Delay in collecting proceeds from the transfer of the Guizhou Province, China business and recognition of an allowance for doubtful accounts

「Although a further ¥200 million was collected during the current consolidated fiscal year, no reversal of the provision for doubtful accounts has been made for collections up to approximately 50% of the balance of accounts receivable at the end of the previous consolidated fiscal year, as the collections were treated in accordance with the original assessment.」

「Although ¥50 million of the transfer consideration was deposited into a consolidated subsidiary's account, ¥685 million remained unpaid at the end of the current consolidated fiscal year, resulting in recognition of a ¥351 million provision for doubtful accounts.」

「On 27 November 2018, our Company transferred its interest in Qiandongnan Kaichuang Water Resources and Environmental Protection Technology Engineering Co., Ltd. to Jinyuan Water Affairs Investment and Construction Co., Ltd. in Jinping County, Guizhou Province, the People's Republic of China. However, payment of the transfer consideration has been delayed, and collection is expected to take time. Accordingly, after taking into account the collectability of the amount in light of these circumstances, we recorded ¥351 million, the amount expected to require recognition as of the end of December 2020, as a provision for doubtful accounts under non-operating expenses.」