カナモト（9678） – [Delayed]Six-Month Consolidated Financial Report for the Fiscal Year Ending October 31, 2022 (Japan GAAP)

June 3, 2022 Six-Month Consolidated Financial Report for the Fiscal Year Ending October 31, 2022 (Japan GAAP) Listed Company Name Company Code Number Listing Exchanges URL Representative Inquiries Kanamoto Co., Ltd. 9678 Tokyo Stock Exchange, Sapporo Stock Exchange https://www.kanamoto.co.jp Tetsuo Kanamoto Shun Hirose President and CEO Director & Corporate Officer, Division Manager, Accounting Division TEL 81-11-209-1600 Scheduled date for submission of Quarterly Report Scheduled date for commencement of dividend payments Preparation of Quarterly Settlement Supplementary Explanatory Materials Quarterly Earnings Briefings (For institutional investors and analysts) June 13, 2022 July 4, 2022 Yes Yes (Numbers less than one million yen have been rounded down) 1. Consolidated Operating Results for the Six-Month Period of the Fiscal Year Ending October 31, 2022 (November 1, 2021 – April 30, 2022) (1) Consolidated Operating Results (Cumulative) (Percentages show the change from the prior year) Net Sales Operating Profit Ordinary Profit Profit Attributable to Owners of Parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % 93,715 – 7,098 -11.9 7,457 -13.5 4,540 -8.2 95,225 4.2 8,061 -12.8 8,626 -4.6 4,945 -7.5 Fiscal year ending October 31, 2022: Second quarter Fiscal year ended October 31, 2021: Second quarter (Note) Comprehensive income (millions of yen) Fiscal year ending October 31, 2022, Second quarter Fiscal year ended October 31, 2021, Second quarter 6,284 6,911 (-9.1%) (29.7%) Earnings per Share Earnings per Share on a Fully Diluted Basis Yen Yen 121.54 130.81 – – Fiscal year ending October 31, 2022: Second quarter Fiscal year ended October 31, 2021: Second quarter (Notes) 1. The Company applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the first quarter of the fiscal year ending October 31, 2022, and the figures for the second quarter of the fiscal year ending October 31, 2022 are figures after the application of the said accounting standard. As a result, the percentage of change for net sales from the same period of the previous year is not shown. 2. In the previous fiscal year, the Company finalized the provisional accounting treatment for business combinations, and the figures for the second quarter of the fiscal year ended October 31, 2021 reflect the finalized content of the provisional accounting treatment. (2) Consolidated Financial Position Total Assets Net Assets Equity Ratio As of April 30, 2022 As of October 31, 2021 Millions of yen Millions of yen 304,810 303,754 137,512 134,917 % 42.4 41.8 (Reference) Equity (millions of yen) As of April 30, 2022 As of October 31, 2021 129,135 126,956 1 (Note) The Company applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the first quarter of the fiscal year ending October 31, 2022, and the figures as of April 30, 2022 are figures after the application of the said accounting standard. 2. Dividends Fiscal year ended October 31, 2021 Fiscal year ending October 31, 2022 Fiscal year ending October 31, 2022 (projected) Annual Dividends per Share End of first quarter End of second quarter End of third quarter Year-end Full-year Yen Yen Yen Yen Yen – – 25.00 35.00 – – 45.00 70.00 40.00 75.00 (Note) Has the Company revised its most recently released dividend projection?: No 3. Projected Consolidated Operating Results for the Fiscal Year Ending October 31, 2022 Net Sales Operating Profit Ordinary Profit (November 1, 2021 – October 31, 2022) (Percentages show the change from the prior year) Profit Attributable to Owners of Parent Earnings per Share Millions of yen % Millions of yen % Millions of yen % Millions of yen Full year 191,100 – 15,600 6.7 15,800 2.7 9,700 % 8.9 Yen 259.65 (Notes) 1. Has the Company revised its most recently released projected consolidated operating results during the quarter?: No 2. As the Company applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the fiscal year ending October 31, 2022, the above projected consolidated operating results are after the application of the said accounting standard. As a result, the percentage of change for net sales from the previous fiscal year is not shown. 