TOYO KANETSU K.K.

TKK Report 2019
Financial Section(Fiscal year ended March 31, 2019)

This material is the Financial Section of the TKK Report 2019, theintegrated report published by Toyo Kanetsu K.K. that summarizes thefinancial information for the Company’s fiscal year 2018 (Apr. 2018 toMar. 2019). For financial information prior to fiscal year 2017, pleasesee our website for the Annual Reports for each fiscal year.
https://www.toyokanetsu.co.jp/global/ir/annual.php

CONTENTS
Analysis of Operating Environment and Results

1

Business Risks

2

Consolidated Balance Sheet

4

Consolidated Statement of Income and Comprehensive Income 6
Consolidated Statement of Changes in Equity

7

Consolidated Statement of Cash Flows9

Notes to Consolidated Financial Statements

11

Independent Auditor’s Report

40

Corporate Data

42

Directory42

Analysis of Operating Environment and Results

In the fiscal year ended March 31, 2019 (fiscal 2018),

to owners of parent came to ¥1,025 million (downalthough the economy continued toward a modest

56.6%). Orders received rose 10.0% to ¥43,286 million.

recovery, including signs of increased consumer
spending on the back of improvements in the

Segment results are as follows.

employment and income environments, the outlook for
the Japanese economy remained uncertain due to factors

Logistics Solutions Businessincluding US-China trade friction, a slowdown in theSales mainly comprise warehouse automation equipment

Chinese economy, and concerns that the economy will

projects incorporating our “Multishuttle” system forbe adversely affected by the expected hike inonline shopping as well as co-op stores and machinery

consumption taxes.

projects for airports. Profits declined slightly due tounprofitable projects and higher costs associated with

Amid these conditions, the Logistics Solutions Businesshuman resource enhancements aimed at further

continued to experience a surge in demand driven by the

expanding business.

expansion of online shopping and labor shortages.

As a result, consolidated net sales in this business

Demand for systems for airports was also strong, based

increased 12.9% year on year to ¥29,274 million, while

partly on expectations of further increases in the number

operating profit fell 1.2% to ¥1,907 million, and ordersof overseas visitors ahead of the 2020 Tokyo Olympics

received grew 2.6% to ¥30,486 million.

and Paralympics.

Plant & Machinery BusinessIn the fiscal year under review, the name of the Material

Although we implemented various measures, including

Handling Systems Business, a traditional reporting

efforts to acquire orders for small- and medium-sized

segment, was changed to the Logistics Solutions

projects overseas, we were unable to acquire the newBusiness. This is a change in name only; it has nolarge projects we were targeting. Sales of maintenancematerial effect on the segment itself.

projects declined in Japan and some construction
projects saw declining profit margins, leading to an

In the Plant & Machinery Business, despite a heightened

increase in operating losses.

focus on LNG, which is expected to reduce greenhouse

As a result, consolidated net sales in this businessgas emissions amid the tightening of environmental

decreased 16.0% year on year to ¥8,421 million, and an

regulations worldwide, supply and demand conditions inoperating loss of ¥1,221 million was posted (compared

the LNG market continued to ease as large plants

with ¥178 million in the previous fiscal year), while orders

commenced operations in the US and Australia. While

received grew 37.3% to ¥11,438 million.

there was some movement in LNG-related capital
investment in energy-importing countries, it lacked

Other Businesses

strength. In Japan, petroleum industry reorganization

Efforts were focused mainly on leveraging thebrought a heightened sense of uncertainty to the market,

specializations of each subsidiary to develop sales forcontributing to a business climate that was moreindustrial machinery, general construction andchallenging than expected.

environmental surveys. Higher demand for labor-saving
products due to changes in population structure, as well

In net sales for the current fiscal year were ¥45,188

as for asbestos surveys due to tightening regulations,million (up 8.2% year on year), there was an increase inprovided a tailwind that resulted in an increase in

the Logistics Solutions Business segment. due in part toconsolidated net sales of 29.4% year on year to ¥7,492

a decline in the number of projects in the Plant &million. Operating profit increased 21.3% to ¥1,108

Machinery segment, the Company’s consolidated net

million, and orders received rose 3.4% to ¥1,362 million.

sales were ¥1,406 million (down 37.9%), while operating
profit was ¥1,771 million (down 33.1%). Profit attributable

TKK Report 2019 Financial Section

1

Business Risks

The following risks may affect the business results, stock

The TKK Group makes an effort to minimize the adverse

price and financial position of the TKK Group.

effects of such exchange rate fluctuations by flexibly
entering into forward exchange contracts or option

Effect of the Global Economy and Energy Market Trends

contracts, and by implementing structural solutions such

The Plant & Machinery Business, the TKK Group’s

as using overseas manufacturing bases andmainstay business, is subject not only to global

internationally procuring raw materials. However, aneconomic trends but also to economic and social

unexpected change in exchange rates may adversely

conditions in oil- and gas-producing and consuming

affect the TKK Group’s business results and financial

countries, energy and environmental policies in eachposition.

country, and the prices of crude oil and LNG. Owing tothese factors, some customers have halted, postponed,

Project Execution

or reviewed their investment plans in ways that could

The business results of the TKK Group may be affected

adversely affect Plant & Machinery Business orders andby situations where, for customer reasons, projects are

the TKK Group’s earnings and financial standing.

suspended or postponed or the project content isotherwise altered.

Potential Risks Associated with International
Activities and Overseas AdvanceFurther, as our projects take the form of inclusive

The TKK Group conducts some operations in overseas

contracts, deterioration in project profitability may impact

markets, primarily those of the Plant & Machineryon business results in the event of a sudden change in

Business. Further, its subsidiary manufactures tankthe economic situation leading to unforeseen rises inmaterials in Indonesia. These overseas operations carryequipment and material prices, transportation costs,

inherent risks as stated below, and the TKK Group’s

construction costs or other expenses, or in the event ofbusiness results and financial position may be adversely

a natural disaster, outbreak of disease, serious accident

affected by such risks.

or other eventualities.

(1) Unexpected changes in laws and regulations

Intense Competition for Winning Orders(2) Political and economic instability

All of the major businesses of the TKK Group are being(3) Difficulties in securing human resources

operated under the make-to-order type system, and the(4) Tax system revisions that could be unfavorable to

TKK Group is facing severe competition to win orders.

the TKK Group(5) Social confusion arising from acts of terror, war or
any other factors

Depending on the circumstances, we recognize thepossibility that a competitor may disregard profitability
and enter into price competition with the TKK Group.
Although the TKK Group strives to reduce all kinds of

Exchange Rate Fluctuations

costs and reinforce its price competitiveness, such

The TKK Group’s business activities include manufacturing

unreasonable downward pressure on the TKK Group’s

products, selling materials and implementing construction

earnings may adversely affect the TKK Group’s business

operations overseas. Foreign currency-denominatedresults and financial position.

accounting items such as sales, expenses and assets are

2translated into Japanese yen for the purpose of preparing

Disasters

consolidated financial statements. The exchange rates used

The TKK Group takes necessary measures such as ain currency conversion may affect the yen-denominated value.

daily check, drill and establishment of a contact system

As most of our payments and receipts are denominated in

to continue it’s business activities to prepare for fire,

U.S. dollars or euros, a stronger yen will adversely affectearthquakes or other large-scale natural disasters. In

the TKK Group’s business, while a weaker yen will

addition, major personal and property damages arefavorably affect the TKK Group’s business.

adequately covered by insurance against such disasters.

TKK Report 2019 Financial Section

However, the TKK Group’s business results and financial
position may be adversely affected if projections are
exceeded by the scale of the direct or indirect material
damage or human injury, or by the burden of restoration
costs or other expenses

Leaks of Confidential Information, etc.
The TKK Group handles a variety of confidential
information, including customer information and technicaldata, during the operation of its business. To strengthen
the management of confidential information, the Information
Security Committee has been established to educate
employees on the importance of protecting this informationand has taken measures to ensure the security of
information systems. If an unforeseen cyberattack
impairs the function of confidential information systems
through unforeseen cyber attacks, including by computerviruses and other malware, or if confidential information
is lost or leaked, this may damage the reliability of the
TKK Group and impact our business activities.

TKK Report 2019 Financial Section

3

Consolidated financial statements, etc.
(1) Consolidated financial statements(i) Consolidated balance sheet(Millions of yen)Previous fiscal period(As of March 31, 2018)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Lease investment assets
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Tools, furniture and fixtures, net
LandConstruction in progress
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

4

TKK Report 2019 Financial Section

*1
*5

*3
*3
*3
*3, *4*2

12,421
9,387
1,781
500
40
3,819
1,640
494
(21)
30,064

3,457
1,152
282
10,707110
015,710
368
8,730
58
398
778
(292)
9,674
25,75355,818Current fiscal period(As of March 31, 2019)

*1
*5

*3
*3
*3
*3, *4*2

7,666
23,267
1,499
–
38
4,252
1,670
534
(22)
38,906

3,321
1,021
310
10,556622
1215,845
357
8,671
63
332
868
(289)
9,646
25,85064,756

(Millions of yen)Previous fiscal period(As of March 31, 2018)
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Accrued expenses
Income taxes payable
Advances received
Provision for bonuses
Provision for loss on order received
Provision for warranties for completed
construction
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Revaluation reserve for land
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

*5
*3
*3

*3

*4

*4

2,033
4,604
15
3,380
316
417
242
183

Current fiscal period(As of March 31, 2019)

*5
*3
*3

1,570
7,849
514
7,534
659
2,020
227
121

580

555

924
12,698870
21,922

3,080
1,591
1,107
325
321
27
6,453
19,151

*3

*4

4,627
1,267
1,095
358
224
27
7,599
29,522

18,5801,273
15,750(1,397)
34,207

18,5801,273
14,549(1,077)33,324

2,995

2,621

133
(676)
5
2,458
0
36,66655,818

*4

106
(759)
(61)
1,907
1
35,23464,756TKK Report 2019 Financial Section

5

(ii)

