Annual Report 2018
Fiscal year ended March 31, 2018

4-2-28 Kudan-kita, Chiyoda-ku, Tokyo, 102-0073, Japan
Tel: +81-(0)3-3265-4685 Fax: +81-(0)3-3265-4698
https://www.wave-nakano.co.jp
SINGAPORE
1 Coleman St., #06-02 The Adelphi, 179803, Singapore
Tel: +65-6333-4933
Fax: +65-6338-8568

MALAYSIA
Block B, 15-4-2, Megan Salak Park Jalan 1/125E, Taman Desa Petaling, Kuala Lumpur 57100, Malaysia
Tel: +60-3-9059-6977
Fax: +60-3-9059-6277

INDONESIA
Tamara Center 14th Floor Jl. Jend. Sudirman KAV. 24, Jakarta 12920, Indonesia
Tel: +62-21-5203674
Fax: +62-21-5203670

THAILAND
2170 Bangkok Tower, 17th Floor New Petchburi Road, Bangkapi, Huaykwang, Bangkok 10310 Thailand
Tel: +66-2-308-0500
Fax: +66-2-308-0497

VIETNAM
Unit 1411-1412, 14th Floor, Daeha Business Center, 360 Kim Ma Street, Ngoc Khanh Ward, Ba Dinh District, Hanoi, Vietnam
Tel: +84-243-724-7552
Fax: +84-243-724-7553

CORPORATE PROFILE
As of 31st March 2018

CONTENTS

Company Outline
Company Name
Headquarters
Foundation
Established
Capitalization
Employees
Stock Listing
Primary Business

FINANCIAL HIGHLIGHTS

1

REPORT OF INDEPENDENT AUDITORS

2

CONSOLIDATED BALANCE SHEETS

3

CONSOLIDATED STATEMENTS OF INCOME

5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

6

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

7

CONSOLIDATED STATEMENTS OF CASH FLOWS

8NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9

Board of Directors

SUPPLEMENTAL INFORMATION

28

Honorary Chairman
Vice Chairman
President
Directors

NONCONSOLIDATED BALANCE SHEETS

28

NONCONSOLIDATED STATEMENTS OF INCOME

30

CORPORATE PROFILE

31

NAKANO CORPORATION
4-2-28 Kudan-kita, Chiyoda-ku, Tokyo 102-0073, Japan
8th February 1933
19th December 1942
¥5,061,678,686
1,355
Tokyo Stock Exchange, First Section
Domestic Construction Projects
International Construction Projects

Outside Directors
Standing Corporate Auditors
Corporate Auditors

Yoshikazu Oshima
Akira Asai
Toshiyuki Taketani
Yorinobu Kato
Hiroyuki Tanada
Moriyasu Kawamura
Akihiko Sugaya
Kohei Yamaya

Satoshi Hattori
Tetsuo Sato
Makoto Fukuda
Koichiro Nakano
Shunichi Sato

Main Affiliated Financial Institutions
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
The Bank of Yokohama, Ltd.
The Yamanashi Chuo Bank, Ltd.

Mitsubishi UFJ Trust and Banking Corporation
The Shoko Chukin Bank, Ltd.
The Shizuoka Bank, Ltd.
The Fukushima Bank, Ltd.

Major Shareholders
Oshima Scholarship Foundation
MUFG Bank, Ltd.
Nakano Employee Shareholder Association

Yoshikazu Oshima
Kanto Kogyo Co., Ltd.
Nakano Investment Fraternity Association

Domestic Offices
Headquarters
Tohoku Regional OfficeOsaka Regional Office
Civil Engineering Office
Hokkaido Branch Office
Ibaraki Branch Office
Higashi Kanto Branch Office
Sales Offices (Mie, Hyogo, Kita Kyushu)

Tokyo Main Office
Nagoya Regional Office
Kyushu Regional Office
Taito Branch Office
Kita Tohoku Branch Office
Kita Kanto Branch Office
Yokohama Branch OfficeInternational Offices
Nakano Singapore (Pte.) Ltd. (Singapore)
PT. Indonakano (Indonesia)
Nakano Vietnam Co., Ltd. (Vietnam)

Cautionary remarks regarding forward looking statements
This Annual Report includes forward-looking statements that represent Nakano Corporation’s assumptions and expectations inlight of currently available information. These statements reflect industry trends, client’s situations and other factors, and involverisks and uncertainties which may cause actual performance results to differ from those discussed in the forward looking
statements in accordance with changes in the domestic and international business environment.
For further information contact:
Nakano Corporation International Operations Headquarters
4-2-28 Kudan-kita, Chiyoda-ku, Tokyo 102-0073, Japan
Tel: +81-(0)3-3265-4685 Fax: +81-(0)3-3265-4698
https://www.wave-nakano.co.jp

Nakano Construction Sdn. Bhd. (Malaysia)
Thai Nakano Co., Ltd. (Thailand)

Industry Affiliations
Japan Federation of Construction Contractors
The Associated General Contractors of Tokyo
General Contractors Association of Osaka

National General Contractors Association of Japan
Japan Association of Representative General Contractors

ANNUAL REPORT 201831

FINANCIAL HIGHLIGHTS

NAKANO CORPORATION and its subsidiaries
Years ended March 31, 2014 through 2018
2014

2015

2016

2017

2018

2018

Millionsof yenThousands of
U.S. dollars

Contract awards¥120,386¥131,256¥114,067¥108,637¥116,422$1,095,839

Net sales

129,177

125,260

114,989

116,802104,456

983,207

Operating income

2,250

3,367

5,481

5,958

4,264

40,135

Ordinary income

2,522

3,801

5,795

6,232

4,579

43,100

Profit attributable to owners of parent

1,543

2,717

3,986

5,544

3,947

37,151

Comprehensive income

2,267

4,625

2,942

5,816

4,631

43,589Total net assets

12,971

18,11020,88026,45530,742

289,363

Total assets

76,47878,41973,976

77,984

84,978799,868

Net cash provided by (used in) operating activities

2,339

(780)

9,607

428

4,611

43,401

Net cash provided by (used in) investing activities

128

(854)

844

(3,698)(1,773)(16,688)

Net cash provided by (used in) financing activities
Cash and cash equivalents at end of period(258)(2,134)(2,244)

(969)

(458)

(4,310)25,23922,99529,32924,36427,001

254,150

Yen

U.S. dollars

Per share of common stock( in yen and U.S. dollars )Net assets¥354.05¥493.98¥577.61¥738.16¥860.02$8.10

Net income

44.89

79.04

115.96161.28114.83

1.08

Cash dividends applicable to the year

3.00

5.00

7.00

10.00

12.00

0.11

1,333

1,334

1,314

1,363

1,355

Number of employees

Notes: 1. The rate of ¥106.24=US$1.00, the foreign exchange rate on March 31, 2018, has been used for translation.
2. Cash dividends applicable to the year in 2017 includes a special dividend ¥3.

140,000

140,000

120,000

120,000

100,000

100,000

80,00060,00040,00080,00060,00040,00020,00020,000002014 2015 2016 2017 2018
Domestic

International

Profit attributableto owners of parent

Millions of yen

Net Sales

Millions of yen

Millions of yen

Contract Awards

2014 2015 2016 2017 2018
Domestic

6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2014 2015 2016 2017 2018

International

ANNUAL REPORT 2018

1

REPORT OF INDEPENDENT AUDITORS

2

NAKANO CORPORATIONCONSOLIDATED BALANCE SHEETSNAKANO CORPORATION and its subsidiaries
As of March 31, 2017 and 2018

Millions of yen

Thousands of
U.S. dollars(Note 2)

2017

2018

2018

¥27,764¥31,885$300,122

Notes receivable, accounts receivable from completed
construction contracts and other (Notes 4 and 8)

26,531

26,525

249,670

Costs on uncompleted construction contracts (Note 4)

899

1,505

14,166

Costs on real estate business

48

48

451

AssetsCurrent assets:
Cash and deposits (Notes 4, 7 and 8)

Raw materials and supplies

5

6

56

Accounts receivable - other

1,740

2,613

24,595

Consumption taxes receivable

593

1,341

12,622

Deferred tax assets (Note 11)

238

537

5,054

Other

1,078

1,116

10,50458,90065,580617,281

Buildings and structures

7,217

7,242

68,166

Machinery, vehicles, tools, furniture and fixtures

1,699

1,627

15,314Land

10,771

10,790101,562

28

199

1,873

Total current assets

Non-current assets:
Property, plant and equipment (Note 4)

Construction in progress
Accumulated depreciation(5,332)(5,453)(51,327)

14,384

14,406

135,598

Leasehold right

944

951

8,951

Other

107

64

602

1,051

1,016

9,563

Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets
Investment securities (Notes 4, 8 and 9)

3,209

3,555

33,461Long-term loans receivable

199

148

1,393

Claims provable in bankruptcy, claims provable inrehabilitation and other

32

—

—

Other

381

291

2,739

Allowance for doubtful accounts

(175)

(21)

(197)

Total investments and other assets

3,647

3,975

37,415

Total non-current assets

19,083

19,397

182,577¥77,984¥84,978$799,868

Total assets
The accompanying notes are an integral part of these financial statements.