2 Notes (1) Changes in material subsidiaries during the period under review (Changes in specific subsidiaries in conjunction with a change in the scope of consolidation): No (2) Application of special accounting method in the preparation of quarterly consolidated financial statements: No (3) Changes in accounting principles, changes in accounting estimates and retrospective restatements (a) Changes in accounting policy in conjunction with revision of accounting standards: Yes (b) Changes other than the above: No (c) Changes in accounting estimates: No (d) Retrospective restatements: No (Note) For details, please refer to “2. Quarterly Consolidated Financial Statements and Significant Notes Thereto (4) Notes Concerning Quarterly Consolidated Financial Statements (Changes in Accounting Policies)” on page 13 of the Attachments. (4) Number of shares issued (common shares) (a) Number of shares issued at the end of the period (including treasury shares) (b) Number of treasury shares at the end of the period As of April 30, 2022: As of October 31, 2021: As of April 30, 2022: As of October 31, 2021: 38,742,241 shares 38,742,241 shares 1,799,465 shares 924,846 shares (c) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year) Fiscal year ending October 31, 2022: Second quarter: Fiscal year ended October 31, 2021: Second quarter: 37,357,999 shares 37,810,252 shares Note: Quarterly earnings reports are not subject to quarterly review by certified public accountants or independent account auditors. Note: Explanation concerning appropriate use of the projected operating results and other items to note (Note concerning forward-looking statements) The forward-looking statements, including business results forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. The Company does not guarantee the achievement of the projections. Actual operating results may differ substantially due to a number of factors. Please refer to “1. Qualitative Information Concerning Quarterly Consolidated Operating Results (3) Explanation Concerning Future Forecasts Including Projected Consolidated Operating Results” on page 6 of the Attachments for the conditions used as assumptions for the projected operating results and matters to note before using the projected operating results. (Methods of obtaining the quarterly settlement supplementary explanatory materials and the content of the quarterly earnings briefings) The Company plans to hold an online meeting for institutional investors and analysts on Monday, June 6, 2022. Following the meeting, the Company will upload the meeting highlights and the discussion (voice recording) on the Company’s website as quickly as possible, together with the quarterly earnings briefings materials used that day. 3 ○Attachments Table of Contents 1. Qualitative Information Concerning Quarterly Consolidated Operating Results ……………………………. 5 (1) Qualitative Information Concerning Consolidated Operating Results ……………………………………. 5 (2) Qualitative Information Concerning Consolidated Financial Position …………………………………….. 6 (3) Explanation Concerning Future Forecasts Including Projected Consolidated Operating Results ……. 6 2. Quarterly Consolidated Financial Statements and Significant Notes Thereto ………………………………. 7 (1) Quarterly Consolidated Balance Sheets ……………………………………………………………………….. 7 (2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income ………………………………………………………………………………………….. 9 (Quarterly Consolidated Statements of Income) …………………………………………………………. 9 (Consolidated Six-Month Period Ended April 30) ………………………………………………………. 9 (Quarterly Consolidated Statements of Comprehensive Income) ……………………………………. 10 (Consolidated Six-Month Period Ended April 30) …………………………………………………….. 10 (3) Quarterly Consolidated Statements of Cash Flows ………………………………………………………… 11 (4) Notes Concerning Quarterly Consolidated Financial Statements ……………………………………….. 13 (Notes Relating to the Going Concern Assumption) ……………………………………………………. 13 (Note on Significant Changes to Shareholders’ Equity)………………………………………………… 13 (Changes in Accounting Policies) …………………………………………………………………………… 13 (Supplemental Information) ………………………………………………………………………………… 14 (Segment Information) ………………………………………………………………………………………. 