Consolidated statement of income and comprehensive income(Millions of yen)Previous fiscal year
(From April 1, 2017
to March 31, 2018)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Miscellaneous loss
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on bargain purchase
Disaster donations
Other
Total extraordinary income
Extraordinary losses
Loss on valuation of investment securities
Loss on disaster
Other
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable toProfit attributable to owners of parent
Loss attributable to non-controlling interests
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 toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

6

TKK Report 2019 Financial Section*1*2, *3*4

41,75834,172
7,585
5,319
2,265

Current fiscal year
(From April 1, 2018
to March 31, 2019)*1*2, *345,18838,194
6,994
5,588
1,406

11
283
5
134
434

12
302
–
136
452

33
–
19
53
2,646

49
19
17
87
1,771

98
320
–
–
–
418

36
74
87
46
1
246

–
–
94
94
2,971
582
26
609
2,362

237
159
20
418
1,599
748
(173)
574
1,025

*4

2,362
(0)

1,025
(0)

1,003
14
(23)
(9)
985
3,347

(374)
–
(83)
(66)
(523)
501

3,347

501

(0)

(0)

(iii) Consolidated statement of changes in equity
Previous fiscal year (From April 1, 2017 to March 31, 2018)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
period18,580Capital surplus

Retained earnings

1,273

16,447

Dividends of surplus
Profit attributable toowners of parent
Reversal of revaluation
reserve for land
Purchase of treasury
sharesRetirement of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
periodTotal shareholders’equityTreasury shares(2,323)33,978(1,150)(1,150)

2,362

2,362

30

30
(1,013)(1,013)(1,939)

1,939

–

–

–

(697)

926

229

18,5801,273

15,750(1,397)

34,207

Accumulated other comprehensive income
Valuation
Deferred gains Revaluationdifference onor losses onreserve foravailable-forhedges
landsale securities
Balance at beginning ofcurrent period
Changes of items during
period

1,992

(14)

163

Foreigncurrencytranslation
adjustment
(652)

Total
Remeasureaccumulated
ments ofother
defined benefit
comprehensive
plansincome14

1,503

Noncontrolling Total net assetsinterests–

Dividends of surplus
Profit attributable toowners of parent
Reversal of revaluation
reserve for land
Purchase of treasury
sharesRetirement of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period35,481(1,150)2,362
30(1,013)
–
1,003

14

(30)

(23)

(9)

955

0

956

1,003

14

(30)

(23)

(9)

955

0

1,185

2,995

–

133

(676)

5

2,458

0

36,666TKK Report 2019 Financial Section

7

Current fiscal year (From April 1, 2018 to March 31, 2019)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
periodCapital surplus

Retained earnings

1,273

15,75018,580

Dividends of surplus
Profit attributable toowners of parent
Reversal of revaluation
reserve for land

Treasury shares(1,397)

34,207

(930)

(930)

1,025

1,025

26

26

Purchase of treasury
sharesRetirement of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
periodTotal shareholders’equity(1,004)(1,004)(1,323)

1,323

–

–

–

(1,201)

319

(882)

18,5801,273

14,549(1,077)33,324

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning ofcurrent period
Changes of items during
period2,995

Revaluation
reserve for land
133

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plans

(676)

5

Total
accumulated
othercomprehensive
income2,458

Noncontrollinginterests

0

Dividends of surplus
Profit attributable toowners of parent
Reversal of revaluation
reserve for land
Purchase of treasury
sharesRetirement of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period8

TKK Report 2019 Financial Section

Total net assets

36,666

(930)
1,025
26
(1,004)
–
(374)

(26)

(83)

(66)

(550)

0

(550)

(374)

(26)

(83)

(66)

(550)

0

(1,432)

2,621

106

(759)

(61)

1,907

1

35,234

(iv) Consolidated statement of cash flows(Millions of yen)Previous fiscal year
(From April 1, 2017
to March 31, 2018)
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Gain on bargain purchase
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Increase (decrease) in provision for loss on order
received
Increase (decrease) in provision for warranties forcompleted construction
Interest and dividend income
Interest expenses
Disaster donations
Loss on disaster
Foreign exchange losses (gains)
Loss (gain) on valuation of investment securities
Loss (gain) on sales of investment securities
Loss (gain) on sales of non-current assets
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable- tradeDecrease (increase) in lease investment assets
Decrease (increase) in inventories
Decrease (increase) in advance payments
Increase (decrease) in notes and accounts payable trade
Increase (decrease) in advances received
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Disaster donations received
Payments associated with disaster loss
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Proceeds from sales and redemption of securities
Purchase of non-current assets
Proceeds from sales of non-current assets
Purchase of investment securities
Proceeds from sales and redemption of investment
securities
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Other, net
Net cash provided by (used in) investing activities

Current fiscal year
(From April 1, 2018
to March 31, 2019)

2,971
737
72
–

1,599
728
–
(87)

(37)

(3)

(28)
(58)

(13)
4

(489)

(62)

68

(25)

(294)
33
–
–
18
–
(320)
(98)
19

(315)
49
(46)
159
72
237
(74)
(31)
8

3,375

(13,749)

(257)
342
252

272
(419)
95

(1,272)

3,714

(773)
74
4,336
294
(32)
–
–
(872)
3,726

1,621
(134)
(6,400)
314
(50)
46
(159)
(449)
(6,698)

100
(436)
295
(634)

500
(1,080)
375
(717)

500

74

–

(427)

91
(85)

(40)
(1,315)TKK Report 2019 Financial Section

9

(Millions of yen)Previous fiscal year
(From April 1, 2017
to March 31, 2018)
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Purchase of treasury shares
Proceeds from share issuance to non-controllingshareholders
Cash dividends paid
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
Cash and cash equivalents at end of period10

TKK Report 2019 Financial Section*1

Current fiscal year
(From April 1, 2018
to March 31, 2019)

2,250
2,000
(60)
(1,013)

3,217
2,000
(38)
(1,004)1

1(1,145)
2,032

(926)
3,249

(64)

(45)

5,609
6,810
12,420(4,810)12,4207,609*1NotesBasis of presenting the consolidated financial statements
The accompanying consolidated financial statements of the Company and its domestic consolidated subsidiaries
are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain
respects as to application and disclosure requirements of International Financial Reporting Standards, and arecompiled from the consolidated financial statements prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan. The accounts of overseas-consolidated subsidiaries are based on theirfinancial statements prepared in conformity with generally accepted accounting principles and practices
prevailing in the respective countries in which the subsidiaries are incorporated.
Significant accounting policies for preparation of the consolidated financial statements
1. Disclosure of scope of consolidation
Number of consolidated subsidiaries: 10 companies
Names of major consolidated subsidiaries are omitted since those names are described in “TKK Group
Companies.”
2. Disclosure about application of the equity method
Not applicable
3. Disclosure about fiscal years, etc. of consolidated subsidiaries
Of the Company’s consolidated subsidiaries, Kankyo Research Co., Ltd., Toyo Kanetsu Corporate Venture
Investment Partnership, Toyo Kanetsu Corporate Venture Fund Ⅱ, PT Toyo Kanetsu Indonesia, Toyo Kanetsu
Singapore Pte. Ltd. and Toyo Kanetsu (Malaysia) Sdn. Bhd. have a closing date of December 31. In preparationof the consolidated financial statements, their financial statements as of December 31 are used. However, formajor transactions that occurred between that date and the consolidated balance sheet date, the necessary
adjustments are made in the consolidated financial statements.
4. Disclosure of accounting policies(1) Accounting policy for measuring significant assets(i) Securitiesa) Held-to-maturity bonds: Stated at amortized cost (straight-line method)b) Available-for-sale securities
Available-for-sale securities with available fair market values are stated at fair value based on the market
price or the like on the consolidated balance sheet date (valuation differences are directly charged or
credited to net assets, and cost of securities sold is determined by the moving-average method).
Available-for-sale securities without available fair market value are valued at cost determined by themoving-average method.
(ii)

Derivatives
Derivatives are valued at fair value.

(iii) Inventoriesa) Finished goods: Primarily, at cost using the first-in first-out method(The value on the balance sheet is written down to reflect a decline in profitability.)b) Work in process: Primarily, at cost using the specific identification method(The value on the balance sheet is written down to reflect a decline in profitability.)c) Raw materials: Primarily, at cost using the weighted-average method(The value on the balance sheet is written down to reflect a decline in profitability.)

TKK Report 2019 Financial Section11

(2) Accounting policy for depreciation of significant assets(i) Property, plant and equipment
The Company and its domestic consolidated subsidiaries use the declining-balance method, and overseas
consolidated subsidiaries use the straight-line method in accordance with provisions of accounting standards
in their respective countries.
However, the Company and its domestic consolidated subsidiaries use the straight-line method to depreciatebuildings (excluding facilities attached to buildings) acquired on or after April 1, 1998, and facilities attached
to buildings and structures acquired on or after April 1, 2016.
The estimated useful lives of major items are as follows:
Buildings and structures
2 to 57 years
Machinery and equipment
2 to 17 years(ii) Intangible assets
Intangible assets are amortized using the straight-line method.
Software for internal use is amortized using the straight-line method over the estimated useful life as internallydetermined (5 years).
(3) Accounting policy for significant provisions(i) Allowance for doubtful accounts
To cover losses from bad debts for notes and accounts receivable - trade, loans receivable and others, anallowance for doubtful accounts is provided based on historical experience of bad debts for general
receivables. For specific receivables such as highly doubtful receivables, the collectibility is individuallyconsidered and the estimated amount of uncollectible accounts is provided as the allowance.
(ii) Provision for bonuses
To pay bonuses to employees, out of the estimated amount to be paid in the following fiscal year, an amountattributable to the current fiscal year is recorded.
(iii) Provision for loss on order received
To make provision for losses on orders received, as for existing construction, for which an amount of loss canbe reasonably estimated at the end of the current fiscal year, an expected amount of loss in future is recorded
as the provision.
(iv) Provision for warranties for completed construction
To cover costs of warranty against defects and after-sales service for completed construction, an amount isrecorded based on the historical loss rate as well as consideration of an amount for individual construction thatis expected to incur in future at the end of the current fiscal year.
(4) Method of accounting for retirement benefits(i) Method of attributing estimated retirement benefits to periods
For the purpose of attributing estimated retirement benefits over the period up to the end of the current fiscal
year in the calculation of retirement benefit obligations, the benefit formula method is applied.
(ii) Method of amortizing actuarial gain or loss and past service cost
Past service costs are recorded as an expense in the year they are incurred.
With regard to actuarial gain or loss, the amount is amortized by the straight-line method over a certain term
within the average remaining service period of the eligible employees (5 years) for each applicable fiscal year,
and expensed from the year following the year in which the gain or loss is recognized.
(5) Accounting policies for significant revenues and expenses(i) Recognition of revenues and costs of completed construction contracts
The percentage-of-completion method is applied to construction showing certainty of performance on the
progress made up until the end of the current fiscal year (the cost-to-cost method is applied to estimate theextent of progress toward completion), and the completed-contract method is applied to other construction.
(ii) Standards for recognition of revenues and expenses related to finance lease transactions
Sales and costs are recognized at the time of receiving lease payments.
(6) Accounting policy for hedging(i) Method of hedge accounting
In principle, the deferral accounting is applied. The allocation method is applied to forward foreign exchange
contracts that meet requirements thereof, and the exceptional treatment is applied to interest rate swaps thatmeet requirements thereof.