ANNUAL REPORT 20183

Millions of yen

Thousands of
U.S. dollars(Note 2)

2017

2018

2018

¥38,671¥37,373$351,778

Liabilities
Current liabilities:
Notes payable, accounts payable for construction contracts
and other (Notes 4 and 8)
Short-term loans payable (Notes 4, 8 and 16)

1,500

650

6,118

Current portion of bonds (Note 15)

80

40

376

Income taxes payable

742

590

5,553

4,423

9,162

86,238

134

169

1,590

Advances received on uncompleted construction contracts
Provision for warranties for completed construction
Provision for loss on construction contracts (Note 4)

25

39

367

Provision for bonuses

452

461

4,339

Other (Note 16)

1,536

1,200

11,29547,56549,688467,695

1,040

1,000

9,412

Long-term loans payable (Notes 4, 8 and 16)

750

1,640

15,436

Deferred tax liabilities (Note 11)

760

869

8,179

Net defined benefit liability (Note 10)

717

378

3,557

Other (Note 16)

694

659

6,202

Total current liabilities
Non-current liabilities:
Bonds payable (Notes 8 and 15)

Total non-current liabilities
Total liabilities

3,962

4,547

42,79951,52854,236

510,504

Net assets
Shareholders’ equity:
Common stock
Authorized: 154,792,300 shares¥5,061¥5,061$47,637

Capital surplus

Issued:34,498,097 shares

1,400

1,400

13,177Retained earnings
Less: Treasury stock, at cost
124,006 shares in 2017 and 125,310 shares in 2018

19,30022,904

215,587

(31)

(32)

(301)

25,73029,333

276,101

Valuation difference on available-for-sale securities

786

1,034

9,732

Foreign currency translation adjustment

(892)

(734)

(6,908)Remeasurements of defined benefit plans (Note 10)

(250)

(71)

(668)

Total accumulated other comprehensive income

(356)

228

2,146

Non-controlling interests:

1,081

1,180

11,106

Total net assets

26,45530,742

289,363¥77,984¥84,978$799,868

Total shareholders’ equity
Accumulated other comprehensive income:

Total liabilities and net assets
The accompanying notes are an integral part of these financial statements.

4

NAKANO CORPORATIONCONSOLIDATED STATEMENTS OF INCOME
NAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2017 and 2018

Net sales:
Net sales of completed construction contracts
Sales on real estate business (Note 12)
Sales on other businessTotal net sales
Cost of sales:
Cost of sales of completed construction contracts (Note 5)
Cost of sales on real estate business (Note 12)
Cost of sales on other businessTotal cost of sales
Gross profit:
Gross profit on completed construction contracts
Gross profit - real estate business
Gross profit - other businessTotal gross profit
Selling, general and administrative expenses (Note 5)
Operating income
Non-operating income:Interest income
Dividend income
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Bond issuance cost
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income:Gain on sales of investment securities (Note 9)
Gain on liquidation of subsidiaries and associates
Other
Total extraordinary income
Extraordinary losses:
Loss on retirement of non-current assets (Note 5)
Loss on sales of shares of subsidiaries and associates
Loss on litigation
Other
Total extraordinary losses
Profit before income taxes
Income taxes:
Income taxes - current
Refund of income taxes for prior periods
Income taxes - deferred (Note 11)
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Millions of yen

Thousands of
U.S. dollars(Note 2)

2017

2018

2018

¥115,677
1,014
110
116,802¥103,312
1,038
105
104,456$972,439
9,770
988
983,207105,242345
84
105,672

94,583358
81
95,023890,2763,369
762
894,418

10,434669
25
11,129
5,170
5,958

8,728
680
23
9,432
5,168
4,264

82,1536,400
216
88,78048,644
40,135

271
43
61
377

352
47
32
431

3,313
442
301
4,056

56
34
—
12
103
6,232

34
—
72
9
117
4,579

320
—
677
84
1,101
43,100

—
11
5
16

11
—
0
12

103
—
0
112

0
11
85
0
98
6,151

14
—
20
0
35
4,555

131
—
188
0
329
42,874

810
(46)
(193)
571
5,580
35
¥5,544

859
—
(303)
556
3,999
51
¥3,947

8,085—(2,852)
5,233
37,641480$37,151

The accompanying notes are an integral part of these financial statements.

ANNUAL REPORT 2018

5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
NAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2017 and 2018

Millions of yen

Thousands of
U.S. dollars(Note 2)

2017

2018

2018

¥5,580¥3,999$37,641

218
(278)
296
236

248
205
178
632

2,334
1,929
1,675
5,948

Comprehensive income¥5,816¥4,631$43,589

Comprehensive income attributable to:Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests¥5,75957¥4,53299$42,658
931

ProfitOther comprehensive income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income (Note 6)

The accompanying notes are an integral part of these financial statements.

6

NAKANO CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSNAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2017 and 2018
Millions of yen
Shareholders’ Equity

Commonstock

Balance as at March 31, 2016

CapitalsurplusRetainedearnings

Accumulated other comprehensive income

Valuation
Total
difference
accumulated
Foreign
Nonothercurrency Remeasurements
Total on available-for-sale translationof defined comprehensive controlling
Treasury shareholders’interests
securities adjustment
incomeequitybenefit plansstock¥5,061 ¥1,400 ¥13,997 ¥(31) ¥20,427

Total net
assets¥567 ¥(592) ¥(546) ¥(572) ¥1,024 ¥20,880

Changes of items during
periodDividends from surplus(240)

Profit attributable to owners ofparent5,544

Purchase of treasury stock

(0)

(240)

(240)

5,544

5,544

(0)

(0)

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance as at March 31, 2017

—

—

5,303

(0)

5,302

¥5,061 ¥1,400 ¥19,300 ¥(31) ¥25,730

218

(299)

296

215

57

272

218

(299)

296

215

57

5,575

¥786 ¥(892) ¥(250) ¥(356) ¥1,081 ¥26,455

Changes of items during
periodDividends from surplus(343)

Profit attributable to owners ofparent

3,947

Purchase of treasury stock

(0)

(343)

(343)

3,947

3,947

(0)

(0)

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance as at March 31, 2018

—

—

3,603

(0)

3,602

¥5,061 ¥1,400 ¥22,904 ¥(32) ¥29,333

248

158

178

584

99

684

248

158

178

584

99

4,286

¥1,034 ¥(734) ¥(71) ¥228 ¥1,180 ¥30,742

Thousands of U.S. dollars (Note 2)
Shareholders’ Equity

Commonstock

Balance as at March 31, 2017

CapitalsurplusRetainedearnings

Accumulated other comprehensive income

Valuation
Total
difference
accumulated
Foreign
Nonothercurrency Remeasurements
Total on available-for-sale translationof defined comprehensive controlling
Treasury shareholders’interests
securities adjustment
incomeequitybenefit plansstock$47,637 $13,177 $181,664 $(291) $242,187

Total net
assets$7,398 $(8,396) $(2,353) $(3,350) $10,175 $249,011

Changes of items during
periodDividends from surplus(3,228)

Profit attributable to owners ofparent37,151

Purchase of treasury stock(0)(3,228)(3,228)37,151

37,151(0)(0)

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance as at March 31, 2018——33,913(0)33,904

2,334

1,487

1,675

5,496

931

6,438

2,334

1,487

1,675

5,496

931

40,342$47,637 $13,177 $215,587 $(301) $276,101 $9,732 $(6,908) $(668) $2,146 $11,106 $289,363

The accompanying notes are an integral part of these financial statements.

ANNUAL REPORT 20187

CONSOLIDATED STATEMENTS OF CASH FLOWSNAKANO CORPORATION and its subsidiaries
For the years ended March 31, 2017 and 2018

Cash flows from operating activities:
Profit before income taxes
Adjustments for:
Depreciation and amortization
Decrease in allowance for doubtful accounts
Decrease in net defined benefit liability
Increase in provision for loss on construction contracts
Interest and dividend income
Interest expenses
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in costs on uncompleted construction
contracts
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in advances received on uncompleted
construction contracts
Decrease/increase in consumption taxes receivable/payable
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sales of investment securities
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net 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
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 7)
The accompanying notes are an integral part of these financial statements.

