Financial Report
Year ended June 30, 2021

Company Profile

Nippon Koei Co., Ltd. is Japan’s leading engineering consultant. In terms ofhuman resources, we have the largest number of engineers and specialists in
the industry capable of solving the most sophisticated and complex issues
which nations face. Our business activities cover five market areas: namely,
domestic infrastructure market, international infrastructure market, electric
power engineering market, urban & spatial development market, andparticipant in energy business.

CONTENTS
Financial Highlights ................................................................................................................1
Financial Information .............................................................................................................2
Consolidated Financial Statements ........................................................................................3
Consolidated Statement of Financial Position .....................................................................3
Consolidated Statement of Profit or Loss andConsolidated Statement of Comprehensive Income .........................5
Consolidated Statement of Changes in Equity .....................................................................6
Consolidated Statement of Cash Flows ................................................................................7
Notes to Consolidated Financial Statements .......................................................................8
Independent auditor’s report ...............................................................................................83
Nonconsolidated Financial Statements ...............................................................................91
Nonconsolidated Balance Sheet ..........................................................................................91
Nonconsolidated Statement of Income ..............................................................................93
Nonconsolidated Statement of Cost of Sales .....................................................................94
Nonconsolidated Statement of Changes in Equity ............................................................95
Notes to Nonconsolidated Financial Statements ...............................................................96
Attachments to Nonconsolidated Financial Statements ..................................................105
Independent auditor’s report ..............................................................................................107

F i n a n cial Highlights

Consolidated
Thousands of
U.S. Dollars

Millions of Yen

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

Revenue ...............................................................

¥117,859¥108,441$1,066,459

Profit attributable to owner of parent .................

4,531

3,099

41,006

Yen

U.S. Dollars

Earnings per share
Basic earnings per share ...................................

¥300.00¥204.94$2.71

Diluted earnings per share ...............................

300.00204.94

2.71
Thousands of
U.S. Dollars

Millions of Yen

As ofJune 30, 2021

As ofJune 30, 2020

As ofJune 30, 2021

Total assets ..........................................................

¥156,137¥147,408$1,412,819

Total equity ..........................................................

72,29465,721

654,159

Nonconsolidated
Thousands of
U.S. Dollars

Millions of Yen

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

Net sales ...............................................................

¥73,970¥69,431$669,326

Net income ..........................................................

2,480

2,526

22,447

Net income per share ..........................................

¥164.23

Yen

U.S. Dollars¥167.07$1.49
Thousands of
U.S. Dollars

Millions of Yen

As ofJune 30, 2021

As ofJune 30, 2020

As ofJune 30, 2021

Total assets ..........................................................

¥110,295¥106,240$998,011

Total equity ..........................................................

55,04353,444

498,061(Notes) 1. In Japan, a company can establish its fiscal year in accordance with the Companies Act and other related laws andregulations. By resolution of the 68th General Shareholders’ Meeting held on June 27, 2013, the fiscal year of Nippon Koei
Co., Ltd., has been established as July 1 to June 30.
2. Per share amounts are based on the weighted average number of shares outstanding during each year.
3. The dollar amounts in this report represent translations of yen, for convenience only, at the rate of ¥110.515 to $1, theapproximate rate of exchange at June 30, 2021.
4. The Group has applied International Financial Reporting Standards (IFRS) from the year-end of fiscal year ended June 30,
2021. In addition, financial figures for the previous fiscal year are also disclosed in accordance with IFRS.

1

F i n a n cial Inform a tion
1. Basis of Presentation for the Consolidated and Nonconsolidated
Financial Statements(1) The Company’s consolidated financial statements are prepared in accordance with the International Financial
Reporting Standards as issued by the International Accounting Standards Board (hereinafter referred to as the“IFRS”) pursuant to the provisions of Article 93 of the “Ordinance on Terminology, Forms, and Preparation
Methods of Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 28, 1976).
(2) The Company’s nonconsolidated financial statements are prepared based on the “Ordinance on the
Terminology, Forms, and Preparation Methods of Financial Statements, etc.” (Ordinance of the Ministry of
Finance No. 59, 1963; hereinafter referred to as the “Regulations on Financial Statements.”).
Moreover, the Company is classified under a provision for a special company submitting financial statements,
and prepares nonconsolidated financial statements, pursuant to the provisions of Article 127 of theRegulations on Financial Statements.

2. Audit Certification
The Company has undergone an audit by PricewaterhouseCoopers Aarata LLC on consolidated financial
statements for the consolidated fiscal year (from July 1, 2020 to June 30, 2021) and nonconsolidated financial
statements for the business year (from July 1, 2020 to June 30, 2021) in accordance with the provisions of Article
193-2, paragraph (1) of the Financial Instruments and Exchange Act.

3. Special Efforts for Ensuring Appropriateness of Consolidated Financial
Statements and the Establishment of a System to Appropriately Prepare
Consolidated Financial Statements in Accordance with IFRSThe Company makes special efforts to ensure appropriateness of consolidated financial statements and theestablishment of a system to appropriately prepare consolidated financial statements in accordance with IFRS.
The details are as follows.
(1) The Company is a member of the Financial Accounting Standards Foundation and participate in seminars
held by the Foundation or the audit firm in order to appropriately grasp the details of accounting standards orto establish a system capable of accurately responding to changes in accounting standards.
(2) Regarding the application of the IFRS, the Company reviews press releases and standards published by theInternational Accounting Standards Board as necessary to understand and apply the standards completely andappropriately. Moreover, the Company establishes group accounting policies in accordance with the IFRS andhas arranged its processes and controls based on accounting for those standards in order to prepare
consolidated financial statements in accordance with IFRS.

4. Restatement of Financial Results for Fiscal Year Ended June 2020
From July to September 2020, it was discovered that it was highly likely that there was a significant budget
overrun for four of the large-scale vertical axis hydroelectric power projects under construction. In response, weestablished a task force in mid-September 2020 to conduct internal investigations, and in early November
established an external advisory team composed of Outside Audit & Supervisory Board Members and external
attorneys to ensure objectivity. The results of the task force’s investigation revealed that sales based on thepercentage-of-completion method were recorded excessively and that provision for loss on construction contracts
was not recorded in a timely manner. Accordingly, the Company determined that the consolidated andnonconsolidated financial statements previously released should be restated, and submitted a revised Annual
Securities Report and a revised Internal Control Report on December 14, 2020 in accordance with the Financial
Instruments and Exchange Act in Japan. As a result of restatements, net sales were reduced by ¥390 million,
provision for loss on construction contracts of ¥396 million were recorded, operating profit was reduced by ¥781
million, and profit was reduced by ¥588 million.
As a result of the task force’s investigation it was found out that the causes of these incidents were inadequate
budgeting and cost management systems from the receipt of orders to sales for large-scale vertical axis
hydroelectric power projects, and a lack of processes to identify timely the events causing cost overruns that
occurred from the day following the end of the period to the submission date of the Annual Securities Report andto confirm the facts and determine the response policy. However, we have determined that there were no
indications of intentional acts such as intentionally understating total estimated costs to completion, concealing
the budget changes, or delaying the timely identification of cost overruns. In response to this material weakness
in internal control, the Company developed a plan to remediate the weakness, by expanding the organization of
its hydroelectric power department and strengthening its management organizational system. As a result, as ofJune 30, 2021, we have determined that internal control over the Company’s financial reporting is effective, withmaterial weaknesses remediated.
The Financial Report for the fiscal year ended June 2020 was prepared based on the restated figures.

2

Co n so l ida ted Fina ncia l S t atemen t s
C o n so l i dated S ta tem e nt o f Fi n an c i al Po s i t i o n
Nippon Koei Co., Ltd.
June 30, 2021

Thousands of
U.S. Dollars (Note 2)

Millions of Yen

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 8) ...
Trade and other receivables (Note 9, 27, 35) ...
Contract assets (Note 27) ......
Other financial assets (Note 10, 35) ...
Other current assets (Note 11) ...
Total current assets .............

As ofJune 30, 2021

As ofJune 30, 2020

Transition Date
As of July 1, 2019

As ofJune 30, 2021

¥17,838
21,18924,3271,315
3,900
68,570¥15,472
19,38921,425
1,283
4,456
62,027¥13,242
16,371
19,125407
3,399
52,544$161,414
191,733
220,127
11,89935,291
620,466

NON-CURRENT ASSETS:
Property, plant and equipment (Note 12, 15) ...
Right-of-use assets (Note 12, 19) ..
Goodwill (Note 13, 15) ..........
Intangible assets (Note 13) ...
Investment property (Note 14) ...
Investments accounted for using
equity method (Note 6, 16) .....
Retirement benefit asset (Note 22) ...
Other financial assets (Note 10, 35) ...
Deferred tax assets (Note 17) ...
Other non-current assets (Note 11) ...
Total non-current assets .....

40,832
9,229
9,182
6,502
4,094

42,039
9,603
7,964
5,480
4,210

38,852
10,410
8,193
5,871
1,945

369,471
83,51383,08858,83637,053

2,077
4,391
7,434
2,437
1,384
87,566

1,974
3,817
6,721
2,140
1,427
85,380

2,440
3,279
6,448
2,035
1,219
80,696

18,79839,73967,26722,05812,524
792,352

TOTAL ASSETS (Note 6) .......

¥156,137¥147,408¥133,241$1,412,819

3Thousands of
U.S. Dollars (Note 2)

Millions of Yen

As ofJune 30, 2021

As ofJune 30, 2020

Transition Date
As of July 1, 2019

As ofJune 30, 2021

LIABILITIESCURRENT LIABILITIES:
Borrowings (Note 18, 35) ........
Lease liabilities (Note 19, 35) ...
Trade and other payables (Note 20, 35) ...
Contract liabilities (Note 27) ...
Other financial liabilities (Note 21, 35) ...
Income taxes payable ............
Provisions (Note 23) ............
Other current liabilities (Note 24) ...
Total current liabilities .....

¥8,3202,678
9,076
10,645
3,005
2,228
818
12,11548,889¥15,778
2,445
8,033
10,895
2,586
1,159
589
8,475
49,963¥2,581
2,858
7,365
8,428
2,876
1,036
123
8,402
33,673$75,288
24,24082,12896,327
27,198
20,165
7,407
109,627
442,382

NON-CURRENT LIABILITIES:
Borrowings (Note 18, 35) .....
Lease liabilities (Note 19, 35) ...
Other financial liabilities (Note 21, 35) ...
Retirement benefit liability (Note 22) ...
Provisions (Note 23) .............
Deferred tax liabilities (Note 17) ...
Other non-current liabilities (Note 24) ...
Total non-current liabilities ...
Total liabilities ...................

18,712
6,699
648
3,861
375
4,533
122
34,953
83,843

14,923
7,240
639
3,965
83
4,709
161
31,723
81,687

17,594
7,551
223
3,967
52
4,796
149
34,33568,009169,318
60,623
5,871
34,9393,396
41,0201,106
316,276
758,659

EQUITY:
Share capital (Note 25) .........
Capital surplus (Note 25) ......
Treasury shares (Note 25) .....
Other components of equity ...
Retained earnings (Note 25) ...
Total equity attributable to owners of parent ...
Non-controlling interests ......
Total equity ..........................

7,480
6,428
(0)
2,820
53,99670,725
1,569
72,294

7,458
6,498(2,415)
1
52,67564,2191,502
65,721

7,437
6,465
(787)
499
50,292
63,907
1,324
65,232

67,687
58,166(1)
25,517
488,592
639,961
14,198654,159

TOTAL LIABILITIES AND EQUITY ...

¥156,137¥147,408¥133,241$1,412,819

LIABILITIES AND EQUITY

4

Consolidated Statement of Profit or Loss and Consolidated Statement of Comprehensive Income
Nippon Koei Co., Ltd.
Year ended June 30, 2021

(Consolidated Statement of Profit or Loss)
Thousands of
U.S. Dollars (Note 2)

Millions of Yen

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥117,859(80,124)
37,735(29,173)¥108,441(75,202)33,238(28,436)$1,066,459(725,008)
341,451(263,981)

35
1,207(2,675)
7,128
519
(471)
7,176
(2,657)¥4,518

144
571
(271)
5,245
414
(631)
5,029
(1,782)¥3,246318
10,926(24,211)64,502
4,702(4,266)64,938(24,050)$40,887

Profit attributable to:
Owners of parent .................................................
Non-controlling interests ....................................
Profit ....................................................................

¥4,531(13)¥4,518¥3,099146¥3,246$41,006(119)$40,887

Earnings per share
Basic earnings per share (Note 32) ....................
Diluted earnings per share .................................

¥300.00
300.00¥204.94204.94$2.71
2.71

Revenue (Note 6, 27) ...........................................
Cost of sales (Note 28) ........................................
Gross profit .........................................................
Selling, general and administrative expenses (Note 28) ...
Share of profit (loss) of investments
accounted for using equity method (Note 6, 16) ...
Other income (Note 29) ......................................
Other expenses (Note 15,29) ..............................
Operating profit (Note 6) ....................................
Finance income (Note 6, 10, 30) ........................
Finance costs (Note 6, 30) ..................................
Profit before tax (Note 6) ....................................
Income tax expense (Note 17) ............................
Profit ....................................................................

(Consolidated Statement of Comprehensive Income)Thousands of
U.S. Dollars (Note 2)

Millions of Yen

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

Profit ....................................................................

¥4,518¥3,246$40,887

Other comprehensive income
Items that will not be reclassified to profit or loss
Equity financial assets measured at fair value
through other comprehensive income (Note 31, 35) ...

395

47

3,575

386

321

3,495

6
788

—
369

60
7,131

Remeasurements of defined benefit plans (Note 22, 31) ...
Share of other comprehensive income of investments
accounted for using equity method (Note 16, 31) ...
Total of items that will not be reclassified to profit or loss ...
Items that may be reclassified to profit or loss
Cash flow hedges (Note 31) ................................
Exchange differences on translation of foreign
operations (Note 31) .........................................

6

6

54

2,392

(441)

21,645

Share of other comprehensive income of investments
accounted for using equity method (Note 16, 31) ...
Total of items that may be reclassified to profit or loss ...
Other comprehensive income ............................
Comprehensive income ......................................

33
2,432
3,220
¥7,738

14
(420)
(51)
¥3,194306
22,00629,137$70,0255

C o n so l i d ated S ta tem e nt o f C h an ges i n E q u i t y
Nippon Koei Co., Ltd.
Year ended June 30, 2021

Millions of Yen
Equity attributable to owners of parent
Other components of equity

BALANCE AS OF JULY 1, 2019 ........................................
Profit (loss) .........................................................................
Other comprehensive income ...........................................
Total comprehensive income ...........................................
Issuance of new shares ......................................................
Change in scope of consolidation .....................................
Purchase of treasury shares (Note 25) ..............................
Disposal of treasury shares (Note 25) ...............................
Cancellation of treasury shares (Note 25) ........................
Dividends (Note 26) ...........................................................
Purchase and disposal of non-controlling interests .........
Transfer to retained earnings ............................................
Total transactions with owners .......................................
BALANCE AS OF JUNE 30, 2020 .....................................
Profit (loss) .........................................................................
Other comprehensive income ...........................................
Total comprehensive income ...........................................
Issuance of new shares ......................................................
Change in scope of consolidation .....................................
Purchase of treasury shares (Note 25) ..............................
Disposal of treasury shares (Note 25) ...............................
Cancellation of treasury shares (Note 25) ........................
Dividends (Note 26) ...........................................................
Purchase and disposal of non-controlling interests .........
Transfer to retained earnings ............................................
Total transactions with owners .......................................
BALANCE AS OF JUNE 30, 2021 .....................................

Share capital

Capital surplus

Treasury shares¥7,437
—
—
—
21
—
—
—
—
—
—
—
21
7,458
—
—
—
21
—
—
—
—
—
—
—
21
¥7,480¥6,465
—
—
—
21
—
—
11
—
—
0
—
32
6,498
—
—
—
21
—
—
(91)
—
—
(0)
—
(70)
¥6,428¥(787)—————(2,001)373————(1,628)(2,415)
—
—
—
—
—
(429)
382
2,462
—
—
—
2,415
¥(0)

Exchangedifferences ontranslation offoreign operations

¥—
—
(432)
(432)
—
—
—
—
—
—
(0)
—
(0)
(432)
—
2,415
2,415
—
—
—
—
—
—
(0)
—
(0)
¥1,982

Cash flow
hedges

¥(42)
—
6
6
—
—
—
—
—
—
—
—
—
(36)
—
6
6
—
—
—
—
—
—
—
—
—
¥(30)

Equity financial assets
measured at fair value
through othercomprehensive income

Remeasurementsof defined
benefit plans

¥541
—
47
47
—
—
—
—
—
—
—
(118)
(118)
471
—
395
395
—
—
—
—
—
—
—
1
1
¥867

¥—
—
330
330
—
—
—
—
—
—
—
(330)
(330)
—
—
390
390
—
—
—
—
—
—
—
(390)
(390)
¥—

Total

¥499
—
(48)
(48)
—
—
—
—
—
—
(0)
(448)
(448)
1
—
3,207
3,207
—
—
—
—
—
—
(0)
(389)
(389)
¥2,820Retainedearnings¥50,292
3,099
—
3,099
—
28
—
—
—
(1,193)0448(716)
52,675
4,531
—
4,531
—
—
—
—
(2,462)(1,138)—389(3,210)¥53,996

Total¥63,907
3,099
(48)
3,050
42
28
(2,001)384—(1,193)——(2,739)64,219
4,531
3,207
7,739
43
—
(429)
291
—
(1,138)(0)—(1,233)¥70,725

Non-controllinginterests¥1,324
146
(2)
144
—
63
—
—
—
(30)
—
—
33
1,502
(13)
12
(0)
—
115
—
—
—
(47)
—
—
67
¥1,569Total¥65,232
3,246
(51)
3,194
42
92
(2,001)384—(1,223)0—(2,706)65,721
4,518
3,220
7,738
43
115
(429)
291
—
(1,186)(0)—(1,165)¥72,294

Thousands of U.S. Dollars (Note 2)
Equity attributable to owners of parent
Other components of equity

BALANCE AS OF JUNE 30, 2020 .....................................
Profit (loss) .........................................................................
Other comprehensive income ...........................................
Total comprehensive income ...........................................
Issuance of new shares ......................................................
Change in scope of consolidation .....................................
Purchase of treasury shares (Note 25) ..............................
Disposal of treasury shares (Note 25) ...............................
Cancellation of treasury shares (Note 25) ........................
Dividends (Note 26) ...........................................................
Purchase and disposal of non-controlling interests ..........
Transfer to retained earnings .............................................
Total transactions with owners ........................................
BALANCE AS OF JUNE 30, 2021 .....................................

Share capital

Capital surplus

Treasury shares$67,491
—
—
—
195
—
—
—
—
—
—
—
195
$67,687$58,801
—
—
—
195
—
—
(828)
—
—
(2)
—
(634)
$58,166$(21,859)—————(3,886)
3,464
22,279———21,858$(1)

Exchangedifferences ontranslation offoreign operations$(3,917)—
21,86021,860
—
—
—
—
—
—
(0)
—
(0)
$17,942

Cash flow
hedges$(329)
—
54
54
—
—
—
—
—
—
—
—
—
$(274)

Equity financial assets
measured at fair value
through othercomprehensive income

Remeasurementsof defined
benefit plans$4,264
—
3,574
3,574
—
—
—
—
—
—
—
10
10
$7,848

$—
—
3,535
3,535
—
—
—
—
—
—
—
(3,535)(3,535)$—

Total

Retainedearnings

Total

$17
—
29,02429,024
—
—
—
—
—
—
(0)
(3,524)(3,525)$25,517$476,638
41,006—41,006————(22,279)(10,298)—
3,524(29,053)$488,592$581,090
41,00629,02470,031390—(3,886)
2,636—(10,298)(2)—(11,159)$639,961

Non-controllinginterests$13,591
(119)
113
(6)
—
1,046
—
—
—
(433)
—
—
613
$14,198

Total$594,681
40,887
29,13770,025390
1,046(3,886)
2,636—(10,732)(2)—(10,546)$654,159

6

Co n so l i d a ted S ta tem e nt o f C as h Fl ow s
Nippon Koei Co., Ltd.
Year ended June 30, 2021

Thousands of
U.S. Dollars (Note 2)

Millions of Yen

Thousands of
U.S. Dollars (Note 2)

Millions of Yen

CASH FLOWS FROM OPERATING ACTIVITIES:Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

CASH FLOWS FROM INVESTING ACTIVITIES:Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

Profit (loss) before tax .............................................
Depreciation and amortization ...............................
Impairment losses ....................................................
Loss (gain) on financial assets measured at fair value
through profit or loss ..............................................
Interest and dividend income ..................................
Interest expenses ......................................................
Share of loss (profit) of investments
accounted for using equity method ......................
Loss (gain) on derivatives ........................................
Loss (gain) on sale of fixed assets ............................
Decrease (increase) in trade and other receivables ...
Decrease (increase) in contract assets ....................
Increase (decrease) in trade and other payables ....
Increase (decrease) in contract liabilities ...............
Increase (decrease) in provisions ............................
Increase (decrease) in accrued expenses ................
Increase (decrease) in consumption taxes payable ...
Other .........................................................................
Sub total ...........................................................
Dividends received ...................................................
Interest received .......................................................
Interest paid .............................................................
Income taxes paid ....................................................
Net cash provided by (used in) operating activities ...

¥7,176
4,566
1,739¥5,0294,700—$64,938
41,32015,737

(202)
(397)
424

87
(335)
407

(1,831)(3,597)
3,844

(35)
(182)
(7)
(1,172)(2,685)
1,242
(733)
498
1,564
2,203
660
14,660
152
251
(433)
(2,556)
12,073

(144)
(134)
(1)
(2,966)(2,468)
329
2,561
513
85
(678)
(534)
6,450
137
181
(400)
(2,003)
4,365

(318)
(1,650)(68)(10,612)(24,299)
11,241(6,634)4,514
14,156
19,9405,975
132,653
1,382
2,271(3,926)(23,132)
109,249

Payments into time deposits ...................................
Proceeds from withdrawal of time deposits ...........
Purchase of property, plant and equipment, and investment property ...
Purchase of intangible assets ..................................
Purchase of other financial assets ...........................
Proceeds from sale and redemption of other financial assets ...
Payments for acquisition of subsidiaries ................
Other .........................................................................
Net cash provided by (used in) investing activities ...

(284)
199
(2,220)
(651)
(32)
1
—
238
(2,750)(826)—(6,725)
(272)
(9)
724
(143)
124
(7,129)(2,576)
1,801(20,090)(5,895)
(296)
17
—
2,155
(24,885)

Proceeds from short-term borrowings (Note 33) ...
Repayments of short-term borrowings (Note 33) ...
Proceeds from long-term borrowings (Note 33) ....
Repayments of long-term borrowings (Note 33) ...
Repayments of lease liabilities (Note 33) ...............
Purchase of treasury shares ....................................
Dividends paid (Note 26) .........................................
Other .........................................................................
Net cash provided by (used in) financing activities ...

244,000(257,000)
15,043(5,977)(2,801)(429)(1,145)381(7,928)253,000(240,000)—(2,508)(3,097)(2,001)(1,228)365
4,529

2,207,845(2,325,476)
136,125(54,089)(25,353)(3,886)(10,362)
3,456(71,739)NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS ......................

1,395

1,765

12,624

CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD (Note 8) ......................

15,472

13,242140,007

EFFECT OF EXCHANGE RATECHANGES ON CASH AND CASH EQUIVALENTS ...

970

465

8,782

CASH AND CASH EQUIVALENTS ATEND OF PERIOD (Note 8) .....................................

¥17,838¥15,472$161,414

7

CASH FLOWS FROM FINANCING ACTIVITIES:N o te s to C onsolidated Fi n an c i al S t atemen t s
Nippon Koei Co., Ltd.
Year ended June 30, 2021

1. REPORTING ENTITY
Nippon Koei Co., Ltd. (hereinafter referred to as the “Company”) is a stock company located in Japan. Addressesof the registered head office and major offices are disclosed on the Company website (https://www.n-koei.co.jp/
english/). The Company’s consolidated financial statements consist of accounts of the Company and its
subsidiaries (hereinafter referred to as the “Group”), as well as the Group’s interests in its associates and joint
ventures. The Group’s fiscal year end is June 30, 2021.
The Group’s businesses are Domestic Consulting, International Consulting, Power Engineering, Urban & Spatial
Development, Energy, and Real Estate Leasing. Details of each business are described in note “6. SEGMENT
INFORMATION.”

2. BASIS OF PREPARATION(1) In Accordance with IFRS and Matters Related to First-time Adoption
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as published by the International Accounting Standards Board pursuant to
the provision of Article 93 of the Ordinance on Terminology, Forms, and Preparation Methods ofConsolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of 1976) as all therequirements of the “Specified Company for Designated IFRSs” set forth in Article 1-2 of said Ordinancehave been fulfilled.
The consolidated financial statements were approved by Hiroaki Shinya, Representative Director andPresident, on September 29, 2021.
The Group applied IFRS for the first time to the consolidated fiscal year ended June 30, 2021. The transition
date to IFRS was July 1, 2019. The impact of the transition to IFRS on the Group’s financial position,
operating results and cash flows, on the date of transition to IFRS and during years of comparison is
described in the note “41. FIRST-TIME ADOPTION.”The Group’s accounting policies are in accordance with the IFRS effective on June 30, 2021, except for
certain exemptions permitted by the provisions of IFRS 1 “First-time Adoption of International Financial
Reporting Standards” (hereinafter referred to as “IFRS 1”).
Applied exemption clauses are described in note “41. FIRST-TIME ADOPTION.”(2) Basis of Measurements
As described in note “3. SIGNIFICANT ACCOUNTING POLICIES,” the Group’s consolidated financial
statements are prepared based on the historical cost, excluding certain financial instruments which aremeasured at fair value.
(3) Functional Currency and Presentation Currency
The financial statements of Group companies are prepared using their respective functional currency. While
Group companies mainly use the local currency as their functional currency, the companies designate
another currency as the functional currency if the currency for the main economic environment in which
they engage in business activities differs from the local currency.
The Group’s consolidated financial statements are reported in Japanese yen in units of one million yen.
Fractions less than one million yen are rounded down.
The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of ¥110.515 to $1, the approximate rate of exchange onJune 30, 2021.
Such translations should not be construed as representations that the Japanese yen amounts could be
converted into U.S. dollars at that or any other rate.

3. SIGNIFICANT ACCOUNTING POLICIESThe Group’s accounting policies are prepared based on the IFRS, except for certain exemptions permitted by theprovisions of IFRS 1.
For the significant accounting policies applied to consolidated financial statements, the same accounting
policies are applied to all the periods described in the consolidated financial statements (including theconsolidated statement of financial position on the transition date), except for those which are otherwise noted.

8

(1) Basis of Consolidationa. Subsidiaries
Subsidiaries refer to companies that are controlled by the Group. The Group is deemed to control thecompany when it is exposed, or has rights, to variable returns from its involvement with the company andhas the ability to affect those returns through its power over the company.
Financial statements of subsidiaries are accounted for on a consolidated basis from the date when theGroup obtains control to the date when it loses control.
If the accounting policies applied to a subsidiary differ from those applied to the Group, adjustments are
made to the financial statements of the subsidiary as necessary. Intra-Group balances of receivables/
liabilities and internal transactions, as well as unrealized gains and losses arising from intra-Grouptransactions are eliminated when preparing consolidated financial statements.
Comprehensive income of subsidiaries is accounted for in owners of parent and non-controlling interests,
even if non-controlling interests become a negative balance.
If control continues when partly disposing of subsidiary interests, it is accounted for as an equity
transaction. The difference between the adjusted amount of non-controlling interests and the fair value ofthe consideration is directly recognized in equity as equity attributable to owners of parent.
When control is lost, a gain or loss arising from the loss of control is recognized as a profit or loss in thecurrent period.
The closing date of some subsidiaries differs from that of the Group. For subsidiaries with a different
closing date, the accounts are settled provisionally as of the closing date of the Group.
b. Associates
Associates refer to companies that the Group does not control nor jointly control, while it has significant
influence over their finance and business policies. If the Group has voting rights greater than 20% but
less than 50%, the Group is presumed to have significant influence over such other companies.
Associates are accounted for under the equity method, from the date when the Group obtains significant
influence until the date when it loses significant influence. Investments in associates include goodwill
recognized at the time of acquisition (after deducting the accumulated amount of impairment losses).
If the accounting policies applied to an associate differ from those applied to the Group, adjustments are
made to the results of the associate used in the equity method accounting as necessary.
The closing date of some associates differs from that of the Group. For associates with a different closing
date, the accounts are settled provisionally as of the closing date of the Group.
c. Joint Ventures
Joint ventures refer to companies whose contractually-agreed control over economic activities is sharedby multiple parties including the Group, and which require the agreement of all parties sharing control
when making strategic decisions on finance and businesses related to their activities.
The joint ventures under the Group are accounted for using the equity method.
(2) Business Combinations
Business combinations are accounted for using the acquisition method. The consideration for acquisition ismeasured as the total of the assets transferred in exchange for the control of the acquiree, the liabilities
incurred by the Company to former owners of the acquiree, and the fair value of equity instruments issued
by the Company on the acquisition date. If the consideration for acquisition exceeds the fair value ofidentifiable assets and liabilities, it is recorded as goodwill in the consolidated statement of financial
position. Conversely, if it falls short, it is recorded as profit or loss in the consolidated statement of profit
or loss.
We determine on an acquisition-by-acquisition basis whether to accounted for non-controlling interests atfair value or by the proportionate share of the recognized amount of identifiable assets if non-controllinginterests in the acquired business exist.
Transaction costs that are incurred in relation to business combinations, including brokerage fees, legal
fees, and due diligence expenses, are expensed as they are incurred.
If the initial accounting of a business combination is not completed by the end of the consolidated fiscal
year when the business combination has occurred, accounts are reported provisionally. If the facts andsituation that existed as of the acquisition date are obtained during the period that was deemed to haveaffected the measurement of the recognized amount (hereinafter referred to as the “Measurement Period”)
if grasped initially on the acquisition date, the provisional amount recognized on the acquisition date isretroactively corrected by reflecting such information. If newly obtained information brings newrecognition of assets and liabilities, additional assets and liabilities are recognized. The Measurement

9Period is one year at the longest.
Since additional acquisitions of non-controlling interests after obtaining control are accounted for as equity
transactions, goodwill is not recognized from such transactions.
Acquiree’s identifiable assets and liabilities are measured at fair value on the acquisition date, except for thefollowing:- Deferred tax assets and liabilities as well as assets and liabilities related to employee benefit
arrangements;- Acquiree’s share-based payment agreements; and- Assets or disposal groups classified as held for sale in accordance with IFRS 5 “Non-current Assets Heldfor Sale and Discontinued Operations.”
interests in the acquiree held by the Group previous to the step transaction when control is obtained areremeasured at fair value on the date when control is obtained, while a gain or loss incurred is recognized as
profit or loss.
(3) Foreign Currency Translationa. Functional Currency and Presentation Currency
The consolidated financial statements of the Group are prepared using the yen, the functional currency of
the Company. Moreover, individual companies in the Group determine functional currencies based on the
primary currency in which operations occur, by which transactions of individual companies aremeasured.
b. Translation of Foreign Currency Transactions
Transactions in foreign currency are translated into the functional currency, by the spot exchange rate on
the transaction date or an approximate rate to it.
Monetary assets and liabilities in foreign currency are translated into the functional currency by the spot
exchange rate on the consolidated closing date. Exchange differences arising from such translation andclosing of accounts are recognized as profit or loss. However, financial assets measured through othercomprehensive income and exchange differences arising from cash flow hedges are recognized as othercomprehensive income.
c. Translation of Foreign Operations
Assets and liabilities of foreign operations are translated into yen based on the spot rate as of the closing
date, and income and expenses are by the spot rate on the transaction date or an approximate rate to it,
and their exchange differences are recognized in other comprehensive income.
If a foreign operation is disposed of, this accumulated translation difference is recognized as a profit orloss during the period when the disposition occurs.
(4) Financial Instruments
a. Financial Assets(i) Initial Recognition and Measurement
The Group measures changes in for certain financial assets at fair value and accounts for thosechanges in profit or loss. Other financial assets are measured at amortized cost and changes arerecognized in other comprehensive income. This classification is determined at the time of initialrecognition.
The Group recognizes financial instruments on the transaction date when it becomes a party to anagreement for the financial assets.
Financial assets are measured at amortized cost if they meet both of the following requirements:- The financial asset is held within a business model whose objective is to hold financial assets inorder to collect contractual cash flows; and- The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding.
Financial assets, other than those measured at amortized cost, are classified as financial assets which
are measured at fair value.
For investments in some equity instruments, the Group has made an irrevocable choice to recognize
fluctuations in the fair value not as profit or loss but through other comprehensive income.
All financial assets are measured at fair value less transaction costs, except for those classified into
the categories that are measured at fair value through profit or loss.