14 4 1. Qualitative Information Concerning Quarterly Consolidated Operating Results (1) Qualitative Information Concerning Consolidated Operating Results During the six-month period under review, Japan’s economy showed signs of picking up due to measures against infection and the easing of restrictions on economic activity despite the continuing impact of COVID-19. However, amid downside risk becoming more apparent due to semiconductor supply shortages, rising raw material prices, etc., uncertainties are intensifying against the backdrop of factors such as the deterioration of the situation in Ukraine. In the construction industry in which the Group is involved, although public sector investment remained steady and private sector construction investment has shown signs of gradual recovery, difficulties are increasing in the environment surrounding the industry as rising material and energy prices as well as the shortage of skilled construction workers are becoming increasingly more severe. In such circumstances, based on the three key measures in the Medium-Term Corporate Management Plan “Creative 60” (FY2020-2024), the Group is strengthening the Alliance Group’s foundations and working to further develop business through synergistic effects within the Group. In addition, the Group is committed to sustainable development and the enhancement of corporate value through the promotion of flexible investment strategy that responds to actual demand, and the acceleration of the improvement of capital efficiency. For the six-month period under review, the Group reported net sales of ¥93,715 million. On the earnings front, partly due to an increase in selling, general and administrative expenses caused by investment in human resources in preparation for the future, operating profit decreased 11.9% from the same period of the prior fiscal year to ¥7,098 million, ordinary profit declined 13.5% to ¥7,457 million, and profit attributable to owners of parent decreased 8.2% to ¥4,540 million. Please note that the Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the beginning of the first quarter. For details, please refer to “2. Quarterly Consolidated Financial Statements and Significant Notes Thereto (4) Notes Concerning Quarterly Consolidated Financial Statements (Changes in Accounting Policies).” Operating results for each of the Company’s business segments were as follows. < Business related to the Construction Equipment Rental Division > In the construction-related business, which is Kanamoto’s core business, although performance remained steady, primarily in disaster prevention and reduction and activities being carried out for Japan’s National Resilience Plan as well as maintenance and renewal of aging social capital, a full-scale recovery in rental demand for construction equipment did not eventuate as some regional disparities in construction demand became more apparent. In addition, the Group is strengthening its ability to respond to the fields of maintenance and repair of social capital and renewable energy in light of medium- to long-term changes in the construction market in addition to promoting the acceleration of digital transformation as well as technological development and business alliances for customers’ diversifying needs despite the promotion of the appropriate deployment and efficient operation of rental equipment. Used construction equipment sales decreased 5.8% year on year, as Kanamoto has carried out the extension of the rental equipment operation period as planned at the beginning of the fiscal year. Reflecting these factors, the Group posted net sales in the construction-related businesses of ¥85,417 million, and operating profit of ¥6,293 million, a decrease of 13.6% year on year. < Other businesses > In the Group’s other businesses, net sales was ¥8,297 million and operating profit increased by 2.8% year on year to ¥559 million, as the business related to the Steel Sales Division as well as the business related to the Information Products Division and welfare-related business performed well. 5 (2) Qualitative Information Concerning Consolidated Financial Position (i) Assets, liabilities, and net assets Total assets at the end of the second quarter under review stood at ¥304,810 million, an increase of ¥1,055 million compared with the end of the prior fiscal year. This was primarily due to a total increase of ¥4,138 million in property, plant and equipment including an increase of ¥3,361 million in rental equipment, while current assets decreased by ¥2,943 million in total, including a decrease of ¥4,286 million in “notes and accounts receivable – trade, and contract assets” compared with the prior fiscal year-end amount of “notes and accounts receivable – trade.” Total liabilities stood at ¥167,298 million, a decrease of ¥1,539 million compared with the end of the prior fiscal year. This was primarily due to a decrease of ¥2,069 million in other under current liabilities. Total net assets stood at ¥137,512 million, an increase of ¥2,595 million compared