8

NAKANO CORPORATION

Millions of yen

Thousands of
U.S. dollars(Note 2)

2017

2018

2018

¥6,151¥4,555$42,874

378
(23)
(1)
25
(315)
56
(5,604)

343
(50)
(150)
16
(399)
34
367

3,228
(470)
(1,411)150(3,755)
320
3,454

1,381
4,535

(604)
(1,779)(5,685)(16,745)(2,664)(2,585)
(913)
420
315
(47)
(260)
428

4,738
(748)
(1,110)
5,211
395
(31)
(964)
4,611

44,597(7,040)(10,448)
49,0493,717(291)(9,073)43,401(4,720)2,971(1,156)(826)—
33(3,698)(9,169)
7,683
(316)
(18)
22
24
(1,773)(86,304)
72,317(2,974)
(169)
207
225
(16,688)(290)
800(2,028)
962
(80)
(240)
(93)
(969)
(725)
(4,964)29,329¥24,364(1,110)
1,300
(150)
—
(80)
(343)
(75)
(458)
258
2,637
24,364¥27,001(10,448)
12,236(1,411)—(753)(3,228)(705)(4,310)2,428
24,821
229,329$254,150

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NAKANO CORPORATION and its subsidiaries

1.	Basis of Presenting
Consolidated
Financial
Statements

The consolidated financial statements presented herein of NAKANO CORPORATION (the“Company”) and its consolidated subsidiaries (together, the “Companies”) are prepared inaccordance with the provisions set forth in the Corporation Law of Japan and the Financial
Instruments and Exchange Law of Japan, and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to applicationand disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications andrearrangements have been made to the consolidated financial statements issued domestically inorder to present them in a form which is more familiar to readers outside Japan. In addition, certain
reclassifications have been made to the 2017 financial statements to conform to the classifications
used in 2018.

2. U.S. Dollar Amounts The accounts of consolidated financial statements presented herein are expressed in Japanese

yen by rounding down to the nearest million. The U.S. dollar amounts shown in the accompanying
consolidated financial statements and notes thereto have been translated from Japanese yen into
U.S. dollars on the basis of ¥106.24 to U.S.$1, the rate of exchange prevailing at March 31, 2018,and have been then rounded down to the nearest thousand. These U.S. dollar amounts are notintended to imply that the Japanese yen amounts have been or could be converted, realized or
settled in U.S. dollars at this or any other rate.

3.	Summary of
Significant
Accounting Policies

a. Consolidation
1) Scope of Consolidation
The Company had 9 subsidiaries as of March 31, 2018. The consolidated financial statements forthe year ended March 31, 2018 include the accounts of the Company and all subsidiaries. The
Company had 1 affiliate as of March 31, 2018. As of March 31, 2018, the equity method was notapplied to this affiliate, as it was not significant in terms of retained earnings and net income of theconsolidated financial statements.
2) Financial Statements of Subsidiaries
The subsidiaries’ financial year-end is March 31.
b. Securities
Securities are classified and accounted for as follows:i) Held-to-maturity debt securities, which are expected to be held to maturity with the positive
intent and ability are reported at amortized cost.
ii) Available-for-sale securities, which are not classified as the aforementioned securities, arereported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a
separate component of net assets, while the cost of securities sold is computed using the movingaverage method.
Non-marketable available-for-sale securities are stated at cost determined by the movingaverage method. For other than temporary declines in fair value, securities are written down to net
realizable value.
c. Inventories
Costs of uncompleted construction contracts are determined by the specific identification method.
Costs on real estate business and raw materials and supplies are stated at cost determined by
the specific identification method for costs on real estate business and by the last purchase pricemethod for raw material and supplies, while the net book value of these inventories in the balance
sheet is written down if the net realizable value declines.
d. Property, Plant and Equipment (excluding lease assets)
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment of
the Company and its domestic consolidated subsidiaries is computed by the declining-balancemethod. Buildings (excluding building fixtures) acquired on or after April 1, 1998 and building
fixtures and structures acquired on or after April 1, 2016 are depreciated using the straight-line
method. Useful lives and residual values of the assets are determined based on the regulations of
the Corporation Tax Act.
Foreign consolidated subsidiaries use primarily the straight-line method.

ANNUAL REPORT 20189

e. Intangible Assets (excluding lease assets)
Intangible assets are amortized by the straight-line method. Useful lives of the assets are
determined based on the regulations of the Corporation Tax Act.
Software for internal use is amortized over a period of the internal available years (5 years)
using the straight-line method.
f. Lease Assets
Depreciation of lease assets under finance leases that do not transfer ownership of the leaseassets to the lessee is calculated by the straight-line method over the lease term of the leaseassets with no residual value.
g. Allowance for Doubtful Accounts
The allowance for doubtful accounts provided by the Company and its domestic consolidated
subsidiaries is stated in amounts considered to be appropriate based on each company’s pastcredit loss experience and an evaluation of potential losses in the receivables and others
outstanding.
Foreign consolidated subsidiaries provide for such possible losses based on the estimateduncollectible amounts of the specific accounts.
h. Provision for Warranties for Completed Construction
The provision for warranties for completed construction is provided by the Company to cover
expenses for defects claimed concerning completed work based on the estimated amount ofcompensation to be paid in the future for the work completed during the fiscal year.
i. Provision for Loss on Construction Contracts
The provision for loss on construction contracts is provided by the Company and its consolidated
subsidiaries with respect to construction projects for which eventual losses are reasonably
estimated.
j. Provision for Bonuses
The provision for bonuses provided by the Company and its domestic consolidated subsidiaries is
accrued at the year end to which such bonuses are attributable.
k. Accounting for Retirement Benefits
In computing projected benefit obligations, the estimated amounts of retirement benefit obligations
are attributed to periods on a benefit formula basis.
Actuarial differences are amortized commencing in the following year after the differences are
incurred by the straight-line method over a period (12 years) which is shorter than the averageremaining years of service of the employees when incurred.
In determining net defined benefit liability and retirement benefit expenses, certain
consolidated subsidiaries adopt a short-cut method where the amount required for voluntarytermination of employees at the fiscal year end is regarded as projected benefit obligations.
l. Revenue and Cost of Construction Contracts
Revenue of construction contracts is recorded by the percentage-of-completion method for thecompleted portion of the contracts at the balance sheet date, if the outcome of the construction
contract can be reliably estimated and the completed-contract method is applied to othercontracts whose outcome cannot be reliably estimated. The percentage of completion is
calculated based on the cost incurred to date as a percentage of the estimated total cost.
Construction revenue recognized based on the percentage-of-completion method for the year
ended March 31, 2018 was ¥96,380 million ($907,191 thousand).
m. Cash and Cash Equivalents in the Consolidated Statements of Cash Flows
In preparing the consolidated statements of cash flows, cash and cash equivalents include cash on
hand, readily-available deposits and short-term highly liquid investments with maturities less than
three months at the time of acquisition that are exposed to insignificant risk of changes in value.

10

NAKANO CORPORATION

n. Accounting Standards not yet Applied“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No.28, February 16, 2018)“Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No.26(revised 2018), February 16, 2018)
1) Overview
The treatment of taxable temporary differences pertaining to shares of subsidiaries, etc. in the
non-consolidated financial statements has been revised, and the treatment of recoverability ofdeferred tax assets in entities that fall under ‘Category 1’ have been clarified.
2) Scheduled date of application
Effective from the beginning of the fiscal year ending March 31, 2019.
3) Effects of the application of the guidance
The Company is in the process of measuring the effects at the time of preparing theaccompanying consolidated financial statements.
“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance
No. 30, March 30, 2018)
1) Overview
This is a comprehensive accounting standard for revenue recognition. Revenue is recognizedby applying the following five steps:
Step 1: Identify the contract with the 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 each performance obligation.
2) Scheduled date of application
Effective from the beginning of the fiscal year ending March 31, 2022.
3) Effects of the application of the guidance
The Company is in the process of measuring the effects at the time of preparing theaccompanying consolidated financial statements.