10

(ii) Subsequent Measurement
Measurement after the initial recognition of financial assets is conducted as follows according totheir classification:(a) Financial Assets Measured at Amortized Cost
Financial assets measured at amortized cost are measured at amortized cost by the effective
interest method.
Gain and loss in the case of amortization by the effective interest method and derecognition arerecognized as profit or loss.
(b) Financial Assets Measured at Fair Value
Financial assets measured at fair value are in principle measured at fair value through profit orloss.
However, for those designated as measured at fair value through other comprehensive income
among equity financial assets, fluctuations in the fair value are recognized as othercomprehensive income. When an investment is disposed of, the accumulated amount of gains orlosses recognized through other comprehensive income is transferred from “Other components ofequity” to “Retained earnings.”
Dividends are recognized as profit.
(iii) Derecognition of Financial Assets
The Group derecognizes financial assets when the contractual right to cash flows from financial
assets expire, or the Group transfers financial assets to transfer substantially all the risks and rewardsof ownership of the financial assets. If the Group retains control of the transferred financial assets,
we recognize assets and related liabilities to the extent of its continuing involvement in the financial
assets.
(iv) Impairment of Financial Assets
For financial assets measured at amortized cost, an allowance is recognized for the expected credit
losses.
The Group evaluates at every end of the period whether the credit risk of each financial asset has
significantly increased since the time of initial recognition, and if credit risk has not significantly
increased since the time of initial recognition, we recognize the expected credit losses arising frompossible events of default within 12 months from the end of the period as allowance for expectedcredit losses. On the other hand, if credit risk has significantly increased since the time of initialrecognition, we recognize the amount equivalent to the lifetime expected credit losses as allowancefor expected credit losses.
When evaluating whether credit risk has significantly increased, we consider information that isreasonably available and can be supported (such as internal or external ratings), in addition to pastdue information.
The Group also ensures that no lifetime expected credit losses need to be recognized if the credit riskof financial assets was deemed to be low at the end of the period.
However, for trade receivables and contract assets, the amount equivalent to the lifetime expectedcredit losses is always recognized as an allowance for expected credit losses, regardless of whether
credit risk has significantly increased since the time of initial recognition or not.
Expected credit losses are measured as the present value of the difference between all contractual
cash flows to be paid to the Group in accordance with the contract and all cash flows expected to bereceived by the Group.
The Group estimates the expected credit losses of financial assets by a method that reflects thefollowing:- An unbiased and probability-weighted amount that is determined by evaluating a range ofpossible outcomes;- Time value of money;- Information on past events, present circumstances, and forecasts of future economic
circumstances that are available and reasonable, and can be supported without excess costs andlabor at the end of the period.
If affected by a material economic change, we will make necessary judgmental adjustments to the
expected credit losses measured in the above calculation.
If there is no reasonable forecast to recover all or part of a financial asset, the Group will directly
decrease the book value for the total amount of financial assets.
Allowance for expected credit losses is recognized as profit or loss. If there is an event to decrease
allowance for expected credit losses, a reversal of allowance for expected credit losses is recognizedas profit or loss.

11

b. Financial Liabilities(i) Initial Recognition and Measurement
The Group classifies financial liabilities either as financial liabilities measured at fair value throughprofit or loss, or those measured at amortized cost. This classification is determined at the time ofinitial recognition.
The Group recognizes financial instruments on the transaction date when it becomes a party to anagreement for the financial liabilities.
All financial liabilities are measured at the amount of fair value without transaction costs, except for
those classified into categories that are measured at fair value through profit or loss.
(ii) Subsequent Measurement
Measurement after the initial recognition of financial liabilities is conducted as follows according totheir classification:(a) Financial Liabilities Measured at Fair Value through Profit or Loss
Financial liabilities measured at fair value through profit or loss are measured at fair value after
the initial recognition, with its fluctuation recognized as profit or loss.
(b) Financial Liabilities Measured at Amortized Cost
Financial liabilities measured at amortized cost are measured at amortized cost by the effective
interest method.
Gain and loss in the case of amortization by the effective interest method and derecognition arerecognized as profit or loss.
(iii) Derecognition of Financial Liabilities
The Group derecognizes financial liabilities when only it is extinguished, i.e., when the obligation
specified in the contract is discharged or cancelled or expires.
c. Presentation of Financial Assets and Liabilities
Financial assets and liabilities are offset and the net amount presented in the consolidated statement offinancial position, only when the Group has the legal right to set off balances, and intends either to settle
on a net basis, or to realize the asset and settle the liability simultaneously.
d. Derivatives
The Group uses derivatives including interest rate and currency swap agreements in order to hedge
foreign exchange risk and interest risk, respectively. These derivatives are initially recognized at fair value
and are remeasured at each reporting period. Changes in the fair value of derivatives are recognized as
profit or loss in the consolidated statement of profit or loss.
(5) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on-hand, deposits that can be withdrawn at any time, and shortterm investments with contractual settlement dates within three months from the initial transaction date,
which are readily convertible to the amount and which bear minimal risk of change in value.
(6) Property, Plant and Equipment
Property, plant and equipment is accounted for at acquisition cost less accumulated depreciation andimpairment.
Acquisition cost includes expenses directly related to the acquisition of assets, expenses for demolition,
removal and restoration costs of land, and capitalizable borrowing costs.
Depreciation for land and assets other than construction in progress is recorded by the straight-line method
over their respective estimated useful life. The estimated useful lives for each major asset class are as follows:- Buildings and structures: 2–50 years- Machinery, equipment, and vehicles: 2–20 years- Tools, furniture, and fixtures: 2–15 years
The estimated useful life, residual value, and depreciation method are reviewed at the end of each fiscal
year, and if there are changes, they will be applied as changes in accounting estimates prospectively.
(7) Goodwill
Goodwill is presented in the consolidated statement of financial position based on initial recognition lessaccumulated impairment losses.
The measurement of goodwill at the time of initial recognition is described in “(2) Business Combinations.”
Goodwill is not amortized, but undergoes an impairment test every period and more often when there are12indications of impairment.
Impairment losses are recognized in the consolidated statement of profit or loss, and are not subject toreversal.
(8) Intangible Assets
For individually acquired intangible assets, they are recorded at the acquisition cost at the time of initialrecognition.
Except for those with indefinite useful lives and those which are not in the condition necessary for it to becapable of operating, intangible assets other than goodwill are amortized by the straight-line method overtheir respective estimated useful life, and presented as the acquisition cost less the accumulated
amortization and impairment.
The estimated useful life, residual value, and amortization method are reviewed at the end of each fiscal
year, and if there are changes, they will be applied as changes in accounting estimates prospectively.
For intangible assets with indefinite useful lives and those not yet available for use, they are not amortized
but undergo an impairment test individually or by cash generating unit in every period and more often
when there is an indicator of impairment.
Intangible assets with indefinite useful lives are measured at the acquisition cost less accumulated
impairment losses.
(9) Investment Property
Investment property is the property held with intentions to generate leasing revenue or capital gains, orboth. Investment property, which is presented as the acquisition cost less accumulated depreciation andimpairment.
Depreciation for assets other than land is calculated by the straight-line method over their respective
estimated useful life (3–50 years). Land is not subject to depreciation.
The estimated useful life, residual value, and depreciation method are reviewed at the end of each fiscal
year, and if there are changes, they will be applied as changes in accounting estimates prospectively.
(10) Leases(Lessee)
It is determined based on the substance of an agreement, even if it is not in the form of a lease legally,
whether the agreement is a lease or not, or whether the agreement includes a lease. If an agreementtransfers the right to control the use of a specified asset in exchange for consideration for a certain periodof time, the transaction is deemed to be a lease.
The Group has chosen not to distinguish the non-lease component from the lease component to account forthem as a single lease component.
Lease liabilities in lease transactions are measured at the discounted present value by discounting theunsettled amount of the total lease payments on the lease commencement date, using the interest rate
implicit in the lease or the lessee’s incremental borrowing rate of interest. The total lease payments include
the following:- Amounts of fixed lease payments less lease incentives receivable;- Amounts of variable lease payments that depend on an index or a rate;- Amounts expected to be payable by the lessee under residual value guarantees;- Exercise price of a purchase option if the lessee is reasonably certain that to exercise that option; and- Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option
to terminate the lease.
Right-of-use assets are initially measured at the amount of the initial measurement of lease liabilities byadjusting initial direct costs and prepaid lease payments, and adding the costs for restoration obligations
based on lease agreements.
Right-of-use assets are depreciated over the shorter of either the useful life of the right-of-use assets or thelease period.
Lease payments are apportioned between a finance charge and a reduction of the outstanding obligation for
future amounts payable to produce a constant periodic rate of interest on the remaining balance of the leaseliability. Finance charges are presented separately from depreciation for the right-of-use assets in the
consolidated statement of profit or loss.
Lease liabilities are remeasured when there are changes in the likelihood that the lease will be terminatedof exercising the extension or termination option. When lease liabilities are remeasured, the remeasurement
is recognized as an adjustment to right-of-use assets. However, if the decreased amount of liabilities by theremeasurement is greater than the book value of right-of-use assets, the amount after reducing the amount13

of right-of-use assets to zero is recognized as profit or loss.
For leases where the lease period completing within 12 months or those with an immaterial value of
underlying assets, lease payments related to the leases are recognized as expenses over the lease period
either by the straight-line method or other regular basis.
(Lessor)Leases for which the Group does not transfer substantially all the risks and rewards of ownership of anasset are classified as operating leases. For operating lease transactions, target assets are recorded in the
consolidated statement of financial position, while lease payments received are recognized as revenue in the
consolidated statement of profit or loss under the straight-line method over the lease period, including any
free rent period.
(11) Impairment of Non-Financial Assets
For the Company’s non-financial assets, excluding deferred tax assets, the Group determines whether there
is an indicator of impairment. When there is an indicator of impairment, the recoverable amount of therelated assets is estimated. Goodwill, intangible assets with indefinite useful lives, and those not yet
available for use are tested for impairment annually, regardless of whether there is an indicator of
impairment.
The recoverable amount of assets or cash generating unit is the larger of the value in use or the fair valueless costs to sell. In calculating value in use, the estimated future cash flows are discounted to the present
value using the time value of money and the pretax discount rate reflecting risks unique to the assets. Assetsthat are not individually tested in an impairment test are tested as part of cash generating units which,through continued use, generates largely cash flows which are largely independent of other assets or asset
groups. Goodwill is allocated to the cash generating unit that is expected to have synergies arising from thebusiness combination. Goodwill is tested for impairment at the cash generating unit level.
Corporate assets of the Group do not generate independent cash inflows. When there is an indicator of
impairment for corporate assets, the recoverable amount of the cash generating unit to which corporate
assets belong is estimated.
An impairment loss is recognized as profit or loss when the book value of assets or cash generating unit
exceeds the estimated recoverable amount. The impairment loss recognized in relation to a cash generating
unit first reduces the book value of goodwill which is allocated to the unit, and then, if goodwill is written
off entirely, reduces the book value of other assets in the cash generating unit proportionally.
Goodwill-related impairment loss is not reversed. For other assets, any impairment loss recognized in thepast is evaluated as to whether there are impairment indicators during each reporting period. Impairment
loss is reversed when there is a change in the estimate used for deciding the recoverable amount.
Impairment loss is reversed to the extent of book value after deducting depreciation and amortization fromthe book value as if there had been no impairment loss.
(12) Employee Benefits
a. Short-term Employee Benefits
Short-term employee benefits are recorded as expenses without discounting when a related service isprovided. For bonuses and paid leave expenses, there are legal or constructive liabilities to pay them, andwhen reliable estimates are possible, the amounts estimated to be paid based on such programs arerecognized as liabilities.
b. Post-Employment Benefits
The Group has established a defined benefit corporate pension plan and a lump sum retirement payment
plan as employees’ retirement benefit plans.
The Group calculates the present value of the defined benefit plan liabilities, and related current and past
service costs, using the projected unit credit method.
Discount rates are calculated based on market yields on prime corporate bonds at the end of the period
corresponding to the period of the estimated date of benefit payments for every future fiscal year.
Liabilities or assets for the defined benefit plans are calculated by deducting the fair value of plan assets
from the present value of the defined benefit plan liabilities. However, if the defined benefit plan is morethan fully funded, the net amount of defined benefit assets is recorded up to the present value of
economic benefits available in the form of refunds from the plan or reductions in future contributions to
the plan. Moreover, the amount of net interest on the net defined benefit liability (asset) is recognized as
operating expense (Cost of sales, Selling, general and administrative expenses) in profit or loss.

14

The remeasured amounts of the defined benefit plan are recognized collectively as other comprehensive
income in the accrual period, to be immediately transferred from “Other components of equity” to“Retained earnings.”
Past service cost is accounted for as profit or loss in the accrual period.
The Group’s parent company entity and its domestic subsidiaries are members of the Engineering
Consultants Company Pension Fund (multi-companies fund) as a defined benefit plan. Since it is a planthat cannot reasonably calculate the amount of pension assets corresponding to any single participant’s
contributions, as with the defined contribution plan, the amount to be paid in exchange of services
provided by employees to companies in the corresponding period is recognized as an expense.
The Group makes contributions to the public pension system in Japan. The contributions to the public
pension system (defined contribution plan) are expensed at the time of accrual, and accounted for as
employee benefits.
(13) Share-based Payments
The Company grants shares with restriction on transfer to directors under the equity-settled share-based
compensation system. Shares with restriction on transfer are estimated at fair value on the grant date, andrecorded as selling, general and administrative expenses over the vesting period, while a corresponding
amount is recognized as equity in the consolidated statement of financial position.
As an incentive plan for the Group employees, an “Employee Stock Ownership Plan (ESOP) Trust System”
is introduced. This is a cash-settled share-based payment transaction, in which if a gain or loss on sales ofshares accrued from the initial acquisition of the Company shares by the ESOP Trust System to sales is apositive gain, trust income will be distributed in cash to the Group employees according to theircontribution ratio during the trust period. Expenses for the ESOP Trust System are recognized as profit orloss, with the recognition of corresponding liabilities.
(14) Provisions
Provisions are recognized when the Group has present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, and the amount of the obligation can be reliably estimated. When the time value of money ismaterial, the estimated future cash flows are discounted to the present value using the time value of money
and the pre-tax interest rate reflecting risks specific to the liabilities. Any rebate of discount on a time basis
is recognized as finance costs.
(15) Revenue
For agreements with customers, excluding rental income from real estate held in the “Real Estate Leasing”
based on IFRS 16 “Leases,” the Group recognizes revenue by applying the following steps:
Step 1: Identify the contract with a customer
Step 2: Identify the performance obligations in the contract
Sept 3: Determine the transaction price
Step 4: Allocate the transaction prices to performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation“Domestic Consulting,” “International Consulting,” “Urban & Spatial Development,” and “Energy” areproviding such services as planning, designing, and supervision mainly for civil engineering, architectureand electric power. “Power Engineering” engages in manufacturing and sale of electronic equipment anddevices, as well as designing and implementation of construction works for electric power.
The Group’s businesses are performance obligations to be satisfied over time, because they fall under eitherof the following cases where: (a) the customer simultaneously receives and consumes the benefits
provided by the Group’s performance as the Group performs; (b) the Group’s performance creates orenhances an asset that the customer controls as the asset is created or enhanced; or (c) the Group’s
performance does not create an asset with an alternative use to the Group and the Group has an
enforceable right to payment for performance completed to date.
Revenue is recognized based on progress toward complete satisfaction of the obligation and, if progresscannot be reliably measured, revenue is recognized to the extent of costs incurred until such time as
progress of performance obligations can be reliably measured.
For the measurement of progress, costs include personnel expenses and outsourcing expenses that are inprinciple based on the cost budget and actual accrued costs.

15

Early-stage projects for work with which the Group has limited prior experience are subject to limited
information, such as similar projects completed previously when estimating total costs, and include
significant assumptions, such as outsourcing costs. Therefore, estimates of total costs are likely to change
due to revisions in the estimate.
To ensure the accuracy of the estimate of total costs, the Group manages budgets by type of work andconfirms the appropriateness of the estimated total costs for each accounting period, to find out outliers ofcosts at an early stage, and to review the cost budget in a timely manner.
Moreover, the measurement of progress in some large projects is based on output measures. Whenrecording sales by expected billings, progressed is recognized based on incurred expense and other output
measures used to measure progress after approval by the project manager.
Contract assets are the Group’s rights to consideration in exchange for goods or services that the Group has
transferred to a customer when that right is conditioned on something other than the passage of time.
Contract liabilities are the Group’s obligation to transfer goods or services to a customer for which theGroup has received consideration or the amount is due from the customer.
Consideration is received by contractual milestones generally in line with the progress in satisfying
performance obligations, with settlement generally occurring within 60 days from the complete satisfactionof performance obligations. Consideration generally does not include significant financing components.
(16) Government Subsidies
Government subsidies are recognized at fair value when incidental conditions for granting subsidies are
satisfied and reasonable assurance is obtained for receiving subsidies.
When government subsidies are related to expense items, they are recognized as other income in the period
in which related costs to be reimbursed by subsidies were recognized as expenses. Regarding subsidies for
assets, the amount of the subsidies is deducted from the acquisition cost of assets.
(17) Income Tax
Income tax expenses consist of current tax and deferred tax. These are recognized as profit or loss, except
for cases where they arise from items recognized as other comprehensive income or equity, and where theyarise from business combinations.
Current tax is measured at the amount for which a payment to or refund from the tax authorities is
expected. Tax rates and tax laws to be used for the calculation of tax amounts are those enacted or passed as
law but not yet effective as of the end of the period.
Deferred tax is recognized for a temporary difference that is a difference between the tax base and thecarrying amount of assets and liabilities, unused tax losses and unused tax credits.
Deferred tax liabilities are recognized for all taxable temporary differences, while deferred tax assets arerecognized for all deductible temporary differences to the extent where it is probable that taxable profit will
be available against which deductible temporary differences, unused tax losses carryforward and unused tax
credits carryforward can be utilized.
Deferred tax assets and liabilities are not recorded for the following temporary differences:- Taxable temporary differences arising from the initial recognition of goodwill;- Temporary differences arising from the initial recognition of assets and liabilities in transactions which
is not a business combination and affects neither accounting profit nor taxable profit (tax loss);- Regarding deductible temporary differences arising from investments in subsidiaries and associates andinterests in joint arrangements, cases where it is not probable that the temporary difference will reversein the foreseeable future, or where it is not probable that taxable profit will be available against which
the temporary difference can be utilized; and- Regarding taxable temporary differences arising from investments in subsidiaries and associates andinterests in joint agreements, cases where the timing of the reversal of the temporary difference can becontrolled and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed every period to reduce the carrying amount of thepart for which it is no longer probable that sufficient taxable profit will be available to utilize all or some ofthe deferred tax assets. Unrecognized deferred tax assets are reviewed every period to recognize them to theextent where it is probable that deferred tax assets will be recovered by future taxable income.
Based on tax rates and tax laws enacted or substantially enacted by the end of the period, deferred tax
assets and liabilities are measured by the tax rates and tax laws expected to be applied for the period torealize assets or to settle liabilities.
Deferred tax assets and liabilities are offset when there are legally enforceable rights attributable to thesame taxable entity subject to the same tax authority to offset the current tax assets and liabilities.

16(18) Earnings Per Share
Basic earnings per share is calculated by dividing profit or loss belonging to ordinary equity holders of theparent by the weighted average number of outstanding ordinary shares adjusted by treasury shares for theperiod. Diluted earnings per share is calculated by adjusting for the effect of all potential ordinary sharesthat have dilutive effects.
(19) Segment Information
A business segment is a constituent unit of business activities that earn revenue and accrue expenses,
including transactions with other business segments. A business segment has operations for which financial
information is separately available and the Company’s Board of Directors regularly reviews them to allocate
management resources to each segment and evaluate results.
(20) Treasury Shares
Treasury shares are recorded at acquisition cost and are accounted for as a reduction from equity. Profit orloss is not recognized for the purchase, sale, or cancellation of Company treasury shares. Rather, thedifference between the book value and consideration paid to acquire the treasury shares is recognized inequity.
(21) Borrowing Cost
For assets that require a considerable period to enable the intended use or sale, borrowing costs directly
arising from their acquisition, construction, and production are capitalized as part of the assets’ acquisition
costs.
Other borrowing costs are recognized as expenses in the period of their accrual.

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENT WITH
ESTIMATESIn preparation of consolidated financial statements in accordance with IFRS, management is required to makejudgements, estimates and assumptions that will affect the application of accounting policies, and the amount ofassets, liabilities, revenue, and expenses. Actual earnings may differ from these estimates.
While the Group has made accounting estimates which assume that it will continue to be affected by the novel
coronavirus (COVID-19) for a certain period of time, the Group believes that it has not had a significant impact
in the current period. However, due to many continuing uncertainties regarding the future impact of COVID-19
on the economy and society as a whole, it may affect the Group’s financial position and operating results for the
next consolidated fiscal year.
Estimates and their underlying assumptions will continue to be revised. Any impact of a revision to accounting
estimates will be recognized in the accounting period in which the estimates are revised, and applied
prospectively to future accounting periods.
The judgements and estimates made by management that could have significant effects on the amounts in the
consolidated financial statements are as follows:- Revenue recognition (Note “3. SIGNIFICANT ACCOUNTING POLICIES, (15) Revenue,” “27. REVENUE”)- Impairment of non-financial assets (Note “3. SIGNIFICANT ACCOUNTING POLICIES, (11) Impairmentof Non-Financial Assets,” “15. IMPAIRMENT OF NON-FINANCIAL ASSETS”)

5. NEW STANDARDS NOT YET APPLIED
Among standards and new interpretations whose establishment or revision is published by the approval date of
the consolidated financial statements, none of them are expected to have a significant effect on the Group’s
consolidated financial statements.

17

6. SEGMENT INFORMATION(1) Overview of Reportable Segments
a. Method of Determination of Reportable Segments
A business segment has operations for which financial information is separately available and theCompany’s Board of Directors regularly reviews them to allocate management resources to each segment
and evaluate results.
The Company identifies its businesses based on the type of products and services offered. Each businessheadquarters formulates a comprehensive strategy based on the products and services and engages in
conducting business activities.
In line with the above, the Company is composed of segments based on products and services, with eachbusiness headquarters serving as the foundation, and the six reportable segments are “Domestic
Consulting”, “International Consulting”, “Power Engineering”, “Urban & Spatial Development”, “Energy”,
and “Real Estate Leasing”.
b. Types of Products and Services by Reportable Segments“Domestic Consulting” engages in operations within Japan such as site surveying, planning, evaluation/assessment, designing, construction management, operational advice in the fields of water resources
development, energy development, agricultural development, transportation, urban and regional
development and management of natural and social environment.
“International Consulting” engages in businesses outside of Japan such as site surveying, planning,
evaluation/assessment, designing, construction supervision, operational advice in the fields of water
resources development, energy development, agricultural development, transportation, urban and regional
development, social development and management of natural and social environment.
“Power Engineering” engages in manufacturing and sale of control devices and systems for power
generating and transforming stations, water turbines, power generators, voltage converters, electric power
related equipment such as line taps for power transmission and distribution networks. It also engages indesigning and implementation of various construction works for electric power and general electricfacilities, including construction for power generation/transformation/transmission/distribution and civilengineering.
“Urban & Spatial Development” engages in the structuring, planning, design, and operation of urban andspatial development business.
“Energy” engages in research, development, design, construction, management, operation, support andsystem/technology development of power generation/energy management operations utilizing distributed
energy resources.
“Real Estate Leasing” engages in the leasing of real estate within Japan.
(2) Calculation Methods for Revenue, Income or Loss, Assets, and Other Items by Reportable Segments
The accounting method for reportable segments is as disclosed in “3. SIGNIFICANT ACCOUNTINGPOLICIES”.
The internal intersegment revenue or transfers are based on the transaction price determined after pricenegotiations taking into consideration the market price.
(3) Revenue, Income or Loss, Assets, Liabilities, and Other Items by Reportable Segments
The Group’s revenue and operating results by reportable segments are as follows:18

Millions of Yen

Year ended June 30, 2021
Reportable Segments
Domestic International
Power
Urban & Spatial
Consulting Consulting Engineering Development

Revenue:
Revenue from external customers ...
Intersegment revenue and transfers ...
Total .....................
Segment profit (loss) ...

EnergyReal Estate
Subtotal
Leasing

Others(Note 1)

Total

¥55,345879¥56,224¥24,753306¥25,060¥15,831341¥16,173¥20,2741¥20,275

¥790
—
¥790

¥778 ¥117,773
158
1,687
¥937 ¥119,461¥86 ¥117,859
666
2,353
¥752 ¥120,213

6,128

1,853

858

2,266

(1,919)585(2,639)

9,772

7,133

Adjustments
Consolidated(Note 3)¥ — ¥117,859(2,353)—¥(2,353) ¥117,859

Finance income ...........

(4)

7,128
519

Finance costs ...............
Profit before tax ..........

(471)
7,176

Other items:
Depreciation and amortization ...

(1,549)

(349)

(394)

(1,190)

(154)

(91)

(3,729)(853)(4,582)

16(4,566)

Impairment losses .......

—

—

—

—

(1,739)—(1,739)—(1,739)—(1,739)

Share of profit (loss) of investments
accounted for using equity method ...
Segment assets ............

—
29,538027,902

12
13,979—32,109

16
9,036

—
6,518

29
119,085—
64,594

29
183,680

1,372

181

1,037

824

708

0

4,123

1,323

5,446

(44)

5,401

30

13

252

—

1,809

—

2,104

—

2,104

(27)

2,077

Increase in property, plant and equipment,
and intangible assets(Note 2) .........
Investments accounted forusing equity method .....

535(27,542) 156,137

Thousands of U.S. Dollars

Year ended June 30, 2021
Reportable Segments
Domestic International
Power
Urban & Spatial
Consulting Consulting Engineering Development

Revenue:
Revenue from external customers ...

EnergyReal Estate
Subtotal
Leasing

Others(Note 1)

Total

Total .....................

$500,793
7,954$508,748$223,984
2,777$226,761$143,249
3,094$146,343$183,45011$183,461$7,152—$7,152$7,048 $1,065,679
1,431
15,269$8,480 $1,080,948$779 $1,066,459
6,030
21,299$6,809 $1,087,758

Segment profit (loss) ...

55,451

16,771

7,764

20,510(17,365)

5,298(23,883)

Intersegment revenue and transfers ...

88,43064,546

Adjustments
Consolidated(Note 3)

$ — $1,066,459(21,299)—$(21,299) $1,066,459

Finance income ...........

(44)

64,502
4,702

Finance costs ...............

(4,266)

Profit before tax ..........

64,938Other items:
Depreciation and amortization ...

(14,019)(3,161)(3,565)(10,772)(1,395)(829)(33,743)(7,724)(41,467)

147(41,320)

Impairment losses .......

—

—

—

—

(15,737)—(15,737)—(15,737)—(15,737)

Share of profit (loss) of investments
accounted for using equity method ...
Segment assets ............

—

1

115

—

151

—

268

—

268

49

318

267,284

252,477

126,493

290,548

81,76958,9781,077,552

584,488

1,662,041

12,420

1,637

9,383

7,459

6,407

2

37,311

11,97149,282(403)

48,879

271

118

2,288

—

16,369—19,046—

19,046(248)

18,798

Increase in property, plant and equipment,
and intangible assets(Note 2) .........
Investments accounted forusing equity method .....

(249,221) 1,412,819(Notes)1. The category of “Others” includes revenues from constituent units that have not earned revenues or (or earn
only incidental revenues), expenses such as general and administrative expenses that do not belong to thereporting segment and corporate assets such as land, buildings, and investment securities.
2. The amount of increase in property, plant and equipment, and intangible assets includes the change as aresult of changes in the balances in right-of-use assets and investment property.
3. “Adjustments” is mainly the elimination of transactions between segments.

19Millions of Yen

Year ended June 30, 2020
Reportable Segments
Domestic International
Power
Urban & Spatial
Consulting Consulting Engineering Development

Revenue:
Revenue from external customers ...
Intersegment revenue and transfers ...
Total .....................
Segment profit (loss) ...

EnergyReal Estate
Subtotal
Leasing

Others(Note 1)

Total

Adjustments
Consolidated(Note 3)¥ — ¥108,441(2,128)—¥(2,128) ¥108,441¥49,958531¥50,489¥22,635
60¥22,696¥15,382463¥15,845¥18,142103¥18,246¥1,070—¥1,070

¥451
156
¥607

¥107,640
1,314¥108,955¥800
814¥1,614¥108,441
2,128¥110,569

4,944

513

995

1,759

(355)

356

8,214

(2,888)

5,325

Finance income ...........

(79)

5,245
414

Finance costs ...............
Profit before tax ..........

(631)
5,029

Other items:
Depreciation and amortization ...

(1,525)

(491)

(382)

(1,126)

(138)

(79)

(3,744)(969)(4,713)13(4,700)

Impairment losses .......

—

—

—

—

—

—

—

—

—

—

—

Share of profit (loss) of investments
accounted for using equity method ...
Segment assets ............

—
28,328026,64043
12,172—
28,079

109
9,683

—
6,542

153
111,447—
66,884

153
178,331(9)(30,923)

144
147,408

2,055

560

842

481

1,187

836

5,965

5,070

11,036(163)

10,872

—

12

241

—

1,753

—

2,007

—

2,007

(32)

1,974

Increase in property, plant and equipment,
and intangible assets(Note 2) .........
Investments accounted forusing equity method .....

