2020

Year ended March 31, 2020

Profile

HAZAMA ANDO CORPORATION was formed on April 1, 2013, through the merger of
HAZAMA CORPORATION (founded in 1889) and ANDO Corporation (founded in 1873).
HAZAMA ANDO CORPORATION utilizes its industry-leading technological capabilities
built on more than a century of experience to support national development and today’s
modern lifestyle in Japan, and in more than 30 countries and territories around the world.
Taking advantage of Japan’s booming construction market, HAZAMA ANDOCORPORATION has boosted its profitability through productivity improvements and othermeasures, and expanded its capital base by stabilizing and strengthening its management
and financial foundations.
HAZAMA ANDO CORPORATION aspires to be a company that meets the expectationsof society, with mutual growth and development. To achieve this, we will generateinnovation throughout the corporate group with reliable technology and passion, new ideas
and flexible thinking, dynamic actions. Further, we seek to realize a prosperous society inwhich people can live with peace of mind and comfort, and to establish our history andtradition as HAZAMA ANDO CORPORATION.

CONTENTSII

Financial Highlights.................................................................................. 1
Message from the President..................................................................... 2
Business Conditions and Outlook............................................................. 3
Topics 2020............................................................................................. 4
Review of Operations............................................................................... 6
Corporate Governance............................................................................ 8
Consolidated Financial Review................................................................. 9
Consolidated Balance Sheets.................................................................. 12
Consolidated Statements of Income....................................................... 14
Consolidated Statements of Comprehensive Income............................... 15
Consolidated Statements of Changes in Net Assets................................. 16
Consolidated Statements of Cash Flows................................................. 18
Notes to Consolidated Financial Statements............................................ 19
Independent Auditor‘s Report................................................................ 43
Global Network..................................................................................... 46
Corporate Data / Directors, Officers / Major Subsidiaries and Affiliates....... 47

Financial Highlights
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2020, 2019 and 2018

Millions of yen		2020¥378,136
24,701
16,804
339,772
136,899

Consolidated
Revenues
Operating income
Profit attributable to owners of parent
Total assets
Net assets
		Basic profit attributable to owners of parent per share
Net assets per share2019¥359,972
23,692
8,863
349,657
133,683

Thousands of
U.S. dollars

2018¥377,021
35,71523,862
329,778
122,400

2020$3,474,556
226,968
154,406
3,122,045
1,257,916

Yen

¥

84.42
704.86¥

U.S. dollars

45.21
664.78¥ 128.97
651.77

$

0.78
6.48

Note: U.S. dollar amounts in this annual report are translated from yen at the rate of ¥108.83 to US$1.00 for convenience.

Non-Consolidated

Consolidated

Consolidated

Revenues

Millions of yen

Operating Income

Millions of yen

Orders Received

Millions of yen
427,652

400,000

377,021359,972

378,136

400,000

40,00035,715300,000

30,000300,000

23,692

24,701200,000

20,000200,000

100,000

10,000100,000

0

‘18

‘19

‘20

0

380,281349,192

‘18

‘19

‘20

0

‘18

‘19

‘20

1

Message from the President

I would like to express our deepest condolences
to those who have lost loved ones as a result of
COVID -19, and ever yone who has sufferedhardship during this time. I also wish a speedy
recovery to those who have been affected by
COVID-19 and currently receive treatment.
HAZAMA ANDO CORPORATION has continued
to move forward with construction projects while
giving the utmost consideration to the health of
employees, as well as customers, partners firms,
and all stakeholders. We will continue to conductbusiness while taking strict measures to preventthe spread of the virus.
In Februar y 2020, HA Z A M A A N DO
CORPORATION announced the Hazama Ando
Vision 2030, outlining our company vision for the
next decade. We also formulated the Mediumterm Management Plan (FY3/21–FY3/23) as thefirst step toward achieving this long-term goal, andlaunched specific actions based on it. By reforming
our business portfolio, and establishing a robust
foundation for earnings resistant to fluctuations in
the business environment, we aim to achievesustainable growth and enhance our enterprisevalue.
The construction industry has been growing

We will continue to focus on safety and quality,

steadily up to now, but recently the impacts frommove forward in a concerted way to become a

COVID-19 have increased uncertainties in economy

corporate group that is trusted by society, and growof Japan as well as the world. I believe during

together with it. We thank you and look forward

uncertain times like this, that it is essential for us toto your continued understanding and support.

carefully consider the longer term, to be flexible tocope with challenges, and to steadily implement
necessary measures for further growth, in order to

Masato Fukutomi

create new value for HAZAMA ANDO CORPORATION

Representative Director and PresidentGroup.

2

Business Conditions and Outlook

1

Summary of Business Activities

The Japanese economy had been recovering at a moderate pace during the fiscal year ended March 2020, but economic conditions have deteriorated rapidly as a resultof the spread of COVID-19, suppressing both domestic and foreign demand, resulting in an extremely harsh situation.
Looking ahead, the difficult circumstances caused by COVID-19 are expected to continue, and it will be necessary to remain sufficiently vigilant regarding risks
that could further suppress demand in Japan and abroad, and to observe closely such factors as shifts in financial markets.
In the construction industry, while public sector investment in construction remains firm, private sector investment is declining as a result of growing uncertainty
surrounding the economic outlook.
Under such conditions, HAZAMA ANDO CORPORATION Group recorded consolidated revenues of ¥378.1 billion (+5.0% year on year) for the fiscal year ended
March 2020, with operating income of ¥24.6 billion (+4.3%), ordinary income of ¥23.9 billion (+6.6%), and profit attributable to owners of parent of ¥16.8 billion(+89.6%).
Results by business segment are as follows.
•Civil Engineering
Revenues amounted to ¥124.2 billion (+4.6% year on year), with operating income of ¥16.2 billion (-10.1%).
•Building Construction
Revenues amounted to ¥227.2 billion (+8.8% year on year), with operating income of ¥11.9 billion (+30.5%).
•Group Business
Revenues amounted to ¥21.7 billion (-20.4% year on year), with operating income of ¥1.3 billion (+21.3%).
•OtherRevenues amounted to ¥4.9 billion (-2.6% year on year), with operating income of ¥0.8 billion (+19.8%).

2

Future Outlook

Extremely harsh business conditions are expected to continue as a result of COVID-19. It will be necessary to remain sufficiently vigilant regarding risks that could
further suppress the economy in Japan and overseas, and to observe closely such factors as shifts in financial markets.
The construction industry continues to face a host of issues, including shrinking construction investment amid long-term population decline, as well as issues ofworking style reforms, productivity increases, and human resource development to address the steady decline in the number of skilled construction workers and aging
population. The industry will also need to strengthen measures to achieve decarbonized society, sustainable society.
In addition, should the current impact from COVID-19 be prolonged, issues of business continuity might also arise such as shrinking private sector investment ascorporate earnings deteriorate, revisions to public sector construction investment due to reduced tax revenue, delays in procurement of materials from reduced
efficiency in the global supply chain, and health and safety management to protect workers from infection.
Under such circumstances, HAZAMA ANDO CORPORATION Group will steadily implement the Hazama Ando Vision 2030 formulated in February 2020, andthe measures in the Medium-term Management Plan (FY3/21–FY3/23) to achieve this long-term vision. Through strategic growth investments, the Group will further
strengthen its mainstay construction business, and take proactive steps to reform its business portfolio by bolstering non-construction businesses. HAZAMA ANDOCORPORATION Group will be flexible to cope with challenges in the business environment, accelerate reforms, and secure a firm foundation for earnings in an effort tocreate new value.
HAZAMA ANDO CORPORATION Group, under its basic policy for business activities of “Secure, Safe, and High-quality Construction,” will steadily implement
the key measures of its Medium-term Management Plan, ensure safety management, quality control, and strict compliance, and aim to become a corporate group thatis trusted by society, and grows together with it.
An overviews of the Hazama Ando Vision 2030 and Medium-term Management Plan are as follows.

Overview of Hazama Ando Vision 2030
1. Long-term vision
Accelerate innovation to create new value•Create customer value•Create shareholder value•Create environmental value•Create employee value

2. Content of measures•Construction business: Further strengthen capabilities for winning orders,
worksite skill, and profitability•Non-construction businesses: Establish a source of earnings centered on theenergy sector
3. Long-term targets
Consolidated ordinary income of 40 billion yen, with 25% of those earnings
from non-construction businesses

Overview of Medium-term Management Plan (FY3/21–FY3/23)
1. Priority Measures(1) Domestic construction business•Continue measures for large-scale, complex projects, drawing on civilengineering experience and technological advantages.
•Strengthen the electric power and energy section.
•Concentrate on the maintenance and renovation businesses, such as
renovation projects for expressways and water/sewage facilities.
•Utilize energy management technologies to strengthen proposal capabilities.
•Strengthen the construction business with measures for redevelopment
projects.
(2) Overseas construction business•Bolster structure through alliance with local partners.
•Enhance development of internationally-capable staff.
(3) Energy-related business•Collaborate with partner firms to expand sources of earnings in the energy
sector.
•Create environmental value through renewable energy business.
(4) Lifecycle support business•Provide solution-oriented management to optimize lifecycle costs and extend
the service life of facilities.
(5) Real estate business/Infrastructure management business•Enter the service business by acquiring yieldable properties and measures forreal estate development.
•Strengthen the business of infrastructure management (PPP, PFI, etc.).

(6) Technology development•Develop productivity enhancement technologies and management systems
utilizing AI, ICT, and BIM/CIM.
•Develop labor-saving technologies for the design and quantity surveying
processes.
•Develop technologies that expand use of PCa materials to enhance
productivity.
•Develop and enhance earthquake resistance technologies for disaster risk
reduction.
•Develop, verify, and implement energy management technologies to support
a decarbonized society.
•Utilize and enhance ZEB technologies by applying them to projects.
(7) Group companies, partner firms, employees•Strengthen measures to achieve a five-day workweek schedule, andimplement working style reforms.
•Instill integrity, and foster a corporate culture that continually heightens
awareness of compliance.
2. Consolidated Target Figures
FY3/23 (Final year of plan)
Ordinary income
ROE
Payout ratio

¥30bn
12%
Over 50%3

Topics 2020

Start of Verification Testing for the “Hazama
Ando Next-generation Energy Project” to Reduce
CO2 Emissions from Buildings across a Wide Area
The Hazama Ando Next-generation Energy Project was
launched in September 2018 as an initiative to solve Japan’s
energy problems. Verification testing began in April 2020.
Three types of tests are being conducted at several
energy demand points in separate locations (wide-areastructures), including the company’s Technical ResearchInstitute.
1) A power generating plant has been established combining
fuel cells able to use CO 2 -free hydrogen* as fuel, and acogeneration system with natural gas energy generating
facilities. The heat generated is supplied to lodging facilities
and other structures on the site.
2) The main building of the Technical Research Institute has
reduced its energy demand by using existing energy saving
technologies, and these energy savings are allocated forenergy circulation across a wide area.
3) The low-CO2 power generated from the plant is transmitted
to several wide-area demand points through a stand-alone
consignment system.
This system allows for integrated control of electricity and heat
use at the three facilities, as well as the forecasting of demandat buildings with different purposes (research center, factory,
worksite), and precise control of supply from the cogeneration

Construction Progress Management System Using
4K Fixed Point Cameras–Work progress visualized with 3D image renderingand AI detection of construction machineries,
enhancing productivity–
The Video Progress Management System Development
Consortium led by HA Z AMA ANDO CORPOR ATION has
developed a construction progress management system using
4K fixed point cameras that efficiently monitors the progress ofwork at construction sites.
The core of the system is integrated by four mainfunctions: 1) Superimposed display of construction information
modeling/management (CIM) and other 3D data in the video;
2) Real-time calculation of distance and area of any location in
the video; 3) AI detection to recognize dump trucks and othermoving construction machineries, and create progress reports;
and 4) Creation of an orthographic (overhead) image from thevideo. The consolidated information can be viewed fromanywhere through a browser.
This system has been trialed with a seawall embankment
work project, confirming the effectiveness of construction

4

Next-generation low-CO2 cogeneration plant

plant. Through a process of data accumulation, testing, andimprovement, the company aims to achieve optimal low-CO 2energy management.
Through this project, HAZAMA ANDO CORPORATION iscontributing the realization of a decarbonized societ y,sustainable society.
* CO2 -free hydrogen:• Hydrogen with low emissions of greenhouse gases at the time of manufacture• Hydrogen manufactured using methods that greatly reduce the volume of CO2
emissions• Hydrogen recognized as more environmental, focusing on the volume of CO2
emissions at the manufacturing stage

progress management for the construction site. In addition, thedevelopment and trial of this system was conducted as part of
the fiscal 2019 Public / Private R & D Investment Strategic
E x p ans i o n P ro g ram ( P R I S M ) of t h e M inis t r y of L a n d,
Infrastructure, Transport and Tourism (MLIT).