4.	Notes to

1. The assets pledged as collateral and collateralized liabilities were as follows:

Consolidated
Balance Sheets

Millions of yen
As of March 31

Cash and deposits
Notes receivableThousands of
U.S. dollars

2017

2018

2018

¥431

¥431

$4,056

300

300

2,823

Buildings

1,460

1,426

13,422

Land

7,811

7,841

73,804

Investment securities

1,472

1,782

16,773Total¥11,475¥11,781$110,890

Short-term loans payable¥1,040¥440$4,141

Long-term loans payable

—

810

7,624

¥1,040¥1,250$11,765

Total

In addition, the following assets were deposited as security for dealing:
Millions of yen
As of March 31

Investment Securities

Thousands of
U.S. dollars

2017

2018

2018

¥9

¥9

$84

ANNUAL REPORT 201811

2. The Companies were contingently liable for the following:
As of March 31

Guarantees to financial institutions, etc. to ensure
the completion of construction contracts ofNakano Singapore (Pte.) Ltd. and its subsidiaries

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥2,580¥3,007$28,303

3.	“Costs on uncompleted construction contracts” which are estimated to recognize losses and“Provision for loss on construction contracts” are to be recorded on a gross basis without
offsetting, if any.
4.	The following notes receivable and payable, etc. matured on March 31, 2018 were included in
the respective accounts, since March 31, 2018 fell on a bank holiday:
Millions of yen
As of March 31

Notes receivable

5.	Notes toConsolidated
Statements ofIncomeThousands of
U.S. dollars

2017

2018

2018

¥—

¥2

$18

Electronically recorded monetary claims

—

47

442

Notes payable

—

766

7,210

Electronically recorded obligations

—

1,452

13,667

1.	Provision for loss on construction contracts included in “Cost of sales of completed construction
contracts” was as follows:
For the year ended March 31

Provision for loss on construction contracts

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥25

¥41

$385

2. The major components of “Selling, general and administrative expenses” were as follows:
Millions of yen
For the year ended March 31

Depreciation
Provision for bonuses
Retirement benefit expenses
Employees’ salaries and allowances

Thousands of
U.S. dollars

2017

2018

2018

¥187

¥163

$1,534

183

191

1,797

157

148

1,393

2,449

2,507

23,597

3.	Research and development costs included in selling, general and administrative expenses wereas follows:
Millions of yen
For the year ended March 31

Research and development costs

Thousands of
U.S. dollars

2017

2018

2018

¥13

¥13

$122

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

4.	“Loss on retirement of non-current assets” consisted of the following:
For the year ended March 31

Buildings

12

NAKANO CORPORATION

¥0

¥14

$131

Other

0

0

0

Total

¥0

¥14

$131

6.	Notes toConsolidated
Statements ofComprehensive
IncomeReclassification adjustments and tax effects related to other comprehensive income were as
follows:
For the year ended March 31

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥316

¥369

$3,473

—

(11)

(103)

Valuation difference on available-for-sale securities
Amount arising during the year
Reclassification adjustments
Total before tax effect

316

357

3,360

Tax effect

(97)

(109)

(1,025)

Valuation difference on available-for-sale securities

218

248

2,334

Amount arising during the year

(274)

205

1,929

Reclassification adjustments

(3)

—

—

(278)

205

1,929

—

—

—

(278)

205

1,929

Amount arising during the year

210

110

1,035

Reclassification adjustments

86

68

640

296

178

1,675

Foreign currency translation adjustments

Total before tax effectTax effectForeign currency translation adjustments
Remeasurements of defined benefit plans

Total before tax effectTax effect

—

—

—

Remeasurements of defined benefit plans

296

178

1,675

¥236

¥632

$5,948

Total other comprehensive income

7.	Notes toConsolidated
Statements of Cash
Flows

The reconciliation between “Cash and cash equivalents” reported in the consolidated statementsof cash flows and “Cash and deposits” reported in the consolidated balance sheets was asfollows:
Millions of yen
As of March 31

Cash and deposits per consolidated balance sheets
Less: Time deposits maturing over three months
Cash and cash equivalents per consolidated statementsof cash flows

Thousands of
U.S. dollars

2017

2018

2018

¥27,764¥31,885$300,122(3,400)(4,884)(45,971)¥24,364¥27,001$254,150

ANNUAL REPORT 201813

8.	Financial
Instruments

1. Overview
1) Policy for financial instruments
The Companies raise operating funds primarily through bank loans and bond issues. Temporary
fund surpluses are managed principally through short-term deposits with little risk. Under thepolicy of the Companies, the Companies use derivatives only for the purpose of reducing foreignexchange fluctuation risks associated with foreign currency denominated transactions and interest
rate fluctuation risks associated with loans payable, and not for speculative purposes.
2) Types of financial instruments, risk and risk management
The Companies control risks by type of financial instruments in accordance with the risk
management policy.
Regarding credit risk associated with notes receivable and accounts receivable fromcompleted construction contracts, the Companies identify major customers’ credit status bymonitoring the payment terms and credit balances by each customer.
Regarding investment securities, principally consisting of equity securities, the Companies
regularly identify the quoted market price of the listed securities to manage the risks arising frommarket value fluctuations.
The Companies manage liquidity risk associated with loans payable by appropriately planningfor fund raising based on monthly cash flow projections.
Regarding derivative transactions, the Companies execute and control the transactions basedon the internal control rules which define the transaction authority and limits and enter into
contracts with only the high credit rating financial institutions to reduce credit risk.
3) Supplementary explanation on fair value of financial instruments
The fair value of financial instruments is determined based on the market price or reasonableestimated amount if there is no market price. Certain assumptions are used for calculation of suchfair value, and accordingly, the result of such calculation may vary, if different assumptions areused.
2. Fair value of financial instruments
The carrying amount, fair value and difference of the financial instruments as of March 31, 2017and 2018 were as follows:
Note that the financial instruments whose fair value is extremely difficult to determine were notincluded in the following table (See Note 2 of the below table):
Millions of yen
As of March 31, 2017

Carrying amount

Fair value

Difference¥27,764¥27,764¥—26,531

26,531—

Held-to-maturity securities

9

10

0

Available-for-sale securities

1,992

1,992

—

(1) Cash and deposits(2) Notes receivable, accounts receivable fromcompleted construction contracts and other(3) Investment securities¥56,298¥56,299¥0(1) Notes payable, accounts payable forconstruction contracts and other

Assets total

38,671

38,671—(2) Short-term loans payable

1,500

1,500

—

(3) Long-term loans payable

750

750

—

(4) Bonds payable
Liabilities total
Derivative transactions

14

NAKANO CORPORATION

1,040

1,039

(0)

¥41,961¥41,961

¥(0)

—

—

—

Millions of yen
As of March 31, 2018

Carrying amount

Fair value

Difference(1) Cash and deposits(2) Notes receivable, accounts receivable fromcompleted construction contracts and other(3) Investment securities
Held-to-maturity securities
Available-for-sale securities¥31,885¥31,885¥—26,525

26,525

—

9
2,338

10
2,338

0
—

Assets total¥60,759¥60,760¥037,373
650
1,640
1,000

37,373
650
1,640
999

—
—
—
(0)

¥40,663—¥40,663
—

¥(0)
—

Carrying amount

Fair value

Difference(1) Cash and deposits(2) Notes receivable, accounts receivable fromcompleted construction contracts and other(3) Investment securities
Held-to-maturity securities
Available-for-sale securities$300,122$300,122$—249,670249,670—84
22,00694
22,006

9—

Assets total$571,884$571,893$9351,778
6,118
15,436
9,412

351,778
6,118
15,436
9,403

—
—
—
(9)

$382,746—$382,737
—

$(9)
—

(1) Notes payable, accounts payable forconstruction contracts and other(2) Short-term loans payable(3) Long-term loans payable(4) Bonds payable
Liabilities total
Derivative transactions

Thousands of U.S. dollars
As of March 31, 2018(1) Notes payable, accounts payable forconstruction contracts and other(2) Short-term loans payable(3) Long-term loans payable(4) Bonds payable
Liabilities total
Derivative transactions(Notes): 1.	Method used for determining the fair value of the financial instruments and matters regarding securities
and derivative transactions:
Assets:(1) Cash and deposits and (2) Notes receivable, accounts receivable from completed construction
contracts and other
The carrying amount is presented as the fair value, since the fair value approximates the carrying amountbecause they will be settled within a short period of their maturity.
(3) Investment securities
The fair value of equity securities is determined based on the quoted price of the exchanges, the fair valueof investment trust is determined based on the published standard quotation price and the fair value ofdebt securities is determined based on the published price by the Japan Securities Dealers Association.
Notes regarding investment securities classified by the management’s intent of holding are described in
Note 9 “Securities”.
Liabilities:(1) Notes payable, accounts payable for construction contracts and other and (2) Short-term loans payable
The carrying amount is presented as the fair value, since the fair value approximates the carrying amountbecause they will be settled within a short period of their maturity.
(3) Long-term loans payable
The carrying amount is presented as the fair value, since the fair value approximates the carrying amountbecause their interest rates will be reset mainly within a short period of their maturity.
(4) Bonds payable
The fair value of bonds issued by the Company is based on the current value of the bonds, which is
calculated by discounting the total amount of principal and interest by an interest rate that reflects theremaining terms of the Company’s bonds and credit risk.

