To the Shareholders of Fukuda Corporation

FUKUDAR E P O R T

Fukuda Corporation

Annual Report forthe 94th Term
January 1, 2020 – December 31, 2020

Stock code: 1899

Introduction

We strive first and foremost to satisfy
our multiple stakeholders.
We would like to take this opportunity to express our sincere
gratitude to all of our shareholders for your continuing support.
We would also like to express our deepest condolences tothose who have lost their lives due to coronavirus disease (COVID19) and to the families they have left behind, and we pray for the
Katsuyuki Fukuda Masanori Araaki
earliest recovery of those still affected.
Chairman &President &In addition, we would like to extend our sincere gratitude to all
Representative Director
Representative Directorof the government agencies and the medical professionals who
are fighting on the frontline to prevent the spread of infection.
We hereby present our business results for the 94th term ended on December 31, 2020.
By upholding the basic principle of “Creating an environment where people, nature and society can coexist” andadhering to the Fukuda Group Spirit of “Always sincere from now until the next century and beyond,” the Fukuda Groupdraws on its comprehensive strengths and sincerity to form strong bonds with those that we love and cherish, in order toprotect their lives and livelihoods. The Company’s management philosophy is: “To value people and the environment, andaim to create inspirational value based on a corporate structure designed to face challenges.” To this end, the entire
company is working together as one, with our highest priority being the satisfaction of all of our stakeholders, including
our customers, shareholders, business partners, local community and employees.
The Company’s business results for the fiscal year under review are shown below. While today’s increasingly global
society is fraught with unexpected risks, we will aim to enhance our corporate value and maintain the Group’s
management base as a united corporate group so that we may further continue to meet the expectations of ourshareholders.
We sincerely hope you will grant us your continued support and guidance going forward.
March 2021
Financial Highlights
Net sales
173,928(Unit: Million yen)

182,088

185,764(Forecast)

92nd term 93rd term 94th term 95th term

1

Operating income

175,000

8,055

8,055

(Unit: Million yen)

8,905

7,800

(Forecast)

92nd term 93rd term 94th term 95th term

Ordinary income
8,410

8,350

(Unit: Million yen)

9,038

8,000

(Forecast)

92nd term 93rd term 94th term 95th term

Business environment for the fiscal year under review
The Japanese economy continued to face a difficult situation due to the global spread of COVID-19. Although exports andcorporate earnings of some companies in specific industries showed signs of recovery, other industries suffered a deterioration incorporate earnings due to voluntary restraints on economic activities, resulting in a greater degree of turmoil in the economy.
Meanwhile, recovery in personal consumption also came to a standstill amid the persisting COVID-19 pandemic.
In the construction industry, demand is increasing for disaster prevention measures and maintenance and renewal works on aging
facilities for public investments. Meanwhile, the amount of investment in construction by the private sector is declining amid a
corporate trend to curb capital investment under the impact of COVID-19.
Consolidated business results for the fiscal year under review
The consolidated business results for the fiscal year under review were as follows. Net sales increased by 2.0% year on year tomore than ¥185.7 billion, mainly because major construction projects were completed and construction works progressed steadily
without anticipated work interruptions and delays due to the COVID-19 pandemic.
In terms of profit, gross profit increased by 5.5% year on year to more than ¥19.0 billion thanks to a significant contribution froman increase in gross profit margins mainly due to the completion of highly profitable construction properties and there being nolosses caused by the COVID-19 pandemic. Operating income increased 10.6% year on year to more than ¥8.9 billion, despite anincrease in selling, general and administrative expenses such as labor costs.
In terms of non-operating income and expenses, ordinary income increased by 8.2% year on year to ¥9.0 billion without any
major fluctuations, and net income attributable to owners of the parent increased by 9.2% year on year to more than ¥5.9 billion as
income taxes remained at the same level as the previous fiscal year, despite the recording of a loss on valuation of investment
securities.
Outlook for the next fiscal year
Going forward, in the construction industry, although the budget for national resilience has been secured, general investment inpublic works construction is expected to decline as authorities are obliged to allocate a large budget for COVID-19 measures. In
addition, new capital investment is predicted to remain at a low level in the meantime due to a sharp decline in both investment inconstruction by the private sector and construction of accommodation facilities, as office buildings undergo changes in workplaces
and workstyles.
The Company is working diligently to achieve the targets in the Medium-Term Business Plan, entering its final year in 2021.
However, we have decided to revise the initial plan for 2021, because orders decreased in 2020 as the result of an unexpectedbusiness environment and due to concerns over a decline in the progress of construction works from 2021.