System screen (shown with CIM data)

SBT Certification and Participation in the RE100
Initiativea decarbonized society, recycling-oriented society, and leave afertile global environment for the next generation.

HAZAMA ANDO CORPORATION has set targets for reductions
in greenhouse gases to aim for environmental conservationand harmony. In December 2019, these targets were certified
by the international initiative Science Based Targets (SBT) as“science-based” standards necessary to meet the goals of theParis Agreement (to limit global warming to well below 2°C
above pre-industrial levels, and pursue efforts to limit warming
to 1.5°C).
HAZAMA ANDO CORPORATION has also joined RE100,
an international initiative that aims to substitute the electricity
used in its business activities with 100% renewable energy.
Going forward, to achieve the goals of SBT and RE100,
in addition to procuring renewable energy and participating inbusiness projects, HA Z AMA ANDO CORPOR ATION will
accelerate development of Next-generation Energy Project andother technologies, and steadily implement measures to realize

Utilization of ZEB Technologies
The ZEB Promotion Office was established in May 2019 toaccelerate the development of net zero energy building (ZEB)
technologies and enhance design capabilities. HAZAMA ANDOCORPORATION’s design and construction portfolio includes
projects certified as “ZEB Ready” (energy savings of 50% ormore compared to benchmark building energy consumption),and the company is accelerating its efforts for buildings
categorized as eco-friendly ZEB. These efforts and track record
were recognized in October 2019 with the registration of
HAZAMA ANDO CORPORATION as a ZEB Planner.
In addition, in conjunction with the Hazama Ando Nextgeneration Energy Project, the main building of the TechnicalResearch Institute was renovated utilizing ZEB -related
technologies, and verification testing is being conducted for

Presentation of the Hazama Ando Vision 2030
In February 2020, HAZAMA ANDO CORPORATION held an
explanatory meeting for analysts at its head office to present its
long-term vision “Hazama Ando Vision 2030,” along with theMedium-term Management Plan (FY3/21-FY3/23) that is thefirst stage to realizing this strategy. President Masato Fukutomi
presented the management indicators the company aims toachieve over the next decade, and explained the strategies forbusiness portfolio reform and growth investments that further
strengthen the business foundation, and provide sustainablegrowth. Going forward, HAZAMA ANDO CORPORATION willcontinue to create opportunities for communication and“planned operational management of energy demand using anenergy-saving system,” in which the portion of energy demand
saved is apportioned for energy circulation across a wide area.
HAZAMA ANDO CORPORATION is building a track record for
ZEB, and contributing to the creation of a sustainable society.

proactively engage with stakeholders in order to deepen
understanding of the company’s business and key strategies.

Explanatory briefing

5Review of Operations

Major Orders Received● Metropolitan Area Tunnel No.1 (Onoji construction area)/
Central Japan Railway Company (Japan)● Fuji Foods Wangan Funabashi Factory Extension Work/F Holdings Co. Ltd., Fuji Foods Co. Ltd. (Japan) ❶● Nagdhunga Tunnel Construction Project/Development
Cooperation Implementation Division, Department ofRoads, Ministry of Physical Infrastructure and Transport(Nepal) ❷● The Projec t for Improvement of Okinawa Road /Autonomous Government of Department of Santa Cruz
Plurinacional State of Bolivia (Bolivia) ❸● BROTHER INDUSTRIES (VIETNAM) LTD. BIVN New No.5
Factory Reconstruction Project/BROTHER INDUSTRIES(VIETNAM) LTD. (Vietnam) ❹

❶
❷

❸

❹

Major Projects in Progress● Komagome Dam Main Construction Work/Tosei Area
Branch Office in Aomori Prefecture (Japan)● Hokkaido Shinkansen, Oshima Tunnel ( Kaminoyu
section) Construction Work/Japan Railway Construction,
Transport and Technology Agency (Japan)● Sagamihara Kyodo Hospital Construction Work/National
Federation of Agricultural Cooperative Associations (Japan)
6● PACKAGE-1, CONSTRUCTION OF GYAING KAWKAREIK
BRIDGE/Department of Bridge, Ministry of Construction(Myanmar) ❺● CROIX-DES-MISSIONS Bridge and New Road Bridge
Construction Project/Ministry of Public Works, Transportand Communications, Republic of Haiti (Haiti) ❻❺❻Major Projects Completed● Yokohama Ring Expressway North-West Line Shield
Tunnel Construction Work/City of Yokohama (Japan) ❼● Kyoto Min-iren Chuo Hospital Construction Work/Public
Interest Incorporated Associations KYOTO HOKENKAI(Japan)● The Project for Improvement and Extension of Water
Supply System in Comayagua City / Municipality of
Comayagua, the Republic of Honduras (Honduras) ❽● The Project for Reconstruction of the Bridges on the
National Road No.9/Department of Roads Ministry of
Public Works and Transport Lao People's Democratic
Republic (Laos) ❾● The Program for Rehabilitation and Recovery from Nepal
Ear thquake (the Subprojec t of reconstruc tion of
Paropakar Maternit y and Women's Hospital, andReconstruction of Bir Hospital)/Ministry of Health andPopulation, Federal Democratic Republic of Nepal (Nepal)● Unipres Alabama, Hot press and assemble area expansion
Project/UNIPRES Alabama,Inc. (U.S.A) ❿

❼

❾

❽

❿

7

Corporate Governance● Basic Policy

HAZAMA ANDO CORPORATION seeks to contribute to the advancement of society and its customers’ business development through businessactivities founded on “Safe, Reliable, High-Quality Manufacturing.” We recognize that maintaining and improving a management system able torespond flexibly to changes in the business environment, along with transparency and fairness in management oversight, is essential to achieve
this goal. Accordingly, we continually pursue measures to enhance corporate governance.
● Matters Regarding Corporate Functions including Business Execution, Auditing/Supervision, Nominating and Determination of Compensation
To strengthen its corporate governance, HAZAMA ANDO CORPORATION has maintained a clear distinction between the decision-making andoperational oversight functions of the directors and Board of Directors, and the business execution function of the Management Meeting,executive officers and the Meeting of Executive Officers. The specific functions are as follows.
1. Directions
The term for directors is fixed at one year to further clarify the management responsibility of directors, and to provide an optimal
management structure responsive to changes in the business environment. Further, directors are classified into those with business execution
responsibility and those without. HAZAMA ANDO CORPORATION does not have the position of “executive director,” and only makes a
distinction between “representative director” and “director.” Non-business execution directors sign contracts with the Company that limits
liabilities for damages to an amount prescribed by law.
2. Board of Directors
The Board of Directors consist of nine members as of June 26, 2020 (including three external directors, two of whom are female), comprising
executive and non-executive directors. External directors, who are non-executive directors, serve in roles based on their experience andinsights, including supervision and providing advice on management. The Board of Directors meets monthly to make decisions on importantmatters regarding management, and to supervise the business execution.
3. Management Meeting
The Management Meeting meets monthly to discuss policies for management strategies and other matters, to confirm the progress ofbusiness plans, and to diversify and strengthen policy-proposing capabilities.
4. Executive Officer System
The number of executive officers is twenty-eight (28) as of June 26, 2020 (including six executive officers who concurrently serve as adirector). HAZAMA ANDO CORPORATION has established the seven officer categorized as “president,” “vice president,” “chairman,” “vicechairman,” “senior managing executive officer,” “managing executive officer” and “executive officer.” We have clarified the responsibilities
for the operations under each executive officer management, and limited the term to one year to enhance the mobility and flexibility of theexecutive officer system. In addition, we clarified the authorities and responsibilities for the operation of each executive officer based on a
resolution of the Board of Directors. A compensations system to reflect the performance of operation under each executive officer has been
introduced.
5. Meeting of Executive Officers
The Meeting of executive officers is held monthly in accordance with the executive officer system, to enhance the efficiency of consensual
decision-making and strengthen operational execution, as well as to ensure that management information is conveyed promptly andaccurately along the management line, and to provide for the sharing of information among departments.
6. The Audit Committee
The Board of Auditors comprises four members as of June 26, 2020 including two full-time auditors, and two non-regular external auditors.
Auditors including external auditors, in accordance with auditing standards established by the Board of Auditors, and in line with theauditing policies for each fiscal period, division of duties and other rules, maintains communication with directors, the Internal Auditing
Department and other employees. Auditors attend meetings of the Board of Directors and other important meetings, receive reports andexplanations from directors and employees regarding the status of the execution of their duties, review important documents and others,
and conduct audits at the head office and other major business locations. External auditors sign contracts with the Company that limits
liabilities for damages to an amount prescribed by law.
7. Various Committees
HAZAMA ANDO CORPORATION has established committees to advise the Board of Directors, including the Governance Advisory Committee
to submit reports on matters related to the nomination and compensation for directors and other executives, and the Internal Control
Committee to submit reports on matters related to the continual improvement of the internal control system overall.
Various committees have also been established to streamline management operations, including the Compliance Promotion
Committee, providing advice regarding compliance matters, and the Central Safety and Health Committee, providing advice regarding healthand safety issues.
● Corporate Governance and Internal Control Structure
Shareholders’ Meeting
Management
Audit
Appoint/Dismiss
ReportAppoint /Dismiss
Directors
Board of Directors

ReportBusiness
Execution

Audit

Board of Directors
Secretariat

Auditors
Board of Auditors

Board of Auditors
Secretariat

ReportReport/Recommend

Appoint/Dismiss
Accounting Auditor

Coordinate
Governance Advisory Committee
Consult

Coordinate

Audit

Audit

Coordinate

Supervise
ReportReportReportManagement Meeting

Executive Officer
Meeting of Executive Officers
ReportDirectDirectDirectInternal Audit Department
Audit
Business Divisions

8

Committees

Consult

President(RepresentativeDirector)

DirectInternal Control Committee

Compliance Promotion Committee
Safety and Health Committee

Compliance Audit Department
ReportImplement

ReportAudit

ImplementGroup Companies(Subsidiaries)

Consolidated Financial Review
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2020, 2019, 2018, 2017 and 2016

Summary
Thousands of
U.S. dollars

Millions of yen
2020

2019

2018

2017

2016

2020

¥358,191¥334,245¥348,879¥378,983¥360,869$3,291,289

19,94525,72728,14229,011

18,389183,267

Operating results:
Revenues
Construction contracts
Other activities

378,136

359,972

377,021407,994379,258

3,474,556

330,918

314,180

319,666

348,836

334,524

3,040,687

47,21845,79257,35559,15844,734433,869

22,517

22,10021,64022,14019,277

206,901

24,701

23,69235,71537,01825,457226,968

16,804

8,863

23,862

26,277

14,984

154,406

Total assets¥339,772¥349,657¥329,778¥318,387¥300,368$3,122,045

Total liabilities

202,873

215,974

207,378

217,643

223,390

1,864,129

Total net assets

136,899

133,683

122,400

100,744

76,9781,257,916¥(3,103)¥5,900¥38,127¥(1,802)¥34,722$(28,512)(3,016)(2,357)(2,261)

6,317(12,016)(27,713)(13,244)(7,780)(3,962)(3,376)

5,941(121,694)

Total
Cost of sales
Gross profit
Selling, general andadministrative expenses
Operating income
Profit attributable toowners of parent
Financial position:

Cash flows:
Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities

Yen
Per share amounts:
Profit attributable toowners of parent
Basic
DilutedU.S. dollars¥84.42¥45.21¥128.97¥142.30¥81.03

$0.78

84.40

44.20

119.41131.60

80.96

0.78

Dividends
Common stock
Net assets

30.00

30.00

25.00

20.00

12.00

0.28

704.86664.78651.77541.43411.76

6.48

Note: 1. U.S. dollar amounts in this annual report are translated from yen at the rate of ¥108.83 to US$1.00 for convenience.
2. The dividend per share for 2018 includes a ¥5 special dividend.