(Notes)1. The category of “Others” includes revenues from constituent units that have not earned revenues or (or earn
only incidental revenues), expenses such as general and administrative expenses that do not belong to thereporting segment and corporate assets such as land, buildings, and investment securities.
2. The amount of increase in property, plant and equipment, and intangible assets includes the change as aresult of changes in the balances in right-of-use assets and investment property.
3. “Adjustments” is mainly the elimination of transactions between segments.
(4) Information by Product and Service
Statement is omitted, as similar information is disclosed in “(3) Revenue, Income or Loss, Assets, Liabilities,
and Other Items by Reportable Segments.”(5) Information by Region
The breakdown by region of revenue and non-current assets is as follows:
Revenue from external customers
Millions of Yen

Japan .......................................................................
Asia .........................................................................
Europe ....................................................................
Africa ......................................................................
Latin America .........................................................
Canada ....................................................................
Middle East ............................................................
Others .....................................................................
Total ........................................................................

Year ended
June 30, 2021
¥74,402
19,456
13,648
3,111
2,886
2,739
1,300
314
¥117,859

Year ended
June 30, 2020
¥66,732
17,191
13,259
2,826
3,160
2,824
2,006
437
¥108,441

Thousands of
U.S. Dollars

Year ended
June 30, 2021
$673,232
176,050
123,497
28,156
26,11924,786
11,7702,846$1,066,459
20

Non-current assets
Thousands of
U.S. Dollars

Millions of Yen

Japan ....................................................
Europe .................................................
Canada .................................................
Others ..................................................
Total .....................................................

As ofJune 30, 2021
¥50,196
16,8582,183
1,986¥71,225

Transition Date
As of
As of
June 30, 2020 As of July 1, 2019 June 30, 2021
¥50,650¥45,773$454,202
14,282
15,137
152,5482,125
2,498
19,7593,668
3,083
17,977¥70,726¥66,493$644,487(Notes)1. “Revenue” and “Non-current assets” are classified based on service areas and their location, respectively.
2. “Non-current assets” do not include financial instruments, deferred tax assets and assets for retirement
benefits.
3. Countries and regions are classified by geographical proximity.
(6) Information on Significant Customers
Customers that account greater than 10% of revenue in the consolidated statement of profit or loss are as
follows:
Millions of Yen

Year ended June 30, 2021
Name of Customers

Ministry of Land, Infrastructure, Transport and Tourism ...
Japan International Cooperation Agency ............................
TEPCO Power Grid, Incorporated .......................................

Sales

Related Segment Name

¥22,561
6,206
4,187

Domestic Consulting
International Consulting
Power Engineering

Thousands of U.S. Dollars

Year ended June 30, 2021
Name of Customers

Ministry of Land, Infrastructure, Transport and Tourism ...
Japan International Cooperation Agency ............................
TEPCO Power Grid, Incorporated .......................................

Sales

Related Segment Name

$204,147
56,16237,887

Domestic Consulting
International Consulting
Power Engineering

Millions of Yen

Year ended June 30, 2020
Name of Customers

Ministry of Land, Infrastructure, Transport and Tourism ...
Japan International Cooperation Agency ............................
TEPCO Power Grid, Incorporated .......................................

Sales¥18,739
6,103
4,214

7. BUSINESS COMBINATIONSStatement is omitted due to its insignificance for the years ended June 30, 2021 and 2020.

21

Related Segment Name

Domestic Consulting
International Consulting
Power Engineering8. CASH AND CASH EQUIVALENTS
The breakdown of cash and cash equivalents is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Transition Date
As of
As of July 1, 2019 June 30, 2021

As ofJune 30, 2021

As ofJune 30, 2020

Cash and bank deposits except for time deposits
with original term of more than three months ...

¥17,838¥15,472¥13,242$161,414

Cash and cash equivalents in the consolidated
statement of financial position .....................

17,83815,472

13,242

161,414

Cash and cash equivalents in the consolidated
statement of cash flows .................................

17,83815,472

13,242

161,414

9. TRADE AND OTHER RECEIVABLES
The breakdown of trade and other receivables is as follows:
Millions of Yen

Notes and accounts receivable - trade ...
Others ...........................................................
Allowance for doubtful accounts .........
Total .......................................................

As ofJune 30, 2021
¥21,143
1,096(1,050)¥21,189

Thousands of
U.S. Dollars

As ofTransition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥18,954¥15,637$191,319
914
1,021
9,921
(479)
(287)
(9,506)¥19,389¥16,371$191,733

Trade and other receivables are classified as financial assets measured at amortized cost.

2210. OTHER FINANCIAL ASSETS(1) Breakdown of Other Financial Assets
The breakdown of other financial assets is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Financial assets measured at amortized
cost:Time deposits with a deposit period of
more than 3 months, etc .......................
Allowance for loss evaluation .............
Financial assets measured at fair value
through profit or loss:
Cross currency swap ..............................
Stocks .........................................................
Bonds ..........................................................

As ofJune 30, 2021

As ofJune 30, 2020

Transition Date
As of
As of July 1, 2019 June 30, 2021

¥3,596¥3,803¥2,819$32,539

(89)

(154)

(155)

(808)

39
1,041
301

—
781
284

—
25
228

353
9,423
2,731

3,860
¥8,749¥1,3157,434¥8,7493,288¥8,004¥1,283
6,721¥8,004

3,938¥6,855¥407
6,448¥6,85534,928$79,167$11,899
67,267$79,167

Financial assets measured at fair value
through other comprehensive income:Stocks and contribution .......................
Total .......................................................
Current assets .............................................
Non-current assets ....................................
Total .......................................................

(2) Equity Financial Assets Measured at Fair Value through Other Comprehensive Income
Fair values of significant equity financial assets measured at fair value through other comprehensive income
are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Issue name:
JESK HORIUCHI CO., LTD. .................
Sumitomo Realty & Development Co., Ltd. ...
Yokogawa Bridge Holdings Corp. .........
OYO Corporation ....................................
Mitsubishi UFJ Financial Group, Inc. ...
OILES CORPORATION ........................
MAEDA CORPORATION .....................
Tsukishima Kikai Co., Ltd. ..................

As ofJune 30, 2021

As ofJune 30, 2020

¥572
545
479
428
427
369
364
—

¥302
444
509
476
300
333
310
—

Transition Date
As of
As of July 1, 2019 June 30, 2021
¥148
577
395
367
365
376
325
738

$5,182
4,939
4,342
3,874
3,871
3,340
3,293
—

As these investments are held for the purpose of strategic cross-shareholding, they are designated as equity
financial assets measured at fair value through other comprehensive income.

23

(3) Derecognition of Equity Financial Assets Measured at Fair Value through Other Comprehensive Income
For the purpose of streamlining assets and reviewing business relationships, the Group sells some equity
financial assets measured at fair value through other comprehensive income and derecognizes them.
The fair value at the derecognition and cumulative gains and losses that have been previously recognized inequity as other comprehensive income are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Fair value ..........................................................................
Cumulative gains or losses ..........................................

As ofJune 30, 2021
¥1
(1)

As of
June 30, 2020
¥724
176

As of
June 30, 2021
$17
(10)

For equity financial assets measured at fair value through other comprehensive income, when derecognized,
cumulative gains or losses recognized as other comprehensive income are transferred to retained earnings.
Cumulative gains or losses (after tax) of other comprehensive income transferred to retained earnings are ¥(1)million ($(10) thousand) and ¥118 million for the years ended June 30, 2021 and 2020, respectively.
The breakdown of dividend income recognized from equity instruments is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Derecognized investments during the reporting period ...
Investments held at year-end ......................................

As ofJune 30, 2021
¥0
90

As of
June 30, 2020
¥—
80

As of
June 30, 2021
$4816

11. OTHER ASSETS
The breakdown of other assets is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Other current assets:
Prepaid expenses .....................................
Consumption taxes receivable ............
Others .........................................................
Total .......................................................
Other non-current assets:Long-term prepaid expenses ...............
Others .........................................................
Total .......................................................

As ofJune 30, 2021

As ofJune 30, 2020

Transition Date
As of
As of July 1, 2019 June 30, 2021

¥2,211384
1,304¥3,900¥1,812
1,065
1,578¥4,456¥1,547339
1,511¥3,399$20,0113,478
11,801$35,291¥208
1,175¥1,384¥214
1,212¥1,427¥53
1,165¥1,219$1,883
10,641$12,524

24

12. PROPERTY, PLANT AND EQUIPMENT(1) Schedule of Changes
The changes in acquisition cost, accumulated depreciation and impairment, and carrying amount of property,
plant and equipment are as follows:
Acquisition cost
Millions of Yen
Land

BALANCE AS OF JULY 1, 2019 .........
Acquisition ...............................................
Acquisition through business combination ...
Sale or disposal .......................................
Account transfer .....................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2020 .....
Acquisition ...............................................
Sale or disposal .......................................
Account transfer .....................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

Buildings
and structures

Machineryand vehicles

Tools, furnitureand fixtures¥24,204————¥13,314
405
3
(947)
9,472

¥3,961
414
—
(72)
4

¥4,986
417
21
(250)
334

(0)
(1,050)¥23,153
—
—
—

(2)
(398)
¥21,846408(1,449)940

22—¥4,330
58
(21)
193

(66)
(32)
¥5,409
322
(312)
134

0
(0)
¥23,15316
101¥21,8633(0)¥4,564339(0)¥5,892Millions of Yen
Constructionin progress

BALANCE AS OF JULY 1, 2019 .........
Acquisition ................................................
Acquisition through business combination ...
Sale or disposal .......................................
Account transfer ......................................
Exchange differences on translationof foreign operations ...........................
Others .........................................................
BALANCE AS OF JUNE 30, 2020 .....
Acquisition ................................................
Sale or disposal .......................................
Account transfer ......................................
Exchange differences on translationof foreign operations ...........................
Others .........................................................
BALANCE AS OF JUNE 30, 2021 .....

25

Total
property, plantand equipment

Right-of-use
assetsTotal¥7,995
4,908——(9,811)¥54,463
6,145
24(1,271)—¥10,583
3,596—(1,431)—¥65,047
9,741
24(2,702)
—

(16)
(416)
¥2,6591,764—(1,268)(63)(1,898)¥57,399
2,554(1,784)—(146)
1¥12,602
2,733(1,943)—(210)(1,897)¥70,0025,288(3,728)—31
10¥3,198392
110¥58,672653(6)¥14,039

1,046
103¥72,712

Thousands of U.S. Dollars
Buildings
and structures

Land

BALANCE AS OF JUNE 30, 2020 .....
Acquisition ...............................................
Sale or disposal .......................................
Account transfer .....................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

Machineryand vehicles

Tools, furnitureand fixtures$209,505———$197,683
3,691(13,119)
8,511$39,180
532
(194)
1,749

$48,946
2,919(2,830)
1,218

8
(7)
$209,506

145
921$197,833

31(1)$41,298

3,075(7)$53,320

Thousands of U.S. Dollars
Constructionin progress

BALANCE AS OF JUNE 30, 2020 .....
Acquisition ...............................................
Sale or disposal .......................................
Account transfer .....................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

Total
property, plantand equipment

Right-of-use
assetsTotal$24,068
15,969—(11,479)$519,384
23,113(16,145)—$114,035
24,734(17,590)—$633,419
47,848(33,735)—287
94$28,941

3,548

5,916
(58)
$127,037

9,464
939$657,937

998$530,900

Accumulated depreciation and impairment
Millions of Yen
Buildings
and structures

Land

BALANCE AS OF JULY 1, 2019 .........
Acquisition through business combination ..
Depreciation ............................................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2020 .....
Depreciation ............................................
Impairment losses .................................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

Machineryand vehicles

Tools, furnitureand fixtures

¥—
—
—
—

¥8,7990460(881)¥2,831—160(71)¥3,979
7
337
(228)

—
—
¥—
—
—
—

(5)
29
¥8,403
596
—
(547)

(0)
(0)
¥2,920
173
—
(20)

(53)
(4)
¥4,037
395
—
(175)

—
—
¥—

6
(3)
¥8,4541(0)¥3,074270(11)¥4,51726

Millions of Yen
Constructionin progress

BALANCE AS OF JULY 1, 2019 .........
Acquisition through business combination ..
Depreciation ............................................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2020 .....
Depreciation ............................................
Impairment losses .................................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

Total
property, plantand equipment

Right-of-use
assets

Total

¥—
—
—
—

¥15,6107959(1,181)

¥173
—
3,183
(334)

¥15,783
7
4,143(1,515)

—
—
¥—
—
1,739
—

(60)
25
¥15,360
1,165
1,739
(742)

(23)
0
¥2,9982,857—(1,187)(84)
25¥18,359
4,023
1,739(1,930)55—¥1,794333(15)¥17,840

141—¥4,810474(15)¥22,650

Thousands of U.S. Dollars
Buildings
and structures

Land

BALANCE AS OF JUNE 30, 2020 .....
Depreciation ............................................
Impairment losses .................................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

Machineryand vehicles

Tools, furnitureand fixtures

$—
—
—
—

$76,035
5,392—(4,955)$26,421
1,572
—
(182)

$36,534
3,579—(1,584)

—
—
$—

57
(29)
$76,500

14(7)$27,818

2,445
(102)
$40,872

Thousands of U.S. Dollars
Constructionin progress

BALANCE AS OF JUNE 30, 2020 .....
Depreciation ............................................
Impairment losses .................................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

Total
property, plantand equipment

Right-of-use
assetsTotal$——
15,737—$138,992
10,544
15,737(6,722)$27,135
25,859—(10,746)$166,127
36,403
15,737(17,468)500—$16,237

3,017

1,276
0
$43,524

4,293
(139)
$204,953(139)$161,428(Notes)1. Depreciation for property, plant and equipment are included in “Cost of sales” and “Selling, general andadministrative expenses” in the consolidated statement of profit or loss.
2. “Others” in acquisition cost for the year ended June 30, 2020 include the amount of transfer to “Investment
property” (¥1,487 million).

27

Carrying amountMillions of Yen
Land

As of July 1, 2019 ................................
As of June 30, 2020 .............................
As of June 30, 2021 .............................

¥24,204
23,15323,153

Buildings
and structures

Machineryand vehicles¥4,515
13,443
13,409¥1,1291,410
1,489

Tools, furnitureand fixtures¥1,007
1,371
1,375

Millions of Yen
Constructionin progress

As of July 1, 2019 ................................
As of June 30, 2020 .............................
As of June 30, 2021 .............................

¥7,995
2,659
1,403

Total
property, plantand equipment

Right-of-use
assets¥38,852
42,03940,832¥10,410
9,603
9,229

Total

¥49,263
51,64250,061Thousands of U.S. Dollars
Land

As of June 30, 2021 .............................

$209,506

Buildings
and structures

Machineryand vehicles$121,332$13,479

Tools, furnitureand fixtures$12,448

Thousands of U.S. Dollars
Constructionin progress

As of June 30, 2021 .............................

$12,703

Total
property, plantand equipment

Right-of-use
assets$369,471$83,513

Total$452,984(Note)
The amount of borrowing costs capitalized during the period is ¥13 million ($126 thousands) and ¥58 million
for the years ended June 30, 2021 and 2020, respectively. The capitalization rate used for calculating the amountof borrowing costs qualified for capitalization is 0.7% and 0.6% for the years ended June 30, 2021 and 2020,
respectively.
(2) Right-of-Use Assets
The carrying amount of right-of-use assets by asset class is as follows:
Millions of Yen
Buildings
and structures

As of July 1, 2019 ................................
As of June 30, 2020 .............................
As of June 30, 2021 .............................

¥9,246
8,605
7,874

Machineryand vehicles

¥471
394
323

Tools, furnitureand fixtures

¥693
604
1,031

Total

¥10,410
9,603
9,229

Thousands of U.S. Dollars
Buildings
and structures

As of June 30, 2021 .............................

$71,256

Machineryand vehicles$2,923Tools, furnitureand fixtures$9,333

Total$83,51328

13. GOODWILL AND INTANGIBLE ASSETS(1) Schedule of Changes
The changes in acquisition cost, accumulated amortization and impairment, and carrying amount of goodwill
and intangible assets are as follows:
Acquisition cost
Millions of Yen
Intangible assets
Goodwill

BALANCE AS OF JULY 1, 2019 .........
Acquisition ...............................................
Acquisition through business combination ...
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2020 .....
Acquisition ...............................................
Acquisition through business combination ...
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

SoftwareTrademarks¥8,193—45—¥4,182285
9(360)¥3,715—0—¥1,484
—
—
—

(273)
—
¥7,964
—
—
—

(9)
(6)
¥4,101
234
0
(102)

(121)
—
¥3,594
—
—
—

(54)
—
¥1,430
—
—
—

1,217
—
¥9,18241
2¥4,276553
0¥4,148211—¥1,641Millions of Yen
Intangible assets
Contact-related
intangible assets

BALANCE AS OF JULY 1, 2019 .........
Acquisition ...............................................
Acquisition through business combination ...
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2020 .....
Acquisition ...............................................
Acquisition through business combination ...
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

29

Customer
relationships

Others

Total

¥—
—
—
—

¥1,49114—(1)¥10,873
300
9
(362)

—
—
¥—
507
—
—

(38)
40
¥1,505
—
—
—

(224)
34
¥10,630
742
0
(102)

30
—
¥537

162
0
¥1,668998
3¥12,272

Thousands of Dollars
Intangible assets
Goodwill

BALANCE AS OF JUNE 30, 2020 .....
Acquisition ...............................................
Acquisition through business combination ...
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

SoftwareTrademarks

Customer
relationships$72,070———$37,109
2,122
2
(931)

$32,523———$12,940———

11,018—$83,088373
23$38,699

5,011
1$37,535

1,909—$14,850

Thousands of Dollars
Intangible assets
Contact-related
intangible assets

BALANCE AS OF JUNE 30, 2020 .....
Acquisition ...............................................
Acquisition through business combination ...
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

Others

Total

$—
4,594
—
—

$13,622———$96,194
6,716
2
(931)

271
—
$4,8651,469
3$15,094

9,036
27$111,046

Accumulated amortization and impairment
Millions of Yen
Intangible assets
Goodwill

BALANCE AS OF JULY 1, 2019 .........
Amortization ............................................
Impairment losses .................................
Reversal of impairment ........................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2020 .....
Amortization ............................................
Impairment losses .................................
Reversal of impairment ........................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

SoftwareTrademarks

Customer
relationships

¥—
—
—
—
—

¥3,593
240
—
—
(299)

¥—
—
—
—
—

¥350
139
—
—
—

—
—
¥—
—
—
—
—

(7)
(1)
¥3,525
231
—
—
(87)

—
—
¥—
—
—
—
—

(14)
—
¥474
146
—
—
—

—
—
¥—

34
1
¥3,705

—
—
¥—

81
—
¥702

30

Millions of Yen
Intangible assets
Contact-related
intangible assets

BALANCE AS OF JULY 1, 2019 .........
Amortization ............................................
Impairment losses .................................
Reversal of impairment ........................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2020 .....
Amortization ............................................
Impairment losses .................................
Reversal of impairment ........................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

Others

Total

¥—
—
—
—
—

¥1,058123———¥5,001
503
—
—
(299)

—
—
¥—
—
—
—
—

(31)
(0)
¥1,149
59
—
—
—

(53)
(2)
¥5,150
436
—
—
(87)

—
—
¥—

152
(0)
¥1,361269
1¥5,769Thousands of Dollars
Intangible assets
Goodwill

BALANCE AS OF JUNE 30, 2020 .....
Amortization ............................................
Impairment losses .................................
Reversal of impairment ........................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....

SoftwareTrademarks

$—
—
—
—
—

$31,905
2,091
—
—
(790)

$—
—
—
—
—

$4,296
1,321
—
—
—

—
—
$—

315
11
$33,533

—
—
$—

740
—
$6,358

Thousands of Dollars
Intangible assets
Contact-related
intangible assets

BALANCE AS OF JUNE 30, 2020 .....
Amortization ............................................
Impairment losses .................................
Reversal of impairment ........................
Sale or disposal .......................................
Exchange differences on translationof foreign operations ..........................
Others ........................................................
BALANCE AS OF JUNE 30, 2021 .....
31

Customer
relationships

Others

Total

$—
—
—
—
—

$10,401539———$46,602
3,953
—
—
(790)

—
—
$—

1,378
(2)
$12,3172,435
9$52,209

Carrying amountMillions of Yen
Intangible assets
Goodwill

As of July 1, 2019 .......................................
As of June 30, 2020 ...................................
As of June 30, 2021 ...................................

Software¥8,1937,964
9,182

Trademarks

¥588
575
570

¥3,715
3,594
4,148

Customer
relationships¥1,134955
938

Millions of Yen
Intangible assets
Contact-related
intangible assets

As of July 1, 2019 .......................................
As of June 30, 2020 ...................................
As of June 30, 2021 ...................................

¥—
—
537

Others

Total

¥432
355
306

¥5,871
5,480
6,502

Thousands of U.S. Dollars
Intangible assets
Goodwill

As of June 30, 2021 ...................................

Software$83,088$5,166

Trademarks$37,535

Customer
relationships$8,491Thousands of U.S. Dollars
Intangible assets
Contact-related
intangible assets

As of June 30, 2021 ...................................

$4,865

Others$2,777

Total$58,836(Notes)1. The breakdown of the carrying amount of goodwill by segment is as described in “15. IMPAIRMENT OFNON-FINANCIAL ASSETS.”
2. Certain trademarks are expected to be used as long as the business continues; as such, they are deemed tohave no foreseeable limit on the period with expected future economic benefits and are therefore classified as
intangible assets with indefinite useful lives. The carrying amount of trademarks classified as intangible assets
with indefinite useful lives is as described in “(2) Significant Goodwill and Intangible Assets.”
3. Others include leasehold interests in land, outstanding orders, telephone subscription right, and right to use
facilities.
4. Amortization for intangible assets is included in “Cost of sales” and “Selling, general and administrative
expenses” in the consolidated statement of profit or loss.
5. Research and development expenses recognized as an expense during the period are ¥1,070 million ($9,687
thousand) and ¥1,195 million for the years ended June 30, 2021 and 2020, respectively.

32

(2) Significant Goodwill and Intangible Assets
Thousands of
U.S. Dollars

Millions of Yen
As of June 30, 2021
Carrying
amountBDP HOLDINGS LIMITED
Goodwill ........................
Trademarks (Note) .....

Useful life
(year)¥8,174
3,769——

Carrying
amountUseful life
(year)¥7,072
3,261

As ofJune 30, 2021

Transition Date
As of July 1, 2019

As of June 30, 2020

Carrying
amount——Useful life
(year)¥7,301
3,367——

Carrying
amount$73,965
34,109(Note)
Intangible assets with indefinite useful lives:
The above trademarks were acquired in connection with a business combination and are expected to be used aslong as businesses continue; as such, it is deemed that their useful lives are indefinite.

14. INVESTMENT PROPERTYThe Company and some consolidated subsidiaries own office buildings (including land) for lease in the Tokyo
metropolitan area. Main details include offices in Chiyoda-ku, Tokyo, and commercial stores in Yokohama City,
Kanagawa. Target assets for operating leases (lessor side) are also included in investment property.
For profit or loss of lease, and impairment losses for the investment property in the fiscal year ended June 30,
2021, please refer to Real Estate Leasing under “6. SEGMENT INFORMATION.” Since the recorded amount ofsegment assets in Real Estate Leasing includes assets other than investment property such as cash and deposits,
it is not consistent with the recorded amount of the investment property in the consolidated statement offinancial position.
(1) Schedule of Changes
The changes in acquisition cost, and accumulated depreciation and impairment of investment property are as
follows:
Acquisition cost
Millions of Yen

Balance at beginning of period .............................
Acquisition ....................................................................
Transfer ..........................................................................
Balance at end of period ..........................................

33

Year ended
June 30, 2021
¥5,66816—¥5,684

Year ended
June 30, 2020
¥3,350830
1,487¥5,668

Thousands of
U.S. Dollars

Year ended
June 30, 2021
$51,287
146—$51,434

Accumulated depreciation and impairment
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of period .............................
Depreciation .................................................................
Others .............................................................................
Balance at end of period ..........................................

Year ended
June 30, 2021
¥1,457106
25¥1,589Year ended
June 30, 2020
¥1,40453—¥1,457

Year ended
June 30, 2021
$13,190959
231$14,380

Carrying amount and fair values of investment property are as follows:
Thousands of
U.S. Dollars

Millions of Yen

As ofJune 30, 2021
¥4,094
Carrying amount .......................................
8,986
Fair value .....................................................

As of
Transition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥4,210¥1,945$37,053
9,085
5,573
81,311

The fair value of investment property is determined by the Group based on “Real Estate Appraisal Standards.”
On the transition date, investment property in development (¥1,483 million recorded in the consolidated
statement of financial position) is not included in the above table because it is in the initial stage of development
and its fair value cannot be reliably determined.
The fair value hierarchy of investment property is classified as Level 3 because unobservable inputs areincluded. The fair value hierarchy is described in “35. FINANCIAL INSTRUMENTS (8) 3.”(2) Revenue and Expenses from Investment Property
For the amount of rental income from investment property, please refer to “6. SEGMENT INFORMATION.”
Direct operating cost accrued with rental income is not significant.

15. IMPAIRMENT OF NON-FINANCIAL ASSETS(1) Impairment Losses
The Group makes grouping based on the minimum unit of asset groups identified to generate mostly
independent cash flows in calculating impairment losses.
Impairment losses are recorded in “Other expenses” of the consolidated statement of profit or loss.
The breakdown of impairment losses is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Property, plant and equipment:
Construction in progress ....................................
Total ..................................................................

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥1,739¥1,739¥—¥—$15,737$15,73734

For the year ended June 30, 2021, impairment loss of ¥1,739 million ($15,737 thousand) are recorded against
construction in progress of ¥2,629 million ($23,792 thousand) for power generation facilities of PT.
CIKAENGAN TIRTA ENERGI, a consolidated subsidiary of the Energy Business segment located in Indonesia.
While the company was constructing a hydroelectric power generation facility for the electric power sellingbusiness in Indonesia, there was damage to the facility under construction as a result of ground deformation
caused by abnormal rainfall, and it decided to postpone the commencement of operations for about one year for
repair and reinforcement works. After the commencement of operations, maintenance costs are expected to be
incurred for measures against ground deformation. The above impairment loss was recorded as a result of an
impairment test.
To determine the impairment loss, the value in use was used as the recoverable amount. The value in use wasdetermined with the assistance of an independent appraiser using the 20-year revenue forecasts which wereapproved by management, including anticipated repair and reinforcement work, and assumed a discount rate of
11.0% which was based on the inflation rate and the weighted average of cost of capital.
(2) Goodwill and Intangible Assets with Indefinite Useful Lives
Goodwill arising from business combinations was allocated to cash generating units that would receive profits
from those business combinations.
The breakdown of the carrying amount by segment of goodwill and intangible assets with indefinite useful lives
is as follows:

Millions of Yen

As ofJune 30, 2021
Domestic Consulting .................................
¥45
13,285
Urban & Spatial Development .............
Total .......................................................
¥13,330

Thousands of
U.S. Dollars

As ofTransition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥45
¥—
$407
11,513
11,908120,215¥11,558¥11,908$120,622

Goodwill and intangible assets with indefinite useful lives of BDP HOLDINGS LIMITED and its groupcompanies
For the goodwill of ¥9,137 million ($82,681 thousand) as well as trademarks as intangible assets with indefinite
useful lives of ¥4,148 million ($37,534 thousand) recognized as a result of the acquisition of BDP HOLDINGSLIMITED and its group companies (which include Quadrangle Architects Limited), the Group conducts an
impairment test annually or more often if indicators of impairment exist. The recoverable amount of theimpairment test is determined based on the value in use, with the assistance of independent appraisers.
The value in use is determined by discounting the estimated future cash flows based on the business plans andgrowth rates for three years in the future approved by management, using the discount rate of 9.6% based on theweighted average of capital costs of the cash generating unit groups, reflecting past experience and external
information.
The growth rate of 2% is assumed, taking into account the industry to which cash generating unit groups belong
and the long-term average growth rate of the country, which does not exceed the long-term average growth rateof the market.
While the recoverable amount (value in use) exceeds the carrying amount by ¥697 million ($6,303 thousand), an
impairment loss may be incurred when the discount rate increases 0.3% or the growth rate decreases 0.3% evenif future cash flows remain at the current level.

35

16. INVESTMENTS AND JOINT OPERATIONS ACCOUNTED FOR USING
THE EQUITY METHOD(1) Investments in Associates and Joint Ventures
The Group has no significant associates and joint ventures.
The total carrying amount of investments in associates and joint ventures, which are not significant individually,is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Carrying amount in total .....................

As ofJune 30, 2021
¥2,077

As ofTransition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥1,974¥2,440$18,798

The amount of equity shares in comprehensive income for these individually insignificant associates and joint
ventures is as follows:
Millions of Yen

Equity shares in net income .................................
Equity shares in other comprehensive income ...
Equity shares in comprehensive income .............

Year ended
June 30, 2021
¥35
40
¥75

Year ended
June 30, 2020
¥144
14
¥158

Thousands of
U.S. Dollars

Year ended
June 30, 2021
$318
366
$685

(2) Investments in Joint Operation
The Group has no significant joint operations.

36

17. INCOME TAXES(1) Deferred Tax Assets and Liabilities
The breakdowns and changes of deferred tax assets and liabilities by major cause of accrual are as follows:
For the year ended June 30, 2021
Millions of Yen
Recognizedthrough profit
or loss

Recognized inothercomprehensive
incomeBusiness
combinations

As ofJune 30, 2021

¥104
940
145
(108)
¥1,081

¥96
14
(11)
888
¥987

¥—
(178)
—
(2)
¥(180)

¥—
—
—
—
¥—

¥200
776
133
777
¥1,888¥(177)(1,310)
(902)
(243)
(878)
(138)
¥(3,650)¥(2,568)

¥(38)
8
714
(5)
(53)
(762)
¥(137)
¥850

¥—
—
—
(176)
—
(19)
¥(196)¥(377)

¥—
—
—
—
—
—
¥—
¥—

¥(216)(1,301)
(188)
(425)
(931)
(920)
¥(3,983)¥(2,095)

As ofJuly 1, 2020

Deferred tax assets:
Tax loss carryforward ....................
Retirement benefit liability ...........
Impairment losses ..........................
Other assets ....................................
Total deferred tax assets .........
Deferred tax liabilities:
Retained earnings of subsidiaries ...
Property, plant and equipment ......
Intangible asset ..............................
Financial assets measured at fair value ...
Retirement benefit asset ................
Other liabilities ..............................
Total deferred tax liabilities ...
Net deferred tax assets ...........

Thousands of Dollars
Recognizedthrough profit
or loss

Recognized inothercomprehensive
incomeBusiness
combinations

As ofJune 30, 2021

$946
8,507
1,316
(983)
$9,786

$870
129
(104)
8,039
$8,935$—(1,611)—(25)$(1,636)

$—
—
—
—
$—

$1,816
7,025
1,212
7,031
$17,085$(1,609)(11,854)(8,166)(2,200)(7,945)(1,250)$(33,027)$(23,240)$(347)
76
6,461
(48)
(484)
(6,897)$(1,240)$7,695$———(1,599)—(180)$(1,779)$(3,416)

$—
—
—
—
—
—
$—
$—

$(1,956)(11,778)(1,704)(3,848)(8,429)(8,328)$(36,047)$(18,962)

As ofJuly 1, 2020

Deferred tax assets:
Tax loss carryforward ....................
Retirement benefit liability ...........
Impairment losses ..........................
Other assets ....................................
Total deferred tax assets .........
Deferred tax liabilities:
Retained earnings of subsidiaries ...
Property, plant and equipment ......
Intangible assets .............................
Financial assets measured at fair value ...
Retirement benefit asset ................
Other liabilities ..............................
Total deferred tax liabilities ...
Net deferred tax assets ...........