12

TKK Report 2019 Financial Section

(ii) Hedging instruments and hedged items
Hedging instruments: ......... Forward foreign exchange contracts, Interest rate swaps
Hedged items: ..................... Forecast transactions denominated in foreign currencies and borrowings(iii) Hedging policy
In accordance with the “Rules on Handling of Derivative Transactions” established by the Company, theCompany and its consolidated subsidiaries (collectively, the “Group”) do not enter into any derivativetransaction for speculative purposes but use derivative transactions only to hedge exchange rate fluctuation
risk and interest rate fluctuation risk.
(iv) Method of assessing the hedging effectiveness
The Group confirms effectiveness by comparing and examining cash flows of hedging instruments and hedged
items in advance. However, the Group omits assessment of effectiveness on interest rate swaps to which the
exceptional treatment is applied.
(7) Accounting policy for goodwill
Goodwill is amortized evenly over the period of 5 years.
(8) Scope of cash and cash equivalents in consolidated statement of cash flows
Cash and cash equivalents include cash in hand, readily available deposits and short-term investments withmaturities of three months or less from the purchase date whose value is not subject to significant fluctuation
risk.
(9) Other significant information for preparation of the consolidated financial statements
Accounting policy for consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of taxes.

Notes - Changes in accounting policies
Not applicable
Notes - New accounting standards to be applied“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, issued by the Accounting Standards
Board of Japan on March 30, 2018)• “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, issued
by the Accounting Standards Board of Japan on March 30, 2018)(1) Overview
The International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB)
jointly developed comprehensive revenue recognition standards and issued “Revenue from Contracts with
Customers” in May 2014 (IASB’s IFRS 15 and FASB’s Topic 606). Considering that IFRS 15 shall apply tofiscal years beginning on or after January 1, 2018, and Topic 606 shall apply to fiscal years beginning after
December 15, 2017, the ASBJ developed a comprehensive accounting standard on revenue recognition and thus
issued the accounting standard together with the implementation guidance.
•

The ASBJ established the accounting standard on revenue recognition by following the basic policies indeveloping it. The basic policies were: firstly, incorporating the core principle of IFRS 15 as the starting pointfrom the perspective of facilitating comparability among financial statements, which is one of the benefits ofensuring consistency with IFRS 15; secondly, adding alternative treatments, but to the extent not impairing
comparability, where consideration should be given to the practice having been used in Japan.
(2) Scheduled date of application
These ASBJ statement and guidance will be applied at the start of the fiscal year beginning on April 1, 2021.
(3) Effects of application of the accounting standard, etc.
The impact of the application of the Accounting Standard for Revenue Recognition on the consolidated financial
statements is currently under evaluation.

TKK Report 2019 Financial Section

13

Notes - Changes in presentation
Changes due to the application of “Partial Amendments to Accounting Standard for Tax Effect Accounting”
The Group has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28, February 16, 2018, hereinafter referred to as the “Partial Amendments”) effective from the
beginning of the fiscal year ended March 31, 2019. Accordingly, deferred tax assets have been presented under“investments and other assets” and deferred tax liabilities have been presented under “non-current liabilities,” and at
the same time, the Notes - Tax effect accounting have been changed.
As a result, “deferred tax assets” under “current assets” decreased by ¥506 million, “deferred tax assets” under“investments and other assets” increased by ¥25 million, and “deferred tax liabilities” under “non-current liabilities”
decreased by ¥480 million in the consolidated balance sheet as of the end of the previous fiscal year.
Deferred tax assets and deferred tax liabilities of the same taxable entity are offset in presentation, and total assets
decreased by ¥480 million compared with the amount before the change.
Furthermore, the contents described in (Note 8) (excluding the total amount of valuation reserve) of the explanatory
notes to the “Accounting Standard for Tax Effect Accounting” and (Note 9) of the same explanatory notes set forthin Paragraph 3 through Paragraph 5 of the Partial Amendments have been added in the Notes - Tax effect accounting.
However, of these contents, information for the previous fiscal year has not been provided in accordance with thetransitional treatment specified in Paragraph 7 of the Partial Amendments.
Consolidated statement of income“Loss on retirement of non-current assets” and “impairment loss” under “extraordinary losses,” which were set
down separately for the previous fiscal year, have been included in “other” in the current fiscal year sincesignificance of the amount has decreased. In order to reflect this change in the method of presentation, the amountin the consolidated financial statements for the previous fiscal year has been reclassified.
As a result, ¥19 million included in “loss on retirement of non-current assets” and ¥72 million included in“impairment loss” under “extraordinary losses” in the consolidated statement of income for the previous fiscal year
have been reclassified to “other.”
Notes - Consolidated balance sheet*1.

The following amounts have been restricted by a bank in return for its issuing a bank guarantee, which wasprovided by the Company:
Previous fiscal year
(As of March 31, 2018)
Cash and deposits*2.

¥1 million¥2 million

Accumulated depreciation of property, plant and equipment are as follows:
Previous fiscal year
(As of March 31, 2018)¥11,620 million

14

Current fiscal year
(As of March 31, 2019)

TKK Report 2019 Financial Section

Current fiscal year
(As of March 31, 2019)¥11,094 million

*3.

Assets pledged and liabilities secured

Assets pledged and liabilities secured as collateral are as follows:
Assets pledged
Previous fiscal year
(As of March 31, 2018)
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Land
Total

Current fiscal year
(As of March 31, 2019)¥373 million
0
0
5,458

[¥373 million][0][0][5,458]¥336 million
0
0
5,458

[¥336 million][0][0][5,458]

5,832[5,832]

5,795[5,795]

Liabilities secured
Previous fiscal year
(As of March 31, 2018)
Short-term loans payable
Long-term loans payable(including current portion of long-term loans
payable)Total

Current fiscal year
(As of March 31, 2019)¥997 million[¥997 million]¥1,670 million[¥1,670 million]

1,130[1,130]1,980[1,980]2,127[2,127]3,650[3,650]In the above table, figures in brackets present mortgages on factory foundation and the relevant debts. The amountsof land are after revaluation.
*4.

In accordance with the “Act on Revaluation of Land” (Act No. 34 promulgated on March 31, 1998), theCompany revalues its land for business use and, as for the valuation difference, records an amount equivalent
to tax relating to the valuation difference as “deferred tax liabilities for land revaluation” in the liabilities
section and an amount after deducting said amount as “revaluation reserve for land” in the net assets section.

Method of revaluation – The Company revalues the land by the calculation method where a value based on theassessed value of fixed asset tax set forth in Article 2, Item 3 and road rating set forth in Article 2, Item 4 of the“Order for Enforcement of the Act on Revaluation of Land” (Cabinet Order No. 119 promulgated on March 31,
1998) is reasonably adjusted.
Date of revaluation – March 31, 2002
Previous fiscal year
(As of March 31, 2018)
Difference between the year-end value ofrevaluated land and the book value after therevaluation

Current fiscal year
(As of March 31, 2019)¥(2,642) million¥(2,537) million*5. Notes matured at the end of the fiscal year
With respect to the accounting treatment of notes matured at the end of the fiscal year, although the last day of thecurrent fiscal year fell on a bank holiday, the notes were treated as though they were settled on the maturity date.
The amounts for notes matured at the end of the fiscal year are as follows:
Previous fiscal year
(As of March 31, 2018)
Notes receivable - trade
Notes payable - trade

Current fiscal year
(As of March 31, 2019)¥143 million
103¥78 million
142

Notes - Consolidated statement of income and consolidated statement of comprehensive income*1.

Provision for loss on order received included in cost of sales
Previous fiscal year
(From April 1, 2017
to March 31, 2018)¥(458) million

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥(56) million

TKK Report 2019 Financial Section

15

*2.

Major components of selling, general and administrative expenses are as follows:
Previous fiscal year
(From April 1, 2017
to March 31, 2018)

Salaries and allowances
Bonuses
Provision for bonuses
Retirement benefit expenses
Provision of allowance for doubtful accounts*3.

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥1,629 million
386
115
102
(37)

¥1,702 million
289
147
147
(1)

Total of research and development expenses included in general and administrative expenses andmanufacturing costs for the current period
Previous fiscal year
(From April 1, 2017
to March 31, 2018)

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥653 million*4.

¥543 million

Impairment loss

Previous fiscal year (From April 1, 2017 to March 31, 2018)
Location

Use

Type

Yokohama City, Kanagawa

Assets for lease

Land, buildings and other assets

Ebina City, Kanagawa

Same as above

Same as above

In principle, the Group’s assets for business use are grouped on the basis of the business, and the Group’s idle assets
are grouped by each asset.
For the previous fiscal year, the book value of assets scheduled to be sold, such as land, buildings and other assets
owned by the Group, was reduced to a recoverable amount calculated using net realizable value based on anassessed value reasonably measured by a third party. Said reduced amount has been recorded under extraordinary
losses as impairment loss (¥72 million). A breakdown of this impairment loss is ¥72 million in land and ¥0 million
in buildings and other assets.
The recoverable amount of this asset group was measured based on the net realizable value and valued based on theplanned sale amount.
Current fiscal year (From April 1, 2018 to March 31, 2019)
Not applicable16

TKK Report 2019 Financial Section

*5.