9Financial Review
Revenues
Revenues in fiscal 2020 totaled ¥378,136 million (US$3,474,556 thousand), of which ¥358,191 million (US$3,291,289 thousand)came from construction projects and ¥19,945 million (US$183,267 thousand) from other activities. These two business segments
accounted for 94.7% and 5.3%, respectively, of total revenues.
Costs and Expenses
Cost of sales amounted to ¥330,918 million (US$3,040,687 thousand), which is equivalent to 87.5% of revenues. Selling, generaland administrative expenses amounted to ¥22,517 million (US$206,901 thousand), which is equivalent to 6.0% of revenues.
Operating income reached ¥24,701 million (US$226,968 thousand), and the operating margin was 6.5%. Profit attributable toowners of parent amounted to ¥16,804 million (US$154,406 thousand). Basic profit attributable to owners of parent per share was¥84.42 (US$0.78). HAZAMA ANDO CORPORATION paid dividend of ¥15(US$0.138) per share for the fiscal year ended March
31, 2019 on June 28, 2019, and paid interim dividend of ¥15 (US$0.138) per share for the fiscal year ended March 31, 2020 on
December 4, 2019.
Financial Position and Analysis
Total assets amounted to ¥339,772 million (US$3,122,045 thousand), total liabilities amounted to ¥202,873 million (US$1,864,129
thousand), and total net assets amounted to ¥136,899 million (US$1,257,916 thousand) at the end of fiscal 2020.
Net worth to total assets ratio was 40.0%. Net assets per share amounted to ¥704.86 (US$6.48).
Cash Flows
Cash and cash equivalents at the end of the year decreased by ¥19,632 million (US$180,391 thousand) to ¥115,462 million(US$1,060,939 thousand).
Net cash used in operating activities amounted to ¥(3,103) million (US$(28,512) thousand) mainly as the result of income
before income taxes amounted to ¥24,455 million (US$224,708 thousand), decrease in advances received on uncompleted
construction contracts amounted to ¥15,154 million (US$139,245 thousand) ,increase in notes and accounts payable amounted to¥ 6,339 million (US$58,247 thousand) and income taxes paid amounted to ¥5,327 million (US$48,948 thousand) .
Net cash used in investing activities amounted to ¥(3,016) million (US$(27,713) thousand) mainly as a result of purchase ofproperty, plant and equipment amounted to ¥3,805 million (US$34,963 thousand).
Net cash used in financing activities amounted to ¥(13,244) million (US$(121,694) thousand) mainly as a result of repaymentof long-term loans payable amounted to ¥7,398 million (US$67,978 thousand), cash dividends paid amounted to ¥6,004 million(US$55,169 thousand), purchase of treasury stock amounted to ¥5,066 million (US$46,550 thousand) and proceeds from longterm loans payable amounted to ¥5,304 million (US$48,737 thousand).
Construction Business (Non-Consolidated Construction Projects)
As HAZAMA ANDO CORPORATION’s construction business accounts for a large percentage of consolidated group business,
the financial performance of the business is presented below for reference.
Thousands of
U.S. dollars

Millions of yen
Revenues

2020

2019

2018

2017

2016

2020

Government sector¥78,588¥70,268¥88,070¥99,198¥85,772$722,117

Private sector

35,98340,531

34,072

31,43432,721

330,635

9,743

7,991

5,331

3,543

4,002

89,525

124,314

118,790

127,473

134,175

122,495

1,142,277

Civil engineering
Domestic

Overseas
Subtotal
Building construction
Domestic
Government sector

30,131

26,932

27,71645,292

29,404

276,863

Private sector

180,720

161,430

168,806

169,470

171,296

1,660,571

16,363

20,497

19,47324,161

32,762

150,354

Subtotal

227,214

208,859

215,995

238,923

233,4622,087,788

Total construction projects¥351,528¥327,649¥343,468¥373,098¥355,957$3,230,065

Overseas10Revenue from the civil engineering category accounted for ¥124,314 million (US$1,142,277 thousand), or 35.4% of total revenue
from construction projects, with domestic projects contributing ¥114,571 million (US$1,052,752 thousand), or 92.2%.
The government sector contributed ¥78,588 million (US$722,117 thousand), or 68.6%, of total domestic civil engineering
revenue, while private-sector civil engineering revenue amounted to ¥35,983 million (US$330,635 thousand), or 31.4% of total
domestic civil engineering revenue. Overseas civil engineering revenue reached ¥9,743 million (US$89,525 thousand), equivalent
to 7.8% of total revenue in the civil engineering category.
Revenue from the building construction category accounted for ¥227,214 million (US$2,087,788 thousand), or 64.6% of total
construction revenue. Domestic projects accounted for ¥210,851 million (US$1,937,434 thousand), or 92.8%.
The government sector contributed ¥30,131 million (US$276,863 thousand), or 14.3%, of total domestic building construction
revenue, while private-sector building construction revenue amounted to ¥180,720 million (US$1,660,571 thousand), or 85.7%, of
total domestic building construction revenue. Overseas building construction revenue reached ¥16,363 million (US$150,354
thousand), equivalent to 7.2% of total revenue in the building construction category.
Total overseas construction revenue reached ¥26,106 million (US$239,879 thousand) and accounted for 7.4% of total
construction revenue. Civil engineering projects accounted for 37.3% of this total, and building construction for 62.7%.
Thousands of
U.S. dollars

Millions of yen
Orders Received
Civil engineering

2020

2019

2018

2017

2016

2020

¥193,575¥192,179¥123,469¥193,008¥123,292$1,778,691

Building construction

186,706

235,473

225,723

236,278

238,922

1,715,575

Total construction projects¥380,281¥427,652¥349,192¥429,286¥362,214$3,494,266

Orders received for construction projects during fiscal 2020 amounted to ¥ 380,281 million (US$3,494,266 thousand). Overseas
work contributed 8.5% of orders in the construction category. Civil engineering orders amounted to ¥193,575 million(US$1,778,691 thousand), or 50.9% of total construction orders. Building construction orders amounted to ¥186,706 million(US$1,715,575 thousand), which is equivalent to 49.1% of total construction orders.
Thousands of
U.S. dollars

Millions of yen
Year-end Backlog

2020

2019

2018

2017

2016

2020

Civil engineering¥364,120¥294,914¥221,679¥226,120¥167,343$3,345,769

Building construction

182,579

223,318

196,300

186,748

189,780

1,677,653

Total construction projects¥546,699¥518,232¥417,979¥412,868¥357,123$5,023,422

Order backlog for construction projects at the end of fiscal 2020 amounted to ¥546,699 million (US$5,023,422 thousand), withcivil engineering work accounting for ¥364,120 million (US$3,345,769 thousand), or 66.6%, and building construction for¥182,579 million (US$1,677,653 thousand), or 33.4%.

11

Consolidated Balance Sheets
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
March 31, 2020 and 2019

Millions of yen

Thousands of
U.S. dollars(Note 1)
2020

2020

2019

Cash and time deposits (Notes 4 and 26)¥102,972¥120,303$946,173

Marketable securities (Notes 3 and 26)

14,00016,000128,641

2,930

8,236

26,9231,238,629

AssetsCurrent assets:

Receivables (Note 26):
Notes

134,800

110,518

Inventories (Notes 6 and 9)

9,615

12,786

88,349Other (Note 8)

13,28018,298122,026

(14)

(12)

(129)

277,583

286,1292,550,612

Land

15,505

15,057

142,470

Buildings and structures

22,297

20,602

204,879

Machinery and equipment

11,456

10,780105,265

Other

1,467

1,072

13,48050,72547,511

466,094(21,577)(20,583)(198,263)

29,14826,928267,831

18,513

22,269170,109

185

173

1,700

Accounts

Less allowance for doubtful accounts
Total current assets

Property, plant and equipment (Notes 8, 10,15, 16 and 17):

Less accumulated depreciation
Net property, plant and equipment

Investments and other assets:
Investment securities (Notes 3, 8 and 26)
Investments in unconsolidated subsidiaries and affiliates

145

439

1,332

Deferred tax assets (Note 20)

9,528

8,428

87,549Other (Note 8)

4,671

5,291

42,921

(1)

(0)

(9)

Long-term loans receivable (Note 8)Less allowance for doubtful accounts
Total investments and other assets
Total assets
See accompanying notes.

12

33,04136,600303,602¥339,772¥349,657$3,122,045

Thousands of
U.S. dollars(Note 1)
2020

Millions of yen
2020

2019

¥12,258¥12,264$112,634

5,133

6,875

47,165

342

358

3,143

Notes

20,203

17,873

185,638

Accounts

61,65858,019566,553

Income taxes payable

4,812

2,437

44,216

Advances received (Note 18)

34,244

49,157

314,656

Liabilities and Net Assets
Current liabilities:
Short-term loans payable (Notes 7 and 26)
Current maturities of long-term loans payable (Notes 7 and 26)
Current portion of bonds (Notes 7 and 26)
Payables (Note 26):

Accrued expenses

38

61

349

Provision for losses on construction contracts (Note 9)

955

1,734

8,775

Provision for losses on fire disaster

6,699

7,743

61,555

Other

33,04535,383

303,639

179,387

191,904

1,648,323

692

712

6,359

Total current liabilities
Long-term liabilities:
Bonds (Notes 7 and 26)
Long-term loans payable, less current maturities (Notes 7 and 26)

8,713

9,065

80,061

Net defined benefit liability (Note 19)

12,776

12,959117,394

Provision for environmental spending

148

152

1,360

Provision for management board incentive plan trust

94

108

864

46

46

423

1,017

1,028

9,345

Total long-term liabilities

23,486

24,070215,806

Total liabilities

202,873

215,974

1,864,129

17,00617,006

156,262

Capital surplus

19,926

19,927183,093

Retained earnings

103,700

92,945

952,862

Less treasury stock, at cost

(5,284)(256)(48,553)

135,348

129,622

1,243,664

1,880

4,483

17,275－(3)－

Deferred tax liabilities (Note 20)
Other

Net assets (Notes 22 and 23):
Shareholders’ equity:
Capital stock
Common stock

Authorized - 400,000,000 shares
Issued – 200,343,397 shares

Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

117

63

1,075

Accumulated remeasurements of defined benefit plans(1,287)(1,357)(11,826)

Total accumulated other comprehensive income

710

3,186

6,524

Foreign currency translation adjustment

Share subscription rights

4

5

37

Non-controlling interests

837

870

7,691

Total net assets

136,899

133,683

1,257,916

Total liabilities and net assets¥339,772¥349,657$3,122,045

13

Consolidated Statements of Income
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

Thousands of
U.S. dollars(Note 1)
2020

Millions of yen
2020

2019

¥358,191¥334,245

19,94525,727183,267

378,136

359,972

3,474,556

Construction contracts

314,013290,868

2,885,353

Other activities

16,90523,312

155,334

330,918

314,180

3,040,687

47,21845,792433,869

22,517

22,100206,901

24,701

23,692226,968

Revenues (Notes 12 and 24):Construction contracts
Other activities$3,291,289

Cost of sales (Notes 13 and 24):

Gross profit
Selling, general and administrative expenses (Notes 14 and 24):
Operating income
Other income (expenses):
Interest and dividends income

426

513

3,914

Interest expense

(422)

(481)

(3,878)Foreign exchange loss

(336)

(416)

(3,087)Compensation for damage

(170)

(455)

(1,562)Gain on sales of noncurrent assets (Note 16)

87

49

799

Gain on sales of investment securities

255

－

2,343

Gain on reversal of provision for losses on fire disaster

733

－

6,735

Loss on sales of noncurrent assets (Note 17)

(30)

－

(275)

Loss on sales of investments securities

(143)

－

(1,314)(643)

Loss on valuation of investments securities

(70)

－

Impairment loss (Note 15)

－

(46)

－

Loss on litigation

(47)

(149)

(432)

Losses on fire disaster(315)(9,333)(2,894)

Other, net

(214)

(358)

(1,966)(246)(10,676)(2,260)24,45513,016

224,708
72,361

Income before income taxes
Income taxes (Note 20):
Current

7,875

7,153

Deferred(147)(3,003)(1,351)

7,728

4,150

71,01016,727

8,866

153,698

(77)

3

(708)

¥16,804¥8,863$154,406

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

U.S. dollars

Yen(Note 1)

2020

2019

2020

Basic

¥84.42¥45.21$0.78

Diluted

84.40

44.20

0.78

30.00

30.00

0.276

Per share amounts (Note 25):
Profit attributable to owners of parent

Cash dividends applicable to the year
Common stock
See accompanying notes.

14

Consolidated Statements of Comprehensive Income
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

2020

2019

Thousands of
U.S. dollars(Note 1)
2020

¥16,727¥8,866$153,698(2,602)(125)(23,909)

3

17

28

Foreign currency translation adjustment

104

(100)

956

Remeasurements of defined benefit plans
Total other comprehensive income (Note 21)

69

(361)

634

Millions of yen

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Comprehensive income(2,426)(569)(22,291)

14,301

8,297

131,407

14,328

8,320

131,655

(27)

(23)

(248)

Comprehensive income attribute to:Comprehensive income attribute to owners of the parent
Comprehensive income attribute to non-controlling interests
See accompanying notes.