ANNUAL REPORT 201815

2.	Carrying amounts of financial instruments for which it is extremely difficult to identify the fair value were as
follows:
Thousands of
U.S. dollars

Millions of yen
As of March 31

Unlisted equity securities

2017

2018

2018

¥1,207¥1,207$11,361

Above financial instruments were not included in “(3) Investment securities” in the above table, since there
is no market price and their fair value is extremely difficult to identify.
3.	Redemption schedule for monetary assets and securities with contractual maturities after balance sheet
date was as follows:
Millions of yen
Due in one year
or less

Due after one
year throughfive years

Due after five
years throughten years

Due after ten
years¥27,764

¥—

¥—

¥—

26,531———

Held-to-maturity securities(Japanese government bonds)

—

9

—

—

Available-for-sale securities
with contractual maturities

—

—

4

—

¥54,296

¥9

¥4

¥—

Due in one year
or less

Due after one
year throughfive years

Due after five
years throughten years

Due after ten
years¥31,885

¥—

¥—

¥—

26,525———

Held-to-maturity securities(Japanese government bonds)

—

9

—

—

Available-for-sale securities
with contractual maturities

—

—

3

—

¥58,411

¥9

¥3

¥—

Due in one year
or less

Due after one
year throughfive years

Due after five
years throughten years

Due after ten
years$300,122

$—

$—

$—

249,670———

Held-to-maturity securities(Japanese government bonds)

—

84

—

—

Available-for-sale securities
with contractual maturities

—

—

28

—

$549,802

$84

$28

$—

As of March 31, 2017

Cash and deposits
Notes receivable, accounts
receivable from completed
construction contracts and other
Investment securities:

Total

Millions of yen

As of March 31, 2018

Cash and deposits
Notes receivable, accounts
receivable from completed
construction contracts and other
Investment securities:

Total

Thousands of U.S. dollars

As of March 31, 2018

Cash and deposits
Notes receivable, accounts
receivable from completed
construction contracts and other
Investment securities:

Total

16

NAKANO CORPORATION

4.	Repayment schedule of short-term loans payable, long-term loans payable and bonds payable after
balance sheet date was as follows:
Millions of yen
Due after
Due after
Due after
one year
two years three years
through two through three through four
years
years
years

Due after
four years
through five Due after five
years
years

As of March 31, 2017

Due in one
year or less

Short-term loans payable¥1,500 ¥— ¥— ¥— ¥— ¥—Long-term loans payable
Bonds payable
Total

—

50

350

50

50

250

—

40

1,000

—

—

—

¥1,500 ¥90 ¥1,350 ¥50 ¥50 ¥250
Millions of yen
Due after
Due after
Due after
one year
two years three years
through two through three through four
years
years
years

Due after
four years
through five Due after five
years
years

As of March 31, 2018

Due in one
year or less

Short-term loans payable¥650 ¥— ¥— ¥— ¥— ¥—Long-term loans payable

—

610

310

310

210

200

Bonds payable

—

1,000

—

—

—

—

Total

¥650 ¥1,610 ¥310 ¥310 ¥210 ¥200
Thousands of U.S. dollars
Due after
four years
through five Due after five
years
years

As of March 31, 2018

Due in one
year or less

Short-term loans payable$6,118 $— $— $— $— $—Long-term loans payable

—

5,741

2,917

2,917

1,976

1,882

Bonds payable

—

9,412

—

—

—

—

Total

9. Securities

Due after
Due after
Due after
one year
two years three years
through two through three through four
years
years
years

$6,118 $15,154 $2,917 $2,917 $1,976 $1,882

1. Investment securities as of March 31, 2017 and 2018 consisted of the following:
Millions of yen
As of March 31

Held-to-maturity securities
Available-for-sale securities with market value
Total

Thousands of
U.S. dollars

2017

2018

2018

¥9

¥9

$84

1,992

2,338

22,006¥2,002¥2,348$22,100

2.	The carrying amount and fair value of held-to-maturity debt securities as of March 31, 2017 and2018 were as follows:
Millions of yen
As of March 31, 2017

Carrying amount

Fair value

Difference

1) Securities with fair value exceeding carrying amount
¥9

¥10

¥0

2) Securities with carrying amount exceeding fair value

¥—

¥—

¥—

Total

¥9

¥10

¥0

Carrying amount

Fair value

Difference

¥9

¥10

¥0

2) Securities with carrying amount exceeding fair value

¥—

¥—

¥—

Total

¥9

¥10

¥0

Japanese government bonds

Millions of yen
As of March 31, 2018

1) Securities with fair value exceeding carrying amountJapanese government bonds

ANNUAL REPORT 201817

Thousands of U.S. dollars
As of March 31, 2018

Carrying amount

Fair value

Difference

$84

$94

$9

2) Securities with carrying amount exceeding fair value

$—

$—

$—

Total

$84

$94

$9

1) Securities with fair value exceeding carrying amountJapanese government bonds

3.	The carrying amount (fair value) and acquisition cost of available-for-sale securities as of March
31, 2017 and 2018 were as follows:
Millions of yen
As of March 31, 20171) Securities with carrying amount exceedingacquisition cost
Equity securities
Other
Subtotal2) Securities with acquisition cost exceeding
carrying amount
Equity securities
Subtotal
Total

Carrying amount

Acquisition cost

Difference¥1,984¥846¥1,137

4

12¥1,988¥848¥1,139

¥4

¥4

¥(0)

¥4

¥4

¥(0)

¥1,992¥853¥1,139

Carrying amount

Acquisition cost

Difference¥2,334¥839¥1,495

3

12¥2,338¥841¥1,497¥—¥2,338

¥—
¥841

¥—
¥1,497

Carrying amount

Acquisition cost

Difference$21,969$7,897$14,071

28

9

18

$22,006$7,916$14,090$—$22,006$—$7,916$—$14,090

Millions of yen
As of March 31, 20181) Securities with carrying amount exceedingacquisition cost
Equity securities
Other
Subtotal2) Securities with acquisition cost exceeding
carrying amount
Total

Thousands of U.S. dollars
As of March 31, 20181) Securities with carrying amount exceedingacquisition cost
Equity securities
Other
Subtotal2) Securities with acquisition cost exceeding
carrying amount
Total(Note)	“Unlisted equity securities” in an amount of ¥1,207 million as of March 31, 2017 and ¥1,207 million ($11,361
thousand) as of March 31, 2018 were not included in available-for-sale securities in the above table, since there
is no market price and their fair value is extremely difficult to identify.

18

NAKANO CORPORATION

4.	Available-for-sale securities which were sold during the years ended March 31, 2017 and 2018
were as follows:
Millions of yen
For the year ended March 31

Thousands of
U.S. dollars

2017

2018

2018

¥—

¥22

$207

Gain on sales

—

11

103

Loss on sales

—

—

—

Sales proceeds

5.	Securities on which impairment loss was recognized during the years ended March 31, 2017and 2018 were as follows:
For the year ended March 31, 2017:
There were no securities on which impairment loss was recognized.
For the year ended March 31, 2018:
There were no securities on which impairment loss was recognized.
If the fair value of available-for-sale securities with fair value declines by 30% to 50% of theacquisition cost, the Company judges the recoverability, considering the current status of theissuing companies and the fair value trends, and recognizes impairment loss, unless the recovery
is reasonably expected.

10.	Retirement
Benefits

1. Outline of the Company’s retirement benefit plans
The Company has defined benefit plans that consist of a defined benefit corporate pension plan
and a lump-sum retirement benefit plan and also defined contribution pension plans. Certain
consolidated subsidiaries have unfunded defined benefit plans and lump-sum benefit plans.
Furthermore, the Company and its consolidated subsidiaries may pay additional retirement
benefits upon the retirement of certain employees.
With respect to lump-sum benefit plans adopted by certain consolidated subsidiaries, net
defined benefit liability and retirement benefit expenses are calculated by the short-cut method.
2. Defined Benefit Plans
1)	The changes in projected benefit obligations for the years ended March 31, 2017 and 2018 wereas follows (excluding the plans to which a short-cut method was applied):
Millions of yen
For the year ended March 31

Thousands of
U.S. dollars

2017

2018

2018

¥4,169¥4,091$38,507

Service cost

275

272

2,560

Interest cost

16

24

225

Beginning balance of projected benefit obligations

Actuarial differences

(74)

18

169

Retirement benefits paid

(295)

(154)

(1,449)Other
Ending balance of projected benefit obligations

(0)

(12)

(112)

¥4,091¥4,240$39,9092)	The changes in plan assets for the years ended March 31, 2017 and 2018 were as follows(excluding the plans to which a short-cut method was applied):
Millions of yen
For the year ended March 31

Beginning balance of plan assets

Thousands of
U.S. dollars

2017

2018

2018

¥3,230¥3,463$32,596

Expected return of plan assets

64

69

649

Actuarial differences

126

120

1,129

Contribution from the employer

328

438

4,122

Retirement benefits paid

(286)

(145)

(1,364)¥3,463¥3,945$37,132

Ending balance of plan assets

ANNUAL REPORT 2018193)	The changes in net defined benefit liability of the plans to which the short-cut method wasapplied for the years ended March 31, 2017 and 2018 were as follows:
Millions of yen
For the year ended March 31

Thousands of
U.S. dollars

2017

2018

2018

¥75

¥88

$828

Retirement benefit expenses

13

4

37

Retirement benefits paid

(0)

(9)

(84)

¥88

¥83

$781

Beginning balance of net defined benefit liability

Ending balance of net defined benefit liability4)	Reconciliation between the ending balances of projected benefit obligations and plan assets andnet defined benefit liability recorded in the consolidated balance sheet as of March 31, 2017 and2018 were as follows:
Millions of yen
As of March 31

Funded projected benefit obligations
Plan assets
Unfunded projected benefit obligations

Thousands of
U.S. dollars

2017

2018

2018

¥3,915¥4,046$38,083(3,463)(3,945)(37,132)

¥452

¥100

$941

264

277

2,607

Net liability recorded in the consolidated balance
sheet

¥717

¥378

$3,557

Net defined benefit liability

¥717

¥378

$3,557

Net liability recorded in the consolidated balance
sheet

¥717

¥378

$3,557(Note) Above amounts include plans to which the short-cut method is applied.