Net income attributable to owners of the parent
5,643

5,475

5,979

(Unit: Million yen)

5,300

Orders (non-consolidated)
151,387(Forecast)

111,000

120,847
98,35492nd term

93rd term

94th term

95th term(Unit: Million yen)

92nd term

93rd term

94th term(Forecast)

95th term2Medium-Term Business Plan 2021
Customers(businesses andindividuals)
Shareholders
andinvestors

Administrative
agencies

Aiming to be the number
one company for multiple
stakeholder satisfaction~ Towards sustained corporate growth ~Other businesses
in the same industry,groups andorganizations

Employees(families andretirees)

Business
partners

The Medium-Term Business Plan 2021 has been
established to realize the Group’s long-term vision
for the next decade.

Environment
and
local
communities

Long-term Vision 2025
A century of history and tradition;
New challenges for the next 100 years

The Group’s Future Ideal

Previous
Medium-TermBusiness Plan
2018
 ring about a recoveryBin performance
Capture incoming
ordersStrengthen
financialfoundations

3

New
Medium-TermBusiness Plan 2021
 ransform the businessT
portfolio
Create new revenue
basesSecure and diversify
talent evelop nation-wide through strong
Dconsolidated management, to be more thanjust a regional construction company
Create customer satisfaction through quality
and safetyBe a corporate group with advanced
technical and proposal capabilities
Secure superior talent and develop an
environment where they can flourish
Establish win-win relationships with all
stakeholders

5 Measures
Transform the portfolio of existing businesses
Adjust the respective weights of the construction, civil engineering and paving
businesses according to social needs (transition from new construction tomaintenance and renewal, from low productivity properties to high-productivity
properties and business areas)
Narrow down new revenue bases for Group companies
Develop new businesses utilizing knowhow from construction and real estatebusinesses
Secure and diversify talent
Hire and educate diverse talent for the accumulation of intellectual capital
Enhance work-life balance to secure talent
Engage in talent exchange between Group companies
Create worksites to provide safe, high-quality services
Work together with partner businesses to provide customers and local
communities with high-quality services
Enhance Group brand strength through providing a high level of additionalvalue
Be trusted as Fukuda Group
Enhance sensitivity to legal and regulatory compliance
Make a suitable contribution to local communities (through taxes, employment,
local contributions, tackling environmental issues, etc.)4Main projects completed in the fiscal year under review
Construction

5

JA Niigata Kouseiren

Mizuho Marubeni Leasing Corporation

JA Niigata Kouseiren Murakami General Hospital Relocation Project(Niigata Prefecture)

Tentative name: Toyocho Project Construction Project (Tokyo)

INOAC CORPORATIONAEON RETAIL CO., LTD.

INOAC Yana Plant No. 2 Construction Project (Aichi Prefecture)

Tentative name: AEON STYLE Ebie Construction Project (Osaka Prefecture)

Akita Real Estate Service Co., Ltd.

Kashii Teriha Project Consortium

Akita Continuing Care Retirement Community (CCRC) Base Development Project(Nakadori 2-chome District Excellent Building Development Project)
Facility Construction Project (Akita Prefecture)

Tentative name: Kashii Teriha Project(Urban Palace Teriha Construction Project) (Fukuoka Prefecture)Civil Engineering

Ministry of Land, Infrastructure, Transport andTourism Hokuriku Regional Development Bureau

Ministry of Land, Infrastructure, Transport andTourism Hokuriku Regional Development Bureau

Kuraoka Low Water Revetment Project (Niigata Prefecture)

Shimazaki River Sluice and Drainage Pumping Station
Reconstruction Project Part 1 (Niigata Prefecture)

Niigata Prefecture
Prefectural Irrigation and Drainage Project (General (Cultivation))
Shinanogawa River Right Bank (Phase 1) District 10th Construction
Project (Niigata Prefecture)

Niigata Prefecture

Iwate Prefecture

Kanagawa Prefecture

Niigata Port (Nishi Ko-ku) Waste Landfill Revetment Management
Dredging Soil and Sand Basin Embankment Construction Project
Part 4 (Niigata Prefecture)

National Route 455 Horono Ohashi Bridge Seismic
Reinforcement and Repair (Substructure) Project(Iwate Prefecture)2019 Kanagawa Prefecture Environmental Improvement Center
Water Leak-resistance Facility Maintenance Project(Kanagawa Prefecture)

Main orders and completed projects for the fiscal year under review
OrdersCompleted projects

DAIWA HOUSE INDUSTRY CO., LTD.

AEON TOWN Co., Ltd.