15

Consolidated Statements of Changes in Net Assets
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

Millions of yen
Shareholders’ equity
CapitalsurplusRetainedearnings¥12,651¥15,643¥89,829

4,355

4,355

Capital stock
Balance at April 1, 2018
Conversion of Convertible bond-typebonds with Subscription rights tosharesCash dividends paid

TreasuryStock(5,796)

Profit attributable to owners of parent

8,863

Disposal of treasury stock

(5)

41

Acquisition of treasury stock
Change of scope of consolidation
Capital reduction of consolidated
subsidiaries
Net changes in items otherthan shareholders’ equity
Balance at April 1, 2019

(2)
(5)

49

(61)

¥17,006¥19,927¥92,945
16,804

Profit attributable to owners of parent(1)

Disposal of treasury stock38(5,066)

Acquisition of treasury stock

Balance at April 1, 2018
Conversion of Convertible bond-typebonds with Subscription rights tosharesCash dividends paid
Profit attributable to owners of parent¥ (256)(6,004)

Cash dividends paid

Change of scope of consolidation
Net changes in items otherthan shareholders’ equity
Balance at March 31, 2020¥(295)(45)¥17,006¥19,926¥103,700¥ (5,284)

Millions of yen
Accumulated other comprehensive income
Accumulated
Valuation
Foreign
Deferred gains
remeasurements
difference on
currencyorlossesonof defined
available-for-saletranslation
hedgesbenefit planssecurities
adjustment¥4,608¥(20)¥135¥(996)

Share
subscription
rights

Noncontrollinginterests

¥9

¥837

(5,796)
8,863
36
(2)
44
(61)
(125)

17

(72)

(361)

(4)

33

(512)

¥4,483¥ (3)¥63¥ (1,357)

¥5

¥870

¥133,683(6,004)

Cash dividends paid
Profit attributable to owners of parent

16,80437

Disposal of treasury stock
Acquisition of treasury stock
Change of scope of consolidation
Net changes in items otherthan shareholders’ equity
Balance at March 31, 2020

16

¥122,401
8,710

Disposal of treasury stock
Acquisition of treasury stock
Change of scope of consolidation
Capital reduction of consolidated
subsidiaries
Net changes in items otherthan shareholders’ equity
Balance at April 1, 2019

Total

(5,066)(45)(2,603)

3

54

70

(1)

(33)

(2,510)¥1,880¥－¥117¥(1,287)¥4¥837¥136,899

Thousands of U.S. dollars (Note 1)
Shareholders’ equity

Balance at April 1, 2019

Capital stock

CapitalsurplusRetained
Earnings

Treasurystock$156,262$183,102$854,038$(2,352)

Cash dividends paid

(55,169)

Profit attributable to owners of parent

154,406(9)

Disposal of treasury stock349(46,550)

Acquisition of treasury stock(413)

Change of scope of consolidation
Net changes in items otherthan shareholders’ equity
Balance at March 31, 2020

$156,262$183,093$952,862$(48,553)

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Accumulated
Valuation
Foreign
Deferred gains
remeasurements
difference on
currency
or losses onof defined
available-for-saletranslation
hedgesbenefit planssecurities
adjustment
Balance at April 1, 2019

$41,193

$(28)

$579

$(12,469)

Share
subscription
rights

Noncontrollinginterests

Total

$46

$7,994$1,228,365

Cash dividends paid

(55,169)

Profit attributable to owners of parent

154,406

Disposal of treasury stock

340

Acquisition of treasury stock(46,550)(413)

Change of scope of consolidation
Net changes in items otherthan shareholders’ equity(23,918)

28

496

643

(9)

(303)

(23,063)

Balance at March 31, 2020

$17,275$－$1,075$(11,826)$37$7,691$1,257,916

See accompanying notes.

17

Consolidated Statements of Cash Flows
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

2020

2019

Thousands of
U.S. dollars(Note 1)
2020

¥24,455¥13,016$224,708

1,815
－
315
3
484
(779)
(1,044)
(87)
(426)
422
189
(112)
70
(57)

1,794
46
9,333
(21)
(375)
1,382
－
(57)
(513)
481
(129)
－
－
(52)

16,677
－
2,894
28
4,447
(7,158)(9,593)(799)(3,914)3,878
1,737(1,029)643(524)(19,060)
2,834
340
1,224
6,339
(15,154)(3,101)
281
4,288
3,239
446
(434)
(1,027)(5,327)(3,103)(13,309)(2,450)(1,097)(390)(15,850)
20,611
13,899(8,575)(2,005)
15,739
473
(442)
(495)
(9,375)5,900(175,136)
26,041
3,124
11,24758,247(139,245)(28,494)
2,582
39,401
29,762
4,098(3,988)(9,436)(48,948)(28,512)(1,474)
1,250
(856)
1,145
(3,805)235
290
199(3,016)(11,124)
11,458(1,203)109(1,754)200－(43)(2,357)(13,544)
11,486(7,865)
10,521(34,963)
2,159
2,665
1,828
(27,713)

9
5,304(7,398)358(394)(5,066)(6,004)(5)(48)(13,244)(184)(19,547)
135,094－(4,410)8,637(6,299)
555
(418)
(1)
(5,796)(5)(43)(7,780)105(4,132)
139,190
36

83
48,737(67,978)
3,290(3,620)(46,550)(55,169)(46)(441)(121,694)(1,691)(179,610)
1,241,330
－

(85)

－

(781)

¥115,462¥135,094$1,060,939

Millions of yen
Cash flows from operating activities:
Income before income taxes
Adjustment to reconcile income before income taxes to net
cash provided by operating activities:
Depreciation and amortization
Impairment loss
Loss on fire disaster
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for warranties for completed construction
Increase (decrease) in provision for loss on construction contracts
Increase (decrease) in provision for losses on fire disaster
Increase (decrease) in net benefit defined liability
Interest and dividends income
Interest expense
Foreign exchange loss (gain)
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on sales of property, plant and equipment
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable
Decrease (increase) in costs on uncompleted construction contracts
Decrease (increase) in other inventories
Decrease (increase) in advances paid
Increase (decrease) in notes and accounts payable
Increase (decrease) in advances received
Increase (decrease) in deposit received
Increase (decrease) in consumption tax payable
Other, net
SubtotalInterest and dividends received
Interest paid
Compensation for damage paid
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of marketable securities and investment securities
Proceeds from sales of short-term and long-term investment securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Proceeds from sales of intangible assets
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury stock
Cash dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly consolidated subsidiary
Decrease in cash and cash equivalents resulting from exclusion ofsubsidiaries from consolidation
Cash and cash equivalents at end of year (Note 4)
See accompanying notes.

18

Notes to Consolidated Financial Statements
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2020 and 2019

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of HAZAMA ANDO CORPORATION (“the Company”) and its consolidated
subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange
Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial ReportingStandards.
The accompanying consolidated financial statements have been restructured and translated into English with some expanded
descriptions from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law.
Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required
for fair presentation, is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2020, which was ¥108.83 to U.S. $1.00. The convenience translations should not
be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into
U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies(1) Consolidation
The consolidated financial statements include the accounts of the Company and its significant subsidiaries (“the Companies”). All
significant intercompany transactions and unrealized profits and losses among the Companies have been eliminated in consolidation.
All companies are required to consolidate all significant investees, which are controlled through substantial ownership ofmajority voting rights or existence of certain conditions. Investments in affiliates over which the Company has the ability to exercise
significant influence over operating and financial policies of the investees, are accounted for by the equity method.
Investments in remaining unconsolidated subsidiaries and affiliates, which have immaterial effect on the consolidated financial
statements, are accounted for at cost. Such investments are adjusted for any non-recoverable diminution in value, and income fromthese unconsolidated subsidiaries and affiliates is recognized only when the Companies receive dividends therefrom.
(2) Revenue and cost recognition
When the outcome of construction contracts can be estimated reliably, the percentage-of-completion method (cost-to-cost method
for the estimated progress) is mainly applied. Otherwise the completed-contract method is applied.
(3) Foreign currency translation
Revenues and expenses denominated in foreign currencies are translated at the rates of exchange prevailing when transactions are
made. Assets and liabilities denominated in foreign currencies are generally translated at the rates of foreign exchange prevailingat the balance sheet date and the resulting translation gains or losses are included in earnings.
(4) Cash and cash equivalents
Cash and cash equivalents include cash on hand, highly liquid investments with maturity of three month or less from the purchasedate. See Note 4 as to a reconciliation of cash and cash equivalents reported in the consolidated statements of cash flows with cash
and time deposits reported in the consolidated balance sheets.
(5) Allowance for doubtful accounts
To prepare for credit loss on receivables, collectability of normal receivables is estimated by applying the historical overall credit
loss rates, and collectability of doubtful receivables is analyzed individually and the estimated uncollectible amount is recorded.
(6) Inventories
Inventories are stated at cost as determined on a specific project basis.

19

(7) Securities
Securities of the Companies are classified into one of the following categories based on the intent of holding, and are accounted
for as follows:(a) Debt securities that are intended to be held to maturity (“held-to-maturity debt securities”) are stated at amortized cost.
(b) Securities other than trading securities, held-to-maturity debt securities and shares issued by unconsolidated subsidiaries andaffiliated companies which are not accounted for under the equity method (“available-for-sale securities”) are stated at fair market
values, if their fair market values are readily determinable. Unrealized gains and losses on these securities are reported, net of
applicable income taxes, as a separate component of net assets. Realized gains and losses on sale of these securities are computed
using moving-average cost. Available-for-sale securities without readily determinable fair market values are stated at movingaverage cost.
(8) Derivatives and hedging transactions
Derivative financial instruments are stated at fair value and changes in the fair value are recognized as gains or losses unlessderivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition ofgains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on the hedged
items are recognized.
If a forward foreign exchange contract is executed to hedge an existing foreign currency receivable or payable,(a) the difference, if any, between the Japanese yen amount of the hedged foreign currency receivable or payable translated using
the spot rate at the inception date of the contract and the book value of the receivable or payables is recognized in the consolidated
statements of income in the period which includes the inception date, and(b) the discount or premium on the contract (that is the difference between the Japanese yen amount of the contract translated using
the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recognized over the termof the contract.
Also, if interest rate swap contracts are used as hedge and meet certain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract
was executed.
The Companies use forward foreign currency contracts and interest rate swap contracts as derivative financial instruments only
for the purpose of mitigating future risks of fluctuation of foreign currency exchange rates and interest rate increases.
The Companies evaluate hedge effectiveness by comparing the cumulative changes in cash flows from or the changes in fairvalue of hedged items and the corresponding changes in the hedging derivative instruments during the period from the inception
date of hedging to the evaluation of hedge effectiveness. However, the evaluation of hedge effectiveness is omitted for interest rate
swap contracts as they meet certain hedging criteria.
(9) Property, plant and equipment, depreciation
Property, plant and equipment are carried at cost. Depreciation of buildings (excluding facilities attached to buildings) and facilities
attached to buildings and structures, which were acquired since April 1, 2016 is mainly recorded on the straight-line method, anddepreciation of other property, plant and equipment is recorded on the declining-balance method over estimated useful lives, exceptthat the declining-balance method is applied to buildings of one consolidated subsidiary.
Expenditures for significant renewals and betterments are capitalized, while expenditures for normal repairs and maintenanceare charged to expense when incurred.
(10) Provision for losses on construction contracts
To prepare for future losses related to construction contracts, the amount of estimated losses is recorded for the construction
contracts when losses are probable to occur and such losses can be reasonably estimated.
(11) Provision for losses on fire disasterTo prepare for future losses due to the fire, the amount of estimated losses other than construction costs at the end of the current
fiscal year is recorded in the provision for losses on fire disaster.
(12) Provision for environmental spending
To prepare for the treatment of Polychlorinated Biphenyl waste, which is obligated by the “Act on Special Measures Concerning
Promotion of Proper Treatment of PCB Waste,” the estimated cost for treatment is recorded.