Reclassification adjustments and tax effects relating to other comprehensive income
Previous fiscal year
(From April 1, 2017
to March 31, 2018)

Valuation difference on available-for-sale securities:
Amount recorded during the period
Reclassified amountCurrent fiscal year
(From April 1, 2018
to March 31, 2019)¥1,446 million–¥(555) million–

Pre-adjustment of tax effectTax effect amount

1,446
(443)

(555)
181

Valuation difference on available-for-salesecurities

1,003

(374)

Deferred gains or losses on hedges:
Amount recorded during the period
Reclassified amount

–
21

–
–

Pre-adjustment of tax effectTax effect amount

21
(6)

–
–

Deferred gains or losses on hedges

14–

Foreign currency translation adjustment:
Amount recorded during the period
Reclassified amount

(23)
–

(83)
–

Pre-adjustment of tax effectTax effect amount

(23)
–

(83)
–

Foreign currency translation adjustment

(23)

(83)

Remeasurements of defined benefit plans, net of tax:
Amount recorded during the period
Reclassified amount

52
(64)

(90)
(30)

Pre-adjustment of tax effectTax effect amount

(11)
2

(120)
54

Remeasurements of defined benefit plans,
net of tax

(9)

(66)

Total other comprehensive income

985

(523)

Notes - Consolidated statement of changes in equity
Previous fiscal year (From April 1, 2017 to March 31, 2018)1.
Matters concerning class and total number of issued shares, and class and number of treasury shares
Number of shares at
beginning of period

Number of shares
increased in period

Number of shares
decreased in period(Thousands of shares)
Number of shares at
end of period

Issued shares
Common shares (Note 1)

103,030–

93,327

9,703

Total

103,030–

93,327

9,703

Common shares (Notes 1 and 2)

7,187

1,727

8,514

401

Treasury shares(Notes) 1.
2.
3.

Total
7,187
1,727
8,514
401
The Company conducted a share consolidation at a ratio of 10 shares of common shares to 1 share on October 1,
2017.
Total number of issued shares decreased by 93,327 thousand shares due to decline after the share consolidation of
87,327 thousand shares and retirement of 6,000 thousand shares of treasury shares based on a resolution by the
Board of Directors.
Total number of treasury shares increased by 1,727 thousand shares due to purchase of treasury shares based on a
resolution by the Board of Directors of 1,716 thousand shares (1,597 thousand shares before the shareconsolidation and 119 thousand shares after the share consolidation), purchase of fractional number of shares inline with the share consolidation of 0 thousand shares and purchase of shares less than one unit of 11 thousand
shares (9 thousand shares before the share consolidation and 1 thousand shares after the share consolidation).

TKK Report 2019 Financial Section

17

4.

2.

The number of common shares in treasury decreased by 8,514 thousand shares due to decline after the shareconsolidation of 2,514 thousand shares and retirement of 6,000 thousand shares of treasury shares based on a
resolution by the Board of Directors.

Matters concerning dividends(1) Cash dividends paid
Resolution

Class of shares

Total cash
dividends

Dividends per
share

Record date

Effective dateOrdinary General Meeting of
Shareholders on June 29,
2017

Common shares¥1,150 million¥12

March 31, 2017

June 30, 2017(2)

Dividends whose record dates are in the current fiscal year but whose effective dates fall in the next
fiscal year

Resolution

Class ofsharesTotal cash
dividends

Source ofdividends

Dividends per
share

Record date

Effective dateOrdinary General
Meeting of
Shareholders on June
28, 2018

Commonshares¥930 million

Retainedearnings¥100

March 31, 2018

June 29, 2018

Current fiscal year (From April 1, 2018 to March 31, 2019)1.
Matters concerning class and total number of issued shares, and class and number of treasury shares
Number of shares at
beginning of period

Number of shares
increased in period

Number of shares
decreased in period(Thousands of shares)
Number of shares at
end of period

Issued shares
Common shares (Note 2)

9,703

–

380

9,323

Total

9,703

–

380

9,323

Common shares (Notes 1 and 2)

401

262

380

283

Treasury shares(Notes) 1.
2.

2.

Matters concerning dividends(1) Cash dividends paid
Resolution

Class of shares

Total cash
dividends

Dividends per
share

Record date

Effective dateOrdinary General Meeting of
Shareholders on June 28,
2018

Common shares¥930 million¥100

March 31, 2018

June 29, 2018

(2)

18

Total
401
262
380
283
Total number of treasury shares increased by 262 thousand shares due to purchase of treasury shares based on a
resolution by the Board of Directors of 261 thousand shares and purchase of shares less than one unit of 1 thousand
shares.
Total number of issued shares decreased by 380 thousand shares and the number of common shares in treasury
decreased by 380 thousand shares due to retirement of treasury shares based on a resolution by the Board of
Directors.

Dividends whose record dates are in the current fiscal year but whose effective dates fall in the next
fiscal year

Resolution

Class ofsharesTotal cash
dividends

Source ofdividends

Dividends per
share

Record date

Effective dateOrdinary General
Meeting of
Shareholders on June27, 2019

Commonshares¥903 million

Retainedearnings¥100

March 31, 2019

June 28, 2019

TKK Report 2019 Financial Section

Notes - Consolidated statement of cash flows*1.

Reconciliation of ending balance of cash and cash equivalents with account balances per balance sheet
Previous fiscal year
(From April 1, 2017
to March 31, 2018)

Current fiscal year
(From April 1, 2018
to March 31, 2019)

Cash and deposits
Time deposits with maturity over 3 months
Restricted deposits¥12,421 million–(1)¥7,666 million
(54)
(2)

Cash and cash equivalents

12,4207,609

Notes - Leases(Borrower)
Operating lease transactions
Future lease payments under non-cancelable operating leases
Previous fiscal year
(As of March 31, 2018)

Current fiscal year
(As of March 31, 2019)

Within 1 year

¥13 million¥20 million

Over 1 year

20

57

33

77

Previous fiscal year
(As of March 31, 2018)

Current fiscal year
(As of March 31, 2019)

Lease payments receivable¥1,826 million¥1,526 million

Estimated residual value

–

Total

(Lender)
Finance lease transactions(1) The components of lease investment assets
Current assets

Amount equivalent to interest income
Lease investment assets

86

(44)

(113)

1,781

1,499

(2)

Amounts expected to be collected on lease payments receivable of lease investment assets after consolidatedbalance sheet dateCurrent assets(Millions of yen)Previous fiscal year (As of March 31, 2018)
Within 1 year
Lease investment
assets669

Over 1 year
to 2 years

Over 2 years
to 3 years

Over 3 years
to 4 years

Over 4 years
to 5 years

Over 5 years

515

317

248

75

–
(Millions of yen)

Current fiscal year (As of March 31, 2019)
Within 1 year
Lease investment
assets600

Over 1 year
to 2 years

Over 2 years
to 3 years

Over 3 years
to 4 years

Over 4 years
to 5 years

Over 5 years

401

332

160

31

–

TKK Report 2019 Financial Section

19

Notes - Financial instruments
1.
Status of financial instruments(1) Policy on treatment of financial instruments
The Group raises funds necessary to run its business smoothly by borrowing from banks. In the case where theGroup has temporary surplus funds, it invests them only in safe financial instruments.
The Group uses derivative transactions to hedge various risks described in (2) in accordance with the “Rules on
Handling of Derivative Transactions” established by the Company and has a policy not to enter into any
speculative transaction.
(2) Content and risks of financial instruments and risk management system therefor
The Group’s notes and accounts receivable - trade are subject to credit risk of its customers, and its certain
receivables denominated in foreign currencies are subject to exchange rate fluctuation risk. The Group mitigatesthe credit risk of its customers by periodically confirming whether there is any overdue receivable using an aging
schedule and other documents and the exchange rate fluctuation risk such as by borrowing in foreign currencies
as needed.
The Company’s securities are subject to credit risk of its investees, but the Company invests surplus funds in safe
financial instruments with high ratings through prescribed internal procedures.
The Group’s investment securities are subject to credit risk of its investees and market price fluctuation risk.
They are equity securities of listed companies with which the Group has business relationships, most of which
are categorized as available-for-sale securities, and the Group periodically ascertains the fair value thereof.
Certain bond securities include hybrid financial instruments that were accounted for with embedded derivatives.
The Group’s notes and accounts payable - trade and accrued expenses are subject to liquidity risk, and its certain
payables denominated in foreign currencies are subject to exchange rate fluctuation risk. The Group mitigates theliquidity risk by periodically preparing a schedule of cash receipts and disbursements and other documents andthe exchange rate fluctuation risk by forward exchange contracts and other means as needed.
Of borrowings, short-term loans payable are primarily for daily business transactions, and long-term loans
payable are primarily for temporary advances on large-scale projects. Variable-rate borrowings are subject tointerest rate fluctuation risk, and the Group uses interest rate swaps as hedging instruments for respective
contracts for most of the long-term loans payable in order to hedge the fluctuation risk of the interest rates to be
paid and fix interest expenses. The Group limits interest rate swaps to those to which the exceptional treatment
can be applied and omits assessment of hedge effectiveness thereon. The Group mitigates the liquidity risk by
periodically preparing a schedule of cash receipts and disbursements and other documents.
The Group executes and manages derivative transactions in accordance with the Company’s Rules on Handlingof Derivative Transactions and, when using derivatives, enters into transactions with financial institutions withhigh ratings to mitigate credit risk. Please see “Accounting policy for hedging” of “Disclosure of accounting
policies” in “Significant accounting policies for preparation of the consolidated financial statements” described
previously for the hedging instruments, hedging policy, method of assessing the hedging effectiveness and otherinformation on hedge accounting.
(3) Supplementary explanation concerning fair values of financial instruments
Fair values of financial instruments comprise values based on market prices and reasonably measured values
where market prices are unavailable. As several variable factors are incorporated in calculating the relevant fairvalue, the resulting amount may vary depending on the different preconditions employed. In addition, thecontract amounts of derivative transactions, mentioned in “Notes - Derivatives” in Notes, should not be
considered indicative of the sizes of the market risks involved in the derivative transactions.