37

For the year ended June 30, 2020
Millions of Yen
Recognizedthrough profit
or loss

Recognized inothercomprehensive
incomeBusiness
combinations

As ofJune 30, 2020

¥112
1,055
139
(219)
¥1,088

¥(8)
39
5
85
¥122

¥—
(154)
—
(2)
¥(157)

¥—
—
—
27
¥27

¥104
940
145
(108)
¥1,081¥(157)(1,310)(1,014)
(259)
(827)
(280)
¥(3,849)¥(2,760)

¥(20)
0
111
41
(50)
141
¥223
¥346

¥—
—
—
(24)
—
—
¥(24)
¥(182)

¥—
—
—
—
—
—
¥—
¥27

¥(177)(1,310)
(902)
(243)
(878)
(138)
¥(3,650)¥(2,568)

As ofJuly 1, 2019

Deferred tax assets:
Tax loss carryforward ....................
Retirement benefit liability ...........
Impairment losses ..........................
Other assets ....................................
Total deferred tax assets .........
Deferred tax liabilities:
Retained earnings of subsidiaries ...
Property, plant and equipment ......
Intangible assets .............................
Financial assets measured at fair value ...
Retirement benefit asset ................
Other liabilities ..............................
Total deferred tax liabilities ...
Net deferred tax assets ...........

The amounts of deductible temporary differences and unused tax losses carry forward without the recognitionof deferred tax assets are as follows:
Millions of Yen

Deductible temporary differences ......
Tax loss carryforward .........................

As ofJune 30, 2021
¥2,643
279

Thousands of
U.S. Dollars

As ofTransition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥1,065¥214$23,917
708
300
2,529

Expiration year of unused tax losses carryforward without the recognition of deferred tax assets are as follows:
Millions of Yen

Due within one year ............................
Due after one year through two years ...
Due after two year through three years ...
Due after three year through four years ...
Due after five years .............................
Total ..............................................

As ofJune 30, 2021
¥—
30
118
71
58
¥279

Thousands of
U.S. Dollars

As ofTransition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥—
¥—
$—
—
—
276
52
—
1,075
118
52
650
537
247
528
¥708
¥300
$2,52938

Deferred tax assets and liabilities on consolidated statement of financial position are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Deferred tax assets ..............................
Deferred tax liabilities ........................
Net deferred tax assets ..............

As ofJune 30, 2021
¥2,437
4,533¥(2,095)

Transition Date
As of
As of
June 30, 2020 As of July 1, 2019 June 30, 2021
¥2,140¥2,035$22,058
4,709
4,796
41,020¥(2,568)¥(2,760)$(18,962)(2) Income Tax Expense
The breakdown of income tax expense is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Current tax expenses .............................................
Deferred tax expenses ...........................................
Total income tax expense ............................

Year ended
June 30, 2021
¥3,621(963)¥2,657

Year ended
June 30, 2020
¥2,095(312)¥1,782

Year ended
June 30, 2021
$32,766(8,715)$24,050

The causes of differences between the effective statutory tax rates and the average effective tax rates are as
follows:

Effective statutory tax rate ...................................
Expenses not subject to deduction .......................
Impact on review of recoverability ofdeferred tax assets ...............................................
Tax credit ...............................................................
Others ....................................................................
Average actual tax rate ....................................

39

2021
31.5%
1.2

2020
31.5%
1.6

4.6

10.3

(1.5)
1.2
37.0%

(5.1)
(2.8)
35.5%

18. BORROWINGS(1) Breakdown of Borrowings
The breakdown of borrowings is as follows:
Millions of Yen

Thousands of
U.S. Dollars

As of
As of
Transition Date
As of
Average
Repayment
June 30, 2021 June 30, 2020 As of July 1, 2019 June 30, 2021 interest rate
term
Short-term borrowings ...........
¥—¥13,000¥—$——%—
Current portion—of long-term borrowings .......
8,320
2,778
2,581
75,2880.603
From August 2, 2022
Long-term borrowings
to October 16, 2034
18,712
14,923
17,594 169,318
0.900(excluding current portion) ...
Total ..................................
¥27,032¥30,702¥20,176 $244,607—%—
Current liabilities ....................
¥8,320¥15,778¥2,581 $75,288—%—
18,712
14,923
17,594 169,318——
Non-current liabilities .............
Total ..................................
¥27,032¥30,702¥20,176 $244,607—%—(Notes)1. The average interest rate shows the weighted average interest rate for the balance of borrowings at the end of
the period.
2. Borrowings are classified as financial liabilities measured at amortized cost.
3. There are no assets pledged as collateral for borrowings.

19. LEASE(1) Right-Of-Use Assets
The right-of-use assets are presented as “Right-of-use assets ” in the consolidated statement of financial position.
For their changes and balances, please refer to “12. PROPERTY, PLANT AND EQUIPMENT.”(2) Lease Liabilities
Lease liabilities are presented as “Lease liabilities” in the consolidated statement of financial position.
For the maturity of these lease liabilities, please refer to “(4) Liquidity Risk Management” in “35. FINANCIAL
INSTRUMENTS.”

40

(3) Expenses and Total of Cash Outflows associated with leases
Expenses and total of cash outflows associated with leases other than those disclosed under “12.PROPERTY,
PLANT AND EQUIPMENT” are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Depreciation of right-of-use assets:
Buildings and structures ....................................
Machinery and vehicles ......................................
Tools, furniture and fixtures ...............................
Depreciation Total ........................................
Interest expenses on lease liabilities ....................
Expenses incurred for leases ending within 12 months ...
Leases of low value ...............................................
Total ................................................................
Total of cash outflows associated with leases .....

Year Ended
June 30, 2021

Year Ended
June 30, 2020

Year Ended
June 30, 2021

¥2,304167
385¥2,857180
27
26¥3,092¥2,926¥2,705176
301¥3,183177
25
36¥3,423¥3,280$20,856
1,516
3,486$25,859
1,636
247
237
$27,980$26,484

There are no significant variable lease payments in the measurement of lease liabilities nor revenue fromsublease of right-of-use assets.
The amount of commitment for short-term leases at June 30, 2021 is ¥7 million ($65 thousand).
(4) Extension Option (Lessee)
In the Group, each company is responsible for managing leases, with lease terms negotiated individually
resulting in widely different lease terms.
The real estate lease mainly for offices includes extension options, many of which are those for one year or thesame period as in the original agreement.
This option is exercised as necessary by contracting parties to the lease in utilizing real estate for business. It is
included in the lease period if the exercise of the extension option is reasonably certain.
(5) Maturity Analysis (Lessor)
The Group mainly offers real estate for lease.
Maturities of lease payments in operating lease transactions are as follows:Year ended June 30, 2021
Millions of Yen

Lease fee ...

Within a year

More than 1 year
Less than 2 years

More than 2 year
Less than 3 years

More than 3 year
Less than 4 years

More than 4 year
Less than 5 years

More than 5
years

¥619

¥617

¥559

¥284

¥301

¥1,104

Within a year

More than 1 year
Less than 2 years

More than 2 year
Less than 3 years

More than 3 year
Less than 4 years

More than 4 year
Less than 5 years

More than 5
years$5,609$5,591$5,063$2,575$2,726$9,997

Total¥3,488

Thousands of U.S Dollars

Lease fee ...

41

Total

$31,564

Year ended June 30, 2020
Millions of Yen

Lease fee ...

Within a year

More than 1 year
Less than 2 years

More than 2 year
Less than 3 years

More than 3 year
Less than 4 years

More than 4 year
Less than 5 years

More than 5
years

¥696

¥619

¥617

¥559

¥284

¥1,406

Total¥4,185

Transition Date as of July 1, 2019
Millions of Yen

Lease fee ...

Within a year

More than 1 year
Less than 2 years

More than 2 year
Less than 3 years

More than 3 year
Less than 4 years

More than 4 year
Less than 5 years

More than 5
years

¥363

¥696

¥619

¥617

¥559

¥1,690Total¥4,548(6) Risk Management Strategy (Lessor)
The Group receives leasehold deposits to ensure the collection of restoration costs for property.

20. TRADE AND OTHER PAYABLES
The breakdown of trade and other payables is as follow:
Thousands of
U.S. Dollars

Millions of Yen

Trade payables .....................................
Other payables ....................................
Total ..............................................

As ofJune 30, 2021
¥6,5002,576¥9,076

As ofTransition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥5,760¥4,957$58,818
2,272
2,408
23,309¥8,033¥7,365$82,128

Trade and other payables are classified as financial liabilities measured at amortized cost.

21. OTHER FINANCIAL LIABILITIESThe breakdown of other financial liabilities is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Financial liabilities measured at amortized cost:
Deposit received ................................
Others ................................................
Financial liabilities measured at fair value
through profit or loss:
Interest rate and currency swaps .....
Total ..............................................
Current liabilities ................................
Non-current liabilities .........................
Total ..............................................

As ofJune 30, 2021

As ofJune 30, 2020

Transition Date
As of
As of July 1, 2019 June 30, 2021

¥3,005648¥2,444639¥2,681
223$27,198
5,871—¥3,654
3,005
648¥3,654141¥3,225
2,586
639¥3,225

194¥3,1002,876
223¥3,100—$33,069
27,1985,871$33,06942

22. EMPLOYEE BENEFIT EXPENSES
As the defined benefit-type plans, the Company and its consolidated subsidiaries have established funded andunfunded defined benefit pension plans and a lump sum retirement payment plan. Moreover, increased
retirement payments may be provided for employees’ retirement. These pension plans are exposed to generalinvestment risks, interest rate risk, inflation risk, and other risks, which are not significant.
The funded defined benefit plan is managed by the pension fund which is legally separated from the Group. The
pension fund’s board of directors and pension fiduciaries are required by law to act while placing top priority on
the interest of plan participants, and responsible for managing assets under the plan in accordance with theprescribed policies. The corporate pension fund falls under related parties.
(1) Defined Benefit System
a. Reconciliation Table for Defined Benefit Plan Liabilities and Plan Assets
Relationship between defined benefit plan liabilities/plan assets and the net defined benefit liability (asset)
recorded in the consolidated statement of financial position is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Present value of funded defined
benefit obligations: ...........................
Fair value of institutional assets ........
Total ..............................................
Present value of non-funded defined
benefit obligations ............................
Impact of asset cap .............................
Net defined benefit liability (asset) .....
Amount on the consolidated statementof financial position:
Retirement benefit liability ..............
Retirement benefit asset ...................
Net defined benefit liability (asset)
recorded on the consolidated
statement of financial position ...........

43

As of
June 30, 2021

As ofJune 30, 2020

Transition Date
As of
As of July 1, 2019 June 30, 2021

¥14,258¥13,533¥13,404$129,020(20,253)¥(5,994)(17,318)¥(3,784)(16,661)¥(3,257)(183,264)$(54,244)

3,828
1,635
¥(530)

3,932
—
¥147

3,944
—
¥687

34,64314,800$(4,800)

3,861(4,391)

3,965(3,817)

3,967(3,279)34,939(39,739)¥(530)¥147¥687$(4,800)

b. Present Value of Defined Benefit Obligations
The change in the present value of defined benefit obligations is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance of present value of defined benefit
obligations at beginning of year .........................
Service cost ............................................................
Interest costs .........................................................
Remeasurement ....................................................
Mathematical differences caused by changes indemographic assumptions ...............................
Actuarial variances caused by changes infinancial assumptions .......................................
Mathematical differences caused by
performance revisions ......................................
Benefit payment amount ......................................
Others ....................................................................
Balance of present value of defined benefit
obligations at end of year ...............................

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥17,465¥17,349$158,041

1,336
78
144

1,302
55
(193)

12,090
712
1,303

—

—

—

51

(202)

466

92

9

836

(942)
4

(1,050)2(8,526)43¥18,087¥17,465$163,663

The weighted average duration of defined benefit plan liabilities as of June 30, 2021, as of June 30,2020 and on
the transition date are 8.9 years, 9.1 years and 9.4 years, respectively.
c. Fair Value Reconciliation Table for Institutional Assets
The changes in the fair value of institutional assets are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance of fair value of institutional assets
at beginning of year ............................................
Interest income ...................................................
Remeasurement ..................................................
Revenue on institutional assets ........................
Contribution from business owner ....................
Benefit payment amount ....................................
Others ..................................................................
Balance of fair value of institutional assets
at end of year .....................................................

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥17,318¥16,661$156,703

84
2,347
2,347
1,130
(630)
3

51
283
283
1,083
(763)
1

764
21,245
21,245
10,225(5,703)
28¥20,253¥17,318$183,264

The Group plans to make contributions of ¥1,184 million to the plan assets during the fiscal year ending June30, 2022.

44

d. Breakdown of Plan Assets
The breakdown of plan assets by major item is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Cash and cash equivalents ..................
Equity Instruments .............................
Domestic stocks ................................
Foreign stocks ...................................
Debt instruments ................................
Domestic bonds .................................
Foreign bonds ...................................
Life insurance general account ..........
Others ..................................................
Total ..............................................

As ofJune 30, 2021
¥0
8,936
4,651
4,285
7,058
5,264
1,794
3,769
488
¥20,253

As of
Transition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥10
¥1
$0
6,925
6,878
80,865
3,281
3,405
42,091
3,644
3,472
38,774
6,362
6,084
63,872
4,434
4,235
47,636
1,927
1,849
16,235
3,477
3,296
34,103
542
401
4,422
¥17,318¥16,661$183,264

Most of the Group’s plan assets are managed as part of funds which are commingled with other companies’
investments and are classified into those without quoted market prices in active markets. The mixed managed
fund makes diversified investments mainly in stocks listed on active markets and bonds, in accordance with thecorporate pension fund rules. The life insurance general account represents the pension assets managed by life
insurance companies mainly through the general account in which principal and interest are guaranteed.
The investment policy for plan assets follows internal policies intended to secure stable returns in the medium tolong term in order to ensure the payment of defined benefit plan liabilities in the future. Specifically, they are
managed by setting a target rate of return and managing the risk profile of the different investments. Whenreviewing asset types and their related risk profiles, we take into account market and environmental risks.
e. Reconciliation Table for Effect of the Upper Limit on Assets
Changes in the impact of asset cap are as follows:
Millions of Yen

Impact of asset cap at balance at beginning of year ...
Limit of interest income .....................................
Remeasurement ..................................................
Fluctuations in the impact of asset cap ...........
Impact of asset cap at balance at end of year ...

Year ended
June 30, 2021
¥—
—
1,635
1,635
¥1,635

Year ended
June 30, 2020
¥—
—
—
—
¥—

Thousands of
U.S. Dollars

Year ended
June 30, 2021$——
14,80014,800$14,800

f. Main Actuarial Assumptions
Main assumptions used for actuarial calculation are as follows:

Discount rate

45

As of
June 30, 2021
0.44%

As of
Transition Date
June 30, 2020
As of July 1, 2019
0.47%
0.34%

g. Sensitivity Analysis
When the discount rate used for actuarial calculation changes by 0.5%, it will have the following impact on
the present value of defined benefit plan liabilities. While this analysis assumes all other variables remain thesame, changes in other assumptions may affect the sensitivity analysis in reality.
Thousands of
U.S. Dollars

Millions of Yen

Discount rate rise by 0.5% ..................
Discount rate drop by 0.5% ................

As ofJune 30, 2021¥(725)
782

As ofTransition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021¥(720)¥(730)$(6,568)
776
787
7,077

h. Multi-employer Plan
The Group’s parent company entity and its domestic subsidiaries are members of the Engineering
Consultants Company Pension Fund (multi-companies fund) (hereinafter referred to as the “Fund”), a multiemployer plan which is classified as a defined benefit plan.
When the Fund is dissolved, or when withdrawing from the Fund, it may be necessary to contribute any
unfunded amounts as special contributions that may exist at the time of dissolution or withdrawal.
The risks of joining the Fund, which is a multi-employer plan, are different compared to a single-employer
plan, i.e., assets contributed by may be used for benefits of other employers’ employees, and the Group may
incur special contributions depending on its funded status when withdrawing from the Fund.
Regarding the plan, since events of participating companies may affect the distribution of plan assets andexpenses for participating companies, it is not possible to reasonably calculate the amount of pension assets
corresponding to the Group’s contributions. Accordingly, we are unable to obtain sufficient information toaccount for the defined benefit pension plan, and the amount of contributions is expensed for retirement
benefits, as with the defined benefit pension plan.
The financial position of the Fund according to the latest report on actuarial valuation at the end of the planyear are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Amount of pension assets ...................
Sum of the actuarial debt in penssion
finance calculation and the amountof minimum reserve .........................
Deduction amount ..............................
Contribution ratio of the company
and domestic subsidiaries ................

As ofJune 30, 2021
¥82,462

As ofTransition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥81,513¥79,656$746,164

63,73363,462

63,109576,692¥18,729¥18,051¥16,547$169,472

13.83%

13.59%

13.50%

13.83%(As of end of March 2021) (As of end of March 2020) (As of end of March 2019) (As of end of March 2021)
The main causes for the above difference are outstanding prior service costs, general reserve, and contribution
shortfalls carried forward in the actuarial calculation of pensions. Liabilities are recorded for outstanding priorservice costs. Moreover, contribution shortfalls carried forward will be rectified by increasing the special
contribution rate as necessary based on the actuarial revaluation of pensions.
The above contribution ratio is calculated by dividing the total contributions made by the Group by the total
contributions to the entire Fund and is not consistent with the actual burden on the Group.
Moreover, the Group will make contributions of ¥512 million in the next consolidated fiscal year.

46

(2) Defined contribution plan
The amount recognized as expenses for the defined contribution plan is ¥2,163 million ($19,580 thousand) and¥2,085 million for the years ended June 30, 2021 and 2020, respectively.
(3) Employee benefit costs
The total amount of employee benefit costs included in Cost of sales and Selling, general and administrative
expenses in the consolidated statement of profit or loss is ¥51,278 million ($463,994 thousand) and ¥48,171 forthe years ended June 30, 2021 and 2020, respectively.

23. PROVISIONSThe breakdown and changes in provisions are as follows:
Millions of Yen

BALANCE, JULY 1, 2020 ..............
Increase during period .....................
Decrease during period(used for purposes) ....
Decrease during period(reversal) ....
Interest expenses by discounting ....
Exchange differences on translationof foreign operations .....................
BALANCE, JUNE 30, 2021 ............

Provision for loss on
construction contracts

Provision forcompensation

Provision for loss
on litigation

Other
provisions

¥496
136
(128)
(43)
—

¥—
499
(141)
—
—

¥—
284
—
—
—

¥177
13
(88)
(21)
0

¥673
934
(358)
(64)
0

—

—

—

8

8

¥460

¥358

¥284

¥90

¥1,193

Total

Thousands of U.S. Dollars

BALANCE, JULY 1, 2020 ..............
Increase during period .....................
Decrease during period(used for purposes) ....
Decrease during period(reversal) ....
Interest expenses by discounting ....
Exchange differences on translationof foreign operations .....................
BALANCE, JUNE 30, 2021 ............

Provision for loss on
construction contracts

Provision forcompensation

Provision for loss
on litigation

Other
provisions$4,493
1,234(1,163)
(397)
—

$—
4,521
(1,280)
—
—

$—
2,577
—
—
—

$1,601
124
(797)
(190)
3

$6,095
8,456(3,241)
(587)
3

—

—

—

77

77

$4,166$3,241$2,577$818$10,803Total

The breakdown of provisions in the consolidated statement of financial position is as follows:
Millions of Yen

Current liabilities ................................
Non-current liabilities .........................
Total ..............................................

47

As of
June 30, 2021
¥818
375
¥1,193Thousands of
U.S. Dollars

As ofTransition Date
As ofJune 30, 2020 As of July 1, 2019 June 30, 2021
¥589
¥123
$7,407
83
52
3,396
¥673
¥176
$10,803

a. Provision for Loss on Construction Contracts
The expected amount of loss for uncompleted works at the end of the consolidated fiscal year under review isrecorded in order to prepare for future loss from construction works. Major target construction works
include large-scale vertical axis hydroelectric power projects under construction. The timing of expenditures
will be affected by progress of the project in the future.
b. Provision for Compensation
As we have present legal obligations as a result of completed projects in the past, we have reasonably
estimated the amount deemed required at the end of the consolidated current year under review andrecorded the expected amount of loss, in order to prepare for expenditures likely to be incurred with thecompensation of future damages. It is expected to be paid within one year from the last day of theconsolidated current year under review.
c. Provision for Loss on Litigation
To prepare for the loss concerning litigation in light of current status of litigation matters, we havereasonably estimated the amount deemed required at the end of the consolidated fiscal year under review
and recorded the expected amount of loss. For details, please refer to “39. CONTINGENT LIABILITIES.”
d. Others
Asset retirement obligations are included.

24. OTHER LIABILITIESThe breakdown of other liabilities is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Other current liabilities:
Outstanding paid leave .....................
Accrued consumption taxes .............
Accrued expenses ..............................
Accrued bonuses ...............................
Remuneration payable for directors ...
Others ................................................
Total ..............................................
Other non-current liabilities:
Others ................................................
Total ..............................................

As ofJune 30, 2021

As ofJune 30, 2020

Transition Date
As of
As of July 1, 2019 June 30, 2021

¥2,932
3,138
1,039
4,608
103
293
¥12,115¥2,954
1,497
951
2,744
60
266
¥8,475¥3,246
1,463
731
2,637
121
202
¥8,402$26,532
28,396
9,403
41,701937
2,656$109,627

122
¥122

161
¥161

149
¥149

1,106
$1,10648

25. SHARE CAPITAL AND OTHER EQUITY ITEMS(1) Number of Authorized Shares and Total Number of Issued Shares
Changes in the number of authorized shares and total number of issued shares are as follows:
SharesYear Ended
June 30, 2021

Year Ended
June 30, 2020

Number of authorized shares
Balance at beginning of year ..............................................
Changes during the period .................................................
Balance at end of year ......................................................

38,000,000—
38,000,000

38,000,000—
38,000,000

Total number of issued shares
Balance at beginning of year ..............................................
Changes during the period (Note 2,3) ................................
Balance at end of year ......................................................

15,933,058(884,490)
15,048,568

15,919,544
13,514
15,933,058(Notes)1. All shares issued by the Company are no-par-value common shares without any restrictions on rights, andissued shares are fully paid.
2. The change in the total number of issued shares for the year ended June 30, 2020 is an increase of 13,514
shares due to the issuance of new shares as restricted stock compensation.
3. The changes in the total number of issued shares for the year ended June 30, 2021 are an increase of 14,996
shares due to the issuance of new shares as restricted stock compensation and a decrease of 899,486 shares
due to the cancellation of treasury shares.
(2) Treasury Shares
The change in the number of treasury shares and the balance are as follows:
Millions of Yen

As of July 1, 2019 ................................................................
Changes during the period (Note 2) ...................................
As of June 30, 2020 .............................................................
Changes during the period (Note 3) ...................................
As of June 30, 2021 .............................................................

¥787
1,628
¥2,415(2,415)¥0Thousands ofU.S Dollars

As of June 30, 2020 .............................................................
Changes during the period (Note 3) ...................................
As of June 30, 2021 .............................................................

49$21,859(21,858)$1

Shares235,268
625,755
861,023(860,963)
60

(Notes)
1. The number of treasury shares as of June 30, 2021, as of June 30, 2020, and on the transition date of July 1,
2019 include 0 shares, 103,000 shares and 226,100 shares held by the ESOP Trust, respectively.
2. The breakdown of changes for the year ended June 30, 2020 is as follows:
Purchase of shares less than one unit: 755 shares
Trading of shares by ESOP Trust: (123,100) shares
Acquisition of treasury shares in accordance with the provisions of Article 156 of the Companies Act,applied by substitution pursuant to the provisions of Article 165, paragraph (3) of the Act: 748,100 shares
3. The breakdown of changes for the year ended June 30, 2021 is as follows:
Purchase of shares less than one unit: 523 shares
Trading of shares by ESOP Trust: (103,000) shares
Acquisition of treasury shares in accordance with the provisions of Article 156 of the Companies Act,applied by substitution pursuant to the provisions of Article 165, paragraph (3) of the Act: 141,000 shares
Cancellation of treasury shares in accordance with the provisions of Article 178 of the Companies Act:
(899,486) shares(3) Capital Surplus
The Companies Act in Japan (hereinafter referred to as the “Companies Act”) provides that no less than half ofreceiving payments or benefits for the issuance of shares should be incorporated in share capital, and the rest
should be incorporated in legal capital surplus under capital surplus. Moreover, the Companies Act allows forthe incorporation of legal capital surplus in share capital by the resolution of the general shareholders’ meeting.
(4) Retained earnings
The Companies Act provides that one-tenth of the amount paid for dividends of surplus should be funded aslegal capital surplus or legal retained earnings until the total amount of legal capital surplus and legal retained
earnings reaches one-fourth of share capital. Funded legal retained earnings may be allocated for loss
compensation. Moreover, legal retained earnings may be used by the resolution of the general shareholders’meeting.

26. DIVIDEND PAYMENTThe amount of dividend payment is as follows:
For the year ended June 30, 2021
Resolution

August 31, 2020
Extraordinary Boardof Directors’ Meeting

Total cash paid
(Millions of Yen)

¥1,138

Total cash paid
(Thousands of U.S. Dollar)$10,298

Cash dividends
per share
(Yen)

¥75

Record dateJune 30, 2020

Effective date

September 9, 2020

Cash dividends
per share(Dollar)$0.68(Note)The total amount of dividends based on the resolution of the extraordinary Board of Directors’ meeting on
August 31, 2020 includes dividends of ¥7 million ($69 thousand) for the Company’s own shares held by the trust
E account.

50

For the year ended June 30, 2020
Resolution

Total cash paid
(Millions of Yen)

August 30, 2019
Extraordinary Boardof Directors’ Meeting

Cash dividends
per share(Yen)¥1,193

Record date

Effective dateJune 30, 2019 September 11, 2019¥75

(Note)The total amount of dividends based on the resolution of the extraordinary Board of Directors’ meeting on
August 30, 2019 includes dividends of ¥16 million for the Company’s own shares held by the trust E account.
Dividends with effective dates that are different from the consolidated fiscal year.
For the year ended June 30, 2021
Resolution

Total cash paid
(Millions of Yen)

August 30, 2021
Extraordinary Boardof Directors’ Meeting

Cash dividends
per share(Yen)¥1,128

Total cash paid
(Thousands of U.S.
Dollars)

Record date¥75

June 30, 2021

Effective date

September 9, 2021

Cash dividends per
share(Dollars)$10,212$0.68

For the year ended June 30, 2020
Resolution

August 31, 2020
Extraordinary Boardof Directors’ Meeting

Total cash paid
(Millions of Yen)

Cash dividends
per share(Yen)¥1,138

Record date¥75

June 30, 2020

Effective date

September 9, 2020

27. REVENUE(1) Disaggregation of Revenue
a. Revenue recognized from contracts with customers and other sources
Millions of Yen

Revenue recognized from contracts with customers ...
Revenue recognized from other sources (Note) ...
Total revenue .................................................

Year ended
June 30, 2021
¥117,080
778¥117,859

Year ended
June 30, 2020
¥107,989
451¥108,441

Thousands of
U.S. Dollars

Year ended
June 30, 2021
$1,059,410
7,048$1,066,459(Note)
Revenues recognized from other sources include rental income from real estate under IFRS 16 “Leases”.
Revenue recognized from contracts with customers does not include material variable consideration.

51

b. Relationship Between Disaggregated Revenue and Segment Revenue
Millions of Yen
Reportable Segment
Domestic

Year ended June 30, 2021 Consulting

Revenue recognized fromcontracts with customers ...
Revenue recognizedfrom other sources .....
Total .......................

International
Power
Urban & Spatial
Consulting Engineering Development

Energy¥55,345¥24,753¥15,831¥20,274

¥790

—

—

—

—

—

¥55,345¥24,753¥15,831¥20,274¥790

Real Estate
Leasing

Subtotal¥ — ¥116,994
778

778

¥778 ¥117,773

Total

Others¥86 ¥117,080—

778¥86 ¥117,859

Thousands of U.S Dollars
Reportable Segment
Domestic

Year ended June 30, 2021 Consulting

Revenue recognized fromcontracts with customers ...
Revenue recognizedfrom other sources .....
Total .......................

International
Power
Urban & Spatial
Consulting Engineering Development

Energy$500,793$223,984$143,249$183,450$7,152

—

—

—

—

—

$500,793$223,984$143,249$183,450$7,152

Real Estate
Leasing

Subtotal$ — $1,058,630
7,048$779 $1,059,410

7,048$7,048 $1,065,679

Total

Others—7,048$779 $1,066,459

Millions of Yen
Reportable Segment

Year ended June 30, 2020

Revenue recognized fromcontracts with customers ...
Revenue recognizedfrom other sources .....
Total .......................

Domestic
Consulting

International
Power
Urban & Spatial
Consulting Engineering Development

EnergyReal Estate
Leasing

Subtotal

OthersTotal¥49,958¥22,635¥15,382¥18,142¥1,070¥—¥107,189¥800¥107,989

—

—

—

—

—

451

451

—

451

¥49,958¥22,635¥15,382¥18,142¥1,070¥451¥107,640¥800¥108,441(2) Contract Balances
The breakdown of receivables, contract assets, and contract liabilities arising from contracts with customers are
as follows:
Thousands of
U.S. Dollars

Millions of Yen

Receivables arising from contracts with customers:
Balance at beginning of year ....................................
Balance at end of year ................................................
Contract assets
Balance at beginning of year ....................................
Balance at end of year ................................................
Contract liabilities
Balance at beginning of year ....................................
Balance at end of year ................................................