20

(13) Provision for management board incentive plan trust
To prepare for future awards of the Company’s stock to the Directors, the estimated cost for stock award debt based on
predetermined regulations for awarding stock is recorded.
(14) Retirement and severance benefits
The retirement benefit obligation is calculated by allocating the estimated retirement benefit amount to periods until the end of thecurrent fiscal year on a benefit formula basis. Actuarial differences are recognized in expenses using the straight-line method overperiod less than the average of the estimated remaining service lives (9 years) commencing with the succeeding period. Prior
service costs are recognized in expenses using the straight-line method over period less than the average of the estimated remaining
service lives (3 years) commencing with present period.
The Company has calculated retirement and severance benefits and retirement benefit costs under certain lump-sum payment
plans using simplified method.
(15) Lease transactions(a) Finance leases which transfer ownership of leased assets
Leased assets arising from finance lease transactions which transfer ownership to the lessee are depreciated by the same method as
the depreciation of fixed assets.
(b) Finance leases which do not transfer ownership of leased assets
Leased assets arising from finance lease transactions which do not transfer ownership to the lessee are depreciated to a residual
value of zero by the straight-line method using the contract term as useful life.
(16) Income taxes
The Companies recognize tax effects of temporary differences between the carrying amounts of assets and liabilities for tax andfinancial reporting purposes. The provision for income taxes is computed based on the pretax income included in the consolidated
statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences.
(17) Appropriations of retained earnings
Appropriations of retained earnings are reflected in the accompanying consolidated financial statements for the following year
upon the shareholders’ meeting approval.
(18) Amounts per share
Basic profit attributable to owners of parent per share is based on the weighted average number of common stock outstanding
during the period, and diluted profit per share reflects the potential dilution that could occur if preferred stock were converted into
common stock or share subscription rights were exercised.
Cash dividends per share represent amounts applicable for the respective years on accrual basis.
A net asset per share is reported at the amounts of ¥704.86 (US$6.48) and ¥ 664.78 at March 31, 2020 and 2019, respectively.
(19) Changes in presentation(Consolidated Statements of Cash Flows)“Purchase of treasury stock” which was included in “Other, net” under cash flows from financing activities in the prior years ispresented separately from the current fiscal year, as its quantitative materiality has increased. Consolidated financial statements forthe previous fiscal year have been reclassified in order to reflect this change in presentation. As a result, ¥(44)million presented in“Other, net” under cash flows from financing activities in the consolidated cash flow statement for the previous fiscal year has been
reclassified into ¥(1)million in “Purchase of treasury stock” and ¥(43) in “Other, net”.

21

(20) New accounting standards not yet applied• “Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29, March 31, 2020)• “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 31, 2020)(a) Summary
The accounting standard is comprehensive accounting standard for revenue recognition. An entity recognizes revenue based on thefollowing five-steps.
Step 1: Identify the contracts with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation(b) Scheduled date of application
Scheduled date of application is from April 1, 2021.
(c) Effect of application of the accounting standard
The effect on the consolidated financial statements is currently under evaluation.

• “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019)• “Implementation Guidance on Accounting Standard for Fair Value Measurement”(ASBJ Guidance No. 31, July 4, 2019)• “Accounting Standard for Measurement of Inventories”(ASBJ Statement No. 9, July 4, 2019)• “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10, July 4, 2019)• “Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020)(a) Summary
In order to enhance comparability with internationally recognized accounting standards, “Accounting Standard for Fair Value
Measurement” and “Implementation Guidance on Accounting Standard for Fair Value Measurement” (together, hereinafterreferred to as “Fair Value Accounting Standards”) were developed and guidance on methods measuring fair value was issued. Fair
Value Accounting Standards are applicable to the fair value measurement of the following item.
•Financial instruments set forth in“Accounting Standard for Financial Instruments”•Inventories held for trading purposes set forth in“Accounting Standard for Measurement of Inventories”
Additionally, the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” has been revised, and thenotes related to the breakdown and other information, of fair value of financial instruments by level have been established.
(b) Scheduled date of application
Scheduled date of application is from April 1, 2021.
(c) Effect of application of the accounting standard
The effect on the consolidated financial statements is currently under evaluation.
• “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections”(ASBJ Statement No. 24,
March 31, 2020)(a) Summary
The purpose of the accounting standard is to clarify principles and overviews of procedures in accounting treatments adopted, incases where provisions of relevant accounting standards, etc. are unclear.
(b) Scheduled date of application
Scheduled date of application is from the end of the fiscal year ending March 31, 2021.
• “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, March 31, 2020)(a) Summary
The purpose of the accounting standard is to disclose information to facilitate financial statements user’s understanding ofaccounting estimates in specific items that have a risk of significantly affecting the financial statements for the following fiscal
year and are recorded in the financial statements for the current fiscal year based on accounting estimates.
(b) Scheduled date of application
Scheduled date of application is from the end of the fiscal year ending March 31, 2021.

22

(21) Additional information
Performance-linked stock compensation plan for directors and executive officers(a) Transaction summary
The Company was resolved to introduce a performance-linked stock compensation plan as an incentive plan for its directors
and executive officers (the “Directors”). The plan is highly transparent and objective and closely linked with the Company’s
performance for the Directors, with the goal of increasing awareness of the importance of contributing to further enhancing thecorporate value and performance over the medium-to-long-term.
The Company’s stock is acquired through the Board Incentive Plan Trust (“BIP Trust”) and awarded to the Directors inaccordance with performance targets achieved.
(b) The Company’s own stock in the Trust
The Company’s own stock in the Trust is recorded in treasury stock under net assets based on the book value in the Trust (excluding
ancillary expenses). The book value and the number of these treasury stock in the Trust as of the current fiscal year were
¥ 235million ($2,159 thousand) and 397,766shares, respectively. Additionally, The Company has decided to extend the trust period
for 3 years and make an additional contribution to the BIP trust by the resolution made at the board of directors held on August
8,2019, and the book value and the number of treasury stock have increased from the end of the previous fiscal year by additional
acquisition of shares.

23

3. Securities(1) The following tables summarize book values and acquisition costs of available-for-sale securities at March 31, 2020 and 2019:
Millions of yen
Book values
Type
Securities with book values exceeding acquisition costs

2020
Acquisition
costs

DifferenceBook values

2019
Acquisition
costs

Difference

Equity securities¥9,674¥5,981¥3,693¥17,737¥11,261¥6,476

Sub total

9,674

5,981

3,693

17,737

11,261

6,476

Securities with book values not exceeding acquisition costs
Equity securities¥5,129¥6,136¥(1,007)¥1,454¥1,654¥(200)

Corporate bonds

－

－

－

2,000

2,000

－

12,00012,000－12,00012,000

－

2,000

2,000

－

2,000

2,000

－

Negotiable certificatesof deposit
Other
Sub total

19,12920,136(1,007)

17,454

17,654

(200)

Total

¥28,803¥26,117¥2,686¥35,191¥28,915¥6,276

Thousands of U.S. dollars
Book values

Type
Securities with book values exceeding acquisition costs

2020
Acquisition
costs

Difference

Equity securities$88,891$54,957$33,934

Sub total

88,891

54,95733,934

Securities with book values not exceeding acquisition costs
Equity securities$47,128$56,382$(9,254)

Corporate bonds

－

－

－

110,264

110,264－

Negotiable certificatesof deposit
Other

18,377

18,377－

Sub total

175,769

185,023(9,254)

Total$264,660$239,980$24,680(2) Total sales, related gains and losses of available-for-sale securities for the year ended March 31, 2020 and 2019 are as follows:

2020

2019

Thousands of
U.S. dollars
2020$10,521

Millions of yen
Type
Equity securities¥1,145¥8

Related gains

255

0

2,343

Related losses

143

－

1,314

Sales

24

4. Cash and Cash Equivalents
Cash and cash equivalents reported in the consolidated statements of cash flows at March 31, 2020 and 2019 were reconciled withcash and time deposits reported in the consolidated balance sheets as follows:

2020

2019

Thousands of
U.S. dollars
2020¥102,972¥120,303$946,173(1,510)(1,209)(13,875)

Millions of yen
Cash and time deposits
Time deposits with maturities of exceeding
3-month from the date of acquisition
Securities with remaining maturities of 3-month or lessTotal: Cash and cash equivalents

14,00016,000128,641¥115,462¥135,094$1,060,939

5. The contents of significant non-cash transactions
The contents of significant non-cash transactions for the year ended March 31, 2020 and 2019 are as follows:
Exercise of share subscription rights in convertible bond-type bonds with subscription rights
2020

2019

Thousands of
U.S. dollars
2020

Increase in capital stock by exercise of share subscription rights¥－¥4,355$－

Increase in capital surplus by exercise of share subscription rights

－

4,355

－

¥－

¥8,710$－Millions of yen

Decrease in convertible bond-type bonds with subscription rights
by exercise of share subscription rights

6. Inventories
Inventories at March 31, 2020 and 2019 consisted of the following:

2020

2019

Thousands of
U.S. dollars
2020

Accumulated Costs on uncompleted construction contracts¥4,928¥7,755$45,282

Others

4,687

5,031

43,067

Total¥9,615¥12,786$88,349

Millions of yen

25

7. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans are represented mainly by loan on deed. The average interest rates of short-term loans were 1.2% and 1.5%
at March 31, 2020 and 2019.
Bonds at March 31, 2020 and 2019 are summarized below:

2020

2019

Thousands of
U.S. dollars
2020$9,502Millions of yen
Long-term debt from bonds, insurance companies and others due serially through 2024:
Unsecured 0.3% (average interest rates)¥1,034¥1,070Less current maturities

(342)

(358)

(3,143)

Total

¥692

¥712

$6,3592019

Thousands of
U.S. dollars
2020

Long-term loans payable at March 31, 2020 and 2019 are summarized below:
Millions of yen
2020
Long-term debt from banks, insurance companies and others due serially through 2029:
1.5% (average interest rates)

¥643

¥728

$5,908

Unsecured 1.3% (average interest rates)

13,203

15,212

121,318

SecuredLess current maturities(5,133)(6,875)(47,165)

Total¥8,713¥9,065$80,061

Repayment schedules for bonds are summarized below:

2021

¥342

Thousands of
U.S. dollars$3,143

2022

292

2,683

2023

237

2,178

2024

127

1,167

2025

36

331

Total

¥1,034$9,502Years ending March 31,

Millions of yen

Repayment schedules for the long-term loans payable are summarized below:

2021¥5,133Thousands of
U.S. dollars$47,165

2022

3,325

30,552

2023

2,819

25,903

2024

1,731

15,906

2025

838

7,700

Total

¥13,846$127,226

Years ending March 31,

Millions of yen

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional
security and guarantees for present and future indebtedness will be given under certain circumstances at the request of the banks,
and that any collateral furnished will be applicable to all indebtedness due to that bank.
In addition, the agreements provide that the bank has the right to offset cash deposited against any long-term and short-term
debt that become due and in case of default and certain other specified events, against all other debts payable to the bank. Suchrights have never been exercised by the bank.

26

8. Pledged Assets
The following assets were pledged to secure short-term bank loans, long-term debt and certain other obligation at March 31, 2020
and 2019:
Thousands of
U.S. dollars

Millions of yen
2020

2019

2020

¥1,559¥1,614$14,325

Investment securities

84

4,456

772

Other assets

109

132

1,002

¥1,752¥6,202$16,099

Property, plant and equipment

Total

9. Estimated loss on uncompleted construction contracts
Amount of costs on uncompleted construction contracts for which a construction loss is anticipated and reserve for expected losses
on construction contracts in process are presented without being offset.
Thousands of
U.S. dollars

Millions of yen

Amount of costs on uncompleted construction contracts for which aconstruction loss is anticipated, matching with reserve for expected
losses on construction contracts in process

2020

2019

2020

¥327

¥1,497$3,005

10. Tax purpose reduction entry
Regarding the tangible fixed assets acquired during the current fiscal year, the amount of tax purpose reduction entry was ¥40
million (US$377 thousand) in buildings and structures.
11. Contingent Liabilities(1) At March 31, 2020 and 2019, the Companies had the following contingent liabilities for loan guaranteed:
Millions of yen
2020

2019

Thousands of
U.S. dollars
2020

Guarantees for loan
Loans of employees

¥1

¥1

$9

Total

¥1

¥1

$9

(2) other
Regarding the fire occurred at the building under construction by the Company in Tama city, Tokyo on July 26, 2018, the Company
recognized expected compensation for damages under the construction contracts and fire-damaged equipment outside of theconstruction range other than the construction costs in the provision for losses on fire disaster.
However, the Company does not record expected compensation for damages that cannot be reasonably estimated and amount of
insurance to cover losses caused by the fire, in the provision for losses on fire disaster.
If the events different from those for which the provision for losses on fire disaster occur, the Company reconsiders the provision
for losses which may have effect on the Company’s consolidated financial statements.