20

TKK Report 2019 Financial Section

2.
Fair values of financial instruments
Carrying amounts on the consolidated balance sheet, fair values and differences therebetween of the financial
instruments as of March 31, 2018 and 2019, are as shown below. However, financial instruments whose fair values
are deemed to be extremely difficult to determine are not included therein (Note 2).
Previous fiscal year (As of March 31, 2018)(Millions of yen)
Carrying amount on
the consolidatedbalance sheet(1) Cash and deposits(2) Notes and accounts receivable - trade
Allowance for doubtful accounts (*)

Difference

12,4219,387(10)12,421

–

9,376

9,376

–

500
7,887

500
7,887

–
–

Total assets

30,18530,185–

Notes and accounts payable - trade
Short-term loans payable
Accrued expenses
Long-term loans payable(including within 1 year)

2,033
4,604
3,380

2,033
4,604
3,380

–
–
–

3,095

3,160

65

Total liabilities

13,113

13,178

65

–
–

–
–

–
–

(3) Securities(4) Investment securities
(1)
(2)
(3)
(4)

Fair value

Derivatives(1)
Those not qualifying for hedge accounting(2)
Those qualifying for hedge accounting

Total derivatives–––(*) Amounts of allowance for doubtful accounts separately included in notes and accounts receivable - trade are excluded.

Current fiscal year (As of March 31, 2019)(Millions of yen)
Carrying amount on
the consolidatedbalance sheet(1) Cash and deposits(2) Notes and accounts receivable - trade
Allowance for doubtful accounts (*)

Difference

7,666
23,267–

7,666–

23,26723,267

–

–
7,414

–
7,414

–
–

Total assets

38,34738,347–

Notes and accounts payable - trade
Short-term loans payable
Accrued expenses
Long-term loans payable(including within 1 year)

1,570
7,849
7,534

1,570
7,849
7,534

–
–
–

5,141

5,232

90

Total liabilities

22,09522,186

90

–
–

–
–

–
–

(3) Securities(4) Investment securities
(1)
(2)
(3)
(4)

Fair value

Derivatives(1)
Those not qualifying for hedge accounting(2)
Those qualifying for hedge accounting

Total derivatives–––(*) Amounts of allowance for doubtful accounts separately included in notes and accounts receivable - trade are excluded.
(Notes) 1.

Calculation method of fair values of financial instruments and matters concerning securities and derivatives
Assets(1) Cash and deposits and (2) Notes and accounts receivable - trade
Because these accounts are settled in a short period, their fair values approximate their book values. Therefore,

TKK Report 2019 Financial Section

21

the fair values are based on the book values.
(3) Securities
Because this account has a short-term maturity, its fair value approximates its book value. Therefore, the fairvalue is based on the book value.
(4) Investment securities
Fair value of this account is based on the price on exchanges, the price provided by counterparty financial
institutions or other prices. Please refer to “Notes - Securities” for the notes.
Liabilities(1) Notes and accounts payable - trade, (2) Short-term loans payable and (3) Accrued expenses
Because these accounts are settled in a short period, their fair values approximate their book values. Therefore,
the fair values are based on the book values.
(4) Long-term loans payable (including within 1 year)
Fair value of this account is determined by discounting the total amount of principal and interest at the interest
rate available for a similar borrowing. Fair values of long-term loans payable with variable rates, to which the
exceptional treatment for the interest rate swap is applied, are determined by discounting the total amount ofprincipal and interest accounted for with the relevant interest rate swaps at the reasonably estimated interest
rates applied to similar borrowings.
Derivatives
Please refer to “Notes - Derivatives” in Notes.
2.
3.

“Assets (4) Investment securities” do not include unlisted equity securities (carrying amount on the consolidatedbalance sheet of ¥1,257 million) because there is no market price and their future cash flows cannot be estimatedand accordingly it is extremely difficult to ascertain their fair values.
Projected redemption amounts for monetary claims and securities with maturities after the consolidated balance
sheet datePrevious fiscal year (As of March 31, 2018)(Millions of yen)

Within 1 year

Over 1 year
to 5 years

Over 5 years
to 10 years

Over 10 years

Cash
Notes and accounts receivable - trade
Securities
Investment securities
Held-to-maturity bonds
Available-for-sale securities

12,408
9,376
500

–
–
–

–
–
–

–
–
–

–
–

–
–

–
–

–
–

Total

22,284–––

Within 1 year

Over 1 year
to 5 years

Over 5 years
to 10 years

Over 10 years

Cash
Notes and accounts receivable - trade
Securities
Investment securities
Held-to-maturity bonds
Available-for-sale securities

7,630
23,112
–

–
155
–

–
–
–

–
–
–

–
–

–
–

–
–

–
–

Total

30,742155––

Current fiscal year (As of March 31, 2019)(Millions of yen)

22

TKK Report 2019 Financial Section

4.

Scheduled repayment amounts of long-term loans payable and other interest-bearing liabilities
Previous fiscal year (As of March 31, 2018)
Over 1 year
to 2 years

Over 2 years
to 3 years

Over 3 years
to 4 years

480

600

–

Over 1 year
to 2 years

Over 2 years
to 3 years

Over 3 years
to 4 years

619

8

–

Long-term loans payable
Current fiscal year (As of March 31, 2019)

Long-term loans payable(Millions of yen)Over 4 years
to 5 years–(Millions of yen)Over 4 years
to 5 years
1,700

Notes - Securities
1.

Held-to-maturity bonds
Previous fiscal year (As of March 31, 2018)Type

Securities for which the fair value
exceeds the carrying amount on the
consolidated balance sheet

Securities for which the fair value
does not exceed the carrying amounton the consolidated balance sheet(1) Government
bonds and municipal
bonds, etc.
(2) Corporate bonds(Millions of yen)
Carrying amount on
the consolidatedbalance sheet–

Fair value

Difference
–

–

–

–

–

500

500

0

Subtotal

500

500

0

(1) Government
bonds and municipal
bonds, etc.

–

–

–

(2) Corporate bonds

–

–

–

(3) Other–––(3) Other

Subtotal
Total

–

–

–

500

500

0

Current fiscal year (As of March 31, 2019)
Not applicableTKK Report 2019 Financial Section

23

2.

Available-for-sale securities (securities classified as other securities under Japanese GAAP)
Previous fiscal year (As of March 31, 2018)
Type(1) Stocks(Millions of yen)
Carrying amount on
the consolidatedbalance sheet

Acquisition cost

Difference

6,723

2,327

4,395

(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

(iii) Other

–

–

–

(3) Other–––(2) Bonds

Securities for which the carrying
amount on the consolidated balance
sheet exceeds the acquisition cost

Subtotal

6,723

2,327

4,395

1,163

1,424

(260)

(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

(iii) Other

–

–

–

(3) Other

–

–

–

1,163

1,424

(260)

(1) Stocks(2) Bonds
Securities for which the carrying
amount on the consolidated balance
sheet does not exceed the acquisition
cost

Subtotal(Note)

24

Total
7,887
3,752
4,134
“Available-for-sale securities” in the above table do not include unlisted equity securities (carrying amount on the
consolidated balance sheet of ¥842 million) because there is no market value and accordingly it is extremely difficult
to ascertain their fair values.

TKK Report 2019 Financial Section

Current fiscal year (As of March 31, 2019)(Millions of yen)
Carrying amount on
the consolidatedbalance sheet

Type(1) Stocks

Acquisition cost

Difference

5,731

1,880

3,850

(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

(iii) Other

–

–

–

(3) Other

–

–

–

5,731

1,880

3,850

1,682

1,937

(254)

(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

(iii) Other

–

–

–

(2) Bonds

Securities for which the carrying
amount on the consolidated balance
sheet exceeds the acquisition cost

Subtotal(1) Stocks(2) Bonds
Securities for which the carrying
amount on the consolidated balance
sheet does not exceed the acquisition
cost(3) Other
Subtotal(Note)

3.

–

–

–

1,682

1,937

(254)

Total
7,414
3,818
3,595
“Available-for-sale securities” in the above table do not include unlisted equity securities (carrying amount on the
consolidated balance sheet of ¥1,257 million) because there is no market value and accordingly it is extremely
difficult to ascertain their fair values.

Available-for-sale securities that were sold
Previous fiscal year (From April 1, 2017 to March 31, 2018)
Type(1) Shares(2) Bonds(i) Government bonds and municipal bonds,
etc.
(ii) Corporate bonds(iii) Other(3) Other
Total

Sales amount400

Total gain on sales
320(Millions of yen)
Total loss on sales
(0)

–

–

–

–
–
–

–
–
–

–
–
–

400

320

(0)

Current fiscal year (From April 1, 2018 to March 31, 2019)
Type(1) Shares(2) Bonds(i) Government bonds and municipal bonds,
etc.
(ii) Corporate bonds(iii) Other(3) Other
Total

Sales amount74

Total gain on sales
74(Millions of yen)
Total loss on sales
–

–

–

–

–
–
–

–
–
–

–
–
–

74

74

–

TKK Report 2019 Financial Section25

Notes - Derivatives
1. Derivative transactions to which hedge accounting is not applied
Not applicable
2. Derivative transactions to which hedge accounting is applied(1) Currencies
Previous fiscal year (As of March 31, 2018)
Not applicable
Current fiscal year (As of March 31, 2019)
Not applicable(2) Interest rates
Previous fiscal year (As of March 31, 2018)(Millions of yen)Classification

Type of derivativetransaction, etc.

Interest rate swap
Exceptionaltransactions
treatment of interest
Receive variable,
rate swaps
pay fixed(Note)

Principal hedged
itemsLong-term loans
payableContract
amount2,495

Portion ofcontract
amount over
1 year2,480(Note)Classification

Type of derivativetransaction, etc.