with the end of the prior fiscal year. This mainly reflects the posting of profit attributable to owners of parent of ¥4,540 million and an increase of ¥1,292 million in foreign currency translation adjustment. Meanwhile, there were decreases of ¥1,701 million and ¥1,966 million, due to dividends of surplus and purchase of treasury shares, respectively. (ii) Cash flows Cash and cash equivalents (“cash”) at the end of the six-month period under review increased by ¥308 million compared with the end of the prior fiscal year to ¥55,866 million. Cash flows for the six-month period under review are discussed below. (Net cash provided by (used in) operating activities) Cash provided by operating activities increased 4.1% from the same period of the prior fiscal year to ¥20,913 million. This was primarily attributable to the following: profit before income taxes of ¥7,450 million, depreciation of ¥15,785 million, decrease in trade receivables of ¥4,356 million, as well as purchase of rental equipment of ¥3,199 million, and income taxes paid of ¥2,435 million. (Net cash provided by (used in) investing activities) Cash used in investing activities was ¥2,276 million, compared with ¥2,353 million used in the same period of the prior fiscal year. This mainly reflected the posting of ¥1,908 million for purchase of property, plant and equipment. (Net cash provided by (used in) financing activities) Cash used in financing activities was ¥18,521 million, compared with ¥14,436 million used in the same period of the prior fiscal year. This mainly reflected proceeds from long-term borrowings of ¥5,994 million, repayments of installment payables of ¥12,839 million, repayments of long-term borrowings of ¥7,288 million, purchase of treasury shares of ¥2,000 million, and dividends paid of ¥1,700 million. (3) Explanation Concerning Future Forecasts Including Projected Consolidated Operating Results There is no change to the projected consolidated operating results announced in the Financial Statements Bulletin for the Fiscal Year Ended October 31, 2021 (Japanese GAAP) on December 10, 2021. 6 2. Quarterly Consolidated Financial Statements and Significant Notes Thereto (1) Quarterly Consolidated Balance Sheets As of October 31, 2021 As of April 30, 2022 (Millions of yen)Assets Current assets Cash and deposits Notes and accounts receivable – trade Notes and accounts receivable – trade, and contract assets Electronically recorded monetary claims – operating Merchandise and finished goods Costs on construction contracts in progress Raw materials and supplies Construction machine parts Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Rental equipment Accumulated depreciation Rental equipment, net Buildings and structures Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Land Other Accumulated depreciation Other, net Total property, plant and equipment Intangible assets Goodwill Customer relationship Other Total intangible assets Investments and other assets Investment securities Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 56,093 39,305 – 7,319 1,666 82 1,375 18,055 3,123 -269 126,751 262,239 -164,193 98,046 42,680 -24,656 18,024 9,764 -8,141 1,623 37,684 2,899 -2,143 756 156,135 4,111 1,276 1,516 6,904 9,249 2,175 3,046 -507 13,963 177,003 303,754 7 56,383 – 35,019 7,443 2,192 – 1,604 18,002 3,439 -277 123,807 272,603 -171,196 101,407 43,438 -25,405 18,033 9,759 -8,168 1,590 37,988 3,424 -2,170 1,254 160,273 4,079 1,411 1,632 7,122 9,200 1,943 3,041 -578 13,606 181,002 304,810 As of October 31, 2021 As of April 30, 2022 (Millions of yen)Liabilities Current liabilities Notes and accounts payable – trade Short-term borrowings Current portion of bonds payable Current portion of long-term borrowings Lease obligations Income taxes payable Provision for bonuses Accounts payable – other Other Total current liabilities Non-current liabilities Long-term borrowings Lease obligations Long-term accounts payable – other Retirement benefit liability Asset retirement obligations Deferred tax liabilities Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets 37,082 960 24 13,055 1,269 2,681 1,548 24,545 6,063 87,230 31,460 2,888 44,486 566 588 1,501 115 81,607 168,837 17,829 19,326 89,048 -1,978 124,226 2,249 0 541 -60 2,729 7,960 134,917 303,754 36,670 980 12 13,093 1,392 2,335 1,632 25,218 3,994 85,327 31,342 3,349 44,365 359 593 1,758 202 81,970 167,298 17,829 19,332 91,887 -3,945 125,104 2,226 0 1,834 -30 4,030 8,377 137,512 304,810 8 (2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income (Quarterly Consolidated Statements of Income) (Consolidated Six-Month Period Ended April 30) (Millions of yen)Six months ended April 30, 2021 Six months ended April 30, 2022 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Insurance claim income Rental income Foreign exchange gains Other Total non-operating income Non-operating expenses Interest expenses Loss on cancellation of leases Other Total non-operating expenses Ordinary profit Extraordinary income Gain on sale of non-current assets Gain on sale of shares of subsidiaries and associates Subsidy income Gain on revision of retirement benefit plan Total extraordinary income Extraordinary losses Loss on sale and retirement of non-current assets Loss on valuation of investment securities Loss on extinguishment of tie-in shares Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent 9 95,225 66,981 28,244 20,183 8,061 22 66 298 44 90 204 726 51 12 97 161 8,626 6 20 17 – 43 79 168 81 329 8,340 2,874 -38 2,835 5,504 558 4,945 93,715 65,697 28,017 20,919 7,098 26 72 14 40 183 231 569 49 15 144 210 7,457 10 6 – 34 52 53 4 – 58 7,450 2,093 383 2,477 4,973 433 4,540 (Quarterly Consolidated Statements of Comprehensive Income) (Consolidated Six-Month Period Ended April 30) (Millions of yen)Six months ended April 30, 2021 Six months ended April 30, 2022 Profit Other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans, net of tax Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 5,504 488 0 914 4 1,407 6,911 6,349 561 4,973 -22 -0 1,292 40 1,310 6,284 5,841 442 10 (3) Quarterly Consolidated Statements of Cash Flows (Millions of yen) Six months ended April 30, 2021 Six months ended April 30, 2022 Cash flows from operating activities Profit before income taxes Depreciation Amortization of goodwill Loss (gain) on sale and retirement of non-current assets Cost transfer resulting from sale of rental equipment Purchase of construction equipment and materials Purchase of rental equipment Loss (gain) on valuation of investment securities Loss (gain) on sale of shares of subsidiaries and associates Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Increase (decrease) in retirement benefit liability Interest and dividend income Assets buy on the installment plan purchase payment interest for rentals Interest expenses Foreign exchange losses (gains) Decrease (increase) in trade receivables Decrease (increase) in inventories Increase (decrease) in trade payables Increase (decrease) in accounts payable – other Loss (gain) on extinguishment of tie-in shares Other, net Subtotal Interest and dividends received Interest paid Income taxes paid Net cash provided by (used in) operating activities 8,340 15,573 361 73 404 -227 -2,777 168 -20 -29 94 32 -88 321 51 -92 5,899 -851 -5,330 846 81 -301 22,530 70 -374 -2,142 20,084 7,450 15,785 298 43 461 -244 -3,199 4 -6 67 84 22 -99 292 49 -174 4,356 -767 -795 1,397 – -1,417 23,610 81 -343 -2,435 20,913 11 (Millions of yen) Six months ended April 30, 2021 Six months ended April 30, 2022 Cash flows from investing activities Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of intangible assets Proceeds from sale of intangible assets Purchase of investment securities Proceeds from sale of investment securities Proceeds from sale of shares of subsidiaries and associates Loan advances Proceeds from collection of loans receivable Collection of long-term accounts receivable-other Other, net Net cash provided by (used in) investing activities Cash flows from financing activities Redemption of bonds Net increase (decrease) in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Repayments of installment payables Repayments of lease obligations Purchase of treasury shares Dividends paid Dividends paid to non-controlling interests Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Increase in cash and cash equivalents resulting from merger with unconsolidated subsidiaries Cash and cash equivalents at end of period -2,353 -2,276 -292 298 -2,292 13 -219 12 -3 7 22 -13 23 103 -13 -32 -75 7,980 -7,280 -12,773 -724 -0 -1,509 -20 -14,436 140 3,434 48,023 260 51,717 -275 293 -1,908 25 -343 – -3 -227 – 22 20 78 42 -12 20 5,994 -7,288 -12,839 -674 -2,000 -1,700 -20 -18,521 191 308 55,557 – 55,866 12 (4) Notes Concerning Quarterly Consolidated Financial Statements (Notes Relating to the Going Concern Assumption) The Company had no material items to report. (Note on Significant Changes to Shareholders’ Equity) The Company repurchased 889,500 shares