2712. Revenues from construction contracts recognized by the percentage-of-completion method
Revenues from construction contracts recognized by the percentage-of-completion method for the fiscal year ended March 31,
2020 and 2019 were ¥340, 091 million (US$3,124,975 thousand) and ¥313, 618 million, respectively.
13. Provision for losses on construction contracts included in cost of sales of construction contracts
Provision for losses on construction contracts included in cost of sales of construction contracts for the fiscal year ended March 31,
2020 and 2019 were ¥741 million (US$6,809 thousand) and ¥1,504 million, respectively.
14. Research and Development Expenses
Research and development expenses included in manufacturing costs, and selling, general and administrative expenses amounted
to ¥2,633 million (US$24,194 thousand) and ¥2,519 million for the years ended March 31, 2020 and 2019, respectively.
15. Impairment Loss
No impairment loss is recognized for the year ended March 31, 2020.
Impairment loss for the year ended March 31, 2019 is as follows:
Location

Use

Type of assets

Fukushima prefecture

Idle asset

Land

Millions of yen
¥46
¥46

Total

The Companies generally conduct grouping of its “business assets” by location and “assets for lease” or “idle assets” by each
property unit to measure impairment loss. As the asset listed in the above table has become idle in the current fiscal year and there
are no plans for its future usage, its book value is reduced to recoverable amount, and such reduction is recorded as an impairment
loss in the other expenses caption. Additionally, the recoverable amounts of these assets are measured based on net selling price,
and are evaluated based on appraisal value for assets with significant book values and based on market standard for other assets.
16. Gain on Sales of Noncurrent Assets
Gain on sales of noncurrent assets for the year ended March 31, 2020 and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen
Type of assets

2020

2019

2020

Land and Buildings

¥55

¥49

$505

Other

32

－

294

Total

¥87

¥49

$799

17. Loss on Sales of Noncurrent Assets
Loss on sales of noncurrent assets for the year ended March 31, 2020 and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen

28

Type of assets

2020

2019

2020

Land and Buildings

¥30

－

$275

Total

¥30

－

$275

18. Advances Received
As is customary in Japan, the Companies normally receive payments from customers on a progress basis in accordance with theterms of the respective construction contracts.
19. Net Defined Benefit Liability
The Company and its consolidated subsidiaries have adopted the lump-sum payment plan and the retirement benefit pension planas their defined benefit plan.
The Company and its consolidated subsidiaries have calculated net defined benefit liability and retirement benefit costs undercertain lump-sum payment plans using simplified method.
Although the Company had adopted a multiple of retirement benefit plans due to its merger with ANDO Corporation as at April
1, 2013, the Company integrated these retirement benefit plans and migrated into defined benefit plans as at April 1, 2014.
Defined benefit plans
2020

2019

Thousands of
U.S. dollars
2020

Millions of yen(1) Movement in retirement benefit obligations¥31,612¥31,218$290,471

Service cost

1,436

1,408

13,195Interest cost

316

312

2,904

Actuarial loss (gain)

(411)

270

(3,777)

Benefits paid

(2,209)(1,596)(20,298)

Balance at March 31, 2020 and 2019¥30,744¥31,612$282,495$185,491

Balance at April 1, 2019 and 2018

(2) Movement in plan assets¥20,187¥20,221

Expected return on plan assets

232

228

2,132

Actuarial loss (gain)

(704)

(453)

(6,469)Balance at April 1, 2019 and 2018

Contributions paid by the employer

1,186

1,201

10,898Benefits paid

(1,447)(1,010)(13,296)

Balance at March 31, 2020 and 2019

¥19,454¥20,187$178,756$14,104(3) Movement in simplified method¥1,535¥1,501Retirement benefit costs

255

268

2,343

Benefits paid

(297)

(228)

(2,729)

(7)

(6)

(64)

¥1,486¥1,535$13,654

Balance at April 1, 2019 and 2018

Other
Balance at March 31, 2020 and 2019(4) Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits
Funded retirement benefit obligation¥30,745¥31,612$282,505

Plan assets(19,454)(20,187)(178,756)

Sub total

11,291

11,425

103,749

Unfunded retirement benefit obligation

1,485

1,534

13,645

Total net liability (asset) for retirement benefits at March 31, 2020 and 201912,776

12,959117,394

Net defined benefit liability

12,776

12,959117,394

Total net liability (asset) for retirement benefits at March 31, 2020 and 2019¥12,776¥12,959$117,394(Note) Retirement benefit obligation under the lump-sum payment plan is included in funded retirement benefit obligation because a retirement
benefit trust has been established for lump-sum payment plans. In addition, the retirement benefit trust that has been established for the lump-sum
payment plan is included in plan assets.

29

2020

2019

Thousands of
U.S. dollars
2020$13,195

Millions of yen(5) Retirement benefit costs
Service cost

¥1,436¥1,408Interest cost

316

312

2,904

Expected return on plan assets

(232)

(228)

(2,132)

Net actuarial loss amortization

393

204

3,611

Retirement benefit expenses by simplified method

254

267

2,334

¥2,167¥1,963$19,912

Total retirement benefit costs for the fiscal year ended March 31, 2020 and 2019(6) Remeasurements of defined benefit plans
Net actuarial loss

¥100¥(520)$919

Total adjustments for retirement benefit¥100¥(520)$919(7) Accumulated remeasurements of defined benefit plans
Actuarial gains and losses that are yet to be recognized¥1,856¥1,956$17,054

Total accumulated adjustments for retirement benefit¥1,856¥1,956$17,054

2020

2019

(8) Plan assets
1. Plan assets comprise:
Bonds

44%

43%

Equity securities

18

20

General account assets

17

16

Cash and deposits

3

3

Other

18

18

Total

100%

100%

(Note) The retirement benefit trust that has been established for the corporate pension plan accounts for 11% and 12% of the total plan assets forthe year ended March 31, 2020 and 2019.
2. Long-term expected rate of return:Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining
the long-term expected rate of return.
(9) Actuarial assumptions
The principal actuarial assumptions at March 31, 2020 and 2019 (expressed as weighted averages) follow:
2020

30

2019

Discount rate

1.0%

1.0%

Long-term expected rate of return

1.2%

1.2%

20. Income Taxes
Differences between the statutory tax rate and the effective tax rate for the year ended March 31, 2020 and 2019 were not disclosed,
since the difference between the statutory tax rate and the effective tax rate is less than 5% of the statutory effective tax rate.
Significant components of deferred tax assets and liabilities at March 31, 2020 and 2019 are as follows:
2020

2019

Thousands of
U.S. dollars
2020

Net defined benefit liability¥5,116¥5,150$47,009

Others

9,278

9,381

85,252Gross deferred tax assets

14,394

14,531

132,261

Less: Valuation allowance(2,382)(2,475)(21,887)

Total deferred tax assets

12,012

12,056110,374

799

1,789

7,341

1,731

1,885

15,906

Millions of yen
Deferred tax assets:

Deferred tax liabilities:
Valuation difference on available-for-sale securities
OthersTotal deferred tax liabilities

2,530

3,674

23,247

Net deferred tax assets¥9,482¥8,382$87,127

21. Comprehensive Income
Amounts reclassified to profit for the fiscal year ended March 31, 2020 and 2019 that were recognized in other comprehensive
income in the current or previous periods and tax effects for each component of other comprehensive income are as follows:
Millions of yen

Thousands of
U.S. dollars
2020

2020

2019

¥(3,652)¥(176)

60－

551(3,592)(176)(33,006)

Valuation difference on available-for-sale securities:
Increase (decrease) during the year
Reclassification adjustment
Sub-total, before tax$(33,557)

990

51

9,097

(2,602)(125)(23,909)

Increase (decrease) during the year

¥0

¥1

$0

Reclassification adjustment

5

6

46

Tax (expense) or benefit
Sub-total, net of tax
Deferred gains or losses on hedges:

Acquisition cost of assets adjustments

－

19

0

Sub-total, before tax

5

26

46

Tax (expense) or benefit

(2)

(9)

(18)

Sub-total, net of tax

3

17

28
$956

Foreign currency translation adjustment:¥104¥(100)

Reclassification adjustment

－

－

－

Sub-total, before tax

104

(100)

956

Increase (decrease) during the year

Tax (expense) or benefit

－

－

－

Sub-total, net of tax

104

(100)

956

Remeasurements of defined benefit plans¥(293)¥(724)$(2,692)

Reclassification adjustment

393

204

3,611

Sub-total, before tax

100

(520)

919

Tax (expense) or benefit

(31)

159

(285)

Increase (decrease) during the year

Sub-total, net of tax
Total other comprehensive income

69

(361)

634

¥(2,426)¥(569)$(22,291)

3122. Net Assets
Under the Japanese Corporate Law (“the Law”), the entire amount paid for new shares is required to be designated as common
stock (or preferred stock). However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding
one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus in the accompanying
consolidated balance sheets.
Under the Law, in cases where dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividendor the excess, if any, of 25% of common stock and preferred stock over the total of additional paid-in capital and legal earnings
reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained
earnings in the accompanying consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit or could becapitalized generally by a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which arepotentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial
statements of the Company in accordance with the Law.
23. Consolidated Statements of Changes in Net Assets(1) Common stock issued

Balance at April 1, 2018

Number ofsharesCommonstock
187,160,261

Increase during the year

13,183,136

Decrease during the year－

Balance at April 1, 2019200,343,397

Increase during the year－

Decrease during the year
Balance at March 31, 2020

(2) Treasury stock outstanding

Balance at April 1, 2018－
200,343,397

Number ofsharesCommonstock
661,621

Increase during the year

2,277

Decrease during the year

97,068

Balance at April 1, 2019566,830

Increase during the year

6,815,350

Decrease during the year

66,635

Balance at March 31, 2020

7,315,545(Note) Stock owned by BIP Trust is included in Treasury stock at March 31, 2020 (Included amount: 397,766 shares).

32

24. Segment Information(1) General information about reportable segments
Each reportable segment of the Companies is the business unit of the Companies, which discrete financial information is able toobtain. Reportable segments are reviewed periodically at the Board of Directors meeting in order to determine distribution ofmanagement resources and evaluate business results by each reportable segment.
The Companies mainly operate the construction and construction-related business. Among them the Company, the general
constructor, operates their businesses that are composed of the civil engineering and building construction, and each headquarter
plans and executes on their business strategy of production systems and sales process in Japan and overseas.
Furthermore, consolidated subsidiaries respectively develop their business by cooperating with the Company.
Accordingly, the Companies classify their business operating segments, identified by product and services, into three reportablesegments as “Civil engineering segment”, “Building construction segment” and “Consolidated subsidiaries segment”.
The major products and services of each segment are as follows:
Reportable segments

Major products and services

Civil engineering
Building construction
Consolidated subsidiaries

Civil engineering of the Company in Japan and overseas
Building construction of the Company in Japan and overseas
Constructions and sales of construction materials of consolidated subsidiaries(2) Basis of measurement about reported segment profit or loss, segment assets, segment liabilities and other material items
Accounting methods of reported segment are the same as that set forth in “Summary of Significant Accounting Policies”. The
segment profits or losses for each reportable segment are in conformity to the operating income of consolidated statements ofincome. Intersegment transactions and transfers are based on fair market prices.
Assets are not allocated to Civil engineering segment and Building construction segment, since the chief operating decision
maker has no financial information on assets in these segments. However, corresponding depreciation expenses including
amortization of intangible fixes assets are allocated to Civil engineering segment and Building construction segment according to
the reasonable criterion measured by depending on the degree on benefit.

33

(3) Information about reported segment profit or loss, segment assets, segment liabilities and other material items(a) Segment information as of and for the fiscal year ended March 31, 2020 is as follows:
Millions of yen
CivilengineeringYear ended March 31, 2020:

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated

Revenues:¥124,276¥227,210¥21,746¥373,232¥4,904¥378,136

¥ －

－

4

48,53948,54315

48,558(48,558)－

Total

124,276

227,21470,285

421,775

4,919

426,694(48,558)

378,136

Segment profit

16,246

11,926

1,397

29,569844

30,413(5,712)

24,701

Assets

Note 4Note 436,615

216,0147,130

223,144

116,628

339,772

458

837

328

1,623

92

1,715

100

1,815

Note 4Note 4

1,329

4,090

－

4,090

5

4,095

Outside customers
Intersegment

Other material items:
Depreciation
and amortization
Capital expenditures¥378,136

Thousands of U.S. dollars
Civil
engineeringYear ended March 31, 2020:

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated

Revenues:
Outside customers
Intersegment$1,141,928$2,087,751$199,816$3,429,495$45,061$3,474,556$ －$3,474,556－

37

446,008

446,045138

446,183(446,183)－
3,474,556

1,141,928

2,087,788

645,824

3,875,540

45,1993,920,739(446,183)

Segment profit

149,279

109,584

12,836271,699

7,755

279,454(52,486)

226,968

Assets

Note 4Note 4

336,442

1,984,876

65,5162,050,392

1,071,653

3,122,045

Other material items:
Depreciation
and amortization
Capital expenditures

4,208

7,691

3,014

14,913845

15,758919

16,677Note 4Note 4

12,21237,582－37,582

46

37,628

Total

Notes:
1. “Other” consisted of mainly research and other activities, which are not included in reportable segment.
2. Reconciliations amounts were as follows:(i) Reconciliations amount of segment profit was to ¥(5,712) million (US$(52,486) thousand), which included ¥9 million (US$83 thousand)of intersegment eliminations and others, and ¥(5,721) million (US$(52,569) thousand) of corporate expenses. Corporate expenses weremainly general and administrative expenses, which are not attributed to reportable segments.
(ii) Reconciliations amount of segment assets was to ¥116,628 million (US$1,071,653 thousand), which included ¥(18,083) million(US$(166,158) thousand) of intersegment eliminations and others, and ¥134,711 million (US$1,237,811 thousand) of corporate assets.
Corporate assets were mainly cash and time deposits, investment securities and others, which are not attributed to reportable segments.
3. Segment profit was adjusted to operating income of consolidated statements of income.
4. As discussed in Note 24. (2), assets are not allocated to Civil engineering segment and Building construction segment, since the chief
operating decision maker has no financial information on assets in these segments. Segment assets of Civil engineering segment and Building
construction segment are amounted to ¥179,399 million (US$1,648,434 thousand), and capital expenditures of these segments are amounted
to ¥2,761 million (US$25,370 thousand).