5)	The components of retirement benefit expenses for the years ended March 31, 2017 and 2018
were as follows:
Millions of yen
For the year ended March 31

Service costThousands of
U.S. dollars

2017

2018

2018

¥275

¥272

$2,560

Interest cost

16

24

225

Expected return of plan assets

(64)

(69)

(649)

Amortization of actuarial differences

95

77

724

Retirement benefit expenses computed byshort-cut method

13

4

37

Other

(0)

(12)

(112)

¥336

¥296

$2,786Retirement benefit expenses on defined benefit
plans6)	The component of “Remeasurements of defined benefit plans” under “Other comprehensive
income” (before adjusting for tax effects) for the years ended March 31, 2017 and 2018 was asfollows:
Millions of yen
For the year ended March 31

Actuarial differences

20

NAKANO CORPORATION

Thousands of
U.S. dollars

2017

2018

2018

¥296

¥178

$1,6757)	The component of “Remeasurements of defined benefit plans” under “Accumulated othercomprehensive income” (before adjusting for tax effects) as of March 31, 2017 and 2018 was asfollows:
As of March 31

Unrecognized actuarial differences

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥(250)¥(71)$(668)

8) Plan assets
a. Components of plan assets
Plan assets as of March 31, 2017 and 2018 consisted of the following:
As of March 31

2017

2018

Bonds

28%

27%

Equity securities

59

61

Insurance assets (general account)

10

10

Other

3

2

Total

100

100

b. Method of determining the long-term expected rate of return on plan assets
The long-term expected rate of return on plan assets is determined considering allocation ofplan assets which are expected currently and in the future and the long-term rates of return
which are expected currently and in the future from the various components of the plan
assets.
9)	Actuarial assumptions used for the years ended March 31, 2017 and 2018 were set forth asfollows:
For the year ended March 31

2017

2018

Discount rate

0.3%

0.2%

Long-term expected rate of return on plan assets

2.0

2.0

3. Defined Contribution Plans
The amount of the required contribution to the defined contribution plans of the Company for theyears ended March 31, 2017 and 2018 was as follows:
For the year ended March 31

Required contribution to the defined contribution
plans

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥73

¥71

$668

ANNUAL REPORT 201821

11.	Deferred Tax
Accounting

1.	The significant components of deferred tax assets and liabilities as of March 31, 2017 and 2018
were as follows:
Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥139

¥141

$1,327

159

30

282

As of March 31

Deferred tax assets:
Provision for bonuses
Net defined benefit liability
Allowance for doubtful accounts

53

6

56

Loss on valuation of real estate for sale

289

287

2,701

Accounts payable for construction contracts
Impairment loss

133

315

2,964

1,449

1,444

13,591

Tax loss carryforwards

523

25

235

Other

492

429

4,038

Subtotal

3,241

2,681

25,235

Less: valuation allowance(2,983)(2,132)(20,067)

¥258

¥549

$5,167¥(351)¥(461)$(4,339)

subsidiaries

(402)

(400)

(3,765)

Other

(18)

(8)

(75)

Deferred tax liabilities¥(772)¥(869)$(8,179)

Net deferred tax liabilities¥(514)¥(320)$(3,012)

Deferred tax assets
Deferred tax liabilities:
Valuation difference on available-for-salesecurities
Undistributed earnings of foreign consolidated

2.	A reconciliation between the normal effective statutory tax rates and the actual effective tax
rates reflected in the consolidated statements of income as of March 31, 2017 and 2018 wereas follows:
As of March 31

2017

2018

Normal effective statutory tax rate

30.9%

30.9%

Expenses not deductible income tax purposes

1.2

0.7

Tax rate differences in foreign consolidated subsidiaries

(4.6)

(2.4)

Undistributed earnings of foreign consolidated subsidiaries

0.7

(0.1)

Inhabitant per capita taxes

0.6

0.8

Refund of income taxes for prior periods

(0.8)

(0.6)

—

0.1

Valuation allowance(16.7)(17.2)

Other

(2.0)

0.0

Actual effective tax rate

9.3

12.2

Reduction of deferred tax assets due to tax rate change

22

NAKANO CORPORATION

12.	Investment andRental Properties

1.	The Company and certain consolidated subsidiaries own office buildings, commercial facilities
and residual units for lease in Tokyo and other areas. Rental income from these real estate
properties for lease for the years ended March 31, 2017 and 2018 were ¥593 million and ¥612
million ($5,760 thousand), respectively. Rental income and related costs were included in “Sales
on real estate business” and “Cost of sales on real estate business”, respectively, in theaccompanying consolidated statements of income for the years ended March 31, 2017 and2018.
2.	The carrying amounts, changes in such balances during the year and fair values of suchproperties were as follows:
As of March 31

Carrying amounts(Note 1):

Beginning balance
Increase (decrease) (Note 2)
Ending balance

Fair value (Note 3)

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥10,398¥11,423$107,520

1,025

(39)

(367)

¥11,423¥11,384$107,153¥14,772¥15,216$143,222(Notes): 1. The carrying amount is presented after deducting accumulated depreciation from the acquisition cost.
2.	Increase during the year ended March 31, 2017 primarily represents the acquisition of real estate of ¥1,077
million and decrease is primarily due to depreciation of ¥110 million.
.	Increase during the year ended March 31, 2018 primarily represents the acquisition of real estate of ¥64
million ($602 thousand) and decrease is primarily due to depreciation of ¥110 million ($1,035 thousand).
3.	The fair values of major properties are determined based on the real estate appraisal value by independent
real estate appraisers and the fair values of other properties are determined based on the value inaccordance with “Japanese Real Estate Appraisal Standard” or based on reasonable internal appraisal.

13.	Segment
Information

1.	Description of reportable segments
The Companies’ reportable segments are those for which separate financial information isavailable and regular evaluation by the Board of Directors is being performed in order to decide
how resources are allocated among the Companies.
The Companies are active in the construction business and the real estate business in Japanand foreign countries.
Therefore, the Companies consist of regional segments which are based on each business.
Reportable segments of the construction business are “Japan” and “Southeast Asia (Singapore,
Malaysia, Indonesia, Thailand and Vietnam)”, and those of the real estate business are “Japan”
and “Southeast Asia (Singapore)”.
2.	Methods of measurement for the amounts of sales, income (loss), assets and other items foreach reportable segment
The accounting policies of each reportable segment are consistent to those disclosed in Note 3,“Summary of Significant Accounting Policies”.

ANNUAL REPORT 201823

3.	Information on sales, income (loss), assets and other items for each reportable segment was asfollows:
Millions of yen
Reportable segments
Construction
For the year ended
March 31, 2017

Southeast
Japan
Asia

Total

Real estateSoutheast
Japan
Asia

Other
(Note 1)

Total

Adjustments Consolidated(Note 2)
(Note 3)Total

Net sales:
Customers
Inter-segment
Total¥74,512 ¥41,165 ¥115,677 ¥1,014 ¥0 ¥1,014¥110 ¥116,802 ¥— ¥116,802

13

12

25

0

—

0

—

25

(25)

—

74,525

41,177

115,702

1,015

0

1,015

110

116,828(25)

116,802

Segment income

3,208

2,178

5,387

555

0

555

15

5,959

(0)

5,958

Segment assets

22,46227,50549,968

11,046

1,035

12,082513

62,564

15,41977,984

Other items:
Depreciation
Increase in property,
plant, and equipment
and intangible assets¥136 ¥74 ¥211 ¥114 ¥— ¥114

856

42

899

66

1,017

1,084

¥53 ¥378 ¥— ¥378

0

1,983

—

1,983

(Notes): 1.	‌“Other” is a business segment not included in the reportable segments, which consists of solar power
generation business and insurance agent business.
2.	An adjustment of “Segment assets” in an amount of ¥15,419 million was corporate assets which were notallocated to each reportable segment and consisted of surplus fund (cash and deposits) and long-term
investment fund (investment securities and insurance funds) of the Company.
3.	Segment income is reconciled with operating income in the accompanying consolidated statements ofincome.
Millions of yen
Reportable segments
Construction
For the year ended
March 31, 2018