Interest rate swap
Exceptionaltransactions
treatment of interest
Receive variable,
rate swaps
pay fixed

26(Note)

The fair value of interest rate swaps that are accounted for using exceptional treatment is included in that ofcorresponding long-term loans payable, as those interest rate swaps are treated as an adjustment to long-term loans
payable as hedged items.

Current fiscal year (As of March 31, 2019)(Note)

Fair value
calculation
methodFair value

Principal hedged
itemsLong-term loans
payable(Millions of yen)Contract
amount3,680

Portion ofcontract
amount over
1 year
3,200

Fair value(Note)

Fair value
calculation
method(Note)

The fair value of interest rate swaps that are accounted for using exceptional treatment is included in that ofcorresponding long-term loans payable, as those interest rate swaps are treated as an adjustment to long-term loans
payable as hedged items.

TKK Report 2019 Financial Section

Notes - Retirement benefits
1. Summary of retirement benefit plans adopted
The Company and certain consolidated subsidiaries have defined benefit corporate pension plans as defined benefit
plans, and certain consolidated subsidiaries have a small and medium sized enterprise retirement allowancecooperative plan and lump-sum retirement plans.
In addition, the Company and certain consolidated subsidiaries have defined contribution corporate pension plans.
The Company and certain consolidated subsidiaries participate in Nihon Sangyo Kikai Kougyo Kigyonenkin Kikin(pension fund of Japan industrial machinery manufacturers). For this fund, since the amount of pension plan assets
corresponding to contributions by the respective companies cannot be reasonably calculated, the fund is accounted
for similar to defined contribution plans.
The Nihon Sangyo Kikai Kougyo Kigyonenkin Kikin has received permission from the Minister of Health, Labourand Welfare on May 1, 2017 for past portions of the entrusted employees’ pension portion to be returned to the state,
and it has changed its pension scheme from an employees’ pension fund plan to a corporate pension fund plan.
2. Defined benefit plans(1) Reconciliation between beginning balance and ending balance of retirement benefit obligations
Previous fiscal year
(From April 1, 2017
to March 31, 2018)
Beginning balance of retirement benefit
obligations
Service cost
Interest expenses
Unrecognized net actuarial gain or loss
Retirement benefits paid
Past service cost
Other
Ending balance of retirement benefit
obligations(2)

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥3,438 million¥3,493 million

182
15
52
(190)
–
(4)

187
16
6
(301)
35
(9)

3,493

3,428

Reconciliation between beginning balance and ending balance of pension plan assets

Beginning balance of pension plan assets
Expected return on plan assets
Unrecognized net actuarial gain or loss
Amount of employer contribution
Retirement benefits paid
Other
Ending balance of pension plan assets

Previous fiscal year
(From April 1, 2017
to March 31, 2018)¥3,432 million
45
105
181
(190)
(7)
3,567

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥3,567 million
42
(61)
178
(310)
(12)
3,403

TKK Report 2019 Financial Section

27

(3)

Retirement benefit obligations and pension plan assets at the end of the fiscal year and reconciliation of net
defined benefit liability and net defined benefit asset on consolidated balance sheet
Previous fiscal year
(From April 1, 2017
to March 31, 2018)

Retirement benefit obligations under
funded system
Pension plan assets
Retirement benefit obligations under
unfunded system
Net amount of assets and liabilities
stated in the consolidated balance sheet
Net defined benefit liability
Net defined benefit asset
Net amount of assets and liabilities
stated in the consolidated balance sheet(4)

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥3,491 million¥3,426 million(3,567)(3,403)

(75)

23

2

2

(73)

25

325
(398)

358
(332)

(73)

25

Retirement benefit expenses and components thereofService cost
Interest expenses
Expected return on plan assets
Amortization of net actuarial gain or
loss
Amortization of past service cost
Retirement benefit expenses pertaining
to defined benefit plans

Previous fiscal year
(From April 1, 2017
to March 31, 2018)¥182 million
15(45)

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥187 million
16
(42)

(60)

(31)

–

35

91

165

(5)

Remeasurements of defined benefit plans, net of tax on consolidated statement of income and comprehensive
income
The components of remeasurements of defined benefit plans, net of tax (before tax effects deduction) are as follows:
Previous fiscal year
(From April 1, 2017
to March 31, 2018)
Past service cost
Actuarial gains and losses
Total

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥– million(11)¥– million
(120)

(11)

(120)

(6) Remeasurements of defined benefit plans on consolidated balance sheet
The components of remeasurements of defined benefit plans (before tax effects deduction) are as follows:
Previous fiscal year
(From April 1, 2017
to March 31, 2018)
Unrecognized past service cost
Unrecognized net actuarial gain or loss
Total

28

TKK Report 2019 Financial Section

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥– million(9)¥– million
94

(9)

94

(7) Pension plan assets(i) Major components of pension plan assets
Ratio of major components for total pension plan assets is as follows:
Previous fiscal year
(From April 1, 2017
to March 31, 2018)

Current fiscal year
(From April 1, 2018
to March 31, 2019)

29%
31
30
10

28%
32
31
9

100

100

Bonds
SharesGeneral account
Other
Total

(ii) Method of establishing expected long-term rates of return on plan assets
In order to determine the expected long-term rates of return on plan assets, the current and forecast distributionof plan assets and the current and expected long-term rates of return from the diverse assets that comprise theplan assets are taken into consideration.
(8) Matters relating to the basis for actuarial calculations
Main basis for actuarial calculations
Previous fiscal year
(As of March 31, 2018)

Current fiscal year
(As of March 31, 2019)

0.25%

0.25%

1.00%

1.00%

Discount rate
Expected long-term rates of return on pension plan
assets3. Defined contribution plans
The required contribution from the Company and its consolidated subsidiaries into the defined contribution pension
plans was ¥58 million in the previous fiscal year and ¥81 million in the current fiscal year.
4. Multi-employer plan
The required contribution amount to the corporate pension fund plan under the multi-employer plan, which isaccounted for in the same manner as a defined contribution plan, was ¥94 million in the previous fiscal year and ¥93
million in the current fiscal year.
(1)

Funded status of multi-employer planPrevious fiscal year
(As of March 31, 2017)

Current fiscal year
(As of March 31, 2018)

Plan assets
Sum of actuarial obligations calculated forfinance status of pension plan and minimum
reserve¥72,648 million¥10,534 million

90,97921,965

Net amount(18,331)(11,431)(2) Group’s proportion of total contributions to planPrevious fiscal year 4.56%(From April 1, 2017 to March 31, 2018)
Current fiscal year 7.37%(From April 1, 2018 to March 31, 2019)(3) Supplementary explanation
Major factors for the net amount in (1) above are the balance of past service liabilities (¥21,372 million as of March
31, 2017 and ¥11,851 million as of March 31, 2018) and surplus amount (¥3,041 million as of March 31, 2017 and¥420 million as of March 31, 2018) for pension financing calculation.
The principal and interest of past service liabilities in this plan are amortized equally over 10 years and 6 months(equal amortization of principal and interest over 20 years until the previous fiscal year), and the Group recorded
special contributions applied to such amortization (¥67 million as of March 31, 2017 and ¥66 million as of March
31, 2018) as expenses in the consolidated financial statements.

TKK Report 2019 Financial Section

29

The proportions in (2) above are not consistent with the proportions actually funded by the Group.

Notes - Share options, etc.
Not applicable
Notes - Tax effect accounting
1. Significant components of deferred tax assets and liabilities

Deferred tax assets
Tax loss carry-forward (Note)
Accrued business tax
Net defined benefit liability
Provision for bonuses
Allowance for doubtful accounts
Provision for loss on order received
Loss on valuation of investment securities
Loss on valuation of investments in capital
Impairment loss
Depreciation
Asset retirement obligations
Other
Deferred tax assets subtotal
Valuation reserve for tax loss carry-forwards (Note)
Valuation reserve for the total of deductible temporary
differences, etc.
Valuation reserve subtotal

Previous fiscal year
(As of March 31, 2018)

Current fiscal year
(As of March 31, 2019)¥166 million
35
99
74
96
54
274
39
159
58
98
250

¥400 million
52
109
69
95
37
246
112
137
62
68
247

1,407
–

1,640
(121)

–

(715)

(715)

(837)

692

802

1,107

1,095

1,135

970

881
208

876
159

Total deferred tax assets
Deferred tax liabilities
Revaluation reserve for land
Valuation difference on available-for-salesecurities
Reserve for advanced depreciation of non-current assets
Other

Total deferred tax liabilities
3,332(Note)
Amounts of tax loss carry-forwards and related deferred tax assets by carry-forward period

3,101

Current fiscal year (As of March 31, 2019)(Millions of yen)
Within 1
year

Over 1 year
to 2 years

Over 2
years to 3
years

Over 3
years to 4
years

Over 4
years to 5
years

Over 5years

Tax loss carry-forwards
(*)

–

–

–

90

31

278

400

Valuation reserve

–

–

–

(90)

(31)

–

(121)

Deferred tax assets

–

–

–

–

–

278

278

(*)

30

Tax loss carry-forwards represent the amount multiplied by the statutory effective tax rate.