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥18,462
20,092¥15,320
18,462$167,055
181,811

21,42524,327

19,125
21,425

193,869
220,127

10,895
10,645

8,428
10,89598,591
96,32752

Contract assets are principally related to work performed to-date which is not yet completed and for which
payment is not yet unconditional, and is presented as “Contract assets” on the consolidated statement offinancial position. Contract assets are transferred to receivables when service provision is completed and theright for payment becomes unconditional.
Contract liabilities are mainly related to advances received, and presented as “Contract liabilities” on the
consolidated statement of financial position.
Significant changes in contract assets for the year ended June 30, 2021 are an increase of ¥73,537 million($665,404 thousand) due to progress on contracts and a decrease of ¥70,786 million ($640,513 thousand) due tothe transfer to receivables. Significant changes in contract assets for the year ended June 30, 2020 are an
increase of ¥65,916 million due to progress on contracts and a decrease of ¥64,724 million due to the transfer toreceivables.
Significant changes in contract liabilities for the year ended June 30, 2021 are an increase of ¥37,945 million($343,349 thousand) due to the receipt of advances received and a decrease of ¥38,777 million ($350,876
thousand) due to revenue recognition. Significant changes in contract liabilities for the year ended June 30, 2020are an increase of ¥35,443 million due to the receipt of advances and a decrease of ¥34,437 million due torevenue recognition.
Revenue recognized in the reporting period that was included in the contract liability balance at the beginningof the period is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥8,987¥7,701$81,323

Revenue recognized in the reporting period thatwas included in the contract liability balance atthe beginning of the period

The amounts of revenue recognized in the year ended June 30, 2021 and 2020 from the performanceobligations satisfied (or partly satisfied) in previous periods are less than 1% of the revenue in the
consolidated fiscal year, respectively.
(3) Transaction Price Allocated to Remaining Performance Obligations
The total transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied)
as of June 30, 2021 is as follows:
Millions of Yen
Reportable Segment

As of June 30, 2021

Domestic
Consulting

Transaction price allocated tounsatisfied (or partially unsatisfied)
performance obligations¥38,561International
Power
Urban & Spatial
Consulting Engineering Development¥99,625¥22,947¥23,068

Energy¥47

Real Estate
Leasing¥—

OthersTotal¥0 ¥184,250

Thousands of U.S Dollars
Reportable Segment

As of June 30, 2021

Domestic
Consulting

Transaction price allocated tounsatisfied (or partially unsatisfied)
performance obligations$348,925

53International
Power
Urban & Spatial
Consulting Engineering Development$901,465$207,637$208,736

Energy$431

Real Estate
Leasing$—

OthersTotal$0 $1,667,198

The above amount includes consideration arising from contracts with customers. For the transaction priceallocated to remaining performance obligations, revenue is recognized according to the progress on eachperformance obligation. Revenue is expected to be recognized within approximately 2 years in the Domestic
Consulting Business, approximately 9 years in the International Consulting Business, approximately 5 years in
the Power Engineering Business, approximately 2 years in the Urban & Spatial Development Business, andapproximately one year in the other businesses.
As permitted in the transition standards of IFRS 1, the transaction price allocated to performance obligations
that are unsatisfied (or partially unsatisfied) as of July 1, 2019 and June 30, 2020 are not disclosed.

28. OPERATING EXPENSES
The primary breakdown of cost of sales, and selling, general and administrative expenses by type is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Employee benefits expenses .......................................
Outsourcing expenses ...................................................
Communication and transportation expenses ......
Depreciation and amortization ..................................

Year ended
June 30, 2021
¥51,278
33,011
3,848
4,566

Year ended
June 30, 2020
¥48,171
32,1286,020
4,700Year ended
June 30, 2021
$463,994
298,706
34,81941,32029. OTHER INCOME AND OTHER EXPENSES(1) Other Income
The breakdown of other income is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Dividend income
Financial assets measured at fair value
through profit or loss ...............................................
Gain on investments in securities
Financial assets measured at fair value
through profit or loss ...............................................
Government grants ........................................................
Other ..................................................................................
Total ............................................................................

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥60

¥57

$545

202

62

1,831

557
387
¥1,207

46
405
¥571

5,047
3,502
$10,92654

(2) Other Expenses
The breakdown of other expenses is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Impairment losses ..........................................................
Loss on investments in securities
Financial assets measured at fair value
through profit or loss .................................................
Provision for loss on litigation ...................................
Other ..................................................................................
Total ............................................................................

Year ended
June 30, 2021
¥1,739Year ended
June 30, 2020—

Year ended
June 30, 2021
$15,737

—

149

—

284
651
¥2,675

—
122
¥271

2,577
5,896
$24,21130. FINANCE INCOME AND FINANCE COSTS(1) Finance Income
The breakdown of finance income is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Interest income
Financial assets measured at amortized cost .....
Dividend income
Equity financial assets measured at fair value
through other comprehensive income ................
Others ................................................................................
Total ............................................................................

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥246

¥197

$2,231

90

80

820

182
¥519

137
¥414

1,650
$4,702(2) Finance Costs
The breakdown of finance costs is as follows:
Millions of Yen

Interest expenses ............................................................
Foreign exchange loss ...................................................
Others ................................................................................
Total ............................................................................

55

Year ended
June 30, 2021
¥424
46
0
¥471

Year ended
June 30, 2020
¥407
222
2
¥631

Thousands of
U.S. Dollars

Year ended
June 30, 2021
$3,844422
0$4,266

31. OTHER COMPREHENSIVE INCOME
Amounts arising during the fiscal year, reclassification adjustments to profit or loss and tax effects by item ofother comprehensive income are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Items that will not be reclassified to profit or loss
Equity financial assets measured at fair value
through other comprehensive income
Changes during the year ...................................
Amount of tax effects ........................................
Equity financial assets measured at fair value
through other comprehensive income ...........
Remeasurements of defined benefit plans
Changes during the year ...................................
Amount of tax effects ........................................
Remeasurements of defined benefit plans ......
Share of other comprehensive income of investments
accounted for using equity method
Changes during the year ...................................
Amount of tax effects ........................................
Share of other comprehensive income of investments
accounted for using equity method ......................
Total of items that will not be reclassified to profit or loss ...
Items that may be reclassified to profit or loss
Cash flow hedges
Changes during the year ...................................
Reclassification adjustments ............................
Amount before income tax effect .....................
Amount of tax effects ........................................
Cash flow hedges ...............................................
Exchange differences on translation of foreign operations
Changes during the year ...................................
Reclassification adjustments ............................
Before adjustments to tax effects .....................
Amount of tax effects ........................................
Exchange differences on translation of foreign operations ...
Share of other comprehensive income of investments
accounted for using equity method
Reclassification adjustments ............................
Before adjustments to tax effects .....................
Amount before income tax effect .....................
Amount of tax effects ........................................
Share of other comprehensive income of investments
accounted for using equity method .....................
Items that may be reclassified to profit or loss ...
Total other comprehensive income ..................

Year ended
June 30,2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥571
(176)

¥72
(24)

$5,174(1,599)

395

47

3,575

564
(178)
386

476
(154)
321

5,107
(1,611)
3,495

6
—

—
—

60
—

6

—

60

788

369

7,131

—
8
8
(2)
6

—
8
8
(2)
6

—
80
80
(25)
54

2,412
—
2,412
(19)
2,392

(441)
—
(441)
—
(441)

21,825—
21,825(180)
21,645

33
—
33
—

14
—
14
—

306
—
306
—

33

14

306

2,432
¥3,220

(420)
¥(51)

22,006$29,13756

32. EARNINGS PER SHARE
Thousands of
U.S.Dollars

Millions of Yen

Profit attributable to owners of parent ...................

Year ended
June 30, 2021
¥4,531

Year ended
June 30, 2020
¥3,099Year ended
June 30, 2021
$41,006

Shares

Weighted-average number of sharesof common stock ....................................................

Year ended
June 30, 2021

Year ended
June 30, 2020

15,106,105

15,124,770

Yen

Basic earnings per share ..........................................

Year ended
June 30, 2021
¥300.00

U.S.Dollars

Year ended
June 30, 2020
¥204.94

Year ended
June 30, 2021
$2.71

Diluted earnings per share are not included because there are no contingent shares.

33. CASH FLOW INFORMATION(1) Changes in Liabilities from Financing Activities
Millions of Yen
Short-termborrowings

BALANCE, JULY 1, 2019 ...............
Changes due to cash flows from financing activities ....
Changes arising from acquisition or loss of control
over subsidiaries or other businesses .............
Impact of changes in foreign exchange rates ...
Changes in fair value .....................
New lease agreements ....................
Decrease due to deconsolidation ...
Other changes ................................
BALANCE, JUNE 30, 2020 ............
Changes due to cash flows from financing activities ....
Changes arising from acquisition or loss of control
over subsidiaries or other businesses .............
Impact of changes in foreign exchange rates ...
Changes in fair value .....................
New lease agreements ....................
Decrease due to deconsolidation ...
Other changes ................................
BALANCE, JUNE 30, 2021 ............

57

Long-term
borrowings

Lease liabilities

Derivative liabilities(Note1)

Total¥—
13,000¥20,176(2,508)¥10,409(3,097)¥194—¥30,780
7,394

—

—

—

—

—

—
—
—
—
—
¥13,000(13,000)

(50)
—
—
—
85
¥17,702
9,066

(124)
—
3,596
(1,126)29¥9,685(2,801)

—
(53)
—
—
—
¥141
—

(175)
(53)
3,596
(1,126)
114¥40,529(6,735)

—

—

—

—

—

—
—
—
—
—
¥—

283
—
—
—
(19)
¥27,032

525
—
2,733
(764)
(0)
¥9,378

—
(180)
—
—
—
(39)

809
(180)
2,733
(764)
(19)
¥36,372

Thousands of U.S. Dollars

BALANCE, JUNE 30, 2020 ............
Changes due to cash flows from financing activities ....
Changes arising from acquisition or loss of control
over subsidiaries or other businesses .............
Impact of changes in foreign exchange rates ...
Changes in fair value .....................
New lease agreements ....................
Decrease due to deconsolidation ...
Other changes ................................
BALANCE, JUNE 30, 2021 ............

Short-termborrowings

Long-term
borrowings

Lease liabilities

Derivative liabilities(Note1)$117,631(117,631)$160,179
82,036$87,644(25,353)$1,282—$366,736(60,947)

—

—

—

—

—

—
—
—
—
—
$—

2,564
—
—
—
(173)
$244,607

4,756—
24,734(6,915)(2)$84,864—(1,635)———($353)

7,320(1,635)24,734(6,915)(175)$329,117

Total

Note1: They are held to hedge interest and foreign currency exchange effects on borrowings.
(2) Non-cash Transactions
Non-cash transactions are acquisition of property, plant and equipment through leasing transactions; for thoseamounts, please refer to 12. PROPERTY, PLANT AND EQUIPMENT.

34. SHARED-BASED PAYMENTS(1) Restricted Stock Compensation System
The Company intends that the directors (not including outside directors; “Eligible Directors”) share benefits
and risks of stock price fluctuations with shareholders in order to further enhance their willingness to contributeto improving share price and enhancing corporate value. Therefore, the Company has introduced a restricted
stock compensation system which issues restricted stock to Eligible Directors.
Shares with restrictions on transfer are estimated at the fair value on the grant date, and recorded as selling,
general and administrative expenses over the vesting period, while the same amount is recognized in equity on
the consolidated statement of financial position. In the determination of fair value, adjustment of expected
dividends is not considered.
2020

2019

2018

Number of shares granted(Shares)

14,996

13,514

14,495Weighted-average fair value
at the grant date
(Yen)

2,880

3,125

3,095

Evaluation method

Fair value is measured on the basis of an observable market priceCategory of grantees

Director of the Company (except outside director )Settlement

Equity settlement

Transfer restriction period

3 years

Lifting of transfer
restriction

On the condition that an eligible director to whom the restricted stocks
were allotted has continuously held the position of director of theCompany during the transfer restriction period, the transfer restriction
on all of his or her allotted stock is lifted by the Company when thetransfer restriction period expires.
58

(2) Employee Stock Ownership Plan (“ESOP”) TrustAt the Board of Directors’ meeting held on May 15, 2017, the Company introduced the Employee Stock
Ownership Plan (ESOP) Trust (hereinafter referred to as the “ESOP Trust”) System as a trust type employee
stock ownership incentive plan that aimed to motivate employees to work and promote the continued
development of the Group by providing the Group employees with incentives to improve the medium- to longterm corporate value, enhancing their employee welfare program, and promoting their equity participation asshareholders.
Under this System, the Company establishes the ESOP Trust in trust banks. For five years after the start of thetrust period, the ESOP Trust acquires common shares of the Company in the amount expected to be acquired by
the Group’s employees’ stockholders association through a third-party allocation from the Company using theborrowed funds. Subsequently, the ESOP Trust will continue to sell common shares of the Company to theGroup’s employees’ stockholders association. The gain on sale of shares recognized cumulatively by the ESOP
Trust at the time of the trust’s termination shall be distributed as trust income to those who meet the beneficiary
requirements. Since the Company guarantees borrowings made in order to finance the acquisition of shares, theCompany shall repay such outstanding debt pursuant to the guarantee provisions of the loan agreement with no
obligation transferred to the employees, in the event that there is any outstanding debt equivalent to losses onsales of shares at the time of the trust’s termination.
The trust period of the ESOP Trust is from May 31, 2017 to March 31, 2021. The Company’s shares owned by thetrust account are deducted from the capital until they are sold to the Group’s employees’ stockholders
association (please refer to“25. SHARE CAPITAL AND OTHER EQUITY ITEMS.”). The assets and liabilitiesof the trust account are recognized as the assets and liabilities of the Group. Distributions of trust income fromthe trust account to the beneficiaries at the end of the trust period are treated as cash settlement transactions.
The liabilities resulting from cash settlement-type stock compensation are not material.
(3) Share-based Payment Expenses
Thousands ofMillions of Yen

Share-based payment expenses:
Restricted stock compensation system ....................
Employee stock ownership plan system ..................
Total ................................................................

U.S. Dollars

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

¥42
(21)
¥20

¥42
11
¥54

$380
$(192)$188

35. FINANCIAL INSTRUMENTS(1) Capital Management
The Group has capital investment policies intended to generate growth based on the medium- to long-term
management strategies, which may include additional capital investment through financing. The aim is toincrease corporate value and strive to improve capital efficiency while taking into account the target level ofreturn on equity (ROE).
As the main indicators for capital management, the Group uses the ratio of equity attributable to owners ofparent and return on equity.
The Group’s ratio of equity attributable to owners of parent and return on equity are as follows:

Ratio of equity attributable to owners of parent .....
Return on equity .......................................................

As ofJune 30, 2021
45.3%
6.7%

These indicators are periodically reported to management and monitored.
There are no restrictions on the Group’s capital.

59

As of
Transition Date
June 30, 2020 as of July 1,2019
43.6%
48.0%
4.8%
—%

(2) Financial Risk Management
The Group is exposed to financial risks (credit risk, liquidity risk, foreign exchange risk, interest rate risk, andrisk of market price fluctuations) in the process of conducting management activities, and manages these risks
based on certain policies in order to mitigate such financial risks. Moreover, it is the Group’s policy not toengage in speculative transactions, using derivative transactions to avoid risks of foreign exchange and interest
rate fluctuations.
(3) Credit Risk Management
Credit risk refers to the risk of incurring financial losses due to counterparty defaults on contractual obligations.
In accordance with the credit management policies, the Group has a system for managing due dates andbalances on obligations from each counterparty, as well as periodically assessing the creditworthiness of thosecounterparties.
Moreover, we execute and manage derivative transactions by assessing them at investment meetings andimplementing them in accordance with internal policies and authorizations. Moreover, when entering into
derivative contracts, we deal only with financial institutions with strong creditworthiness in order to mitigate
credit risk.
a. Trade and Other Receivables, and Contract Assets
Based on counterparties’ creditworthiness as well as the payment status of receivables, the Groupmanages risks by classifying trade and other receivables and contract assets into receivables with credit
impairment and those without credit impairment. For receivables without credit impairment, we provide
allowance for expected credit losses, taking into account the forecasts, the past-due status of receivables,
and historical experience. For receivables with credit impairment, we provide the difference between
contractual cash flows and collectible cash flows as allowance for expected credit losses.
We evaluate creditors who are overdue in payment for potential default or impairment risk.
For trade and other receivables, and contract assets, we recognize an allowance for expected credit losses
in the same amount as the lifetime expected credit losses.
The calculation of the expected credit losses for trade and other receivables, and contract assets is asfollows:
Millions of Yen%

As of June 30, 2021
Trade and otherreceivables,
Contract assets

Non credit-impaired financial assets ........................
Credit-impaired financial assets ...............................
Total ...........................................................................

Lifetime expectedcredit losses¥45,415
1,151¥46,567¥86964¥1,050

Expected credit
loss rates

0.19%
83.71%
2.26%

Thousands of U.S. Dollars

As of June 30, 2021
Trade and otherreceivables,
Contract assets

Non credit-impaired financial assets ........................
Credit-impaired financial assets ...............................
Total ...........................................................................

Lifetime expectedcredit losses$410,944
10,423$421,367

$781
8,725
$9,506

Millions of Yen%

As of June 30, 2020
Trade and otherreceivables,
Contract assets

Non credit-impaired financial assets ........................
Credit-impaired financial assets ...............................
Total ...........................................................................

¥40,692600¥41,293

Lifetime expectedcredit losses

¥80
398
¥479

Expected credit
loss rates

0.20%
66.25%
1.16%

60

Millions of Yen%

Transition Date as of July 1, 2019
Trade and otherreceivables,
Contract assets

Non credit-impaired financial assets ........................
Credit-impaired financial assets ...............................
Total ...........................................................................

Lifetime expectedcredit losses¥35,438346¥35,784

Expected credit
loss rates

¥29
257
¥287

0.08%
74.52%
0.80%

The change of Allowance for expected credit losses related to trade and other receivables, and contract
assets is as follows:
Millions of Yen
Non credit-impaired
financial assets

BALANCE, JULY 1, 2019 .........................................................
Increases during period ............................................................
Decreases during period(reversal) ...........................................
Decreases during period(direct depreciation) .........................
Others ........................................................................................
BALANCE, JUNE 30, 2020 ......................................................
Increases during period ............................................................
Decreases during period(reversal) ...........................................
Decreases during period(direct depreciation) .........................
Others ........................................................................................
BALANCE, JUNE 30, 2021 .......................................................

Credit-impaired
financial assets

¥29
80
(29)
—
—
80
86
(80)
—
—
¥86

¥257
238
(55)
(38)
(5)
398
636
(19)
(72)
21
¥964

Thousands of U.S. Dollars
Non credit-impaired
financial assets

BALANCE, JUNE 30, 2020 ......................................................
Increases during period ............................................................
Decreases during period(reversal) ...........................................
Decreases during period(direct depreciation) .........................
Others ........................................................................................
BALANCE, JUNE 30, 2021 .......................................................

$732
781
(732)
—
—
$781

Credit-impaired
financial assets$3,602
5,759
(173)
(657)
194
$8,725b. Other Financial Assets
As the amount of the allowance for expected credit losses is not material, the statement on changes in theallowance for expected credit losses is omitted.
(4) Liquidity Risk Management
Liquidity risk is the risk that when fulfilling repayment obligations of mature financial liabilities, the Group
becomes unable to repay them on the due date.
The Group manages liquidity risk by preparing appropriate repayment funds, securing credit lines available atany time from financial institutions, and continuously monitoring cash flow plans and results.

61

Outstanding financial liabilities (including derivative financial instruments) by due date are as follows:
Millions of Yen

Year ended June30, 2021
Contractual
cash flows

Non-derivative financial liabilities .....
Short-term borrowings .....................
Trade Payables ..................................
Long-term borrowings ......................
Deposit ...............................................
Lease liabilities..................................
Others ................................................
Derivative Financial assets ...............
Proceeds ..........................................
Payments .........................................
Total.....................................................

Due within
one year

Due after one year
through five years

Due after five
years

¥—
9,076
27,547
9,889
3,005
648

¥—
9,076
8,489
2,835
3,005
—

¥—
—
18,350
5,532
—
—

¥—
—
707
1,521
—
648

(4,937)
4,883¥50,113(999)
983¥23,391(3,938)
3,899¥23,843——¥2,878

Thousands of U.S. Dollars

Year ended June30, 2021
Contractual
cash flows

Non-derivative financial liabilities .....
Short-term borrowings .....................
Trade Payables ..................................
Long-term borrowings ......................
Deposit ...............................................
Lease liabilities..................................
Others ................................................
Derivative Financial liabilities..........
Proceeds ..........................................
Payments .........................................
Total.....................................................

Due within
one year

Due after one year
through five years

Due after five
years

$—
82,128249,263
89,48927,198
5,871$—
82,12876,81525,657
27,198—$——166,041
50,063
—
—

$—
—
6,405
13,769—5,871(44,681)
44,188$453,457(9,042)
8,902$211,658(35,638)
35,286$215,752——$26,046

Millions of Yen

Year ended June30, 2020
Contractual
cash flows

Non-derivative financial liabilities .....
Short-term borrowings .....................
Trade Payables ..................................
Long-term borrowings ......................
Deposit ...............................................
Lease liabilities..................................
Others ................................................
Derivative Financial liabilities..........
Proceeds ..........................................
Payments .........................................
Total.....................................................

Due within
one year

Due after one year
through five years

Due after fiveyears

¥13,000
8,033
18,202
10,232
2,444
639¥13,000
8,033
3,279
2,587
2,444
—

¥—
—
12,150
5,436
—
—

¥—
—
2,772
2,208
—
639

(5,812)
5,870¥52,610(989)
987¥29,341(3,872)
3,913¥17,629(950)
969¥5,63962

Millions of Yen

Transition Date as of July 1, 2019
Contractual
cash flows

Non-derivative financial liabilities
Trade Payables .................................
Long-term borrowings .....................
Deposit ..............................................
Lease liabilities .................................
Others ...............................................
Derivative Financial liabilities
Proceeds .........................................
Payments ........................................
Total ....................................................

Due within
one year

Due after one year
through five years

Due after fiveyears

¥7,36521,195
11,0852,681
223¥7,365
3,286
3,023
2,681
—

¥—
12,902
5,762
—
—

¥—
5,007
2,300
—
223

(7,086)
6,862¥42,328(1,065)991¥16,283(4,083)
3,928¥18,509(1,938)
1,942¥7,535(5)Foreign Exchange Risk Management
Since we at the Group are engaged in business internationally, our business performance is greatly affected bycurrency exchange rate fluctuations between the Japanese yen and the U.S. dollar as well as other foreign
currencies.
In order to mitigate foreign exchange risk, the Group strives to mitigate the risk by using interest rate andcurrency swaps for the purpose of managing the risk of foreign exchange fluctuations arising from thesetransactions in foreign currencies.
Analysis of Foreign Exchange Sensitivity
The impact on profit before tax in the consolidated statement of profit or loss in each reporting period, when the
yen appreciates 10% against the U.S. dollar is as follows:
The above analysis assumes other variables to be constant in the analysis.
Millions of Yen

Profit before tax ...................................................

Year ended
June 30, 2021¥(396)

Year ended
June 30, 2020¥(549)

Thousands of
U.S. Dollars

Year ended
June 30, 2021$(3,587)(6) Management of Interest Rate Risk
While the Group is exposed to various risks of interest rate fluctuations in the business activities, there is not asignificant risk of interest rate fluctuations for borrowings held, because most borrowings are at fixed interest
rates, and interest rate and currency swaps are used to mitigate the risk of interest rate fluctuations. Moreover,there is not a significant risk of interest rate fluctuations for bonds held and loans receivable.
(7) Management of Risk of Market Price Fluctuations
The Group is exposed to share price fluctuation risk arising from equity instruments. To manage this pricefluctuation risk, we periodically grasp market prices and the financial position of issuers, etc. to review ourholdings as necessary.
When the market price of equity instruments held by the Group at the end of a period changes by 10%, it will
have the following impact on profit before tax and other comprehensive income (before deducting the tax
effect).
The above analysis assumes other variables to be constant in the analysis.

63Thousands of
U.S. Dollars

Millions of Yen

Profit before tax ...................................................
Other comprehensive income ..............................

Year ended
June 30, 2021
¥134
386

Year ended
June 30, 2020
¥106
328

Year ended
June 30, 2021
$1,2153,492(8) Fair Value of Financial Instruments
For financial instruments measured at fair value, we classify investments into Level 1 to 3, according to theobservability and significance of inputs used to determine the fair value.
Level 1: Market price of the identical assets or liabilities in active markets (unadjusted)
Level 2: Fair value calculated by using directly or indirectly observable values other than those under Level 1
Level 3: Fair value calculated by valuation techniques based on unobservable inputs
a. Method of Calculating Fair Value
The method of calculating the fair value of financial instruments is as follows:
Cash and Cash Equivalents, Trade and Other Receivables, Trade and Other Payables
The fair value is close to the book value, as they are settled in a short period of time.
Other Financial Assets, Other Financial Liabilities
The fair value of listed stocks is calculated using the market price at the end of the period. The fair value of
unlisted stocks is calculated using the valuation method based on discounted future cash flows, a method
based on the market prices of comparable companies, and a method based on net asset value. For time
deposits with a deposit period of more than three months, and deposits received, the fair value is close to
the book value because they are settled in a short period of time.
As financial assets or liabilities measured at fair value through profit or loss, derivatives are calculated
based on the price presented by counterparty financial institutions.
Borrowings
Borrowings are calculated using the present value obtained by discounting future cash flows by the
expected interest rate when a similar agreement is newly executed.
b. Financial Instruments Measured at Amortized Cost
The book value and fair value of financial instruments measured at amortized cost are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Carrying amountFinancial liabilities measured at amortized cost
Long term borrowings ......................
Fair value
Financial liabilities measured at amortized cost
Long term borrowings ......................

As ofJune 30, 2021

As ofJune 30, 2020

Transition Date
As of
as of July 1, 2019 June 30, 2021

¥27,032¥17,702¥20,176$244,607¥27,025¥17,684¥20,134$244,540(Notes)
1. Among financial instruments measured at amortized cost, the above table does not include those whose bookvalue is reasonably approximate to the fair value.
2. The fair value of long-term borrowings is classified into Level 2.

64

c. Financial Instruments Measured at Fair Value
The fair value hierarchy of financial instruments measured at fair value is as follows:
Millions of Yen

As of June 30, 2021
Level 1

Level 2

Level 3

Total

Financial assets:
Financial assets measured at fair value
through profit or loss
Derivative assets
Other financial assets
Financial assets measured at fair value
through other comprehensive income
Other financial assets
Total

¥—
1,041

¥39
—

¥—
301

¥39
1,343

3,141
¥4,182—¥39

718¥1,0203,860¥5,242Financial liabilities:
Financial liabilities measured at fair value
through profit or loss
Derivative liabilities
Total

—
¥—

—
¥—

—
¥—

—
¥—

Thousands of U.S. Dollars

As of June 30, 2021
Level 1

Level 2

Level 3

Total

Financial assets:
Financial assets measured at fair value
through profit or loss
Derivative assets
Other financial assets
Financial assets measured at fair value
through other comprehensive income
Other financial assets
Total

$—
9,423

$353
—

$—
2,731

$353
12,15428,423$37,846

—
$353

6,505
$9,23634,928$47,436

Financial liabilities:
Financial liabilities measured at fair value
through profit or loss
Derivative liabilities
Total

—
$—

—
$—

—
$—

—
$—

65

Millions of Yen

As of June30, 2020
Level 1

Level 2

Level 3

Total

Financial assets:
Financial assets measured at fair value
through profit or loss
Derivative assets
Other financial assets
Financial assets measured at fair value
through other comprehensive income
Other financial assets
Total

¥—
781

¥—
—

¥—
284

¥—
1,066

2,759
¥3,541

—
¥—

528
¥813

3,288
¥4,354

Financial liabilities:
Financial liabilities measured at fair value
through profit or loss
Derivative liabilities
Total

—
¥—

(141)
¥(141)—¥—(141)¥(141)

Millions of Yen

Transition Date as of July 1, 2019
Level 1

Level 2

Level 3

Total

Financial assets:
Financial assets measured at fair value
through profit or loss
Derivative assets
Other financial assets
Financial assets measured at fair value
through other comprehensive income
Other financial assets
Total

¥—
—

¥—
—

¥—
253

¥—
253

3,523
¥3,523

—
¥—

414
¥668

3,938
¥4,192Financial liabilities:
Financial liabilities measured at fair value
through profit or loss
Derivative liabilities
Total

—

(194)

¥—

¥(194)—¥—(194)¥(194)

Transfer between the levels of the fair value hierarchy is recognized on the date when an event or circumstancecausing the change in classification occurs. There are no significant reclassifications between the fair value
Levels 1 and 2 in each fiscal year.

66

d. Valuation Process
For financial instruments classified into Level 3, external valuation experts or appropriate valuation
experts conduct valuation and analysis of valuation results, in accordance with the valuation policies andprocedures approved by the person in charge of the business administration department. The valuation
results are reviewed and approved by the person in charge of the business administration department.
e. Qualitative Information on Financial Instruments Classified into Level 3
Significant inputs not observable concerning financial instruments classified into Level 3 are discountrates, PER, PBR, and non-liquidity discounts. The fair value increases (decreases) by a decline (rise) in the
discount rate, a rise (decline) in PER, a rise (decline) in PBR, and a decline (rise) in the non-liquidity
discount. The expected change in the fair value is not significant when non-observable inputs are replacedby reasonably possible alternative assumptions.
f. Reconciliation of Financial Instruments Classified into Level 3 from Beginning to End of Period
Changes in financial instruments classified into Level 3 from the beginning to the end of the period are as
follows:
Millions of Yen

Balance at beginning of period ..........
Total gains or losses ................................
Profit or loss (Note1) ............................
Other comprehensive income (Note2) ..
Purchases .................................................
Sales .........................................................
Transfer from Level 3 ..............................
Others (Note 3) ........................................
Balance at end of period ......................

Year ended
June 30, 2021
¥813
—
16
192
—
—
—
(1)
¥1,020Year ended
June 30, 2020
¥668
—
56
114
241
—
—
(267)
¥813

Thousands of
U.S. Dollars

Year ended
June 30, 2021
$7,358
—
153
1,741
—
—
—
(17)
$9,236(Notes)1. Gains and losses included in profit or loss are those concerning financial assets measured at fair value
through profit or loss on the closing date. Among gains and losses recognized as profit or loss, thoseconcerning financial assets held at the end of the consolidated fiscal year are ¥16 million ($153 thousand) and¥56 million for the years ended June 30, 2021 and 2020, respectively. These gains and losses are included in“Other revenue” and “Other expenses” in the consolidated statement of profit or loss.
2. Gains and losses included in other comprehensive income are those arising from equity financial assets
measured at fair value through other comprehensive income on the closing date. These gains and losses areincluded in “Equity financial assets measured at fair value through other comprehensive income” in the
consolidated statement of comprehensive income.
3. Others recognized in the previous consolidated fiscal year was due to making an investee an associate.

6736. SIGNIFICANT CONSOLIDATED SUBSIDIARIES
Significant consolidated subsidiaries as of June 30, 2021 are as follows:
Name

Location

Segment

Proportion of
Voting Rights
Held (%)

Tamano Consultants Co., Ltd.

Japan

Domestic Consulting

100.0

Nippon Civic Consulting Engineers Co., Ltd.

Japan

Domestic Consulting

85.3

El Koei Co., Ltd.

Japan

Domestic Consulting

100.0

Geoplan Namtech Inc.

Japan

Domestic Consulting

56.0

Koei Research & Consulting Inc.

Japan

International Consulting

100.0

Nippon Koei Latin America-Caribbean Co., Ltd.

Japan

International Consulting

100.0

Nippon Koei LAC, INC.

PanamaInternational Consulting

100.0

Nippon Koei Latin America - Caribbean, Mexico S. De R. L. De C.V.

MexicoInternational Consulting

100.0

Nippon Koei India Pvt. Ltd.

India

International Consulting

99.9

Nippon Koei Bangladesh Ltd.

BangladeshInternational Consulting

99.9

Nippon Koei Vietnam International Co., Ltd.

VietnamInternational Consulting

100.0

Philkoei International, Inc.

Philippines

International Consulting

40.0

PT.Indokoei International

Indonesia

International Consulting

80.0

Myanmar Koei International Ltd.

MyanmarInternational Consulting

70.0

Koei System Inc.

Japan

Power Engineering

100.0

BDP Holdings Limited

United Kingdom

Urban & Spatial Development

100.0

Building Design Partnership Limited

United Kingdom

Urban & Spatial Development

100.0

Quadrangle architects Limited

CanadaUrban & Spatial Development

49.0

Kisho Kurokawa Architect & Associates Co., Ltd.