34

(b) Segment information as of and for the fiscal year ended March 31, 2019 is as follows:
Millions of yen
CivilengineeringYear ended March 31, 2019:

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated

Revenues:¥ 118,760¥ 208,851¥ 27,326¥ 354,937¥ 5,035¥ 359,972

¥ －

－

8

42,30642,31415

42,329(42,329)－

Total

118,760

208,859

69,632397,251

5,050

402,301(42,329)359,972

Segment profit

18,078

9,142

1,152

28,372705

29,077(5,385)23,692

Assets

Note 4Note 433,301

198,212

7,956

206,168

143,489

349,657

481

846

278

1,605

91

1,696

98

1,794

Note 4Note 4

954

2,071

－

2,071

21

2,092

Outside customers
Intersegment

Other material items:
Depreciation
and amortization
Capital expenditures¥ 359,972

Notes:
1. “Other” consisted of mainly research and other activities, which are not included in reportable segment.
2. Reconciliations amounts were as follows:(i) Reconciliations amount of segment profit was to ¥(5,385) million, which included ¥(7) million of intersegment eliminations and others,and ¥(5,378) million of corporate expenses. Corporate expenses were mainly general and administrative expenses, which are not attributed
to reportable segments.
(ii) Reconciliations amount of segment assets was to ¥143,489 million, which included ¥(17,786) million of intersegment eliminations andothers, and ¥161,275 million of corporate assets. Corporate assets were mainly cash and time deposits, investment securities and others,
which are not attributed to reportable segments.
3. Segment profit was adjusted to operating income of consolidated statements of income.
4. As discussed in Note 24. (2), assets are not allocated to Civil engineering segment and Building construction segment, since the chief
operating decision maker has no financial information on assets in these segments. Segment assets of Civil engineering segment and Building
construction segment are amounted to ¥164,911 million, and capital expenditures of these segments are amounted to ¥1,117 million.

(4) Related information(a) Information about products and services
Disclosure of information about products and services is omitted, since reportable segments of the Companies are classified
by their products and services.
(b) Information about geographic areas(Revenues)
Revenues information about geographic areas for the year ended March 31, 2020 and 2019 are as follows:

2020

2019

Thousands of
U.S. dollars
2020¥350,266¥329,729$3,218,469

27,87030,243

256,087¥378,136¥359,972$3,474,556

Millions of yen

Geographic Areas
Japan
Other
Total

(Tangible fixed assets)
Disclosure of tangible fixed assets information about geographic areas is omitted, since the proportion of tangible fixed assets
in Japan to total tangible fixed assets is over 90%.
(c) Information about major customers
Disclosure of information about major customers is omitted, since net sales to no single customer represented 10% or moreof consolidated revenues of the consolidated statements of income for the year ended March 31, 2020.

35

(d) Information about impairment loss of fixed assets by reported segment
Impairment loss of fixed assets by reported segment of the year ended March 31, 2020 and 2019 are as follows:
Millions of yen
2020

Impairment loss

Reportable segments
Building
Consolidated
Civil engineering
construction
subsidiaries
¥ －
¥ －
¥ －

Other

Eliminations
and others

¥ －

Total

¥ －

¥ －

Thousands of U.S. dollars
2020

Impairment loss

Reportable segments
Building
Consolidated
Civil engineering
construction
subsidiaries
$ －
$ －
$ －

Other

Eliminations
and others

$ －

Total

$ －

$ －

Millions of yen
2019

Impairment loss

Reportable segments
Building
Consolidated
Civil engineering
construction
subsidiaries
¥ －
¥ －
¥ －

Other

Eliminations
and others

Total

¥46

¥ －

¥46

25. Amounts per Share of Common Stock
Basis of calculation of basic and diluted profit attributable to owners of parent per share (the “EPS”) for the year ended March 31,
2020 is as follows:
Profitattributable toowners of parent
Year ended March 31, 2020:

Millions of yen

Profit attributable to owners of parent¥16,804

Basic EPS-Profit available to common shareholders¥16,804

Weightedaverage
sharesThousands ofshares
199,042EPS
YenU.S. dollars¥84.42$0.78¥84.40$0.78

Effect of dilution
Shares adjusted by share subscription rights
Diluted EPS-Profit for computation－

47¥16,804

199,089(Note) Shares in BIP Trust are included in treasury stock from which are deducted in calculating profit attributable to owners ofparent per share. The weighted-average number of shares issued and outstanding during the year ended March 31, 2020 were 1,301
thousand including 389 thousand of shares in BIP Trust at the year ended March 31, 2020.
Basis of calculation of basic and diluted profit attributable to owners of parent per share (the “EPS”) for the year ended March 31,
2019 is as follows:
Profitattributable toowners of parent
Year ended March 31, 2019:

Millions of yen

Profit attributable to owners of parent¥8,863

Basic EPS-Profit available to common shareholders¥8,863Weightedaverage
sharesThousands ofshares196,038

EPS
Yen¥45.21

Effect of dilution
Shares adjusted by share subscription rights
Diluted EPS-Profit for computation

36

(3)

4,401

¥8,860200,439¥44.2026. Financial Instruments(1) Status of financial instruments(a) Policies for using financial instruments
The Companies raise funds mainly by borrowings from bank and bond issues, and restrict temporary surplus funds to the lower
risk assets such as deposits. Derivative transactions are employed for hedging of the risk described below, and never use for
speculation.
(b) Detail of financial instruments and the related risks
Notes and accounts receivable are exposed to the credits risks in relation to customers. Foreign currency-dominated notes andaccounts receivable are also exposed to foreign exchange risk.
Investment securities which are mainly share held for keep the relationship with business partners are exposed to market pricefluctuation risk.
Notes and accounts payable are mostly settled within one year.
Borrowings are primarily for working funds. With variable interest rates, it is exposed to interest-rates risk.
Borrowings, notes and accounts payable are also exposed to liquidity risk.
Derivative transactions entered into by the Companies are forward currency exchange contracts to hedge foreign exchange risk
involving oversea business and interest rate swap contracts to hedge interest-rates risk involving borrowing.
Refer to Note 2(8) “Derivatives and hedging transactions” for information about the hedging instruments and hedging items,
hedging policy and method of evaluating hedging effectiveness concerning the hedge accounting methods adopted by theCompanies.
(c) Policies and processes for risk management
In order to control customer’s credit risk, each business and sales management division within the Companies conduct periodic
monitoring of key transaction partners and attempt to find out deterioration of the financial situation at the initial stage under theinternal credit policies.
For the purpose of hedging foreign exchange risk, the Companies conduct forward exchange contracts. The Companies also
conduct interest rate swap contracts to avert interest-rate risk by each long-term borrowing.
The Fair value of investment securities is periodically reported to the Directors and Executive Officers. The possession situationof securities is also continually reviewed, taking into consideration of the Companies’ relationship with respective business
partners.
Derivative transactions are treated by the Finance Department in accordance with the established policies. The Companies deal
with credible banks to reduce the credit risk.
In order to manage the liquidity risk, the Companies update financial plan monthly.
(d) Supplementary explanation on fair value of financial instruments
The fair value of financial instruments is based on market value or reasonable estimate if there is no market value. Since certain
assumptions are used for estimating values, values could be different if different assumptions are applied. In addition, the derivative
contract amounts described in Note 27 “Derivative Financial Instruments” are not indicative of actual market risk involved inderivative transactions.
(e) Concentration of credit risk
The trade receivables for specific and large-scale customers accounted for 12.8% of the total trade receivables in the consolidated
financial statements of the current fiscal year. Since these large-scale customers are government agencies, the credit risk isextremely low.

37

(2) Fair value of financial instruments
The following tables summarize book values and fair values of financial instruments at March 31, 2020:
Millions of yen
TypeAssets(a) Cash and time deposits

Thousands of U.S. dollars

Book values

Fair values

DifferenceBook values

Fair values

Difference¥102,972¥102,972¥ －$946,173$946,173$ －(b) Receivables:
Notes
Accounts

2,930

2,930

－

26,92326,923－

134,800

134,773(27)

1,238,629

1,238,381(248)(c) Marketable securities andInvestment securities:
28,80328,803－

264,660

264,660－¥269,505¥269,478¥(27)$2,476,385$2,476,137$(248)

Notes¥20,203¥20,203¥ －$185,638$185,638$ －Accounts

61,65861,658－566,553

566,553－

12,25812,258－112,634

112,634

－

5,133

5,133

－

47,16547,165

－

342

342

－

3,143

3,143

－

692

691

(1)

6,359

6,349

(10)

8,713

8,731

18

80,06180,226

165¥108,999¥109,016¥17$1,001,553$1,001,708

$155

¥－

¥－

¥－

$－

$－

$ －

Available-for-sale securities
Total assets
Liabilities(a) Payables:(b) Short-term loans payable
Current maturities oflong-term loans payable
Current portion of bonds(c) Bonds(d) Long-term loans payable,
less current maturities
Total liabilities
Derivative transactions

The following tables summarize book values and fair values of financial instruments at March 31, 2019:
Millions of yen
TypeAssets(a) Cash and time deposits

Book values

Fair values

Difference¥120,303¥120,303¥ －(b) Receivables:
Notes

8,236

8,236

－

110,518

110,507(11)

35,19135,191－¥274,248¥274,237

¥(11)

Notes

¥17,873¥17,873¥ －Accounts

58,01958,019－12,264

12,264

－

6,875

6,875

－

Accounts(c) Marketable securities andInvestment securities:
Available-for-sale securities
Total assets
Liabilities(a) Payables:(b) Short-term loans payable
Current maturities oflong-term loans payable
Current portion of bonds(c) Bonds(d) Long-term loans payable,
less current maturities
Total liabilities
Derivative transactions

38

358

358

－

712

714

2

9,065

9,099

34

¥105,166¥105,202

¥36

¥(5)

¥(5)

¥ －

Notes:1. Method of measurement of financial instruments and matters concerning securities and derivatives(Assets)(a) Cash and time deposits
The fair values of this account are equivalent to the book value, since this account is settled in a short period of time.
(b) Notes and accounts receivables
The fair values of these accounts are based on the present value of discounted cash flows using the interest rate determined by the factors of theremaining terms and credit risks, with respect to each receivable categorized by collection terms.
(c) Marketable securities and Investment securities
The fair values of this account are based on the quoted market value. However, the fair value of negotiable certificates of deposit is equivalent
to the book value, since this account is settled in a short period of time.
(Liabilities)(a) Notes and accounts payables and (b) Short-term loans payable, Current maturities of long-term loans payable and Current portion of bonds
The fair values of these accounts are equivalent to the book value, since these accounts are settled in a short period of time.
(c) Bonds
The fair value of bonds issued by the Company is based on the price on bond markets or present value of the total principal and interest discounted
by an interest rate determined taking into account the remaining period of bond and current credit risk.
(d) Long-term loans payable, less current maturities
The fair values of this account are based on the present value of discounted cash flows using the interest rate which may be applicable when thesame kinds of borrowings are made.
(Derivative transactions)
See Note 27 “Derivative Financial Instruments”.
2. Financial instruments which are difficult to estimate the fair value
Non-marketable securities (book values of ¥3,895 million (US$35,790 thousand) and ¥3,250 million at March 31, 2020 and 2019, respectively)
are not included in the above “Assets (c) Marketable securities and investment securities”; since it is difficult to estimate the fair values thereof
because neither market quoted value is available nor future cash flows can be estimated.
3. Redemption schedules for cash and time deposits, receivables, held-to-maturity debt securities and other at March 31, 2020 and 2019 are as
follows:
Millions of yen
2020
Within1 yearCash and time deposits¥102,972

