $ 1,174 $ 11,266 $ 10,156 $ 24,018 Valuation reserve (413) (743) (238) — (9,835) (1,092) (12,321) Net deferred tax assets — — 28 1,174 1,431 9,064 (b)11,697

(Notes) (a) Carryforward tax loss shown in the above table is after multiplying the statutory tax rate. (b) Deferred tax asset of ¥1,275 million ($11,697 thousand) was recognized for carryforward tax loss of ¥2,618 million ($24,018 thousand), which was amount multiplied by the statutory tax rate. No valuation reserve is recognized for the carryforward loss since the amount was determined to be recoverable based on expected future taxable income.

17. Investment and Rental Property The Company owns some rental office buildings and rental commercial facilities for the purpose of earning rent income in Tokyo and other regions. Information relating to fair value of investment and rental property was disclosed as follows:

Millions of yen 2020 beginning-of- Increase (decrease) 2020 end-of-year year balance during 2020 balance 2020 fair value Rental real estate ¥14,711 ¥(819) ¥13,892 ¥54,801

(Notes) 1. Figures stated above were the amounts after accumulated depreciation was deducted from the cost of acquisition. 2. The decrease in investment and rental property during the year ended March 31, 2020, was mainly attributable to depreciation ¥819 million ($7,514 thousand). 3. The fair value at March 31, 2020 represented the appraisal value from an independent real estate appraiser.

Millions of yen 2019 beginning-of- Increase (decrease) 2019 end-of-year year balance during 2019 balance 2019 fair value Rental real estate ¥15,550 ¥(839) ¥14,711 ¥54,648

(Notes) 1. Figures stated above were the amounts after accumulated depreciation was deducted from the cost of acquisition. 2. The decrease in investment and rental property during the year ended March 31, 2019, was mainly attributable to depreciation ¥839 million. 3. The fair value at March 31, 2019 represented the appraisal value from an independent real estate appraiser.

Thousands of U.S. dollars 2020 beginning-of- Increase (decrease) 2020 end-of-year year balance during 2020 balance 2020 fair value Rental real estate $134,963 $(7,514) $127,449 $502,761

The profits and losses associated with rental real estate and real estate that contains portions that were used as rental real estate for the fiscal years ended March 31, 2020, 2019 and 2018 were as follows.

Millions of yen Year ended March 31, 2020 Operating income Operating cost Operating profit Rental real estate ¥3,219 ¥1,866 ¥1,353

Millions of yen Year ended March 31, 2019 Operating income Operating cost Operating profit Rental real estate ¥3,218 ¥1,799 ¥1,419

33 Millions of yen Year ended March 31, 2018 Operating income Operating cost Operating profit Rental real estate ¥3,200 ¥1,863 ¥1,337

Thousands of U.S. dollars Year ended March 31, 2020 Operating income Operating cost Operating profit Rental real estate $29,532 $17,119 $12,413

18. Cash and Cash Equivalents 1. Reconciliations of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents shown in the consolidated statements of cash flows as of March 31, 2020 and 2019 were as follows:

Thousands of Millions of yen U.S. dollars 2020 2019 2020 Cash and time deposits ¥ 13,272 ¥ 12,688 $ 121,761 Time deposits with maturities exceeding three months (633) (216) (5,807) Restricted deposits (18) (39) (165) Cash and cash equivalents ¥ 12,621 ¥ 12,433 $ 115,789

2. Significant non-cash transactions Significant non-cash transactions as of March 31, 2020 were as follows; Not applicable for the fiscal year ended March 31, 2019 and 2018.

EAML ENGINEERING Co., LTD., which was an affiliated company, was added to the scope of consolidation resulting from purchase of additional shares on June 28, 2019. The breakdown of acquisition amount of assets, liabilities, and net gain at the acquisition date, is as follows;

Thousands of Millions of yen U.S. dollars 2020 2020 Current assets ¥ 3,250 $ 29,816 Fixed assets 1,501 13,771 Goodwill 20 183 Current liabilities (846) (7,762) Fixed liabilities (224) (2,055) Non-controlling interests (2,060) (18,898) Sub-total ¥ 1,641 $ 15,055 Equity valuation until acquisition of control (1,186) (10,880) Gain on acquisitions of subsidiaries achieved in stages (366) (3,358) Acquisition cost of stocks ¥ 89 $ 817 Cash and Cash equivalents (1,738) (15,945) Subtract (Proceeds from acquisition) ¥ (1,649) $ (15,128)

19. Related Party Transactions Not applicable for the fiscal year ended March 31, 2020, 2019 and 2018.

34 20. Net Income per Share The bases for per share amount calculation for the years ended March 31, 2020, 2019 and 2018 were as follows:

Thousands of Millions of yen U.S. dollars 2020 2019 2018 2020 Basic earnings per share: Net income ¥ 8,208 ¥ 7,654 ¥ 7,057 $ 75,303 Earnings not attributable to common shareholders — — — — Net income allocated to common stocks 8,208 7,654 7,057 75,303

Diluted net income per share is not presented, since the Company has not issued any dilutive securitie.