Tentative name: Kasugai Shopping Center Construction Project

Tentative name: AEON TOWN Fujimino Construction Project

AEON TOWN Co., Ltd.

JA Niigata Kouseiren

Tentative name: AEON MALL Noshiro Construction Project

JA Niigata Kouseiren Murakami General Hospital Relocation Project

Hitachi Power Solutions Co., Ltd.

Miyagi Prefecture

SGET Shin-Shirakawa Photovoltaic Power Plant Construction Project and SGET
Shin-Shirakawa Photovoltaic Power Plant Self-owned Line Construction Project

Okawa Outer River Disaster Recovery Construction Project (No. 2)

Funabashi City
Kaminagatsugawa Trunk River No. 1 Culvert Construction Project oga City Genboen Land Division Readjustment
K
Association
Tentative name: Koga City Genboen Land Division Readjustment
Project

6

Topics

TOPICS

1Contributing to the Spread of ICT Construction

Certified for 8 years running

Certified as a “Company with Excellent
Record of Construction Projects”

TOPICS

2The Company received
certification and an award
as a Company with
Excellent Record ofConstruction Projects for
Fiscal 2020 from the
Hokuriku Bureau of the
Ministry of Land,
Infrastructure, Transport
and Tourism. This is theeighth consecutive yearthat the Company hasreceived this certification,
attesting to the continuity
and stability of its
technical capabilities inregard to construction andquality control.

Certified as a “Company with Excellent
Record of Construction Projects Utilizing ICT”
The Company received
certification and an award
as a Company with
Excellent Record ofConstruction Projects
Utilizing ICT for Fiscal
2020 from the Hokuriku
Bureau of the Ministry ofLand, Infrastructure,
Transport and Tourism.
This is the second timesince fiscal 2017 that theCompany has received
this certification. We areproactively working on
information andcommunication
technology (ICT)
construction as part ofworkstyle reforms,
including productivity
improvements.

Practicing Health and Productivity Management
TOPICS

3

Registered and Certified as the Prefecture’s “Niigata Health and Productivity Management
Promotion Company” and the City’s “Health and Productivity Management Certified Business”

Promoting the introduction of “KenCoM,” awebsite for the exclusive use of the insured
established by the All Japan Civil
Engineering and Construction National
Health Insurance Association to support thehealth management of employees

7

Based on the idea that “giving consideration to the health of its
employees will also bring significant management benefits,” theCompany is working on health and productivity management thatconsiders and strategically implements health care from amanagement perspective. Following our registration as a “Niigata
Health and Productivity Management Promotion Company” by
Niigata Prefecture in 2019, we were certified as a “Health andProductivity Management Certified Business” (Gold Class) by
Niigata City in April 2020. Specifically, we will support the healthcare of employees from various angles, including promoting
participation in “Minna de Arukatsu,” a walking event sponsored by
the health insurance association the Company is affiliated to,providing support for employees who return to work after taking
leave, and establishing a leave system and rehabilitation
attendance system for employees requiring hospital visits.

Consolidated Financial Statements
Consolidated Balance Sheet (Unit: Million yen, rounded down to the nearest million yen)

Consolidated Statement of Income (Unit: Million yen, rounded down to the nearest million yen)

94th term
93rd term(as of December 31, 2020) (as of December 31, 2019)94th term
93rd term(as of December 31, 2020) (January 1, 2019 - December 31, 2019)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Non-operating expenses
Ordinary income
Extraordinary income
Extraordinary losses
Income before income taxes and minority interests
Income taxes – current
Income taxes – deferred
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent

AssetsCurrent assets

102,288

104,203

Non-current assets

35,27335,343

Total assets

137,562

139,546

Current liabilities

58,71762,880Non-current liabilities

7,508

8,531

Total liabilities

66,226

71,412

70,17066,697

Accumulated other comprehensive income

550

840

Valuation difference on available-for-sale securities

655

853

Revaluation reserve for land8775

Remeasurements of defined benefit plans

17

63

615

596

Total net assets

71,335

68,134

Total liabilities and net assets

137,562

139,546

Liabilities

Net assets
Shareholders’ equity

Non-controlling interests

185,764
166,692
19,071
10,165
8,905
337
205
9,038
151
365
8,824
2,718
80
6,026
47
5,979

182,088
164,018
18,06910,014
8,055
413
117
8,350
176
240
8,286
2,825
57
5,519
43
5,475

Consolidated Statement of Cash Flows (Unit: Million yen, rounded down to the nearest million yen)
94th term
93rd term(as of December 31, 2020) (January 1, 2019 - December 31, 2019)