TKK Report 2019 Financial Section

Total

2. Main components causing significant differences between the statutory effective tax rate and the actual effective
tax rate after application of tax effect accounting
Previous fiscal year
(As of March 31, 2018)
Statutory effective tax rate
Adjustments
Increase/decrease in valuation reserve
Expenses not deductible for income tax purposes, such asentertainment expenses
Income not included for income tax purposes, such as dividends
received
Per capita levy of inhabitant taxes
Effect of differences in tax rates applicable to subsidiaries fromtax rate applicable to the Company
Retained earnings of overseas subsidiaries
Other

Current fiscal year
(As of March 31, 2019)30.86%

30.62%(12.36)

0.70

1.19

1.75

(0.44)(0.91)

1.30

2.57

1.40

2.39

(1.68)
0.22(1.66)
0.47

20.50

35.93

Actual effective tax rate

Notes - Asset retirement obligations
Of asset retirement obligations, items recorded on the consolidated balance sheeta) Outline of asset retirement obligations
The asset retirement obligations of the Group are obligations in certain facilities for rent under the Ordinanceon Prevention of Asbestos Hazards.
b) Calculation method for determining asset retirement obligation amountThe amount of asset retirement obligations was calculated assuming an estimated period of use of 31 years
from acquisition, and using a discount rate from 2.2%.
c) Increase (decrease) in total asset retirement obligations
Previous fiscal year
(From April 1, 2017
to March 31, 2018)

Current fiscal year
(From April 1, 2018
to March 31, 2019)

Beginning balance
Decrease due to settlement of asset retirement obligations¥332 million(10)¥321 million(97)

Ending balance

321

224

TKK Report 2019 Financial Section31Notes - Real estate for lease, etc.
The Company and certain subsidiaries rent out a space such as in their business places as well as land mainly forrental housing and buildings in the Tokyo metropolitan area and other areas. Rental profit related to the real estate
for rent, etc. for the previous fiscal year was ¥418 million (rent income is recorded in net sales, and rent expenses
are recorded in cost of sales). Rental profit related to the real estate for rent, etc. for the current fiscal year was ¥458
million (rent income is recorded in net sales, and rent expenses are recorded in cost of sales).
Carrying amounts on the consolidated balance sheet, changes during period for the previous and current fiscal years
and fair values of the real estate for rent, etc. are as follows:(Millions of yen)
Current fiscal year
(From April 1, 2018
to March 31, 2019)

Previous fiscal year
(From April 1, 2017
to March 31, 2018)
Carrying amount on the consolidatedbalance sheet
Balance at
beginning of period

5,049

5,424

Increase (decrease)during period

375

(809)

Balance at end of
period

5,424

4,615

Fair value at end of period
3,587
3,089
(Notes) 1. Carrying amount on the consolidated balance sheet is calculated by subtracting accumulated depreciation andimpairment loss from acquisition cost.
2. The increase (decrease) during period for the previous fiscal year primarily consist of an increase in rentable space(¥486 million), impairment loss (¥72 million) and decrease due to depreciation (¥38 million). The increase(decrease) during period for the current fiscal year primarily consist of a decrease in rentable space (¥439 million),a decrease due to sales of real estate (¥335 million) and decrease due to depreciation (¥34 million).
3. Fair value of property whose amount has significance at the end of the period is an amount based on a value
investigation report by an external real property appraiser, and that of other property whose amount has little
significance is an amount based on an index which is believed to reflect a market value appropriately.

Notes - Segment information, etc.
[Segment information]
1. Description of reportable segments
The reportable segments of the Company are components for which discrete financial information is available
and whose operating results are regularly reviewed by the Board of Directors of the Company to make decisions
about resource allocation and assess their performance.
The Group develops comprehensive business strategies and engages in business activities for respective products
and services of divisions by product and service in the Company and of Toyo Kanetsu Solutions K.K., asubsidiary of the Company.
Accordingly, the Company is comprised of segments by product and service, and its reportable segments consistof “Logistics Solutions Business” and “Plant & Machinery Business.”“Logistics Solutions Business” develops, designs, builds and executes construction works of, material handlingsystems focusing on sorting, picking and conveying systems and provides maintenance services and otheroperations for these systems. “Plant & Machinery Business” designs, builds, and executes construction works of,storage tanks for LNG, LPG, crude oil and other gas and liquid and provides maintenance services and otheroperations for these tanks.
The name of the reportable segment that was previously disclosed as “Material Handling Systems Business” hasbeen changed to “Logistics Solutions Business” from the current fiscal year. This change was made only to thename, and does not affect the segment information. Segment information for the previous fiscal year has been
provided under the changed name of the reportable segment.
2. Method of measurements of sales, profit (loss), asset, liability, and other items for each reportable segment
The accounting procedures for the reporting operating segments are nearly the same as those stated in“Significant accounting policies for preparation of the consolidated financial statements.” Profits of thereportable segments are based on operating profit. Intersegment transactions are based on actual transaction
amounts.

32

TKK Report 2019 Financial Section

3. Disclosure of sales, profit (loss), asset, and other items for each reportable segment
Previous fiscal year (From April 1, 2017 to March 31, 2018)
Reportable segments

Sales
Sales to externalcustomers
Transactions withother segments

Other(Note)(Millions of yen)

Logistics
Solutions
Business

Plant &
MachineryBusiness

25,93910,03035,9695,788–

41,758

–

–

–

682

(682)

–
41,758Total

Adjustment

Total

Total

25,93910,03035,969

6,470

(682)

Segment profit (loss)

1,931

(178)

1,753

914

(401)

2,265

Segment assets

17,434

10,252

27,686

12,47915,65155,818

349

220

569

153

14

737

357

103

460

129

11

602

Other items
Depreciation
Increase in property,
plant and equipment,
and intangible assets(Note)“Other” includes the building construction business, manufacturing and sales of industrial facilities and equipment, realestate rental operations, leasing operations and other operations.

Current fiscal year (From April 1, 2018 to March 31, 2019)(Millions of yen)

Reportable segments

Sales
Sales to externalcustomers
Transactions withother segments

Other(Note)

Logistics
Solutions
Business

Plant &
MachineryBusiness

29,274

8,421

37,696

7,492–

45,188

–

–

–

745

(745)

–
45,188Total

Adjustment

Total

Total

29,274

8,421

37,696

8,237

(745)

Segment profit (loss)

1,907(1,221)

686

1,108

(389)

1,406

Segment assets

31,326

10,40541,732

13,1299,894

64,756

352

153

505

179

43

728

549

107

657

289

4

950

Other items
Depreciation
Increase in property,
plant and equipment,
and intangible assets(Note)“Other” includes the building construction business, manufacturing and sales of industrial facilities and equipment, realestate rental operations, leasing operations, inspection, measurement and analysis of asbestos, etc. and other operations.

TKK Report 2019 Financial Section33

4. Differences between total amounts for reportable segments and amounts in the consolidated financial statements
and main details of these differences (matters relating to difference adjustments)
Profit(Millions of yen)
Current fiscal year

Previous fiscal year

Reportable segments total
Profit of “other”
Corporate expenses (Note)
Other adjustments

1,753
914
(404)
2

686
1,108
(389)
–

Operating profit in the consolidated
2,265
1,406
financial statements(Note) Corporate expenses mainly represent expenses related to administrative divisions such as the general affairs division,
which are not attributable to the reportable segments.
(Millions of yen)
Asset
Reportable segments total
Assets of “other”
Corporate assets (Note)
Other adjustments

Previous fiscal year

Current fiscal year
27,686
12,47915,721(70)

41,732
13,129
9,955(60)

Total assets in the consolidated financial
56,81864,756statements(Note) Corporate assets mainly represent assets related to divisions managing cash and deposits, investment securities andother assets of the Company, which are not attributable to the reportable segments.

34

TKK Report 2019 Financial Section

[Information associated with reportable segments]
Previous fiscal year (From April 1, 2017 to March 31, 2018)
1. Information for each product and service(Millions of yen)
Material handlingsystemStorage tank, etc.
equipment, etc.
Sales to external customers

25,939Maintenanceservices ofstorage tanks

2,248

Other

7,781

5,788

2. Information about geographical area
(1) Sales
Japan(Note)

Total(Millions of yen)Southeast Asia

Total

Other

39,5792,012
166
Sales are classified by country or region on the basis of construction sites.

41,758(2) Property, plant and equipment
Japan

41,758(Millions of yen)Southeast Asia

14,755

Oceania

908

Total
46

15,7103. Information for each of main customers(Millions of yen)
Name of customer

Net sales

ASKUL Corporation

8,354

Related segment
Logistics Solutions BusinessCurrent fiscal year (From April 1, 2018 to March 31, 2019)
1. Information for each product and service(Millions of yen)
Material handlingsystemStorage tank, etc.
equipment, etc.
Sales to external customers

29,274Maintenanceservices ofstorage tanks

2,168

Other

6,253

2. Information about geographical area
(1) Sales
Japan(Note)

Total

7,492

(Millions of yen)Southeast Asia

Total

Other

42,312
2,700
176
Sales are classified by country or region on the basis of construction sites.

(2) Property, plant and equipment
Japan45,188(Millions of yen)Southeast Asia

15,10245,188698

Oceania

Total
44

15,845

3. Information for each of main customers
This information has been omitted since sales to a specific customer account for less than 10% of net sales in the
consolidated statement of income and comprehensive income.

TKK Report 2019 Financial Section

35

[Disclosure of impairment loss on non-current assets for each reportable segment]
Previous fiscal year (From April 1, 2017 to March 31, 2018)(Millions of yen)
Reportable segments
Logistics Solutions
Business
Impairment loss
(Note)

Plant & Machinery
Business

–

–

Other

Adjustment

72

–

Total
72

The amount of “other” is an amount related to real estate rental operations.

Current fiscal year (From April 1, 2018 to March 31, 2019)
Not applicable[Amortization and unamortized balance of goodwill for each reportable segment]
Previous fiscal year (From April 1, 2017 to March 31, 2018)
Not applicable
Current fiscal year (From April 1, 2018 to March 31, 2019)
Not applicable[Gain on bargain purchase for each reportable segment]
Previous fiscal year (From April 1, 2017 to March 31, 2018)
Not applicable
Current fiscal year (From April 1, 2018 to March 31, 2019)
In the first quarter, as a result of making Kankyo Research Co., Ltd. a subsidiary, the Company recorded gain on
negative goodwill of ¥87 million as extraordinary income.
This gain on negative goodwill is not related to any specific reportable segment, and is included in “other.”[Information associated with related parties]
Subsidiaries and others
1.
Related party transactions
Not applicable2.

36

Notes concerning the parent company or important affiliated companies
Not applicableTKK Report 2019 Financial Section

Notes - Per share information

Net assets per share
Basic earnings per share(Notes) 1.
2.
3.