Southeast
Japan
Asia

Total

Real estateSoutheast
Japan
Asia

Other
(Note 1)

Total

Adjustments Consolidated(Note 2)
(Note 3)Total

Net sales:
Customers
Inter-segment
Total¥73,895 ¥29,416 ¥103,312 ¥1,013 ¥24 ¥1,038 ¥105 ¥104,456 ¥— ¥104,456
0

—

0

0

—

0

—

0

(0)

—

73,89529,416

103,312

1,014

24

1,039

105

104,456(0)

104,456

Segment income

2,985

691

3,677

563

11

574

13

4,265

(0)

4,264

Segment assets

27,33024,63851,969

11,215

1,039

12,255439

64,664

20,314

84,978Other items:
Depreciation
Increase in property,
plant, and equipment
and intangible assets¥120 ¥63 ¥183 ¥107 ¥6 ¥114 ¥46 ¥343 ¥— ¥343

60

28

89

245

—

245

0

335

—

335

Thousands of U.S. dollars
Reportable segments
Construction
For the year ended
March 31, 2018

Southeast
Japan
Asia

Total

Real estateSoutheast
Japan
Asia

Other
(Note 1)

Total

Adjustments Consolidated(Note 2)
(Note 3)Total

Net sales:
Customers
Inter-segment
Total$695,547 $276,882 $972,439 $9,535 $225 $9,770 $988 $983,207 $

— $983,207

0

—

0

0

—

0

—

0

(0)

—

695,547

276,882

972,439

9,544

225

9,779

988

983,207(0)983,207

Segment income

28,096

6,504

34,610

5,299

103

5,402

122

40,144(0)40,135

Segment assets

257,247

231,908

489,166

105,562

9,779

115,352

4,132

608,659

191,208

799,868

Other items:
Depreciation
Increase in property,
plant, and equipment
and intangible assets

24

NAKANO CORPORATION$1,129 $592 $1,722 $1,007 $56 $1,073 $432 $3,228 $— $3,228

564

263

837

2,306

—

2,306

0

3,153

—

3,153

(Notes): 1.	“Other” is a business segment not included in the reportable segments, which consists of solar power
generation business and insurance agent business.
2.	An adjustment of “Segment assets” in an amount of ¥20,314 million ($191,208 thousand) was corporate
assets which were not allocated to each reportable segment and consisted of surplus fund (cash anddeposits) and long-term investment fund (investment securities and insurance funds) of the Company.
3.	Segment income is reconciled with operating income in the accompanying consolidated statements ofincome.

14.	Per ShareInformation

Basic net income per share is computed based on the weighted average number of shares ofcommon stock outstanding during the year. Diluted net income per share was not presented forthe years ended March 31, 2017 and 2018 since the Company had no potentially dilutive shares
outstanding as of the balance sheet dates.
Net assets per share is computed based on the number of shares of common stock
outstanding as of the balance sheet dates.
Net assets and net income per share for the years ended March 31, 2017 and 2018 were as
follows:
Yen

U.S. dollars

For the year ended March 31

2017

2018

2018

Net assets per share¥738.16¥860.02$8.10161.28114.83

1.08

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥26,455¥30,742$289,363

Basic net income per share(Notes): 1. Net assets per share was calculated based on the following information:

As of March 31

Total net assets
Deductions from total net assets:(1,081)(1,180)(11,106)

Net assets attributable to common stock¥25,373¥29,561$278,247

Number of shares of common stock usedin computing net assets per share(in thousand shares)

34,37434,372

34,372Millions of yen

Thousands of
U.S. dollars

Non-controlling interests

2. Net income per share was calculated based on the following information:

For the year ended March 31

Profit attributable to owners of parent
Amount not attributable to common stock
shareholders
Profit attributable to common stock ofowners of parent
Average number of shares of common
stock during the year (in thousand shares)

2017

2018

2018

¥5,544¥3,947$ 37,151———¥5,544¥3,947$ 37,151

34,37434,37334,373

ANNUAL REPORT 201825

15. Bonds Payable

Short-term and long-term bonds payable as of March 31, 2017 and 2018 consisted of thefollowing:
Millions of yen

Issuer and Issue type

Issue date2017

Thousands of
U.S. dollars
Interest
rate(%)

Collateral

Maturity

2018

2018

Sep.30, 2013 ¥120 ¥40
(40)

$376
(376)

0.64

None Sep. 28, 2018

1,000

9,412

0.69

None

¥1,120 ¥1,040(40)$9,789(376)(Nakano Corporation)
7th unsecured bond(Nakano Corporation)
8th unsecured bondMar.10, 2017

Total

1,000

Mar. 10, 2020

(Notes): 1. ( ) denotes the amount expected to be redeemed within one year.
2. The following was a summary of maturities of bonds subsequent to March 31, 2018:
Years ending March 31

Millions of yen

Thousands of
U.S. dollars

2019

¥40

$376

2020

1,000

9,412

2021

—

—

2022

—

—

2023

—

—

2024 and thereafter
Total

26

NAKANO CORPORATION——¥1,040$9,78916.	Loans Payable and Short-term loans payable, long-term loans payable and other debts as of March 31, 2017 andOther Debts

2018 were as follows:

Millions of yen

As of March 31

Thousands of
U.S. dollars

2017

2018

2018

Averageinterest rate(%)

Maturity

Short-term loans payable¥1,450¥340$3,200

1.16—

Current portion of
long-term loans payable

50

310

2,917

0.96

—

Current portion of leaseobligations

74

28

263

—

—

Long-term loans payable
excluding current portion

750

1,640

15,436

May. 31, 2019 –0.93 Feb. 25, 2027

Lease obligations
excluding current portion

36

8

75

Apr. 30, 2019 –— Feb. 28, 2021

¥2,361¥2,326$21,893

Total

—

—

(Notes):1.	“Average interest rate” represents the weighted average interest rate on loans payable outstanding as of
the balance sheet date. “Average interest rate” of lease obligations is not shown since interest equivalentamounts included in the aggregated lease premiums are allocated to each fiscal year using the straightline method.
2.	The following was a summary of annual maturities of loans payable and lease obligations subsequent toMarch 31, 2018:
Millions of yen
Years ending March 31

Lease
obligations

Long-termloans payableLease
obligations

2019

¥310

¥28

$2,917

$263

2020

610

7

5,741

65

2021

310

0

2,917

0

2022

310

—

2,917

—

2023

210

—

1,976

—

2024 and thereafterTotal

17.	Subsequent
EventsThousands of U.S. dollars

Long-termloans payable

200

—

1,882

—

¥1,950¥36$18,354$338

At the Annual General Meeting of Shareholders held on June 28, 2018, it was resolved to distributethe year-end cash dividends of ¥12 ($0.11) per share of common stock of the Company.
The aggregate amount of such cash dividends was ¥412 million ($3,878 thousand).

ANNUAL REPORT 201827

SUPPLEMENTAL INFORMATIONNONCONSOLIDATED BALANCE SHEETSNAKANO CORPORATIONAs of March 31, 2017 and 2018

AssetsCurrent assets:
Cash and deposits
Notes receivable - trade
Accounts receivable from completed construction contracts
Costs on uncompleted construction contracts
Costs on real estate business
Raw materials and supplies
Short-term loans receivable from subsidiaries and affiliates
Deferred tax assets
Accounts receivable - otherConsumption taxes receivable
Other
Total current assets
Non-current assets:
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
VehiclesAccumulated depreciation
Vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Total intangible assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Long-term loans receivable from subsidiaries and affiliates
Claims provable in bankruptcy, claims provable in rehabilitationand other
Insurance funds
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

28

NAKANO CORPORATION

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥11,385
2,189
14,293
885
43
5
10
229
1,177
593
757
31,570¥14,929
996
18,950
1,467
43
6
15
529
2,013
1,341
729
41,023$140,521
9,375
178,369
13,808
404
56
141
4,979
18,947
12,622
6,861
386,135

6,539(3,850)
2,688
144
(116)
28
562
(199)
363
11
(7)
3
301
(274)
27
10,426
225
(170)
54
28
13,6206,562(3,961)
2,600
145
(121)
23
562
(242)
319
11
(8)
2
355
(286)
69
10,445
96
(76)
20
199
13,681

61,765(37,283)
24,472
1,364(1,138)216
5,289(2,277)
3,002
103
(75)
18
3,341
(2,692)649
98,315
903
(715)
188
1,873
128,774