Japan

Urban & Spatial Development

100.0

Koei Energy Co., Ltd

Japan

Energy100.0

Nippon Koei Energy Europe B.V.

Netherlands

Energy100.0

RNK UK Investments Limited

United Kingdom

Energy80.0

PT. Cikaengan Tirta Energi

Indonesia

Energy90.0

Ironmont Hydro Pte. Ltd.

Singapore

Energy62.2

ACEI Singapore Holdings Private Ltd.

Singapore

Energy100.0

Nikki Corporation

Japan

Real Estate Leasing

100.0

DSI Co., Ltd.

Japan

Others100.0

There is no subsidiary with individually important non-controlling interests for the years
ended June 30, 2021 and 2020.

68

37. RELATED PARTY TRANSACTIONS(1) Related Party Transactions
Transactions with related parties for the year ended June 30, 2021 are as follows:
For details of subsidiaries and associates, please refer to “16. INVESTMENTS AND JOINT OPERATIONSACCOUNTED FOR USING THE EQUITY METHOD” and “36. SIGNIFICANT CONSOLIDATEDSUBSIDIARIES”.
There were no significant related party transactions on the transition date as of July 1, 2019.
There were no significant related party transactions during the years ended June 30, 2021 and 2020.
(2) Compensation for Main Executive Management
Millions of Yen

Short-term employee benefit expenses ................
Share-based payment expenses ............................
Total ................................................................

Thousands of
U.S. Dollars

Year ended
Year ended
Year ended
June 30, 2021 June 30, 2020 June 30, 2021
¥405
¥350
$3,671
41
43
378
¥447
¥394
$4,04938. COMMITMENTS
The commitments for expenditures after the closing date are as follows:
Millions of Yen

Purchase of property, plant and equipment ........
Purchase of investment property ........................
Total ................................................................

Thousands of
U.S. Dollars

As of
As of
Transition Date
As ofJune 30, 2021 June 30, 2020 As of July 1, 2019 June 30, 2021
¥72
¥148
¥3,910
$654
—
—
805
—
¥72
¥148
¥4,715$654

39. CONTINGENT LIABILITIES
Litigation
On June 19, 2014, Nippon Civic Consulting Engineers Co., Ltd. (“NCC”), a consolidated subsidiary of theCompany, was sued by Osaka Prefecture for damages resulting from a project related to designing a shieldtunnel under tort liability. Osaka Prefecture increased its claim of damages to ¥6,189 million ($56,008
thousand), which also includes a 5% per annum delinquency charge, via a written petition for the amendment of
the claim dated February 29, 2016.
Due to the court petition by Osaka Prefecture, a decision was made to restrict cash in regard to these claims inJune 2014. Therefore, NCC deposited the money for release from a provisional seizure of ¥750 million ($6,786
thousand), which is included in other assets under other non-current assets on consolidated statement offinancial position, in July 2014 with the Legal Affairs Bureau.

69Regarding the lawsuit, while the Osaka District Court rendered a judgement on March 26, 2021, acknowledging
damages of ¥220 million ($1,997 thousand) and delayed damages at the annual rate of 5%, the Osaka prefectural
government was not content with it and appealed on April 5, 2021, and the Company also made an incidental
appeal on June 11, 2021. The Company made a provision for loss on litigation of ¥284 million ($2,577 thousand)for the year ended June 30, 2021.
Some other subsidiaries are currently parties to cases under dispute. No provision is made for litigation, etc.
whose final result cannot be reasonably estimated. Even if liabilities are incurred due to these cases of litigation,
the impact on the Group’s financial position and business performance would be immaterial, based on thecurrently available information.

40. SUBSEQUENT EVENTS(1) Issuance of New Shares as Restricted Stock Compensation
The Board of Directors resolved to issue new shares for restricted stock compensation at the extraordinary
Board of Directors’ meeting held on September 29, 2021, as follows. This is a system whereby an eligible person
has the right to issue or dispose of the Company’s common stock by paying all of the monetary claims provided
by the Company as in-kind contribution in accordance with provisions of the Companies Act, Article 208,
Paragraph 2. The transfer-restricted share allotment agreement between each eligible person and the Company
stipulates:
a. Purpose and Reason for Issuance
The Company aims to have the directors (not including outside directors; “Eligible Directors”) sharebenefits and risks of stock price fluctuations with shareholders and further enhance their willingness tocontribute to improving stock prices and enhancing corporate value. Therefore, the Company decided, at
the Board of Directors’ meeting held on August 14, 2017, to introduce a restricted stock compensation
system (the “System”), which will issue restricted stock to Eligible Directors.
Furthermore, the 73rd Annual General Meeting of Shareholders held on September 28, 2017, approved,
under the System, setting the total amount of monetary compensation claims payable to the Eligible
Directors as compensation related to restricted stock at a level where it does “not exceed an annual amountof ¥60 million.” In addition, the total number of 50,000 shares, which are restricted stock to be allotted to
Eligible Directors will be the upper limit of the number of restricted shares to be allotted in each fiscal
year, and the transfer restriction period of restricted stock will be between one year to five years,
determined by the Board of Directors.
b. Issuance Overview
1. Payment date
2. Class and number of shares to be issued
3. Issue price
4. Total issue price of shares to be issued
5. Capitalization amount
6. Total capitalization amount
7. Method of offer or allotment
8. Method of contribution
9. Allottees, number thereof andnumber of shares to be allotted
10. Transfer restriction period
11. Others

October 28, 2021
11,746 shares of common stock of the Company¥3,595 per share¥42,226,870¥1,798 per share¥21,119,308
Allotment of specified restricted stocks
In-kind contribution of monetary compensation claims
11,746 shares to eight directors of the company (excluding
outside directors)
October 28, 2021 to October 27, 2024
Issue of new shares to be allotted is conditioned on the
securities registration statement taking effect in accordancewith the Financial Instruments and Exchange Act.

(2) Recording of Provision for Loss on Litigation
It became probable that the Group would pay compensation related to certain litigation in which the Group is
involved. The Group recorded ¥1,500 million ($13,572 thousand) as provision for loss on litigation as of the endof the first quarter of the fiscal year ending June 30, 2022. A corresponding asset was recognized in other noncurrent assets due to the expectation of the receipt of insurance. As a result, there was no impact on profit or
loss.

70

41. FIRST-TIME ADOPTIONThe Group has prepared its consolidated financial statements in accordance with IFRS for the first time in thecurrent year. The most recent consolidated financial statements prepared in accordance with Japanese GAAP are
for the fiscal year ended June 30, 2020. The transition date to IFRS is July 1, 2019.
(1) Exemption Clause in IFRS 1IFRS requires a company that applies IFRS for the first time (hereinafter referred to “First-time Adopter”) to
retroactively apply the standards required in IFRS in principle. However, IFRS 1“First-time Adoption ofInternational Financial Reporting Standards” (hereinafter referred to as “IFRS 1”) stipulates those to which
the exemption clause must be compulsorily applied and those to which the exemption clause is voluntarily
applied for some standards required by IFRS. The impact of the adoption of these clauses was adjusted inretained earnings or other equity components on the IFRS transition date. When the Group transitioned
from Japanese GAAP to IFRS, the following exemption clauses were adopted:- Business combinations
A First-time Adopter is permitted to elect not to retroactively apply IFRS 3“Business Combinations”(hereinafter referred to as “IFRS 3”) to any business combinations made before the IFRS transition date.
The Group has applied the relevant exemption clause and has elected not to retroactively apply IFRS 3 tobusiness combinations made prior to the transition date. As a result, the amount of goodwill incurred fromthe business combination before the transition date is based on the book value as of the transition dateaccording to Japanese GAAP.
An impairment test was conducted for goodwill as of the transition date regardless of whether or not there
were any indicators of impairment.
- Deemed cost for property, plant and equipment
For property, plant and equipment, IFRS 1 permits an entity to use the fair value on the transition date as
deemed cost. For some property, plant and equipment, the fair value on the transition date is used as thedeemed cost.
- Exchange differences on translation of foreign operations
IFRS 1 permits an entity to elect to the cumulative translation differences for foreign operations as of the
IFRS transition date as zero. The Group has applied the relevant exemption clause and elected to regard
cumulative translation differences of foreign operations as zero as of the transition date.
- Share-based payments
It is encouraged by IFRS 1 to apply IFRS 2 “Share-based Payment” (hereinafter referred to as “IFRS 2”) tostock compensation that were granted after November 7, 2002 and whose rights were finalized before the
IFRS transition date, but it is not required to do so. The Group has applied the relevant exemption clauseand has elected not to apply IFRS 2 to stock compensation whose rights were finalized prior to thetransition date.
- LeaseIFRS 1 permits a First-time Adopter to assess whether or not the contract includes leases as of the IFRStransition date. The Group has applied the relevant exemption clause and determined whether the contract
includes leases based on the facts and circumstances that existed as of the transition date.
- Borrowing cost
IFRS 1 permits an entity to set the start date of capitalization of borrowing costs pertaining to qualifying
assets to the IFRS transition date. The Group has applied the relevant exemption clause and capitalized theborrowing costs pertaining to qualifying assets after the transition date in accordance with IAS 23“Borrowing Costs.”- Designation of financial instruments previously recognized
IFRS 1 permits an entity to determine classification in IFRS 9 “Financial Instruments” (hereinafter referred
to as “IFRS 9”) based on the facts and circumstances as of the transition date instead of the facts andcircumstances that existed as of the time of the initial recognition. It is also permitted to designate
fluctuation of the fair value of equity financial assets as financial assets to be measured through other71comprehensive income based on the facts and circumstances that exist as of the transition date.
The Group has applied the relevant exemption clause and has determined the classification in IFRS 9 basedon the facts and circumstances that existed as of the transition date and has designated some equity
financial assets as financial assets to be measured through other comprehensive income.
- Revenue from contracts with customers
While a First-time Adopter needs to retrospectively apply IFRS 15 “Revenue from Contracts with
Customers,” it is not required to restate the contracts that were completed before the beginning of theearliest period (contracts which transferred all goods or services identified according to the previous
accounting principles). Moreover, it is permitted to use one or more of the following practical expedients
when applying the Standard retrospectively.
(i) For completed contracts, an entity need not restate contracts that begin and end within the sameannual reporting period.
(ii) For completed contracts that have variable consideration, an entity may use the transaction price atthe date the contract was completed rather than estimating variable consideration amounts in thecomparative reporting periods.
(iii) For contracts that were modified before the beginning of the earliest period presented, an entity need
not retrospectively restate the contract for those contract modifications.
(iv) For all reporting periods presented before the date of initial application, an entity need not disclose
the amount of the transaction price allocated to the remaining performance obligations and an
explanation of when the entity expects to recognize that amount as revenue.
The Group has chosen to apply the practical expedient (iv).

72

(2) Reconciliations
The reconciliations required to be disclosed for the first-time adoption of IFRS are shown below.
In the reconciliation table, “Reclassification of presentation” includes items that do not affect retained
earnings and comprehensive income and “Difference in recognition and measurement” includes items that
affect retained earnings and comprehensive income.
Reconciliations of equity as of July 1, 2019 (The date of transition to IFRS)Millions of Yen
Line items presented
under Japanese GAAP

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade

Japanese
GAAP

Reclassification
Difference inofrecognition andpresentation
measurement

IFRS¥13,147
29,938
—
—
5,709
3,855
(203)
52,446¥(484)(13,561)
14,400
394
(514)
(512)
181
(94)

¥579
(5)
4,724
12
(5,194)55
21
192¥13,242
16,371
19,125
407
—
3,399
—
52,544

Intangible assets

29,882—
13,501——(2,379)114(5,307)
5,307
2,265

11,350
10,296—564(319)

38,852
10,410
8,193
5,871
1,945

Investment securities

7,228(7,228)

2,440

2,440

Long-term loans receivable
Deferred tax assets
Asset for retirement benefits
Other
Allowance for doubtful accounts
Total non-current assets
Total assets

2,276
1,502
3,943
2,564
(169)
60,728¥113,175

8,487——(1,333)
169
94¥—

Work in process
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

73(4,315)
6,448
533
2,035
(663)
3,279
(11)
1,219
—
—
19,87380,696¥20,066 ¥133,241

Notes

1,19
2,3
3
6
3

Line items presented
under IFRS

AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Other financial assets
Other current assets

Total current assets
Non-current assets
9Property, plant and equipment
10
Right-of-use assets
11
Goodwill
12Intangible assets
8
Investment property
Investments accounted for
13,19
using equity method
4,6,19 Other financial assets
7
Deferred tax assets
Retirement benefit asset
Other non-current assets
Total non-current assets
Total assets

Millions of Yen
Line items presented
under Japanese GAAP

Liabilities
Current liabilities
Short-term loans payable
Current portion of
long-term loans payable

Japanese
GAAP

Reclassification
Difference inofrecognition andpresentation
measurement

Notes

IFRS

Liabilities and equity
Liabilities
Current liabilities
Borrowings¥—¥2,082¥499¥2,581

2,082(2,082)

—

—

—
5,037
—
—
1,137
1,972
91

37
2,319
9,580
2,681
(105)
(1,972)
(91)

2,820
9
(1,151)
194
4
—
—

2,858
7,365
8,428
2,876
1,036
—
—

6,10
2
15
5

Lease liabilities
Trade and other payables
Contract liabilities
Other financial liabilities
Income taxes payable

119

3

—

123

16

Provisions

6,687
10,95328,082(6,687)(5,764)
—

—
3,213
5,590

—
8,402
33,67315
15,16

17,639
—
—
3,817
30
34
2,819
545
24,88652,969

—
74
223
—
(30)
18
—
(286)
—
—

(44)
7,476
—
149
—
—
1,977
(109)
9,449
15,03917,594
7,551
223
3,967
—
52
4,796
149
34,33568,009

7,437
6,488
(787)
(1,913)47,864

—
—
—
—
—

—
(22)
—
2,412
2,428

7,437
6,465
(787)
499
50,29259,090—4,817

63,907

1,115
Non-controlling interests
Total net assets
60,205
Total liabilities and net assets ¥113,175

—
—
¥—

209
5,026
¥20,066

1,324
65,232¥133,241

Notes and accounts payable - trade

Income taxes payable
Provision for bonuses
Provision for directors’ bonuses
Provision for loss on
construction contracts
Advances received
Other
Total current liabilities
Non-current liabilities
Long-term loans payable

Liability for retirement benefits
Provision for directors’ retirement benefits
Provision for environmental measures
Deferred tax liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Capital stock
Capital surplus
Treasury shares
Accumulated other comprehensive income
Retained earnings

14

Line items presented
under IFRS

6,10
6
17

18
18

Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Other financial liabilities
Retirement benefit liability
Provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityShare capital
Capital surplus
Treasury shares
Other components of equity
Retained earnings
Total equity attributable toowners of parent
Non-controlling interests
Total equity
Total liabilities and equity

74

Reconciliations of equity as of June 30, 2020 (The end of the latest period presented in the most recent
consolidated financial statements under Japanese GAAP)
Millions of Yen
Line items presented
under Japanese GAAP

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade

Japanese
GAAP

Reclassification
Difference inofrecognition andpresentation
measurement

IFRS

Notes

¥16,003
39,047
—
—
1,725
4,947
(308)
61,415¥(1,232)(19,767)
20,355
1,250
(488)
(450)
333
—

¥701
109
1,069
33
(1,236)
(40)
(25)
611

¥15,472
19,38921,425
1,283
—
4,456
—
62,027

1,19
2,3
3
6
3

Intangible assets

40,756—
12,132——(8,250)3,724(4,735)
4,734
4,526

9,533
5,879
567
745
(316)

42,039
9,603
7,964
5,480
4,210

9
10
11
12
8

Investment securities

6,500(5,028)

502

1,974

13,19

Long-term loans receivable
Deferred tax assets
Asset for retirement benefits
Other
Allowance for doubtful accounts
Total non-current assets
Total assets

980
1,541
4,080
2,964
(157)
68,800¥130,215

6,400——(1,529)
157
—
¥—

(659)
6,721
598
2,140
(262)
3,817
(7)
1,427
—
—
16,58085,380¥17,192 ¥147,408

4,6,197Work in process
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

75

Line items presented
under IFRS

AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Other financial assets
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Investment property
Investments accounted forusing equity method
Other financial assets
Deferred tax assets
Retirement benefit asset
Other non-current assets
Total non-current assets
Total assets

Millions of Yen
Line items presented
under Japanese GAAP

Liabilities
Current liabilities
Short-term loans payable
Current portion of
long-term loans payable
Notes and accounts payable - trade

Income taxes payable
Provision for bonuses
Provision for directors’ bonuses
Provision for loss on
construction contracts
Provision for business restructuring
Advances received
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Liability for retirement benefits
Provision for directors’ retirement benefits
Provision for environmental measures
Deferred tax liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Capital stock
Capital surplus
Treasury shares
Accumulated other comprehensive income
Retained earnings
Non-controlling interests
Total net assets
Total liabilities and net assets

Japanese
GAAP

Reclassification
Difference inofrecognition andpresentation
measurement

Notes

IFRS

14

Line items presented
under IFRS

Liabilities and equity
Liabilities
Current liabilities
Borrowings¥13,000¥2,780¥(2)¥15,778

2,780(2,780)

—

—

—
5,724
—
—
1,266
2,201
52

704
2,289
11,0552,539(107)(2,201)
(52)

1,740
18
(159)
46
1
—
—

2,445
8,033
10,895
2,586
1,159
—
—

6,10
2
15
5

Lease liabilities
Trade and other payables
Contract liabilities
Other financial liabilities
Income taxes payable

496
93
8,009
11,87645,50093(93)(8,009)(6,219)
—

—
—
—
2,818
4,463

589
—
—
8,475
49,963

16
16
15
15,16

Provisions

14,922
3,078
—
3,814
17
34
2,585
791
25,24570,745

—
—
639
—
(17)
49
—
(670)
—
—

1
4,161
—
151
—
—
2,123
40
6,478
10,942

14,923
7,240
639
3,965
—
83
4,709
161
31,723
81,687

7,458
6,509(2,415)(2,515)49,207

—
—
—
—
—

—
(11)
—
2,517
3,467

7,458
6,498
(2,415)
1
52,67558,245—

5,973

64,2191,225
59,470¥130,215

—
—
¥—

276
6,250
¥17,192

1,502
65,721¥147,408

6,10
6
17

18
18

Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Other financial liabilities
Retirement benefit liability
Provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityShare capital
Capital surplus
Treasury shares
Other components of equity
Retained earnings
Total equity attributable toowners of parent
Non-controlling interests
Total equity
Total liabilities and equity

76Notes on Reconciliation of Equity
1 Reclassification of cash and deposits
Time deposits with a deposit period of more than 3 months, which were included in “Cash and deposits”
under Japanese GAAP have been reclassified to “Other financial assets (current)” under IFRS.
2 Reclassification of accounts receivable and accounts payable
Accounts receivable included in “Other” of current assets under Japanese GAAP have been transferred to“Trade and other receivables” under IFRS. Also, accounts payable included in “Other” of current liabilities
under Japanese GAAP have been reclassified to “Trade and other payables” under IFRS.
3 Contract assets
Of the rights to the consideration received in exchange for goods or services transferred to customers, whichwere included in “Notes and accounts receivable - trade” under Japanese GAAP, the conditional rights otherthan the passage of time have been reclassified from “Trade and other receivables” to “Contract assets” under
IFRS.
As for consulting contracts accounted for under the construction completion method in accordance withJapanese GAAP, revenues are recognized for a certain period of time and contract assets of the same amountare also recognized under IFRS. Work in process, which was recorded under Japanese GAAP, has been
reclassified to “Cost of sales.”4 Securities
Under Japanese GAAP, marketable securities are measured according to the fair value and non-marketablesecurities are measured based on the acquisition cost. Also, gain or loss from sales of securities is net profit orloss regardless of whether or not they are marketable. Under IFRS, all the equity instruments are measured
by fair value.
Under IFRS, it is permitted to recognize fluctuations in fair value of equity instruments in othercomprehensive income, and when recognizing fluctuations in fair value in other comprehensive income, gainor loss from sales or valuation gain or loss of the relevant equity instruments is not transferred to net profit orloss.
5 Other financial assets and other financial liabilities
Under Japanese GAAP, interest rate and currency swaps that qualify for hedge accounting and meet specificmatching criteria were not remeasured at market value but the differential paid or received under the swap
agreements was recognized and included in interest expenses or income. However, under IFRS, hedging
instruments were recognized at fair value on the transfer date and the cash flow hedges were recorded asother components of equity at the same time. And, as we have decided not to apply hedge accounting on andafter the transfer date, it is treated in accordance with the regulations for termination of hedge accounting
for the future.
6 Reclassification of other financial assets and other financial liabilities
Short-term loans receivable included in “Other” of current assets under Japanese GAAP have been reclassified
to “Other financial assets (current)” under IFRS. Also, “Investment securities” and “Long-term loans
receivable” presented separately under Japanese GAAP have been reclassified to “Other financial assets (noncurrent)” under IFRS. Also, lease obligations included in “Other” of current liabilities and “Other” of noncurrent liabilities under Japanese GAAP have been reclassified into “Lease liabilities (current)” and“Lease liabilities (non-current)” under IFRS, respectively.
7 Review of recoverability of deferred tax assets
In association with adoption of IFRS, we review recoverability of all deferred tax assets.
8 Reclassification of investment property
Investment property included in “Property, plant and equipment” under Japanese GAAP has been reclassified
to “Investment property” under IFRS.
9 Adjustments to the recorded amount of property, plant and equipment
Real estate acquisition taxes and borrowing costs directly attributable to acquisition of qualifying assets,
which were expensed under Japanese GAAP, are capitalized under IFRS. In addition, the Company has
applied the exemption provisions of IFRS 1 and used the fair value of certain property, plant and equipment
as of the transition date as deemed cost.

77

10 Lease transactions
Operating lease transactions were not capitalized under Japanese GAAP. However, right-of-use assets andlease liabilities are recorded under IFRS. Also, we adopted a method of not deducting a reasonable estimatedamount equivalent to interest from the total amount of lease fees for finance lease transactions withouttransfer of title at the end of the lease term, whose total amount of lease assets is recognized as insignificant,under Japanese GAAP. However, we adopt the basic method under IFRS.
11 Adjustments to the recorded amount of goodwill
Goodwill is amortized under Japanese GAAP, but not amortized under IFRS.
12 Other intangible assets
Trademark rights are amortized under Japanese GAAP because there is no concept of an intangible asset withindefinite useful life, but not amortized under IFRS as intangible assets with indefinite useful lives.
13 Adjustments of the recorded amount of investments accounted for using equity method“Investments accounted for using equity method” were included in “Investment securities” under Japanese
GAAP, but are separately presented under IFRS. Also, goodwill on associated companies accounted for using
equity-method is amortized under Japanese GAAP, but not amortized under IFRS.
14 Reclassification of borrowings“Current portion of long-term loans payable” separately presented as current liabilities under Japanese GAAP
have been reclassified into “Borrowings (current)” under IFRS.
15 Contract liabilities“Advances received” separately presented as current liabilities and deferred income included in “Other” underJapanese GAAP has been reclassified into “Contract liabilities” under IFRS.
16 Reclassification of other current liabilities“Provision for bonuses” and “Provision for directors’ bonuses” presented separately as current assets underJapanese GAAP have been reclassified into “Other current liabilities” under IFRS. “Provision for loss on
construction contracts” and “Provision for business restructuring” presented separately as current assets andasset retirement obligations included in “Other” of non-current liabilities under Japanese GAAP have been
reclassified into “Provisions” under IFRS. Also, outstanding paid leave, that was not accounted for underJapanese GAAP, is recorded as “Other current liabilities” under IFRS.
17 Adjustments of retirement benefit liability
The Group recognized actuarial gain or loss as other comprehensive income when it occurred and theamount distributed according to a certain number of years within the average remaining working period of
the employee was expensed from the fiscal year after the fiscal year in which it occurred. However, actuarial
gain or loss is recognized when it occurs as other comprehensive income and immediately transferred toretained earnings under IFRS.
18 Reclassification of cumulative exchange differences on translation of foreign subsidiaries
For the first-time adoption, we elected the exemption clause prescribed in IFRS 1 and reclassified all the
cumulative translation differences as of the transition date to retained earnings.
19 Scope of consolidation and the equity method
The subsidiaries that were not consolidated based on monetary importance, etc., and associates that were outof the scope of the equity method under Japanese GAAP, are classified as consolidated subsidiaries andassociates accounted for using the equity method under IFRS. The impact of fluctuations in the scope of
consolidation and the equity method is included in “Differences in recognition and measurement.” Main
fluctuations include increase in cash and cash equivalents and decrease in loans receivable due to theelimination of internal transactions.
The Company implements the Employee Stock Ownership Plan Trust Program (hereinafter referred to as“ESOP trust”). Under Japanese GAAP, profit or loss related to ESOP trusts are not added to the profit or lossof the Group, and if the net amount of profit or loss is positive, it is recorded as a liability, and if the value isnegative, it is recorded as an asset. Under IFRS, the Group consolidates the relevant trusts. Specifically, theCompany’s shares owned by the trust account are deducted from the capital until they are sold to the Group’s
employees’ stockholders association. The assets and liabilities of the relevant trust account is recognized as78

the assets and liabilities of the Group. Distributions of trust income from the trust account to thebeneficiaries at the end of the trust period are treated as cash settlement transactions. The liabilities resulting
from cash settlement-type stock compensation are not material.
20 Adjustments to retained earnings
Millions of Yen

Adjustments to the recorded amount of property, plant and equipment ...
Adjustments to the recorded amount of intangible assets ..............
Adjustments to outstanding paid leave .............................................
Reclassification of cumulative exchange difference on translationof foreign subsidiaries ...................................................................
Other ...................................................................................................
Sub-total ........................................................................................
Adjustments by tax effect ..................................................................
Adjustment for non-controlling interests .........................................
Total ...............................................................................................

79

As of
Transition Date
June 30, 2020
As of July 1, 2019¥8,793¥8,825
1,321
589(2,709)(3,109)(3,063)(3,063)700
5,042(1,318)(256)¥3,467843
4,086(1,448)(209)¥2,428

Reconciliations of profit or loss and comprehensive income for the fiscal year ended June 30, 2020(The latest
period presented in the most recent consolidated financial statements under Japanese GAAP)
Millions of Yen
Line items presented
under Japanese GAAP

Japanese
GAAP

Reclassification
Difference inofrecognition andpresentation
measurement

Notes

IFRS

Net sales¥112,214
78,762
Cost of sales
Gross profit
33,452
Selling, general andadministrative expenses
28,861

¥—
118
(118)
(72)

(352)

28,436

—
—
—
4,590
950
938
—
—
4,603
1,940
(163)
2,826

62
480
268
230
(950)
(938)
587
670
134
(28)
163
—

81
91
3
425
—
—
(172)
(38)
291
(128)
—
419

144
571
271
5,245
—
—
414
631
5,029
1,782
—
3,246

(158)
(21)

—
—

206
342

47
321

6

—

—

6

6

8

(439)

—

(2)

(441)

58

—

(44)

14

(559)
¥2,266

—
¥—

508
¥927

(51)
¥3,194

Operating income
Other income
Other expenses

Income before income taxes
Income taxes - current
Income taxes - deferred
Net income
Other comprehensive income(loss)
Unrealized loss on availablefor-sale securities
Defined retirement benefit plans

Foreign currencytranslation adjustments
Share of other comprehensive
income (loss) of associates
accounted for using equity method
Total other comprehensive
income (loss)
Comprehensive income¥(3,773) ¥108,441(3,677)75,202(95)
33,2381
1,2,6,10
2,3,4,6,
7,10
5,9
9
9
5,9
9
9
2,8,9
11

Line items presented
under IFRSRevenue
Cost of sales
Gross profit
Selling, general andadministrative expenses
Share of profit (loss) of investments
accounted for using equity method
Other income
Other expenses
Operating profit

Finance income
Finance costs
Profit before tax
Income tax expense
ProfitOther comprehensive income
Items that will not bereclassified to profit or loss
Equity Financial assets measured at fairvalue through other comprehensive income
Remeasurements of defined benefit plans
Items that may bereclassified to profit or loss
Cash flow hedges
Exchange differences ontranslation of foreign operations
Share of other comprehensive
income of investments accounted
for using equity method
Other comprehensive income
Comprehensive income

80Notes on Reconciliations of Profit or Loss and Comprehensive Income
1 Adjustments to revenue and cost of sales
As for consulting contracts with the construction completion method adopted under Japanese GAAP,
revenues are recognized for a certain period of time and contract assets of the same amount are also
recognized under IFRS. “Work in process”, which was recorded under Japanese GAAP, has been transferred
to “Cost of sales”.
2 Lease transaction
The Group accounted for operating lease transactions in accordance with the method pertaining to normallease transactions under Japanese GAAP, but records right-of-use assets and lease liabilities and also records
depreciation and interest expenses under IFRS. Also, we adopted a method of not deducting a reasonableestimated amount equivalent to interest from the total amount of lease fees for finance lease transactions
without transfer of title at the end of the lease term, whose total amount of lease assets is not material, andrecorded only depreciation under Japanese GAAP. However, we record depreciation and interest expenses
under IFRS.
3 Adjustments to the recorded amount of goodwill
Goodwill is amortized under Japanese GAAP, but not amortized under IFRS.
4 Other intangible assets
Trademark rights are amortized under Japanese GAAP, but not amortized under IFRS as intangible assets
with indefinite useful lives.
5 Adjustments of the recorded amount of investments accounted for using equity method“Share of profit (loss) of investments accounted for using equity method” were included in “Non-operating
income” under Japanese GAAP, but are separately presented under IFRS.
6 Adjustments of retirement benefit liability
The Group recognized actuarial gain or loss as other comprehensive income when it occurred and theamount distributed according to a certain number of years within the average remaining working period of
the employee was expensed from the fiscal year after the fiscal year in which it occurred. However, actuarial
gain or loss is recognized when it occurs as other comprehensive income and immediately transferred toretained earnings under IFRS.
7 Levies
The items that fall under levies such as property taxes were evenly expensed for one year from the payment
date under Japanese GAAP, but expenses are recognized as incurred based on accrual accounting under
IFRS.
8 Adjustment to financial income and financial cost
Under Japanese GAAP, interest rate and currency swaps that qualify for hedge accounting and meet specificmatching criteria were not remeasured at market value but the differential paid or received under the swap
agreements was recognized and included in interest expenses or income. However under IFRS, hedging
instruments were recognized at fair value on the transfer date and the cash flow hedges were recorded asother components of equity at the same time. And, as we have decided not to apply hedge accounting on andafter the transfer date, it is treated in accordance with the regulations for suspension of hedge accounting forthe future.
9 Adjustments to line items
For the items presented as “Non-operating income,” “Non-operating expenses,” “Extraordinary income” and“Extraordinary losses” under Japanese GAAP, financial profit and losses are recorded as “Financial income”
and “Financial costs” and other items are presented in “Other income,” “Other expenses” and “Share of profit(loss) of investments accounted for using equity method” under IFRS.
10 Outstanding paid leave
Outstanding paid leave, which was not accounted for under Japanese GAAP, is recognized as personnel
expenses under IFRS.