Thousands of shares 2020 2019 2018 Weighted-average number of common stocks 45,371 45,373 226,876

A reverse split of stocks was conducted on October 1, 2018, at a ratio of 1-for-5 common stocks. The net income per share was calculated assuming the reverse split of stocks was conducted at the beginning of 2018.

21. Business Combination Business combination information as of March 31, 2020 was as follows; Not applicable for the fiscal year ended March 31, 2019 and 2018.

(2020) Business combination through acquisition

1. Outline of business combination (1) Name of acquired company and description of business (a) Name of acquired company EAML ENGINEERING CO.,LTD. (Hereafter, EAML)

(b) Description of business Designing, manufacturing, sales and repairing of water power generators and peripheral equipment.

(2) Main reason for business combination To strengthen small and medium water power generation related business, the Company will more closely cooperate with EAML as a subsidiary and strengthen synergy effects of operation of the group.

(3) Date of business combination June 28, 2019

(4) Legal form of business combination The share acquisition in exchange for cash, and treasury share acquisition by EAML.

(5) Name of company after business combination No change

(6) Percentage of the acquired voting rights Percentage of voting shares held immediately before business combination: 33% Percentage of voting shares additionally acquired: 11% (Shares acquisition by the Company: 1%) (Treasury shares acquisition by EAML: 10%) Percentage of total voting shares held after acquisition: 44%

(7) Main grounds in determining the acquirer The Company came to own 44% of the total voting shares and control majority of the board of directors meeting as a result of the additional share purchase.

35 2. Period of Performance of the acquired company in the consolidated financial statements From July 1, 2019 to March 31, 2020 The acquired company was accounted for using the equity method as an affiliated company from April 1 to June 30, 2019.

3. Acquisition cost of the acquired company and breakdown thereof Market value on acquisition date of shares, which was owned by right before the acquisition: ¥1,552 million($14,239 thousand) Acquisition cost of the shares additionally acquired (cash): ¥89 million ($817 thousand) Total acquisition cost: ¥1,641 million ($15,055 thousand)

4. Difference of acquisition cost and total acquisition cost of each transaction of the acquired company Gain on acquisitions of subsidiaries achieved in stages: ¥366 million ($3,358 thousand)

5. Other fees required for acquisition Advisory fees: ¥3 million ($28 thousand)

6. Amount for goodwill recognized, reason for goodwill, amortization method and period (1) Amount of accrued recognized ¥20 million ($183 thousand)

(2) Reason for goodwill Goodwill was recognized based on future increase in profitability expected from the future business development.

(3) Amortization method and period Straight-line method over 10 years.

7. Amount and breakdown of assets and liabilities received on date of the business combination

Thousands of Millions of yen U.S. dollars Current assets ¥ 3,250 $ 29,816 Fixed assets 1,501 13,771 Total asset ¥ 4,751 $ 43,587 Current liabilities ¥846 7,762 Fixed liabilities 224 2,055 Total liabilities ¥ 1,070 $ 9,817

8. Approximate amounts and calculation method of the impacts on consolidated statements of the fiscal year, assuming that the business combination had been completed on the first date of the fiscal year Disclosure is omitted as it is immaterial.

22. Subsequent Events Conclusion of a credit commitment line contract The Company concluded the following new credit commitment line contract on June 25, 2020 to manage financial risks.

(1) Names of financial institutions in the banking syndicate group Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Limited, MUFG Bank, lTD. and Mizuho Bank, LTD.

(2) Credit line amount ¥20,000 million ($183,486 thousand)

(3) Contract period From June 30, 2020 to June 29, 2021.

(4) Borrowing balance (as of the date of the announcement of this report) None.

As a result, the total credit line amount is ¥45,000 million ($412,844 thousand) and there is no executed amount.

36 23. Litigation The application for an arbitration request was filed at the SIAC Court of Arbitration on January 31, 2018, which claimed compensation for a breach of contract by the Company in relation to the share acquisition and shareholder agreement (hereinafter “Agreement”) concluded among the Company and India-based Prime Meiden Limited (referred to as “PML” below) and its shareholders, PCI Limited (former parent company of PML; referred to as “PCI” below) and six other PML shareholders on June 1, 2016. The demand for 12,752 million Indian rupees (approx. ¥18.6 billion ($170,642 thousand); converted using the exchange rate as of March 31, 2020) was made claiming that the Company reduced the corporate value of PML and caused damages to shareholders as a result. The Company maintains that the content of the request is inappropriate and groundless because it is inconsistent with the Agreement. The Company will sincerely engage for early dismissal of the arbitration request by explaining the facts and legal grounds in line with the Agreement. At this stage, the Company doesn’t expect that the arbitration will have an impact on the consolidated financial statements.

37 Independent Auditor’s Report

38 39 40