Adoption of the Revenue Recognition Standard

「With respect to the application of the Revenue Recognition Standard and other relevant standards, in accordance with the transitional treatment prescribed in the proviso to paragraph 84 of the Revenue Recognition Standard, the cumulative effect of retrospectively applying the new accounting policy before the beginning of the first quarter of the current consolidated fiscal year was adjusted against retained earnings at the beginning of the first quarter of the current consolidated fiscal year. As a result, the opening balance of retained earnings decreased by ¥106 million. The impact on net sales and cost of sales for the six months ended the second quarter of the current consolidated fiscal year was immaterial.」

「The Company applied the Accounting Standard for Revenue Recognition (Accounting Standard No. 29, 31 March 2020; hereinafter, the “Revenue Recognition Standard”) and other relevant standards from the beginning of the first quarter of the current consolidated fiscal year. Accordingly, revenue is recognized at the amount expected to be received in exchange for the promised goods or services when control of those goods or services is transferred to the customer. In certain transactions in the ocean shipping business, the consideration is determined through negotiations with the customer or by other means after the Company has provided its services. Previously, the Company estimated transaction prices that remained undetermined at the reporting date and reflected those estimates in the consolidated financial statements. From the current consolidated fiscal year, in light of the uncertainty surrounding variable consideration, the Company has changed its method to reflect the transaction price only to the extent that it can reasonably determine that it is highly probable that a significant reversal of cumulative recognized revenue will not occur.」