81

11 Income tax expenses“Income taxes - current” and “Income taxes - deferred” were presented separately under Japanese GAAP, butthey are collectively presented as “Income tax expense” under IFRS. Also, in adoption with application of
IFRS, we review the recoverability of all deferred tax assets.
Reconciliations of cash flows for the fiscal year ended June 30, 2020 (The latest period presented in the mostrecent consolidated financial statements under Japanese GAAP)
Payment of lease fees by operating lease were classified as “Cash flows from operating activities” under Japanese
GAAP. However, IFRS requires all leases to be recognized as lease liabilities in principle, and thus expendituresfrom repayment of lease liabilities are classified as “Cash flows from financing activities.”82

Independent Auditor’s Report
To the Board of Directors of Nippon Koei Co., Ltd.
OpinionWe have audited the consolidated financial statements of Nippon Koei Co., Ltd. and its subsidiaries(the Group), which comprise the consolidated statement of financial position as at June 30, 2021, andthe consolidated statement of profit or loss and consolidated statement of comprehensive income,consolidated statement of changes in equity and consolidated statement of cash flows for the year thenended, and notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at June 30, 2021, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with theInternational Financial Reporting Standards.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of theGroup in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were addressedin the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.

PricewaterhouseCoopers Aarata LLC
Otemachi Park Building, 1-1-1 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan
T: +81 (3) 6212 6800, F: +81 (3) 6212 6801, www.pwc.com/jp/assuranceResponse to restatement of consolidated financial statements
Key audit matter description
How our audit addressed the key audit matter
On December 14, 2020, the Group submitted a We understood and assessed the remediation
revised Annual Securities Report for the year
status of deficiencies identified due to theended June 2020 and, relatedly, a revised
Restatement which aggregated into a materialInternal Control Report.
weakness throughout the year. Specifically, thefollowing controls were newly designed andThis was due to the fact that estimatedimplemented appropriately by the end of the year.
progress on four large-scale vertical axis
● Control to identify and specify thehydroelectric power projects undermanagement unit for each type of
construction in the Power & Digital Businessconstruction (water turbine, generator, andDivision of the Group was overstated. The
construction) for large-scale vertical axis
overstatement arose from inaccurate estimateshydroelectric power projects with respect toof remaining total costs to completion due to abusiness processes.
failure to review the total costs in a timely● Controls to confirm whether revisions of themanner. Revenue of 390 million yen were
estimated total cost of large-scale vertical axis
recognized under the percentage-ofhydroelectric power projects are necessary,completion method earlier than they should
and related controls to collect information
have been recognized, and, relatedly, aregarding subsequent events in a timely andprovision for loss on construction contracts ofcomprehensive manner with respect to the
396 million yen on these construction projects
financial closing reporting process.
was recorded due to the inaccurate estimatesof the total costs (hereinafter referred to as theWe performed the following principal procedures"Restatement") which were discovered afterin response to the Restatement in the course of
the filing date of the Annual Securities Report.
our audit of the consolidated financial statements.
In connection with the Restatement, the Group● Inspected of the Group's investigation report
identified deficiencies in internal controlson the Restatement
related to inadequate budgeting and cost
● Inquired with management in regard to the
management systems for these large-scale
investigation and the remediation of thevertical axis hydroelectric power projects, andmaterial weakness
a lack of a process to identify events that result● Examined fraud risk factors
in cost changes timely. The Group determined● Verified the reasonableness of the revisedthat these deficiencies constitute a material
budgets for all large-scale vertical axis
weakness to be disclosed. The Group'shydroelectric power projects
investigation regarding the Restatement did● Inspected contract specifications, cost
not identify any signs of fraud.
estimation materials, and other pertinent
information
We issued an audit report on the consolidated
financial statements dated December 14, 2020, ● Inquired with management of the divisions incharge of the projects
as amended. In the audit for the current fiscal● Reconciled total costs to supporting
year, the audit was conducted with due
documents used in developing the estimatesconsideration to the response to the
Restatement and the impact of the deficiencies ● Analyzed the reasonableness of estimatedtotal costs using actual costs incurred andin internal controls related to the Restatement.
specifications for similar projects completed
Accordingly, we have determined that thepreviously
matter constitutes a key audit matter.
● Reconciled incurred costs with supporting
documents● Recalculated revenue recognized● Reviewed monthly trends in incurred costs

2 of 7

Revenue recognition in contracts for which revenue is recognized over time
Key audit matter description
How our audit addressed the key audit matter
The Group contracts with customers such as
In reviewing the appropriateness of revenue
national and local governments, foreign
recognition for these contracts, we performed thegovernments, and electric power companies
following principal audit procedures:for public infrastructure development projects
Understood and evaluated the design andto provide construction consulting services
implementation and tested the operatingsuch as planning, design, and construction
effectiveness of internal controls related to budget
management, as well as manufacturing andmanagement and the process for estimating total
sales of electric power-related equipment.
costs developed by the Group. Specifically,
Most of the 117,859 million yen in revenue inregarding the material weakness that was
the consolidated statement of profit and loss
identified and disclosed in connection with theconsists of performance obligations which arerestatement of the prior period financial
recognized over time. As described in Note 3.
statements, we considered the remediation status
SIGNIFICANT ACCOUNTING POLICIES (15)of the material weakness identified.
Revenue, revenue from these performanceobligations is recognized based on progress
In addition, contracts with customers for longtoward complete satisfaction of the obligations, term large-scale projects were evaluated on a test
and, if progress cannot be reliably measured,basis, which are highly important in terms of therevenue is recognized to the extent of costs
amount of orders received and the amount of sales
incurred until such time as progress ofrevenue, early-stage projects for work which theperformance obligations can be reliably
Group has limited prior experience, and projects
measured. In addition, the measurement ofwith significant revenues recognized, such as
progress is generally based on actual incurred
those for which revenue was recognized based on
costs relative to estimated total costs, while
output measures for large-scale projects, thesome large projects are based on actual output. following procedures were performed.
The Group's contracts with customers differ
from one another in terms of the nature of thedeliverables and the specifications for thosedeliverables, and the estimation of total costs isdependent on management judgment. In
particular, early-stage projects for work withwhich the Group has limited prior experience
are subject to limited information, such as
similar projects completed previously whenestimating total costs, and include significant
assumptions, such as outsourcing costs.
Therefore, estimates of total costs are likely tochange due to revisions in estimate. In
addition, revenue recognized based on output
measures for large-scale projects includes
estimates.
Due to the nature of the contracts, revenue
recognition involves management judgment
and requires evaluation on a contract-bycontract basis. Accordingly, we havedetermined that this matter constitutes a key
audit matter.

3 of 7

●
●
●
●
●
●
●
●
●

Inspected contracts and related specification
documents
Inquired with the personnel in charge of
executing the contract
Reconciled estimates of total costs andsupporting documentation such as
outsourcing costs
Assessed the reasonableness of estimates of
total cost and assumptions of outsourcing
costs
Reconciled incurred costs with supporting
documents
Matched the estimated billing amount with
the incurred expense and other output
measures used to measure progress
Recalculated revenue recognized
Matched deposit vouchers to revenue booked
Reviewed monthly trends in revenues andprofit margins to assess reasonablenessImpairment of property, plant and equipment of PT. CIKAENGAN TIRTA ENERGIKey audit matter description
How our audit addressed the key audit matter
PT. CIKAENGAN TIRTA ENERGI ("CKTE"), aWe performed the following principal audit
consolidated subsidiary which operates inprocedures on the impairment loss on theIndonesia, is engaged in the business ofconstruction in progress of CKTE.
constructing a hydroelectric power generation
facility in Indonesia. After the completion of the ● Evaluated the design and implementation andpower generation facility, CKTE plans to selltested the operating effectiveness of internal
electric energy generated from the facility based
controls related to the determination of
on the power sale agreement entered into withindicators of impairment of non-financial
the local power company. However, due toassets and the recognition of impairment
ground deformation caused by abnormal
losses and the measurement of the value in
rainfall in 2020, the facility under constructionuse, including the establishment ofsuffered damage. As a result of investigation,
assumptions such as future revenue
large-scale repair and reinforcement costs to fix
projections, repair and reinforcement costs,
the damage done to the facility were necessary,and the discount rate, which are the basis forand maintenance costs were expected to be
estimating the future cash flows of CKTE
incurred for measures against ground● Understood the business plan, including thedeformation after the commencement of
earnings forecast of CKTE, and assumptions
operations. Therefore CKTE decided tosuch as the repair and reinforcement plan, by
postpone the commencement of operations forinquiring with CKTE management andapproximately one year.
reviewing relevant documentation● Confirmed the consistency of the selling pricebased on usage, which is a significant
Taking into account these circumstances, 2,629
assumption in the revenue plan, with themillion yen of construction in progress costs
power sale agreement, and the consistency
related to the power generation facility underwith historical rainfall data on expected
construction were tested for impairment. As a
precipitation which is a basis of future power
result, the Group recorded an impairment loss
generation forecastedof 1,739 million yen as described in Note 15.
● Examined the reasonableness of the costs
IMPAIRMENT OF NON-FINANCIAL ASSETS
expected to be incurred as a result of the(1) Impairment losses in the consolidated
repair and reinforcement plan by examining
financial statements.
the consistency of selected elements of thosecosts with the supporting documents
In measuring the impairment loss on the● Calculated the discount rate independently
construction in progress described above, thewith the assistance of valuation experts andGroup determined that the value in use
compared to the discount rate used byexceeded the fair value less costs of disposal andmanagement. The calculation of the discountused value in use as the recoverable amount.
rate independently was based on dataobtained from the market. In addition, we
Significant assumptions in estimating the value
evaluated the reasonableness of the method
in use are future revenue projections, repair andapplied by management in calculating thereinforcement costs, and the discount rate useddiscount rate
the estimated period of cash flows is 20 years,● Confirmed the consistency of the inflation rate
which was based on the expected term of thewith the published data of external public
power sales agreement; and the discount rate isorganizations
calculated based on the weighted average cost ofcapital and was estimated based on the expected
rate of inflation in Indonesia.
Because CKTE's estimates of future cash flows
are highly uncertain and involve subjective
judgments by management, we havedetermined that the matter was a key audit
matter.

4 of 7

Valuation of goodwill and trademarks attributable to BDP HOLDINGS LIMITED GroupKey audit matter description
How our audit addressed the key audit matter
As described in Note 13. GOODWILL AND
In reviewing the appropriateness of the valuation
INTANGIBLE ASSETS to the consolidatedof goodwill and trademarks attributable to thefinancial statements, the carrying amounts of
BDP Group, we performed the following principal
goodwill and trademarks classified asaudit procedures:
intangible assets with indefinite useful lives are● Understood and evaluated the design and
9,182 million yen and 4,148 million yen,
implementation and tested the operating
respectively, the majority of which are
effectiveness of internal controls related to theattributable to consolidated subsidiary BDP
valuation of goodwill and trademarks
HOLDINGS LIMITED ("BDP") and its
developed by the Group, as well as thesubsidiaries (”BDP Group”).
establishment of significant assumptions,
The Group acquired BDP, an UK-basedsuch as estimates included in the businessconstruction design company, in 2016 toplan as well as the growth rate related to the
expand the urban development market andvaluation, and also the discount rate
recorded significant goodwill and trademarks● Inquired of management regarding theat the time of acquisition as a result. BDP also
business plan to assess the reasonableness ofacquired Quadrangle Architects Limited, athe plan
Canadian construction design firm, in 2019,● Examined the consistency of the growth rate
and recorded goodwill and trademarks as awith external information
result.
● Calculated the discount rate independently
with the assistance of valuation experts andAs described in Note 15, IMPAIRMENT OF
compared to the discount rate used by
NON-FINANCIAL ASSETS (2) Goodwill andmanagement. The calculation of the discountIntangible Assets with Indefinite Useful Lives,rate independently was based on publiclythe Group performs an impairment test on
available market data. Also evaluated the
goodwill and trademarks annually or moremethods applied by management inoften if indicators of impairment exist.
calculating the discount rate
● Evaluated the reasonableness of the current
As part of the annual impairment test, theyear estimates by conducting comparative
Group determines the value in use of the BDP
analyses of the estimates and significant
Group by discounting the estimated cash flows
assumptions used in the previous year's
based on a management-approved business
impairment test as well as actual results
plan and a long-term growth rate to present● Performed a sensitivity analysis to assessvalue using a discount rate which is based on
significant assumptions by evaluating thethe weighted average cost of capital of thevariability in future cash flows associated withCGU.
changes in those significant assumptions
Because of the significance of the amount of
goodwill and trademarks attributable to the
BDP Group, the estimates in the businessplan's forecasts used to determine the value in
use, and significant assumptions such as thelong-term growth rate and the discount rate
are affected by assumptions of future market
and economic conditions and involve
management judgments and are subject to ahigh degree of estimation uncertainty, we havedetermined that such matters constitute a key
audit matter.

5 of 7

Responsibilities of Management and Those Charged with Governance for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with the International Financial Reporting Standards, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as applicable, matters related to going
concern.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is nota guarantee that an audit conducted in accordance with auditing standards generally accepted inJapan will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the purpose of the consolidated
financial statement audit is not to express an opinion on the effectiveness of the Group’s internal
control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
• Evaluate whether the presentation and disclosures of the consolidated financial statements are inaccordance with the International Financial Reporting Standard, the overall presentation, structure
and content of the consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and events in a mannerthat achieves fair presentation.

6 of 7

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those mattersthat were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Convenience translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended June 30, 2021 are presented solely for convenience. Our audit also included the translationof Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been madeon the basis described in Note 2 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

自動署名EL

自動署名Co1

Masataka Kubota

Hitoshi Kondo

Designated Engagement Partner
Certified Public Accountant

Designated Engagement Partner
Certified Public Accountant

November 19, 2021

7 of 7

90

No n co n solida ted Fina n c i al S t atemen t s
Nonconsolidated Balance Sheet
Nippon Koei Co., Ltd.
June 30, 2021

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

As ofJune 30, 2021

As ofJune 30, 2020

As ofJune 30, 2021

CURRENT ASSETS:
Cash and deposits ...............................................
Accounts receivable - trade (*1) .........................
Work in process ...................................................
Short-term loan receivables (*1) ........................
Current portion of long-term receivables (*1) ...
Other (*1) ............................................................
Allowance for doubtful accounts .......................
Total current assets ...........................................

¥6,11430,616
674
2,339
296
2,113
(572)
41,583¥4,242
26,892
970
2,463
283
2,885
(284)
37,451$55,327
277,037
6,105
21,1692,684
19,122(5,178)376,268

NON-CURRENT ASSETS:PROPERTY, PLANT AND EQUIPMENT
Buildings (*4) ......................................................
Accumulated depreciation ................................
Buildings, net ....................................................
Structures ............................................................
Accumulated depreciation ................................
Structures, net ...................................................
Machinery and equipment (*4) .........................
Accumulated depreciation ................................
Machinery and equipment, net ........................
Furniture and fixtures ........................................
Accumulated depreciation ................................
Furniture and fixtures, net ...............................
Land .....................................................................
Construction in progress ....................................
Other, net .............................................................
Total property, plant and equipment ...............

20,654(7,186)
13,467
765
(684)
81
2,520
(2,097)423
2,543(1,858)685
14,374497
121
29,651

20,446(6,935)
13,511
754
(674)
79
2,318
(2,021)296
2,437(1,782)655
14,374172
129
29,218186,891(65,026)
121,865
6,928(6,194)733
22,806(18,977)
3,828
23,017(16,813)6,203
130,067
4,505
1,098
268,303

INTANGIBLE ASSETS
Leasehold interests in land .................................
Software ..............................................................
Other ....................................................................
Total intangible assets .......................................

627
413
56
1,097

627
328
89
1,045

5,678
3,740
508
9,926

ASSETSINVESTMENTS AND OTHER ASSETS
Shares of subsidiaries and associates .................
Long-term loans receivablefrom subsidiaries and associates ......................
Prepaid pension costs ..........................................
Other .....................................................................
Allowance for doubtful accounts ......................
Total investments and other assets .................
Total non-current assets ................................

27,614

27,103249,875

4,810
2,931
4,414
(1,808)37,96368,711

4,347
2,756
4,408
(92)
38,52468,78843,52926,52639,949(16,367)
343,513621,743

TOTAL ASSETS ...................................................

¥110,295¥106,240$998,011

91Thousands of
U.S. Dollars (Note 1)

Millions of Yen

As ofJune 30, 2021

As ofJune 30, 2020

As ofJune 30, 2021

CURRENT LIABILITIES:
Accounts payable - trade (*1) .............................
Short-term borrowings (*1 and *3) ...................
Current portion of long-term borrowings .........
Provision for bonuses .........................................
Provision for directors’ bonuses .........................
Provision for loss on construction contracts .....
Provision for compensation ...............................
Other (*1) ............................................................
Total current liabilities .....................................

¥4,984
7,510
8,176
994
94
440
280
13,40635,885¥4,003
19,710
2,160
947
52
472
—
9,354
36,700$45,098
67,95473,985
8,995
853
3,987
2,533
121,306
324,714

NON-CURRENT LIABILITIES:Long-term borrowings ........................................
Liability for retirement benefits .........................
Provision for environmental measures ..............
Deferred tax liabilities ........................................
Other ....................................................................
Total non-current liabilities ..............................
Total liabilities .................................................

17,685
80
25
978
596
19,36655,252

13,979
90
25
1,318
680
16,094
52,795160,027
727
230
8,851
5,398
175,235
499,950

7,480

7,458

67,687

6,179

6,157

55,915

1,546

1,546

13,9892,746
1,920
22,367
12,20840,788(0)54,4472,770
1,920
22,367
13,304
41,907(2,345)53,17824,855
17,373202,388
110,466
369,073(1)
492,674595
55,043265
53,444

5,386
498,061¥110,295¥106,240$998,011

LIABILITIES AND EQUITYEQUITY:
Shareholder’s equity:
Share capital .......................................................
Capital surplus:
Legal capital surplus ...........................................
Retained earnings:
Legal reserve .....................................................
Other retained earnings
Reserve for tax purpose reduction entry
of non-current assets ....................................
Reserve for market development ...................
General reserve ................................................
Retained earnings brought forward ...............
Total retained earnings ......................................
Treasury shares ....................................................
Total shareholders’ equity .................................
Valuation difference on
available-for-sale securities .............................
Total equity ......................................................
TOTAL LIABILITIES AND EQUITY .................
See notes to nonconsolidated financial statements.

92

N o n co n solidated S ta temen t o f I n c o me
Nippon Koei Co., Ltd.
Year ended June 30, 2021

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

NET SALES (*1) .................................................

¥73,970¥69,431$669,326

COST OF SALES (*1) ..........................................
Gross profit ............................................................

52,972
20,99751,67917,752

479,325
190,000

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (*1 and *2) ...
Operating income .................................................

16,812
4,185

16,1391,613

152,128
37,872OTHER INCOME:
Interest income (*1) ............................................
Dividend income (*1) ..........................................
Administrative service fee income (*1) ..............
Other (*1) ............................................................
Total other income ..........................................

150
1,467
228
310
2,156

162
1,499
203
420
2,286

1,358
13,2742,063
2,813
19,510OTHER EXPENSES:Interest expenses (*1) .........................................
Provision for compensation ...............................
Foreign currency exchange loss .........................
Commission expenses ...........................................
Other .....................................................................
Total other expenses .......................................
Ordinary Profit ......................................................

215
280
—
68
27
591
5,750

242
—
143
19
356
762
3,136

1,953
2,533
—

246
5,349
52,032EXTRAORDINARY LOSSES:
Provision of allowance for doubtful accounts (*3) ...

1,780

—

16,106

INCOME BEFORE INCOME TAXES ...............

3,970

3,136

35,926

INCOME TAXES:
Current ................................................................
Deferred ...............................................................
Total income taxes ..........................................

1,975
(485)
1,489

664
(55)
609

17,871(4,392)
13,478NET INCOME ......................................................

¥2,480¥2,526$22,44793616

N o n co n solida ted S ta temen t o f C o s t o f S al es

Millions of
Yen

Ratio(%)

Millions of
Yen

Ratio(%)

Thousands of
U.S.Dollars

Year ended
June 30, 2021

Year ended
June 30, 2020

Materials costs ............................................

¥2,1104.0¥1,6693.5$19,092

Labor costs ..................................................

22,12642.0

19,196

39.7

Expenses(Note) ...........................................

28,44054.0

27,454

Total expenses in the current period .........

52,677100.0

48,320

Beginning Work in process .........................

970

Total .............................................................

(Note) The main breakdown is as follows:

Thousands of
U.S.Dollars

Millions of Yen

Year ended
June 30, 2021

Year ended
June 30, 2021

Year ended
June 30, 2020

Year ended
June 30, 2021

Outsourcing expenses .................................

¥22,575¥20,309$204,276

200,213

Travel and transportation expenses ...........

2,638

3,661

23,873

56.8

257,345

Rent expenses ..............................................

1,029

828

9,313

100.0

476,652

Report Preparation Fee ..............................

1,003

999

9,081

4,329

8,778

Depreciation ................................................

377

348

3,419

53,64752,649485,431

Ending Work in process .............................

674

970

6,105

Cost of sales .................................................

¥52,972¥51,679$479,325

The Company uses cost accounting based on job-order cost system.

94

No n co n solidated S ta temen t o f C h an ges i n E q u i t y
Nippon Koei Co., Ltd.
Year ended June 30, 2021

Millions of Yen
Capital Surplus

UnappropriatedSharecapitalBALANCE AS OF JULY1, 2019 ............................
Issuance of new shares .........................................
Cash dividends ......................................................
Provision of reserve for tax purpose reduction entry of non-current assets ...
Reversal of reserve for tax purpose reduction entry of non-current assets ...
Net income ............................................................
Purchase of treasury shares .................................
Disposal of treasury shares ...................................
Cancellation of treasury shares ............................
Net change in the year ..........................................
BALANCE AS OF JUNE 30, 2020 ........................
Issuance of new shares .........................................
Cash dividends ......................................................
Provision of reserve for tax purpose reduction entry of non-current assets ...
Reversal of reserve for tax purpose reduction entry of non-current assets ...
Net income ............................................................
Purchase of treasury shares ................................
Disposal of treasury shares ..................................
Cancellation of treasury shares ...........................
Net change in the year ..........................................
BALANCE AS OF JUNE 30, 2021 ........................

Retained Earnings
Treasury
Shares

Total
Shareholders’EquityValuationdifference on
Available-forSale
Securities

Total
EquityReserve for Tax
Purpose Reduction
Entry of NonCurrent Assets

Reserve forMarketDevelopment

General Reserve¥1,546¥2,771¥1,920¥22,367¥11,969¥40,574¥(717)¥53,431¥435¥53,866

—

—

—

—

—

—

—

42

—

42

—

—

—

—

(1,193)(1,193)—(1,193)—(1,193)

—

1,080

—

—

(1,080)

—

—

—

—

—

—

—

(1,081)

—

—

1,081

—

—

—

—

—

—

—

—

—

—

—

2,526

2,526

—

2,526

—

2,526

—

—

—

—

—

—

—

—

(2,001)(2,001)—(2,001)

—

—

—

—

—

—

—

—

373

373

—

373

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(169)

(169)

7,458

6,157

1,546

2,770

1,920

22,367

13,304

41,907(2,345)53,178265

53,444

21

21

—

—

—

—

—

—

—

43

—

43

—

—

—

—

—

—

(1,138)(1,138)—(1,138)—(1,138)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(23)

—

—

23

—

—

—

—

—

—

—

—

—

—

—

2,480

2,480

—

2,480

—

2,480

—

—

—

—

—

—

—

—

(429)

(429)

—

(429)

—

—

—

—

—

—

—

—

312

312

—

312

—

—

—

—

—

—

(2,462)(2,462)

2,462

—

—

—

—

—

—

—

—

—

—

—

—

—

329

329

¥7,480¥6,179¥1,546¥2,746¥1,920¥22,367¥12,208¥40,788¥(0)¥54,447¥595¥55,043

Total
Shareholders’EquityValuationdifference on
Available-forSale
Securities

Legal capitalsurplus

Legal Reserve¥7,437¥6,136

21

21

—

—

—

—

—

Retained
Earnings
brought
forward

Total Retained
Earnings

Thousands of U.S.Dollars (Note 1)
Capital Surplus

UnappropriatedSharecapitalBALANCE AS OF JUNE 30, 2020 .............................
Issuance of new shares .........................................
Cash dividends ......................................................
Provision of reserve for tax purpose reduction entry of non-current assets ...
Reversal of reserve for tax purpose reduction entry of non-current assets ...
Net income ............................................................
Purchase of treasury shares .................................
Disposal of treasury shares ...................................
Cancellation of treasury shares ............................
Net change in the year ..........................................
BALANCE AS OF JUNE 30, 2021 ........................
See notes to nonconsolidated financial statements.

95

Retained Earnings
Treasury
Shares

Total
EquityReserve for Tax
Purpose Reduction
Entry of NonCurrent Assets

Reserve forMarketDevelopment

General Reserve$13,989$25,066$17,373$202,388$120,386$379,203$(21,224)$481,191$2,404

—

—

—

—

—

—

—

390

—

390

—

—

—

—

—

(10,298)(10,298)—(10,298)—(10,298)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(210)

—

—

210

—

—

—

—

—

—

—

—

—

—

—

22,44722,447—22,447—22,447

—

—

—

—

—

—

—

—

(3,886)(3,886)—(3,886)

—

—

—

—

—

—

—

—

2,828

2,828

—

2,828

—

—

—

—

—

—

(22,279)(22,279)

22,279———Legal capitalsurplus

Legal Reserve$67,491$55,720

195

195

—

Retained
Earnings
brought
forward

Total Retained
Earnings$483,596

—

—

—

—

—

—

—

—

—

—

2,982

2,982

$67,687$55,915$13,989$24,855$17,373$202,388$110,466$369,073$(1)$492,674$5,386$498,061

N o te s to N onconsolida ted Fi n an c i al S t atemen t s
Nippon Koei Co., Ltd.
Year ended June 30, 2021

1. BASIS OF PREPARATION
The accompanying nonconsolidated financial statements have been prepared by Nippon Koei Co., Ltd. (the“Company”) in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange
Act and its related accounting regulations, and in conformity with accounting principles generally accepted inJapan, which are different in certain respects as to the application and disclosure requirements of International
Financial Reporting Standards as issued by the International Accounting Standards Board.
As consolidated statements of cash flows and certain disclosures are presented in the consolidated financial
statements of the Company, nonconsolidated statements of cash flows and certain disclosures are not required
to be presented herein, in accordance with accounting principles generally accepted in Japan.
Effective for the year ended March 31, 2014, the Japanese Financial Instruments and Exchange Act and its
related accounting regulations were amended to allow an entity to not disclose certain designated footnote
information in its nonconsolidated financial statements if the entity also prepares and discloses consolidated
financial statements. Accordingly, the Company has omitted disclosures of certain footnote information in theaccompanying nonconsolidated financial statements.
The nonconsolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥110.515 to $1,
the approximate rate of exchange at June 30, 2021. Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SIGNIFICANT ACCOUNTING POLICIESa. Valuation Standards and Methods for Securities(1) Held-to-Maturity Bonds
Amortized cost method (Straight-line method)(2) Shares of Subsidiaries and Associates
Cost method based on the moving average method(3) Other SecuritiesThose with an active market priceMarket value method based on the market price on the closing date (any valuation difference is accounted
for by the method of direct recognition into net assets in full, while the cost of products sold is calculated
based on the moving average method)Those without an active market price
Cost method based on the moving average method.

b. Valuation Standards and Methods for Derivatives
Market value method

c. Valuation Standards and Methods for Inventories

Work in progress is stated at the lower of cost, which is generally determined by the specific identification
cost method, or net selling value.

96d. Method for Depreciation of Non-current Assets(1) Property, Plant and Equipment (excluding lease assets)
Straight-line method
Main useful lives are as follows.
Buildings: 2–50 years
Structures: 2–40 years
Machinery and equipment: 2–15 years
Tools, furniture and fixtures: 2–15 years(2) Intangible Assets (excluding lease assets)
Straight-line method(3) Lease Assets
Lease assets for finance lease transactions without transfer of title at the end of the lease term
The straight-line method is used when the lease period matches the useful life and zero residual value.

e. Basis for the Translation of Foreign Currency Assets and Liabilities into Japanese Currency

Foreign currency financial receivables and liabilities are translated into yen using the spot exchange rate at
the end of the period, with the translation difference accounted for as profit or loss.

f. Recording Criteria for Allowances/Provisions(1) Allowance for Doubtful Accounts
To determine the estimate of uncollectible trade receivables and loan receivables, the Company considers
the historical rate of credit losses for normal receivables and evaluates individually specific receivables asnecessary.
(2) Provision for Bonuses
The provision for bonuses is based on the estimated payment to be made to employees.
(3) Provision for Directors’ Bonuses
It is provided based on the estimated amount of payment to be appropriated for expenditures on bonuses
paid to directors.
(4) Provision for Loss on Construction Contracts
The expected amount of loss for contracts in process at the end of the current fiscal year was recorded inorder to reserve based on expected future losses.
(5) Provision for Compensation
It is provided for potential legal obligations as a result of completed projects in the past to compensate
custom for future damages.
(6) Provision for Retirement Benefits
To provide for accruals for retirement benefits of employees, the estimated provision is based on the
expected amount of retirement benefit liabilities and pension assets as of the end of the current fiscal
year.
The following are the accounting methods for provision for retirement benefits and retirement benefit
expenses.
1) Attribution Method for the Expected Amount of Retirement Benefits
The calculation of retirement benefit liabilities is based on the benefit formula as the method of
attributing the expected amount of retirement benefits to the periods up to the current period.
2) Accounting for Actuarial Gains/Losses and Prior Service Cost
Actuarial gains/losses are amortized using the straight-line method from the fiscal year following theiraccrual over a certain period (mainly 13 years) within the average remaining service period of
employees at the time of accrual. Prior service costs are amortized using the straight-line method overa certain period (mainly 13 years) within the average remaining service period of employees at the timeof accrual.
(7) Provision for Environmental Measures
To prepare for the expenditure on the treatment of PCB wastes under the “Act on Special Measuresconcerning Promotion of Proper Treatment of PCB Wastes,” the estimated amount of treatment is provided.

g. Recognition Criteria for Significant Revenue and Expense

Recognizing net sales on service contracts whose results of progress are deemed certain in the process ofoperations is based on the percentage-of-completion method (mainly the cost-to-cost method to estimate
progress).

97

h. Method of Hedge Accounts(1) Method of Hedge Accounting
The integrated method is applied to interest rate and currency swaps which are eligible for such treatment.
(2) Hedging Instruments and Hedging Targets
Hedging instruments
Interest rate and currency swap
Hedging targets
Borrowings at variable interest rates in foreign currency(3) Hedging Policy
Foreign exchange fluctuation risk and interest rate fluctuation risk of hedging targets are hedged basedon the Company’s internal policies and procedures.
(4) Method of Evaluating Effectiveness of Hedging
For the interest rate and currency swaps using the integrated method, the evaluation of the effectivenessis not necessary.

i. Other Significant Items as The Basic of Financial Statements’ Preparation(1) Accounting for Consumption Tax, Etc.
The tax exclusion method is used for accounting for consumption tax.
(2) Accounting Method for Retirement Benefits
Non-consolidated financial statements treat the unrecognized actuarial difference and unrecognized priorservice costs differently from the consolidated financial statements. In the balance sheet, prepaid pension
cost is recognized as the amount of retirement benefit liabilities with the addition or deduction of
unrecognized actuarial difference and unrecognized prior service cost, less the amount of pension assets.