2019

Over
1 yearless than
5 years¥ －Over
5 yearsless than
10 years¥ －Over
10 yearsWithin1 year¥ －¥120,303Over
1 yearless than
5 years¥ －Over
5 yearsless than
10 years¥ －Over
10 years¥ －Receivables:
Notes
Accounts
Corporate bonds

2,930

－

－

－

8,236

－

－

124,882

9,918

－

－

100,092

10,426

－

－

－

－

－

－

2,000

－

－

－

－

Negotiable certificates of deposit

12,000－－－12,000

－

－

－

Other

2,000

－

－

－

2,000

－

－

－

Total

¥244,784¥9,918¥ －¥ －¥244,631¥10,426

¥ －

¥ －

39

Thousands of U.S. dollars
2020
Within1 year$946,173

Cash and time depositsOver
1 yearless than
5 years$ －Over
5 yearsless than
10 years$ －Over
10 years$ －Receivables:
26,923－－－

1,147,496

91,133

－

－

－

－

－

－

Negotiable certificates of deposit

110,264

－

－

－

Other

18,377

－

－

－

Total

$2,249,233$91,113

$ －

$ －

Notes
Accounts
Corporate bonds

27. Derivative Financial Instruments
Derivative transactions accounted for by the hedge accounting at March 31, 2020 and 2019 are as follows:(Interest-related transactions)
Millions of yen
2020
Type ofderivative transactions

Main items
hedged2019

Contract amount
Settled overTotal
1 yearFair
value

Contract amount
Settled overTotal
1 yearFair
value

Benchmark method:
Interest swap contract:
To pay fixed, to receive variable

Long-termloans payable

¥－

¥－

¥－

¥648

¥576

¥(5)

¥627

¥321

Note 2¥2,544¥378

Note 2

Short-cut method:
Interest swap contract:
To pay fixed, to receive variable

Long-termloans payable

Thousands of U.S. dollars
2020
Type ofderivative transactions

Main items
hedgedContract amount
Settled overTotal
1 yearFair
value

Benchmark method:
Interest swap contract:
To pay fixed, to receive variable

Long-termloans payable

$－

$－

$－

$5,761$2,950Note 2

Short-cut method:
Interest swap contract:
To pay fixed, to receive variable

Long-termloans payableNote:
1. Fair value is based on the prices obtained from counterparty financial institutions.
2. The fair values of special case interest swap treatment are included in the fair value of long-term loans payable since such interest swap istreated together with long-term loans payable being hedged.

40

28. Stock Option Plans(1) No cost for stock options is recognized for the years ended March 31, 2020 and 2019.
(2) The stock options outstanding at March 31, 2020 are mainly as follows:(a) Content
The third series
The fourth seriesof shareof sharesubscription rights (A)subscription rights (A)June 29, 2010
Persons granted

Directors of the Company: 8
Executive officers: 8Class and numberof shares
Date of grantCondition of
settlement rights

June 29, 2011
Directors of the Company: 9
Executive officers: 13

90,000 sharesof common stock

85,800 sharesof common stock

July 16, 2010
The person who exercises
stock purchase rights shall bea director, or executive officerof the Company, who has
continued to work at theCompany from the seventh
stockholders’ meeting to theeighth stockholders’ meeting.
However, this condition isinvalid in case of death or lossof position due to theCompany circumstances.

July 15, 2011
The person who exercises
stock purchase rights shall bea director, or executive
officer of the Company, who
has continued to work at theCompany from the eighth
stockholders’ meeting to theninth stockholders’ meeting.
However, this condition isinvalid in case of death orloss of position due to theCompany circumstances.

From July 16, 2010

From July 15, 2011

Length of service
Exercisable period

to July 15, 2011

to July 14, 2012

From July 16, 2011

From July 15, 2012

to July 15, 2021

to July 14, 2022(b) Number and price

The third
series of sharesubscription
rights (A)The fourth
series of sharesubscription
rights (A)At the beginning of the year－－

Granted during the year－－

Forfeited and expired during the
year

－

－

Vested during the year－－

At the end of the year－－

Non-vested shares

Vested shares
At the beginning of the year

27,00023,100

Vested during the year－－

Exercised during the year

3,500

－

－

－

23,50023,100¥1¥1

Forfeited and expired during theyear
Unexercised at the end of the year
Exercise price
Average stock price at exercise

¥704

－

Fair value price at the grant date

¥72

¥111

41

(3) Method to estimate fair value of stock options
The Company does not grant any stock options to its employees for the current fiscal year.
(4) Method to estimate number of vested stock options
As a reasonable estimate of the forfeited number of stock options in the future is generally difficult, the Company adopts a method
whereby only actual forfeited numbers are reflected.

42

Independent Auditor’s Report
Independent Auditor’s Report
To the Board of Directors of HAZAMA ANDO CORPORATION.:
OpinionWe have audited the accompanying consolidated financial statements of HAZAMA ANDOCORPORATION (“the Company”) and its consolidated subsidiaries (collectively referred to as “theGroup"), which comprise the consolidated balance sheets as at March 31, 2020 and 2019, the consolidated
statements of income and comprehensive income, changes in net assets and cash flows for the years thenended, and notes, comprising a summary of significant accounting policies, other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as at March 31, 2020 and 2019, and its consolidated
financial performance and cash flows for the years then ended 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 Consolidated Financial Statements section of our report. We are independent of the Group inaccordance 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 accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.
Responsibilities of Management and Corporate auditors and the board of corporate auditors for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statementsin accordance with accounting principles generally accepted in Japan, 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 the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’
performance of their duties including the design, implementation and maintenance of 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 awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with auditing standards generally accepted in Japan will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial 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 our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:43

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, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the 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 andbased on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease to continue as agoing concern.



Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, 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 manner that
achieves fair presentation.

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 remain solely
responsible for our audit opinion.

We communicate with corporate auditors and the board of corporate auditors regarding, among othermatters, the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2020 are presented solely for convenience. Our audit also included the translation of yen
amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of theCertified Public Accountants Act of Japan.

44

/S/ Tatsunaga Fumikura
Designated Engagement Partner
Certified Public Accountant/S/ Daio Aida
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
August 25, 2020
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

45

Global Network
Japan
Head Office6-1-20, Akasaka, Minato-ku, Tokyo 107-8658, Japan

Branches

Sapporo, Tohoku, Hokuriku, Tokyo, Kanto, Shizuoka,
Nagoya, Osaka, Shikoku, Hiroshima, Kyushu

International Division

6-1-20, Akasaka, Minato-ku, Tokyo 107-8658, Japan

Branches

81-3-6234-3600

81-3-6234-3640

Asia, North America

Technical Research Institute515-1, Karima, Tsukuba-shi, Ibaraki 305-0822, Japan

81-29-858-8800

Overseas

TurkeyU.S.A.
Laos
Cambodia
Nepal

South Africa

OfficesThailand

Vietnam

Sri Lanka
MyanmarThailand
Malaysia
Indonesia

MexicoHonduras
PanamaAddressPhone

159 Serm-Mit Tower Building, 15th Floor, Sukhumvit Road 21 (Soi Asoke), North Klongtoey,
Wattana, Bangkok 10110, Thailand

66-2-665-7041

Vietnam

18th Floor, Harbour View Tower, 35 Nguyen Hue Street, District 1, Ho Chi Minh City, Vietnam84-28-38299533

Malaysia

Suite 17.1, Level 17, Menara IMC, Letter Box No.9, No.8, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia

60-3-2031-4902

Indonesia

MidPlaza 1 Building, 16th Floor, Jl. Jend. Sudirman Kav. 10-11, Jakarta 10220, Indonesia

62-21-5735220

Myanmar

Office No. 07, 19th Floor, Kantharyar Centre Office Tower, No. 11, Corner of Kan Yeik Thar Road &U Aung Myat Road, Mingalar Taung Nyunt Township, Yangon, Myanmar

95-9-266-008-005

Sri Lanka

4th Floor, No. 65C, Dharmapala Mawatha, Colombo 07, Colombo 00700, Sri Lanka

94-11-233-4784

Laos

Ban Sibounheung Unit No.3 House No.038 Chanthabouly District Vientiane Capital, LAO.P.D.R

856-21-250-872

Cambodia

Office NO.19, HOTEL CAMBODIANA 313 Sisowath Quay, Phnom Penh, Cambodia

855-23-992-914

Nepal

Jagannath Bhawan, Arniko Rajmarga, New Baneshwor, Ward No.10, Kathmandu, Nepal

977-1-4787289

TurkeyATATURK MAHALLESI GIRNE CADDESI, NO:27, D:2-3, Atasehir, Istanbul, Turkey

90-216-456-5047

MexicoPaseo de la Reforma N° 373 1-B Col. Cuauhtémoc C.P. 06500 Del. Cuauhtémoc Mexico D.F.

52-55-5525-9311

U.S.A.

500 West Wilson Bridge Road, Suite 130 Worthington, Ohio 43085, U.S.A.

1-614-985-4906

PanamaEdificio Office One. Oficina No. 1104 Avenida Nicanor de Obarrio o Calle 50 con 58 Este Obarrio, Ciudad de Panamá 507-830-6671

Honduras

Colonia Lomas de Miraflores Sur 3ra. Calle, Casa No. 4310, Tegucigalpa M.D.C., Honduras, C.A

504-2271-1283

South Africa 2nd Floor, West Tower, Maude Street, Nelson Mandela Square, Sandton 2196, Johannesburg, Republic ofSouth Africa PO Box 785553 Sandton

27-11-881-5959

46

Corporate DataName

(As of March 31, 2020)

Authorized Shares

HAZAMA ANDO CORPORATION

Issued Shares

Common stock
400,000,000

Established

Common stock
200,343,397

October 1, 2003

Number of Shareholders
27,092
Number of Employees
3,520

Capital¥17,006,123,275

Directors, Officers
Board Directors
Representative Director andPresident
Masato Fukutomi
Board Directors and Vice
Presidents
Toru Ikegami
Muneo Gomi
Haruyuki Kaneko
Board Directors/Managing
Executive Officers
Shinya Miyamori
Katsuhiko Tabuchi(As of June 26, 2020)

Board Directors(External Board Directors)
Masami Fujita
Mariko Kitagawa
Mieko Kuwayama

Auditors
Auditors
Norio Chonan
Tomoki Kitagawa
Corporate Auditors(External Auditors)
Shigeo Kamimura
Masamitsu Takahara

Executive Officers
Managing Executive Officers
Kazuya Ozawa
Hajime Tsukizu
Shin Terauchi
Ichiro Kato
Ryo Onishi
Takeshi Komatsu
Hiroshi Nakanishi
Executive Officers
Kazutaka Miyazaki
Hiroshi Ono
Fuminori Hirosue
Tetsuo Tomoike

Major Subsidiaries and Affiliates
Name
Stated Capital			Akio Fujimoto
Naoto Aida
Michio Yoshida
Kazuhiko Kuniya
Norio Kubota
Yoshio Ishihara
Junya Utsumi
Takeaki Inoue
Yoshiyuki Yamanaka
Hirotsugu Yoneda
Kazuhiro Funatsu(As of March 31, 2020)

Principal Business

Address / Phone

Hazama Ando Kogyo
152 million JPY
Sales of Construction Materials
Co., Ltd.			

1-38-4, Kameido, Koto-ku, Tokyo 136-0071, Japan
81-3-5626-7130

Aoyama Kiko Co., Ltd.
80 million JPY
Construction, Procurement			

2-18-4, Kitaueno, Taito-ku, Tokyo 110-0014, Japan
81-3-5830-9500

Ryoko Kaihatsu Co., Ltd.
80 million JPY
Real-estate			

1-4-8, Shiba Daimon , Minato-ku, Tokyo 105-0012, Japan
81-3-6450-1760

HAZAMA ANDO (THAILAND)
14 million THB
Construction
CO., LTD.			
			

159 Serm-Mit Tower Building, 15th Floor, Sukhumvit Road 21(Soi Asoke), North Klongtoey, Wattana, Bangkok 10110, Thailand
66-2-665-2980

PT. Hazama Ando Murinda
50,000 Million IDR Construction						

MidPlaza 1 Building, 16th floor, Jl.Jend. Sudirman Kav. 10-11,
Jakarta 10220, Indonesia
62-21-5735774

VIETNAM DEVELOPMENT
1 Million USD
Construction
CONSTRUCTION CO.,LTD.			
			

18th Floor, Harbour View Tower, 35 Nguyen Hue Street, District 1,
Ho Chi Minh City, Vietnam84-28-38299533
47

W09I Printed in Japan