208

163

1,534

3,068
1,183
600

3,408
1,390
120

32,07813,083
1,129

32
31
460
(451)
4,924
18,754¥50,324

—
31
321
(21)
5,251
19,096¥60,119

—
291
3,021
(197)
49,425
179,743$565,879

Liabilities
Current liabilities:
Notes payable – trade
Electronically recorded obligations - operating
Accounts payable for construction contracts
Short-term loans payable
Current portion of bonds
Income taxes payable
Advances received on uncompleted construction contracts
Provision for warranties for completed construction
Provision for loss on construction contracts
Provision for bonuses
Other
Total current liabilities
Non-current liabilities:
Bonds payable
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Long-term deposits received
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity:
Common stock
Authorized: 154,792,300 shares
Issued:34,498,097 shares
Capital surplus
Legal capital surplus
Total capital surplus
Retained earnings
Other retained earnings
Retained earnings brought forward
Total retained earnings
Less: Treasury stock, at cost
124,006 shares in 2017 and 125,310 shares in 2018
Total shareholders’ equity
Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

¥5,258
8,118
9,752
1,500
80
505
4,076
134
25
448
1,299
31,198¥4,573
9,134
12,137
650
40
215
8,837
169
—
458
935
37,151$43,044
85,975
114,241
6,118
376
2,023
83,179
1,590
—
4,310
8,800
349,689

1,040
750
315
242
492
161
3,001
34,200

1,000
1,640
423
58
489
132
3,743
40,895

9,412
15,436
3,981
545
4,602
1,242
35,231
384,930¥5,061¥5,061$47,637

1,400
1,400

1,400
1,400

13,177
13,177

8,979
8,979

11,836
11,836

111,408
111,408(31)
15,409(32)
18,265(301)
171,922715
715
16,124959
959
19,2249,026
9,026
180,948¥50,324¥60,119$565,879

ANNUAL REPORT 2018

29

NONCONSOLIDATED STATEMENTS OF INCOME
NAKANO CORPORATION
For the years ended March 31, 2017 and 2018

Millions of yen

Thousands of
U.S. dollars

2017

2018

2018

Net sales:¥74,525¥73,895$695,547

Sales on real estate businessNet sales of completed construction contracts

953

956

8,998

Sales on other business

75

75

705

75,55474,927705,261

67,43067,006

630,704

372

382

3,595

Total net sales
Cost of sales:
Cost of sales of completed construction contracts
Cost of sales on real estate business
Cost of sales on other business

61

53

498

67,86367,442634,807

7,095

6,888

64,834Gross profit - real estate business

581

573

5,393

Gross profit - other business

14

22

207

7,690

7,484

70,444

4,158

4,164

39,194

3,531

3,320

31,250Interest income

26

21

197

Dividend income

42

45

423

Other

56

27

254

124

95

894

Interest expenses

54

27

254

Foreign exchange losses

—

75

705

Bond issuance cost

34

—

—

Other

3

8

75

92

111

1,044

3,563

3,304

31,099

Reversal of allowance for doubtful accounts

—

275

2,588

Gain on liquidation of subsidiaries and associates

11

—

—

Total cost of sales
Gross profit:
Gross profit on completed construction contracts

Total gross profit
Selling, general and administrative expenses
Operating income
Non-operating income:

Total non-operating income
Non-operating expenses:

Total non-operating expenses
Ordinary income
Extraordinary income:

Other

—

11

103

11

286

2,692

Loss on valuation of shares of subsidiaries

—

252

2,371

Other

86

35

329

86

288

2,710

3,488

3,302

31,080

491

402

3,783

Total extraordinary income
Extraordinary losses:

Total extraordinary losses
Profit before income taxes
Income taxes:
Income taxes - current
Refund of income taxes for prior periods

(46)

—

—

Income taxes - deferred

(231)

(300)

(2,823)

Total income taxes
Profit30

NAKANO CORPORATION

214

102

960

¥3,274¥3,200$30,120CORPORATE PROFILE
As of 31st March 2018

CONTENTS

Company Outline
Company Name
Headquarters
Foundation
Established
Capitalization
Employees
Stock Listing
Primary Business

FINANCIAL HIGHLIGHTS

1

REPORT OF INDEPENDENT AUDITORS

2

CONSOLIDATED BALANCE SHEETS

3

CONSOLIDATED STATEMENTS OF INCOME

5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

6

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

7

CONSOLIDATED STATEMENTS OF CASH FLOWS

8NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9

Board of Directors

SUPPLEMENTAL INFORMATION

28

Honorary Chairman
Vice Chairman
President
Directors

NONCONSOLIDATED BALANCE SHEETS

28

NONCONSOLIDATED STATEMENTS OF INCOME

30

CORPORATE PROFILE

31

NAKANO CORPORATION
4-2-28 Kudan-kita, Chiyoda-ku, Tokyo 102-0073, Japan
8th February 1933
19th December 1942
¥5,061,678,686
1,355
Tokyo Stock Exchange, First Section
Domestic Construction Projects
International Construction Projects

Outside Directors
Standing Corporate Auditors
Corporate Auditors

Yoshikazu Oshima
Akira Asai
Toshiyuki Taketani
Yorinobu Kato
Hiroyuki Tanada
Moriyasu Kawamura
Akihiko Sugaya
Kohei Yamaya

Satoshi Hattori
Tetsuo Sato
Makoto Fukuda
Koichiro Nakano
Shunichi Sato

Main Affiliated Financial Institutions
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
The Bank of Yokohama, Ltd.
The Yamanashi Chuo Bank, Ltd.

Mitsubishi UFJ Trust and Banking Corporation
The Shoko Chukin Bank, Ltd.
The Shizuoka Bank, Ltd.
The Fukushima Bank, Ltd.

Major Shareholders
Oshima Scholarship Foundation
MUFG Bank, Ltd.
Nakano Employee Shareholder Association

Yoshikazu Oshima
Kanto Kogyo Co., Ltd.
Nakano Investment Fraternity Association

Domestic Offices
Headquarters
Tohoku Regional OfficeOsaka Regional Office
Civil Engineering Office
Hokkaido Branch Office
Ibaraki Branch Office
Higashi Kanto Branch Office
Sales Offices (Mie, Hyogo, Kita Kyushu)

Tokyo Main Office
Nagoya Regional Office
Kyushu Regional Office
Taito Branch Office
Kita Tohoku Branch Office
Kita Kanto Branch Office
Yokohama Branch OfficeInternational Offices
Nakano Singapore (Pte.) Ltd. (Singapore)
PT. Indonakano (Indonesia)
Nakano Vietnam Co., Ltd. (Vietnam)

Cautionary remarks regarding forward looking statements
This Annual Report includes forward-looking statements that represent Nakano Corporation’s assumptions and expectations inlight of currently available information. These statements reflect industry trends, client’s situations and other factors, and involverisks and uncertainties which may cause actual performance results to differ from those discussed in the forward looking
statements in accordance with changes in the domestic and international business environment.
For further information contact:
Nakano Corporation International Operations Headquarters
4-2-28 Kudan-kita, Chiyoda-ku, Tokyo 102-0073, Japan
Tel: +81-(0)3-3265-4685 Fax: +81-(0)3-3265-4698
https://www.wave-nakano.co.jp

Nakano Construction Sdn. Bhd. (Malaysia)
Thai Nakano Co., Ltd. (Thailand)

Industry Affiliations
Japan Federation of Construction Contractors
The Associated General Contractors of Tokyo
General Contractors Association of Osaka

National General Contractors Association of Japan
Japan Association of Representative General Contractors

ANNUAL REPORT 201831

Annual Report 2018
Fiscal year ended March 31, 2018

4-2-28 Kudan-kita, Chiyoda-ku, Tokyo, 102-0073, Japan
Tel: +81-(0)3-3265-4685 Fax: +81-(0)3-3265-4698
https://www.wave-nakano.co.jp
SINGAPORE
1 Coleman St., #06-02 The Adelphi, 179803, Singapore
Tel: +65-6333-4933
Fax: +65-6338-8568

MALAYSIA
Block B, 15-4-2, Megan Salak Park Jalan 1/125E, Taman Desa Petaling, Kuala Lumpur 57100, Malaysia
Tel: +60-3-9059-6977
Fax: +60-3-9059-6277

INDONESIA
Tamara Center 14th Floor Jl. Jend. Sudirman KAV. 24, Jakarta 12920, Indonesia
Tel: +62-21-5203674
Fax: +62-21-5203670

THAILAND
2170 Bangkok Tower, 17th Floor New Petchburi Road, Bangkapi, Huaykwang, Bangkok 10310 Thailand
Tel: +66-2-308-0500
Fax: +66-2-308-0497

VIETNAM
Unit 1411-1412, 14th Floor, Daeha Business Center, 360 Kim Ma Street, Ngoc Khanh Ward, Ba Dinh District, Hanoi, Vietnam
Tel: +84-243-724-7552
Fax: +84-243-724-7553