Previous fiscal year
(From April 1, 2017
to March 31, 2018)

Current fiscal year
(From April 1, 2018
to March 31, 2019)¥3,941.68¥3,897.68¥251.26¥112.80

The amount of diluted earnings per share is not provided because there are no potential shares.
The Company conducted a share consolidation at a ratio of 10 shares of common shares to 1 share, effective on
October 1, 2017. Accordingly, the net assets per share and basic earnings per share are calculated based on theassumption that the share consolidation had been conducted at the beginning of the previous fiscal year.
The basis for calculation for basic earnings per share is as follows:
Previous fiscal year
Current fiscal year
(From April 1, 2017
(From April 1, 2018
to March 31, 2018)
to March 31, 2019)

Profit attributable to owners of parent
Profit not relating to common shareholders¥2,362 million¥1,025 million––

Profit attributable to owners of parent pertaining tocommon shares

2,362

1,025

Average number of outstanding common shares

9,401
thousand shares

9,092
thousand shares

TKK Report 2019 Financial Section

37

Notes - Significant events after reporting period Purchase of treasury shares
The Company’s Board of Directors made a resolution on May 14, 2019 for the Company to acquire its own sharespursuant to the provision of Article 156, Paragraph 1 of the Companies Act, as applied by replacing the relevantterms pursuant to the Act’s provision of Article 165, Paragraph 3 and conducted the purchase of treasury sharesaccording to the particulars stated below.
(1) Reason for purchase
To implement a flexible capital policy based on the shareholder return policy.
(2) Details of the matters relating to transaction(i) Type of the shares to be acquired:
Common shares(ii) Total number of shares to be repurchased: Up to 100 thousand shares(Ratio of the total number of shares to be repurchased to thetotal number of shares issued (excluding treasury shares):
1.1%)(iii) Total price of repurchase:
Up to ¥200 million(iv) Repurchase period:
May 20, 2019 to June 21, 2019(v) Repurchase method:
Purchase on the stock exchange via a trust bank
The above purchase of treasury shares was ended as of May 29, 2019.
(i) Type of the shares acquired:
Common shares(ii) Total number of shares repurchased:
89,700 shares(iii) Total price of repurchase:¥199 million

38

TKK Report 2019 Financial Section

(v)Annexed consolidated detailed schedules

Annexed consolidated detailed schedule of corporate bonds
Not applicable
Annexed consolidated detailed schedule of borrowings
Beginning balance

Classification(Millions of yen)

Short-term loans payable

Ending balance(Millions of yen)

Average interest
rate (%)

Repayment due¥4,604¥7,8490.362–

Current portion of long-term loans
payable

15

514

0.916

–

Long-term loans payable (excluding
current portion)

3,080

4,627

0.824

Between 2020 and 2026

Total

7,699

12,990–(Notes) 1.
2.

–

In calculating the average interest rate, the weighted average interest rate on the ending balance of loans payable, isshown.
Repayment of long-term loans payable (excluding the current portion) scheduled within five years after the balance
sheet date is as follows:
Over 1 year
to 2 years

Classification
Long-term loans
payableOver 2 years
to 3 years¥619 million

Over 3 years
to 4 years¥8 million

Over 4 years
to 5 years¥– million¥1,700 million

Annexed consolidated detailed schedule of asset retirement obligations
A schedule of asset retirement obligations has been omitted since matters to be stated in the schedule are stated as
notes prescribed in Article 15-23 of the Ordinance on Terminology, Forms, and Preparation Methods ofConsolidated Financial Statements.

(2) Other information
Quarterly information for the current fiscal year
(Cumulative period)
Net salesFirst quarter(Cumulative)(From April 1, 2018
to June 30, 2018)

Second quarter(Cumulative)

Third quarter(Cumulative)(From April 1, 2018
(From April 1, 2018
to September 30, 2018) to December 31, 2018)

Current fiscal year

(From April 1, 2018 toMarch 31, 2019)(Millions of yen)

7,603

17,10026,96345,188

Profit (loss) before income taxes(Millions of yen)

(61)

189

(18)

1,599

Profit (loss) attributable to ownersof parent(Millions of yen)

78

121

(68)

1,025

Basic earnings (loss) per share(Yen)

8.55

13.32

(7.54)

112.80First quarter

Second quarter

Third quarter

Fourth quarter

8.55

4.75

(21.06)121.07(Accounting period)
Basic earnings (loss) per share(Yen)TKK Report 2019 Financial Section

39

(TRANSLATION)
INDEPENDENT AUDITOR’S REPORT
June 27, 2019
To the Board of Directors of
Toyo Kanetsu K.K.
GYOSEI & CO.
Designated Partner
Engagement Partner
Certified Public Accountant

Takayuki Nakagawa (seal)

Designated Partner
Engagement Partner
Certified Public Accountant

Tetsuo Noguchi(seal)

Designated Partner
Engagement Partner
Certified Public Accountant

Akira Mishima(seal)

Audit of Financial Statements
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act of Japan, we haveaudited the accompanying consolidated financial statements of Toyo Kanetsu K.K. (the “Company”), which
comprise the consolidated balance sheet as of March 31, 2019, and the consolidated statements of income andcomprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows
for the fiscal year from April 1, 2018 to March 31, 2019, and significant accounting policies for preparation of theconsolidated financial statements, other notes, and annexed consolidated detailed schedules, all expressed inJapanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for designing and operating such internal
control as management determines is necessary to enable the preparation and fair presentation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit as
independent auditor. We conducted our audit in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal
controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the40

TKK Report 2019 Financial Section

consolidated financial position of the Company and its subsidiaries as of March 31, 2019, and the consolidated
results of their operations and their cash flows for the year then ended in conformity with accounting principles
generally accepted in Japan.
Audit of Internal Control
Pursuant to the second paragraph of Article 193-2 of the Financial Instruments and Exchange Act of Japan, we haveaudited management’s report on internal control over financial reporting of the Company as of March 31, 2019.
Management’s Responsibility for the Report on Internal Control
Management is responsible for designing and operating effective internal control over financial reporting and for the
preparation and fair presentation of its report on internal control in accordance with assessment standards forinternal control over financial reporting generally accepted in Japan.
There is a possibility that misstatements may not be completely prevented or detected by internal control overfinancial reporting.
Auditor’s Responsibility
Our responsibility is to express an opinion on management’s report on internal control based on our internal control
audit as independent auditor. We conducted our internal control audit in accordance with auditing standards forinternal control over financial reporting generally accepted in Japan. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether management’s report on internal control is free frommaterial misstatement.
An internal control audit involves performing procedures to obtain audit evidence about the results of theassessment of internal control over financial reporting in management’s report on internal control. The procedures
selected depend on the auditor’s judgment, including the significance of effects on reliability of financial reporting.
An internal control audit includes examining representations on the scope, procedures and results of the assessmentof internal control over financial reporting made by management, as well as evaluating the overall presentation ofmanagement’s report on internal control.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the management’s report on internal control referred to above, which represents that the internal
control over financial reporting of the Company as of March 31, 2019 was effective, presents fairly, in all material
respects, the results of the assessment of internal control over financial reporting in accordance with assessment
standards for internal control over financial reporting generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants
Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese language.

TKK Report 2019 Financial Section

41

Corporate Data
Date of Establishment

May 16, 1941

Common Stock¥18,580 million

Authorized Shares

297,000,000

Capital Stock Issued

9,323,074

Number of Shareholders

9,130

Security Traded

Tokyo Stock Exchange, First Section

Transfer Agent and Registrar

The Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan

Annual Meeting

The annual meeting of shareholders is normally held in June in Tokyo, Japan

Directory
Head Office11-1, Minamisuna 2-chome, Koto-ku, Tokyo 136-8666, Japan
Tel: +81-3-5857-3333 Fax: +81-3-5857-1952
URL: https://www.toyokanetsu.co.jp/global/

Osaka Sales Office
1-9-2, Senrioka-Higashi, Settsu, Osaka 566-0011, Japan
Tel: +81-72-645-2520 Fax: +81-72-645-2532

Logistic Solution Systems Business
Tel: +81-3-5857-3126 Fax: +81-3-5857-3185

Plant & Machinery Business
Tel: +81-3-5857-3109 Fax: +81-3-5857-3173

2 Tsukiji, Kisarazu, Chiba 292-0835, Japan
Tel: +81-438-36-7161 Fax: +81-438-36-8211

Domestic Subsidiaries

Overseas Subsidiaries

Toyo Kanetsu Builtec K.K.

PT Toyo Kanetsu Indonesia

11-1, Minamisuna 2-chome, Koto-ku, Tokyo 136-8666, Japan
Tel: +81-3-3640-5164 Fax: +81-3-6800-3156
URL: http://www.web-tkb.com(Jakarta Head Office)Midplaza Building 1, 8th Floor, Jl. Jend. Sudirman Kav. 10-11,
Jakarta 10220, Indonesia
Tel: +62-21-570-7805 / 7739 Fax: +62-21-570-3950
URL: http://www.pttki.com/

Toyo Service System K.K.
11-1, Minamisuna 2-chome, Koto-ku, Tokyo 136-8666, Japan
Tel: +81-3-5857-3200 Fax: +81-3-5857-3171
URL: https://www.toyoservice.co.jp

Toyo Koken K.K.
11-1, Minamisuna 2-chome, Koto-ku, Tokyo 136-8666, Japan
Tel: +81-3-5857-3161 Fax: +81-3-5857-3198
URL: https://www.toyokoken.co.jp/en

Kankyo Reserch Co., Ltd.
6-22, Okadomachi, Hachioji-shi, Tokyo 192-0054, Japan
Tel: +81-42-627-2810 Fax: +81-42-627-2820
URL: http://www.kankyo-research.co.jp/

42

Chiba Plant

TKK Report 2019 Financial Section

Toyo Kanetsu Singapore Pte. Ltd.
16 Ayer Rajah Crescent, #03-04 Tempco Technominium,
3rd Floor, Singapore 139965
Tel: +65-6776-2393 Fax: +65-6773-1703

Toyo Kanetsu (Malaysia) Sdn. Bhd.
Sublot 51, 1st Floor, Medan Jaya Commercial Centre,
97000 Bintulu, Sarawak, Malaysia
Tel: +60-86-338-122 Fax: +60-86-338-123

Contact

TOYO KANETSU K.K.
Corporate Planning Department
Corporate Division
TEL: +81-3-5857-3333 FAX: +81-3-5857-3170
E-MAIL: tkkreport@toyokanetsu.co.jp
URL: https://www.toyokanetsu.co.jp/global/