of treasury shares in accordance with the resolution of the meeting of the Board of Directors held on December 10, 2021. As a result, treasury shares increased by ¥1,999 million during the six-month period ended April 30, 2022, resulting in a net loss of ¥3,945 million for treasury shares as of the end of the six-month period ended April 30, 2022. (Changes in Accounting Policies) (Application of accounting standard for revenue recognition, etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations effective from the beginning of the first quarter, and it has recognized revenue at the time the control of promised goods or services is transferred to the customer at the amount expected to be received upon exchange of said goods or services. The main changes resulting from the application are as follows: (1) Change in the timing of revenue recognition With respect to revenues from construction-related businesses and other businesses, the Group previously recognized revenues from the rental of construction equipment to customers and sales of products at the time of shipment. However, the Group now recognizes revenue at the time of delivery when control over the rental construction equipment or goods sold is transferred to the customer. (2) Revenue recognition for agent transactions For certain transactions, the Group previously recognized as revenue the gross amount of consideration received from customers. However, for transactions in which the Group’s role in the provision of goods or services to customers is that of an agent, the Group now recognizes revenue as the net amount received from customers less the amount paid to suppliers. The application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations is subject to the transitional treatment provided for in the proviso to paragraph 84 of the Accounting Standard for Revenue Recognition. The cumulative effect of the retrospective application, assuming the new accounting policy had been applied to periods prior to the beginning of the first quarter was added to or deducted from the opening balance of retained earnings of the first quarter, and thus the new accounting policy was applied from such opening balance; provided, however, that the new accounting policy was not retrospectively applied to contracts for which nearly all the revenue amounts had been recognized according to the previous treatment in periods prior to the beginning of the first quarter, by applying the method provided for in paragraph 86 of the Accounting Standard for Revenue Recognition. As a result of this change, for the six-month period under review, net sales decreased by ¥1,704 million and cost of sales decreased by ¥1,704 million, while operating profit, ordinary profit and profit before income taxes each increased by ¥0 million. In addition, the opening balance of retained earnings decreased by ¥0 million. Due to the application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations, “Notes and accounts receivable – trade” under current assets of the consolidated balance sheet as of the end of the prior fiscal year has been included in “Notes and accounts receivable – trade, and contract assets” under current assets from the quarterly consolidated balance sheet as of the end of the first quarter. In accordance with the transitional treatment provided for in paragraph 89-2 of the Accounting Standard for Revenue Recognition, figures for the prior fiscal year have not been restated in accordance with the new approach to presentation. Furthermore, the information on disaggregation of revenue from contracts with customers during the six-month period of the prior fiscal year has not been disclosed as allowed by the transitional treatment provided for in paragraph 28-15 of the Accounting Standard for Quarterly Financial Reporting (ASBJ Statement No. 12, March 31, 2020). 