3. SIGNIFICANT ACCOUNTING ESTIMATES
a. Revenue Recognition(1) The Amount for the Year Ended June 30, 2021
Net Sales ¥73,970 million ($669,326 thousand)(2) Information on the Contents of Significant Accounting Estimates
Most of net sales are recognized based on progress towards full satisfaction of performance obligations.
For the measurement of progress, the most significant components of cost in the estimated costs
remaining for these contracts are personnel expenses and outsourcing expenses that are based on the costbudget and actual accrued costs.
Early-stage projects for work with which the Company has limited prior experience are subject to limited
information, such as similar projects completed previously when estimating total costs, and include
significant assumptions, such as outsourcing costs. Therefore, estimates of total costs are likely to change
due to revisions in the estimate.
To ensure the accuracy of the estimate of total costs, the Company manages budgets by type of work andconfirms the appropriateness of the estimated total costs for each accounting period, to find out outliersof costs at an early stage, and to review the cost budget in a timely manner.
Moreover, the measurement of progress in some large projects is based on output measures. Whenrecording sales by expected billings, progressed is recognized based on incurred expense and other output
measures used to measure progress after approval by the project manager.
However, if estimates of total costs fluctuate significantly due to changes in the business environment andother factors, it may affect net sales for the following fiscal year.

b. BDP HOLDINGS LIMITED Stocks(1) The Balance as of June 30, 2021
Shares of subsidiaries and associates ¥16,898 million ($152,904 thousand)(2) Information on the Contents of Significant Accounting Estimates
For shares of subsidiaries whose fair value is not readily determinable, the Company recognizes
impairment losses when the net asset value of the shares, which reflects excess profitability, declines bymore than 50% compared to the acquisition cost. Unless the recoverability of the shares of subsidiaries is
supported by sufficient evidence, the Company recognizes a loss to the extent of net asset value.
The excess earning power is determined by discounting the estimated future cash flows based on thebusiness plans and growth rates for three years in the future approved by management, using thediscount rate of 9.6% based on the weighted average of capital costs of the cash generating units or the
cash generating unit groups, reflecting past experience and external information.
While these assumptions are made using the best estimate and judgment based on information available
at the time, the estimate may need to be revised due to changes in the business environment or otherfactors in the future, and an impairment loss may be recognized, which could have a significant impact
on the financial statements for the following fiscal year.

984. CHANGES IN PRESENTATIONStatement of Income“Administrative service fee income” included in “Other” under “Other income” for the previous fiscal year isseparately listed for the current fiscal year, due to quantitative significance.
“Commission expenses” included in “Other” under “Other expenses” for the previous fiscal year is separately
listed for the current fiscal year, due to quantitative significance.
“Loss on valuation of investment securities” (¥ 0 million ($ 0 thousand) in the current fiscal year) under “Other
expenses” listed separately for the previous fiscal year is included in “Other” for the current fiscal year due toquantitative significance.

Application of the “Accounting Standard for Disclosure of Accounting Estimates”“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31, March 31, 2020) is
applied to financial statements for the end of the current fiscal year, and a note on significant accounting
estimates is included in financial statements.
However, the note does not describe details concerning the previous fiscal year, in accordance with thetransitional treatment stipulated in the provisions per paragraph 11 of the Standard.

5. ADDITIONAL INFORMATION
Employee Stock Ownership Plan (“ESOP”) Trust

The Company maintains an ESOP for a part of its employees’ welfare programs which includes transfers of theCompany’s own stock to the employees’ stockholders association through a trust.
(1) Overview of the Transaction
At the Board of Directors’ meeting held on May 15, 2017, the Company resolved to reintroduce an ESOP as adisposition-type employee shareholding incentive plan to provide the Group’s employees with incentives toimprove corporate value and enhance their welfare programs.
The Company also resolved to transfer a portion of its shares held in treasury to an account established in
Trust & Custody Services Bank, Ltd. (the “Trust Account E”) by third-party allocation. The ESOP is an
incentive plan that distributes the profit of stock price rise for all the employees who join “Nippon Koei
Group employees’ stockholders association” (the “Employees’ Stockholders Association”). To establish theESOP, the Company concluded the “Stock benefit Trust (disposition-type ESOP) Agreement;” the trust
established pursuant to the role of the agreement shall be referred to as the “ESOP Trust” whereby theCompany is to act as administrator and the role of trustee is assigned to Mizuho Trust & Banking Co., Ltd.
(the “Trustee”.) The Trustee also concluded an agreement with Trust & Custody Services Bank, Ltd., underwhich the Trustee is to re-entrust management of security and other asset of the ESOP Trust to Trust &Custody Services bank Ltd.
The Trust Account E acquires shares of the Company that the Employees’ Stockholders Association is
expected to obtain over the five years after the trust is set up, and periodically sells its holdings to the
Employees’ Stockholders Association. If, by the time of the ESOP Trust’s termination, gains equivalent tocapital gains on sales of shares are accumulated within the ESOP Trust through sales of Company’s shares by
the Trust Account E to the Employees’ Stockholders Association, then those gains will be distributed as
residual assets to the Employees’ Stockholders Association enrollees who meet the requirements for eligible
beneficiaries. Furthermore, to guarantee funds borrowed by the Trustee that enable the Trust Account E toacquire Company’s shares, the Company is to repay any such outstanding debt pursuant to guarantee
agreement, in the event that there is any outstanding debt equivalent to losses on sales of shares due to adownturn in the price of Company’s shares up until termination of the ESOP Trust. The trust was terminatedin March 2021.
(2) Company’s Shares Remaining in the Trust
The Company’s shares remaining in the trust are recorded as “Treasury shares” at book value in the trust(excluding transaction costs). The book value and number of shares of such treasury shares were ¥312
million and 103 thousand shares as of June 30, 2020 and are no remaining as of June 30, 2021, as the trust
was terminated.
(3) Book Value of Borrowings Recorded Due to Application of the Gross Method
There were ¥345 million as of June 30, 2020 and are no recorded borrowings as of June 30, 2021, as the trust
was terminated.

99

The Impact of COVID-19 on Accounting Estimates

While the Company has made accounting estimates which assume that it will continue to be affected by thenovel coronavirus (COVID-19) for a certain period of time, the Company believes that it has not had a significant
impact in the current period. However, due to many continuing uncertainties regarding the future impact of
COVID-19 on the economy and society as a whole, it may affect the Company’s financial position and operating
results for the next fiscal year.

6. BALANCE SHEETS(*1)The balance of receivables and payables to affiliated companies are as follows:
Millions of Yen

Short-term account receivables ............................
Short-term account payables ................................

As ofJune 30, 2021
¥3,7028,181

As ofJune 30, 2020
¥3,444
7,199

Thousands of
U.S.Dollars

As ofJune 30, 2021
$33,501
74,034(2) Contingent Liabilities
The Company recorded the following contingent liabilities:
Millions of Yen

Bank refundment bonds of subsidiaries ..............
Bank guarantee bonds of subsidiaries .................
Total ................................................................

As ofJune 30, 2021
¥1,141
1,069¥2,211

As ofJune 30, 2020
¥500
1,063
¥1,563Thousands of
U.S.Dollars

As ofJune 30, 2021
$10,330
9,676$20,007(*3) To procure working capital efficiently, the Company has contracts for overdraft protection and a three-year
syndicated commitment line agreements with four counterparty banks. For the commitment line
agreement, there is a restrictive financial covenant attached for each counterparty bank. The unused
portions of commitments based on these agreements at the end of fiscal year are as follows:
Millions of Yen

Total amount of medium-term commitment lines and overdraft limits ...
Balance of borrowings ..........................................
Balance of unused portion ....................................

As ofJune 30, 2021
¥41,500—¥41,500

As ofJune 30, 2020
¥36,500
13,000¥23,500

Thousands of
U.S. Dollars

As ofJune 30, 2021
$375,514—$375,514

100

(*4) Reduction Entry
In the case of certain capital investments made by the Company that have been subsidized by the national
government, the amount of such subsidies is offset against the acquisition cost of the corresponding property,
plant, and equipment.
The amount of reduction entry by accounts under property, plant, and equipment are as follows:
Millions of Yen

Buildings ................................................................
Machinery and equipment ...................................
Total ................................................................

As ofJune 30, 2021
¥9
147
¥156

As of
June 30, 2020
¥9
147
¥156

Thousands of
U.S. Dollars

As ofJune 30, 2021
$84
1,333
$1,417

7. STATEMENTS OF INCOME(*1) The amounts relating to transactions with affiliated companies in nonconsolidated statement of income
are as follows:
Millions of Yen

Sales ........................................................................
Cost of purchased goods ........................................
Selling, general and administrative expenses.......
Non-operating income ...........................................
Non-operating expenses ........................................

Year ended
June 30, 2021
¥583
3,348
1,008
1,753
22

Year ended
June 30, 2020
¥510
3,056
898
1,715
20

Thousands of
U.S.Dollars

Year ended
June 30, 2021
$5,27730,301
9,121
15,869202(*2) The ratio of selling expenses to total selling, general and administrative expenses for years ended June30, 2021 and 2020, was 18% and 21%, respectively. The ratio of general and administrative expenses
to total selling general administrative expenses for years ended June 30, 2021 and 2020, were 82% and79%, respectively.
The breakdown of selling, general and administrative expenses by main characteristic is as follows:
Millions of Yen

Salaries and allowance ..........................................
Rent expenses on real estate..................................
Provision for bonuses ............................................
Provision for directors’ bonuses ................................
Retirement benefit expenses....................................
Provision of allowance for doubtful accounts ......
Depreciation ...........................................................

Year ended
June 30, 2021
¥4,958
1,465
303
94
362
224
612

Year ended
June 30, 2020
¥4,310
1,793
295
52
385
159
393

Thousands of
U.S.Dollars

Year ended
June 30, 2021
$44,863
13,264
2,744
853
3,280
2,028
5,546

(*3) The Company had loans receivable of ¥3,000 million ($27,145 thousand) to its consolidated subsidiary,
PT.CIKAENGAN TIRTA ENERGI (hereinafter referred to as “CKTE”) as of June 30, 2021. As stated in theNotes to Consolidated Financial Statements, “15. IMPAIRMENT LOSSES OF NON-FINANCIALASSETS, (1) Impairment Losses,” CKTE is insolvent.
The Company has recorded an allowance for doubtful accounts against this loan receivable based on the
20-year business plan, which includes CKTE’s electric power sale contract, and the anticipated timing ofrecovery, considering CKTE’s insolvency. The loss was recorded as an extraordinary loss.

101

8. LEASESOperating Leases(Lessor side)
The rental commitments under noncancelable operating leases are as follows:
Thousands of
U.S.Dollars

Millions of Yen

Due within one year ..............................................
Due after one year .................................................
Total ................................................................

As ofJune 30, 2021
¥276
813
¥1,089As ofJune 30, 2020
¥351
1,089
¥1,440

As ofJune 30, 2021
$2,5007,361$9,861

9. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATED COMPANIESMarket prices of stocks of subsidiaries and associated companies are not shown as they are not traded on active
markets and therefore do not have quoted market prices.
The carrying amount of investments in subsidiaries and associated companies whose fair values are not readily
determinable is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Investment in subsidiaries that do nothave a quoted market price in an active market ...
Investments in associated companies that do nothave a quoted market price in an active market ...
Total ................................................................

As ofJune 30, 2021

As ofJune 30, 2020

As ofJune 30, 2021

¥26,794¥26,313$242,453

820¥27,614790¥27,103

7,421$249,875102

10. INCOME TAXES(1) The Breakdown and changes of deferred tax assets and liabilities by major caption are as follows:
Thousands of
U.S. Dollars

Millions of Yen

As ofJune 30, 2021

As ofJune 30, 2020

As ofJune 30, 2021

¥53
579
729
452
92
6
304
134

¥52
596
115
11
74
2
290
144

$481
5,244
6,597
4,097
834
61
2,754
1,220

24
7
81
61
93
290
(1,465)
1,447

27
7
169
61
93
142
(847)
943

222
70
740
560
844
2,629
(13,263)
13,097

(897)

(844)

(8,122)(1,212)(1,222)(10,969)

Others ..................................................................
Total deferred tax liabilities ........................

(262)
(52)
(2,425)(117)(77)(2,261)(2,377)(479)(21,948)

Net deferred tax liabilities .................................

¥(978)¥(1,318)$(8,851)

Deferred tax assets:
Inventories ............................................................
Investment in subsidiaries ..................................
Allowance for doubtful accounts .......................
Accrued bonuses ......................................................
Accrued enterprise tax ..........................................
Accrued foreign tax ..............................................
Provision for bonuses ..........................................
Provision for loss on construction contracts .....
Liability for retirement benefits
for employees ....................................................
Provision for environmental measures.....................
Overdepreciation ......................................................
Loss on impairment of long-lived assets .................
Loss on valuation of investment securities ..............
Others ........................................................................

Less valuation allowance ....................................
Total deferred tax assets ..............................
Deferred tax liabilities:
Prepaid pension cost ...........................................
Reserve for deferred gains onsale of property .................................................
Unrealized gain on available-for-salesecurities ............................................................

103

(2) A reconciliation between the effective statutory tax rates and the actual effective tax rates reflected in theaccompanying nonconsolidated statement of income are as follows:

Normal effective statutory tax rate ......................
Per capita levy of local tax ....................................
Expenses not deductible for tax purposes ...........
Foreign income tax ...............................................
Valuation allowance ..............................................
Special Tax Credit ..................................................
Income not included for tax purposes .................
Income taxes for prior periods ............................
Other – net ...................................................................

Actual effective tax rate ........................................

As ofJune 30, 2021
30.6%
2.1
1.6
2.8
15.6
(2.6)
(10.3)
2.1
(4.4)
37.5%

As of
June 30, 2020
30.6%
2.8
2.1
4.1
7.0
(8.2)
(12.9)
(1.4)
(4.7)
19.4%

11. SIGNIFICANT SUBSEQUENT EVENTSStatement is omitted, as similar information is disclosed in “40. SUBSEQUENT EVENTS (1)Issuance of
New Shares as Restricted Stock Compensation” in “Notes to Consolidated Financial Statements.”

104

Attachments to Nonconsolidated Financial Statements
Nippon Koei Co., Ltd.
Year ended June 30, 2021

1. PROPERTY, PLANT AND EQUIPMENT and INTANGIBLE ASSETS
Millions of Yen

Property, plant and equipment:
Buildings ...............................
Structures ..............................
Machinery and equipment ...
Vehicles ..................................
Tools, furniture and fixtures ...
Land .......................................
Leased assets .........................
Construction in progress ......
Total ..................................
Intangible assets:
Leasehold interests in land ...
Telephone subscription right ...
Right to use water facilities ...
Software ................................
Software development in progress ...
Total ..................................

Book value atbeginning of period

Increase

Decrease

Depreciation

Book value at Accumulated Acquisition cost
end of period depreciation at end of period¥13,511
79
296
19
655
14,374
109
172¥29,218

¥633
12
217
7
251
—
30
949
¥2,102

¥106
1
0
0
69
—
2
623
¥803

¥570
9
90
6
151
—
36
—
¥866

¥13,467
81
423
20
685
14,374100
497¥29,651

¥627
44
0
328
44
¥1,045

¥—
—
—
236
138
¥375

¥—
—
—
8
172
¥181

¥—
—
0
143
—
¥143

¥627
44
0
413
11
¥1,097¥7,186
684
2,097
81
1,858
—
84
—
¥11,993¥20,654
765
2,520
102
2,543
14,374
185
497¥41,644

Thousands of U.S. Dollars
Book value atbeginning of period

Property, plant and equipment:
Buildings ............................... $122,257
Structures ..............................
721
Machinery and equipment ....
2,682
Vehicles ...................................
178
Tools, furniture and fixtures ...
5,928Land ........................................
130,067
Leased assets ..........................
991
1,556
Construction in progress .......
Total .................................. $264,384
Intangible assets:$5,678
Leasehold interests in land ...
Telephone subscription right ...
406
Right to use water facilities ...
2
Software ................................
2,973
400
Software development in progress ...
Total ..................................
$9,461

105

Depreciation

Book value at Accumulated Acquisition cost
end of period depreciation at end of period

Increase

Decrease$5,732
110
1,966
69
2,278
—
272
8,595
$19,024

$961
9
3
0
629
—
18
5,645
$7,267$5,163 $121,865 $65,026 $186,891
88
733
6,194
6,928
817
3,828
18,97722,806
60
187
740
928
1,374
6,203
16,81323,017— 130,067— 130,067
334
911
768
1,680
—
4,505
—
4,505
$7,837 $268,303 $108,522 $376,826

$—
—
—
2,141
1,257
$3,398

$—
—
—
81
1,557
$1,639

$—
—
0
1,294
—
$1,294$5,678
406
1
3,740
99
$9,926

(Note) Main increase and decrease during the fiscal year ended June 30, 2021 are as follows:
Millions of Yen

Thousands of
U.S. Dollars

Real estate acquisition taxes for Hanzomon PREX
Large tent warehouse at Fukushima Site
Value-Up Construction for Kojimachi 4-chome Kyodo Building

¥133
109
494

$1,206
987
4,475

Rotary table type 5-axis machining center

132

1,194

Increase:
Buildings
Construction in progress
Decrease:
Construction in progress

2. ALLOWANCE AND PROVISION
Millions of Yen

Allowance for doubtful accounts ........................
Provision for bonuses ...........................................
Provision for directors’ bonuses ............................
Provision for loss on construction contracts .......
Provision for environmental measures ................
Provision for compensation .................................

Balance at
beginning of period
¥377
947
52
472
25
—

Allowance for doubtful accounts .........................
Provision for bonuses ...........................................
Provision for directors’ bonuses ............................
Provision for loss on construction contracts .......
Provision for environmental measures ................
Provision for compensation .................................

Balance at
beginning of period$3,411
8,572
471
4,271
230
—

Increase

Decrease¥2,134
994
94
398
—
280

¥130
947
52
429
—
—

Balance at
end of period¥2,381
994
94
440
25
280

Thousands of U.S. Dollars

Increase

Decrease$19,316
8,995
853
3,602
—
2,533

$1,181
8,572
471
3,886
—
—

Balance at
end of period$21,546
8,995
853
3,987
230
2,533

[PRINCIPAL ASSETS AND LIABILITIES]Statement is omitted, as similar information is disclosed in consolidated financial statements[OTHERS]
There is no applicable information.

106

Independent Auditor’s Report
To the Board of Directors of Nippon Koei Co., Ltd.
OpinionWe have audited the nonconsolidated financial statements of Nippon Koei Co., Ltd. (the Company),
which comprise the nonconsolidated balance sheet as at June 30, 2021, and the nonconsolidated
statement of income and nonconsolidated statement of changes in equity, and notes to thenonconsolidated financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as at June 30, 2021, and its financial performance for the year thenended in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the nonconsolidated Financial Statements section of our report. We are independent of theCompany in accordance with the ethical requirements that are relevant to our audit of thenonconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the nonconsolidated financial statements of the current period. These matters wereaddressed in the context of our audit of the nonconsolidated financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters.

PricewaterhouseCoopers Aarata LLC
Otemachi Park Building, 1-1-1 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan
T: +81 (3) 6212 6800, F: +81 (3) 6212 6801, www.pwc.com/jp/assuranceResponse to restatement of the nonconsolidated financial statements
Key audit matter description
How our audit addressed the key audit matter
On December 14, 2020, the Company
We understood and assessed the remediation status
submitted a revised Annual Securities Report of deficiencies identified due to the Restatement
for the year ended June 2020 and, relatedly,
which aggregated into a material weakness
a revised Internal Control Report.
throughout the year. Specifically, the following
controls were newly designed and implemented
This was due to the fact that estimatedappropriately by the end of the year.
progress on four large-scale vertical axis
● Control to identify and specify the managementhydroelectric power projects underunit for each type of construction (water
construction in the Power & Digital Businessturbine, generator, and construction) for largeDivision of the Company was overstated. The
scale vertical axis hydroelectric power projects
overstatement arose from inaccuratewith respect to business processes.
estimates of remaining total costs tocompletion due to a failure to review the total ● Controls to confirm whether revisions of theestimated total cost of large-scale vertical axis
costs in a timely manner. Net sales of 390
hydroelectric power projects are necessary, andmillion yen were recognized under the
related controls to collect information
percentage-of-completion method earlier
regarding subsequent events in a timely andthan they should have been recognized, and,comprehensive manner with respect to therelatedly, a provision for loss on construction
financial closing reporting process.
contracts of 396 million yen on these
construction projects was recorded due to theWe performed the following principal procedures ininaccurate estimates of the total costs(hereinafter referred to as the "Restatement") response to the Restatement in the course of ouraudit of the nonconsolidated financial statements.
which were discovered after the filing date of
the Annual Securities Report.
● Inspected of the Company's investigation reporton the Restatement
In connection with the Restatement, the● Inquired with management in regard to theCompany identified deficiencies in internal
investigation and the remediation of thecontrols related to inadequate budgeting andmaterial weakness
cost management systems for these large● Examined fraud risk factors
scale vertical axis hydroelectric power● Verified the reasonableness of the revised
projects, and a lack of a process to identify
budgets for all large-scale vertical axis
events that result in cost changes timely. The
hydroelectric power projects
Company determined that these deficiencies● Inspected contract specifications, cost
constitute a material weakness to be
estimation materials, and other pertinent
disclosed. The Company's investigation
information
regarding the Restatement did not identify● Inquired with management of the divisions inany signs of fraud.
charge of the projects
We issued an audit report on the● Reconciled total costs to supporting documents
used in developing the estimatesnonconsolidated financial statements dated
December 14, 2020, as amended. In the audit ● Analyzed the reasonableness of estimated total
costs using actual costs incurred andfor the current fiscal year, the audit was
specifications for similar projects completed
conducted with due consideration to thepreviously
response to the Restatement and the impactof the deficiencies in internal controls related ● Reconciled incurred costs with supporting
documents
to the Restatement. Accordingly, we have
● Recalculated revenue recognizeddetermined that the matter constitutes a key
audit matter.
● Reviewed monthly trends in incurred costs

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Revenue recognition in contracts for which revenue is recognized over time
Key audit matter description
How our audit addressed the key audit matter
The Company contracts with customers such
In reviewing the appropriateness of revenue
as national and local governments, foreign
recognition for these contracts, we performed thegovernments, and electric power companies
following principal audit procedures:for public infrastructure development
Understood and evaluated the design andprojects to provide construction consulting
implementation and tested the operating
services such as planning, design, andeffectiveness of internal controls related to budget
construction management, as well as
management and the process for estimating total
manufacturing and sales of electric powercosts developed by the Company. Specificallyrelated equipment.
regarding the material weakness that was identified
Most of the 73,970 million yen in net sales inand disclosed in connection with the restatement of
the nonconsolidated statement of income
the prior period financial statements, we considered
consists of performance obligations which are the remediation status of the material weakness
recognized over time. As described in Note 2. identified.
SIGNIFICANT ACCOUNTING POLICIES g.
Recognition Criteria for Significant Revenue
In addition, contracts with customers for long-termand Expense, recognizing net sales on service large-scale projects were evaluated on a test basis,
contracts whose results of progress arewhich are highly important in terms of the amountdeemed certain in the process of operations is of orders received and the amount of net sales,
based on the percentage-of-completion
early-stage projects for work which the Company
method (mainly the cost-to-cost method to
has limited prior experience, and projects withestimate progress).
significant net sales recognized, such as those forwhich net sales was recognized based on output
The Company's contracts with customers
measures for large-scale projects, the following
differ from one another in terms of the nature procedures were performed.
of the deliverables and the specifications for
those deliverables, and the estimation of total ● Inspected contracts and related specification
costs is dependent on management
documents
judgment. In particular, early-stage projects● Inquired with the personnel in charge offor work with which the Company has limited
executing the contractprior experience are subject to limited● Reconciled estimates of total costs andinformation, such as similar projects
supporting documentation such as outsourcing
completed previously, when estimating total
costs
costs, and include significant assumptions,● Assessed the reasonableness of estimates ofsuch as outsourcing costs. Therefore,
total cost and assumptions of outsourcing costs
estimates of total costs are likely to change● Reconciled incurred costs with supporting
due to revisions in estimate. In addition, net
documents
sales recognized based on output measures● Matched the estimated billing amount with thefor large-scale projects includes estimates.
incurred expense and other output measuresused to measure progress
Due to the nature of the contracts, revenue● Recalculated revenue recognizedrecognition involves management judgment● Matched deposit vouchers to revenue booked
and requires evaluation on a contract-by● Reviewed monthly trends in revenues andcontract basis. Accordingly, we haveprofit margins to assess reasonablenessdetermined that this matter constitutes a key
audit matter.

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Valuation of loans to PT. CIKAENGAN TIRTA ENERGIKey audit matter description
How our audit addressed the key audit matter
As of June 30, 2021, the Company has loaned In assessing the appropriate valuation of the loans
3,000 million yen to PT. CIKAENGAN
to CKTE, we performed the following principal
TIRTA ENERGI ("CKTE"), a consolidated
audit procedures:subsidiary located in Indonesia. An allowance● Evaluated the design and implementation andfor doubtful accounts of 1,780 million yen
tested the operating effectiveness of internal
was provided for such loans.
CKTE is currently constructing hydroelectric
controls related to the determination of
power generation facility in Indonesia. After
assumptions such as future revenue
the completion of the power generation
projections, repair and reinforcement costs, andfacility, CKTE plans to sell electric energy
the discount rate, which are the basis forbased on the power sales agreement with theestimating the future cash flows of CKTE
local electric power company. However, due● Understood the business plan, including theto the ground deformation caused byearnings forecast of CKTE, and assumptions
abnormal rainfall in 2020, the facility undersuch as repair and reinforcement plan, byconstruction suffered damaged. As a result of
inquiring with CKTE management andinvestigation, large-scale repair andreviewing relevant documentation
reinforcement costs to fix the damage done to ● Confirmed the consistency of the selling pricethe facility were necessary, and maintenancebased on usage, which is a significant
costs ware expected to be incurred forassumption in the revenue plan, with the power
measures against ground deformation after
sales agreement, and the consistency withthe commencement of operations. Therefore,
historical rainfall data on expected precipitation
CKTE recorded an impairment loss of 1,739
which is a basis of future power generation
million yen in the current term and has fallen
forecasted
into negative net worth.
● Examined the reasonableness of the costs
expected to be incurred as a result of the repair
As described in Note 2. SIGNIFICANT
and reinforcement plan by examining the
ACCOUNTING POLICIES f. Recording
consistency of selected elements of those costs
Criteria for Allowances/Provisions (1)with the supporting documents
Allowance for Doubtful Accounts, to determine ● Obtained the financial statements of CKTE andthe estimate of uncollectible trade receivables andconfirmed the status of its negative net worthloan receivables, the Company considers thehistorical rate of credit losses for normal
receivables and evaluates individually specificreceivables as necessary.
The Company maintains an allowance for
doubtful accounts based on CKTE's estimatedamount and timing of collections of loan
receivable under its business plan for the
next 20 years, which is the term of the powersales agreement, and establishes anallowance to the extent of any net deficit.
We have determined that the probablecollection of the loans involves management
judgments and, therefore, constitutes a key
audit matter.

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Valuation of BDP HOLDINGS LIMITED shares
Key audit matter description
How our audit addressed the key audit matter
As described in Note 9. INVESTMENTS IN
In considering the reasonableness of the valuation
SUBSIDIARIES AND ASSOCIATED
of the investment in BDP, whose fair value is
COMPANIES in the nonconsolidated financial deemed extremely difficult to determine, we
statements, the Company has recorded on theperformed the following principal audit procedures:balance sheet 27,614 million yen of shares of● Understood and evaluated the status of thesubsidiaries and associates whose fair value isdesign and implementation and tested the
not readily determinable as of June 30, 2021.
operating effectiveness of internal controls,
Of this amount, the book value of investments
including the estimation of cash flow in thein a subsidiary BDP HOLDINGS LIMITED
business plan and the establishment of("BDP") is 16,898 million yen, which
important assumptions such as a long-term
accounted for approximately 61% of the total.
growth rate and a discount rate
The Company acquired BDP, an UK based● Understood BDP's business environment byconstruction design company, in 2016 toinquiring with management and reviewing
expand the urban development market. The
relevant documents to understand whether
acquisition occurred at a higher price than thethere were any circumstances that would
net asset value per share, reflecting BDP'ssuggest signs of deterioration in financial
excess earning power.
condition● Inquired with management regarding the
For shares of subsidiaries whose fair value isbusiness plan to assess the reasonablenessnot readily determinable, the Company● Examined the consistency of the growth rate
recognizes impairment losses when the netwith the external information
asset value of the shares, which reflects excess ● Calculated the discount rate independently withprofitability, declines by more than 50%
the assistance of valuation experts andcompared to the acquisition cost. Unless thecompared to the discount rate used byrecoverability of the shares of subsidiaries ismanagement. The calculation of the discountsupported by sufficient evidence, therate independently was based on data obtained
Company recognizes a loss to the extent of net
from the market. Also evaluated the methods
asset value.
applied by management in calculating thediscount rate
The determination of whether excess● Conducted comparative analyses of the
profitability of BDP is no longer probable issignificant assumptions used in the previous
based on management's approved businessyear's impairment test between the previous
plan and estimated cash flows based on the
year's estimates and actual values
expected long-term growth rate and other● Performed a sensitivity analysis to significant
factors discounted to present value using a
assumptions by evaluating the variability indiscount rate based on the BDP's weighted
future cash flows associated with changes inaverage cost of capital.
significant assumptions
Due to the quantitative significance of theinvestment, the management judgment
involved in determining significant
assumptions used in the valuation of excess
profitability, including the high degree of
estimation uncertainty in estimates of thebusiness plan, the long-term growth rate andthe discount rate, we have determined that thematter constitutes a key audit matter.

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Responsibilities of Management and Those Charged with Governance for the
Nonconsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the nonconsolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of nonconsolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the nonconsolidated financial statements, management is responsible for assessing theCompany’s ability to continue as a going concern and disclosing, as applicable, matters related to going
concern.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Nonconsolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the nonconsolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with auditing standards generally accepted inJapan will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these nonconsolidated
financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the nonconsolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the purpose of the financial statement
audit is not to express an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the nonconsolidated financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
• Evaluate whether the presentation and disclosures of the nonconsolidated financial statements arein accordance with accounting principles generally accepted in Japan, the overall presentation,
structure and content of the nonconsolidated financial statements, including the disclosures, andwhether the nonconsolidated financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation.

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We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those mattersthat were of most significance in the audit of the nonconsolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Convenience translation
The U.S. dollar amounts in the accompanying nonconsolidated financial statements with respect to theyear ended June 30, 2021 are presented solely for convenience. Our audit also included the translationof Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been madeon the basis described in Note 1 to the nonconsolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

自動署名EL

自動署名Co1

Masataka Kubota

Hitoshi Kondo

Designated Engagement Partner
Certified Public Accountant

Designated Engagement Partner
Certified Public Accountant

November 19, 2021

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5-4 Kojimachi, Chiyoda-ku, Tokyo 102-8539, Japan
Telephone: +81 3 5276 2454 Facsimile: +81 3 5276 2656
http://www.n-koei.co.jp E-mail: info@n-koei.co.jp

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