13 (Application of accounting standard for fair value measurement, etc.) The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) and relevant ASBJ regulations from the beginning of the first quarter, and it has applied the new accounting policy provided for by the Accounting Standard for Fair Value Measurement, etc. prospectively in accordance with the transitional measures provided for in paragraph 19 of the Accounting Standard for Fair Value Measurement, and paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). There is no impact on the quarterly consolidated financial statements. (Supplemental Information) (Changes to a retirement benefit plan) NISHIKEN CO., LTD., a consolidated subsidiary of the Company, shifted from a lump-sum retirement benefit plan to a defined contribution pension plan on January 31, 2022, except for certain eligible employees. The accounting treatment in this transition applied “Accounting for Transfer between Retirement Benefit Plans” (ASBJ Guidance No. 1, December 16, 2016) and “Practical Solution on Accounting for Transfer between Retirement Benefit Plans” (ASBJ Practical Issues Task Force No. 2, February 7, 2007). As a result, extraordinary income of ¥34 million was recorded for the six-month period under review. (Segment Information) I Six-month period ended April 30, 2021 (From November 1, 2020 to April 30, 2021) 1. Information concerning the amount of net sales and income or loss by reporting segment Reporting segment Business related to the Construction Equipment Rental Division (Millions of yen) Other businesses (Note) Total Net sales Net sales to outside customers Net sales or transfers between related segments Total Segment income 86,603 – 86,603 7,284 8,622 – 8,622 544 95,225 – 95,225 7,828 (Notes) 1. The “Other businesses” classification encompasses business segments not included in the reporting segment, and includes business related to the Steel Sales Division and business related to the Information Products Division, welfare-related business and other businesses. 2. The segment information for the six-month period ended April 30, 2021 reflects material changes that were made to the initial allocation of acquisition costs as a result of finalizing the provisional accounting treatment for business combinations. 2. Difference between total reporting segment income or loss and the amount reported on the Quarterly Consolidated Statement of Income, and the main reasons for the difference (Matters Pertaining to Reconciliation of Difference) Reporting segment total Income Income for “Other businesses” classification Other adjustments Operating profit reported on the Quarterly Consolidated Statement of Income (Millions of yen) Amount 7,284 544 232 8,061 (Note) The segment information for the six-month period ended April 30, 2021 reflects material changes that were made to the initial allocation of acquisition costs as a result of finalizing the provisional accounting treatment for business combinations. 14 II Six-month period ended April 30, 2022 (From November 1, 2021 to April 30, 2022) 1. Information concerning the amount of net sales and income or loss by reporting segment, and information on disaggregation of revenue Reporting segment Business related to the Construction Equipment Rental Division (Millions of yen) Other businesses (Note) Total 63,490 22,762 7,370 93,623 91 93,715 – 93,715 6,853 6,293 559 244 7,098 Net sales Rental contracts Sales of merchandise and finished goods Other Revenue from contracts with customers Other revenues Net sales to outside customers Net sales or transfers between related segments Total Segment income 59,834 18,641 6,849 85,326 91 85,417 – 85,417 6,293 3,655 4,121 520 8,297 – 8,297 – 8,297 559 (Note) The “Other businesses” classification encompasses business segments not included in the reporting segment, and includes business related to the Steel Sales Division and business related to the Information Products Division, welfare-related business and other businesses. 2. Difference between total reporting segment income or loss and the amount reported on the Quarterly Consolidated Statement of Income, and the main reasons for the difference (Matters Pertaining to Reconciliation of Difference) (Millions of yen) Amount Income Reporting segment total Income for “Other businesses” classification Other adjustments Operating profit reported on the Quarterly Consolidated Statement of Income 3. Matters pertaining to changes in reporting segments, etc. As described in “Changes in Accounting Policies,” the Company has applied the “Accounting Standard for Revenue Recognition” and relevant ASBJ regulations from the beginning of the first quarter, and changed the accounting treatment for revenue recognition. Accordingly, the Company has changed the method of measuring profit or loss of operating segments. For the six-month period under review, as a result of this change, and compared with the figures obtained by the previous method, net sales decreased by ¥559 million for the construction-related businesses, and net sales decreased by ¥1,144 million and segment income increased by ¥0 million for other businesses. 15