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

6,909
2,193
4,680
35
23,171
23,116

1,151
1,849
3,314
313
22,85823,171

Consolidated Statement of Changes in Equity (January 1, 2020 – December 31, 2020) (Unit: Million yen, rounded down to the nearest million yen)
Capitalstock

Balance as of January 1, 2020
Changes of items during the period
Dividends of surplus
Net income attributable to owners of the parent
Purchase of treasury shares
Disposal of treasury shares
Change of scope of consolidation
Reversal of revaluation reserve for land
Net changes of items during the period
other than shareholders’ equity
Total changes of items during the period
Balance as of December 31, 2020

5,158

Shareholders’ equity
CapitalRetained
Treasury
surplusearnings
shares6,16256,118741

66,697

1,688
137

980
5,979
1,688
144
5
11

980
5,979
6
5
11

5,158

6
6,169

5,015
61,133

Accumulated other comprehensive income
NonTotal shareholders’ Valuation difference on Revaluation Remeasurements of Accumulated other controlling
equityavailable-for-sale securities reserve for land defined benefit plans comprehensive income interests

1,550
2,291

3,472
70,170

853

75

63

840

596

Total net
assets

68,134
980
5,979
1,688
144
5
11

198

11

80

290

19

271

198
655

11
87

80
17

290
550

19
615

3,200
71,3358

Business Overview/Subsidiaries
In addition to the construction orders and projects undertaken

Construction by the Company, FUKUDA ROAD CONSTRUCTION CO., LTD.
businessand 21 other subsidiaries, and TAKAKEN CO., LTD. and four
affiliates are also engaged in construction orders and¥181,568million otherprojects, as well as the rental and manufacturing/sales ofRatio of net sales by
consolidated business

97.7%

construction-related materials and equipment, some of which
are ordered by the Company.

Real estatebusiness¥3,541million

In addition to the business undertaken by the Company in realestate sales, leasing and development, FUKUDA ASSET &SERVICE CO., LTD. and three other subsidiaries, as well as anaffiliate, TAKAKEN CO., LTD., and another affiliate are also
engaged in the real estate business.

Otherbusiness¥654million

FUKUDA ROAD CONSTRUCTION CO., LTD. and four othersubsidiaries are engaged in the lease, manufacture and sale ofproducts other than those related to construction projects.
Another subsidiary, Design Workshop Co., Ltd., is engaged in
the management of welfare facilities.

1.9%

0.4%
Okumikawa Co., Ltd.
Okumikawa Co., Ltd. islocated near the border ofAichi Prefecture, which issurrounded by Gifu, Nagano
and Shizuoka Prefectures.
Although it is a region
experiencing depopulation,
the Shitara Dam construction
project, a national policy, isunderway targetingcompletion by 2026, andthere are more people
working on the dam
construction project than the
town population of Shitara
itself.
Living up to our corporate
philosophy of “Cheerfully,
Seriously, and With Utmost
Effort,” every employee isstrenuously working every day
for the sake of their families,
the local community, and forthe company. We willcontinue to push ahead with aspirit of sincerity 100 years
from now.

9

Representative	Toshiya Sawaki, Representative Director
Address	5-2 Kiyosaki Azamizuguchi, Shitara-cho,
Kita Shitara-gun, Aichi Prefecture
Establishment January 1978
Capital¥20 million
Websitehttps://www.okumikawaweb.com/
Business	Company specializing in road paving with afocus on asphalt paving

Corporate Data
Company Profile (as of December 31, 2020)
Established:

January 1902

3-10 Ichibanboridoricho, Chuo-ku, Niigata

Chairman &Representative Director Katsuyuki Fukuda
Chairman of the Board
President &Representative Director Masanori Araaki
President of the Board
Vice President &Representative Director
Wataru Ishikawa
Vice President of the Board
Director &Executive Officer Hideaki Saito
Director &Executive Officer Shinichi Otsuka
Director &Executive Officer Yutaka Yamaga
Director &Executive Officer Katsuhiko Iwasaki

Tel: 025-266-9111 (Main line)

Director

Main Branch & Branches

Director

Founded:December 1927

Capital:5,158,408,496 yen

Employees:

913

Consolidated subsidiaries: 16 (including FUKUDA ROAD CONSTRUCTION CO., LTD.)
Main offices:

Directors and Executive Officers (as of March 25, 2021)

Head officeNiigata Main Branch (Chuo-ku, Niigata),
Tokyo Main Branch (Chiyoda-ku, Tokyo),
Tohoku Branch (Aoba-ku, Sendai),
Nagoya Branch (Naka-ku, Nagoya),
Osaka Branch (Kita-ku, Osaka),
Kyushu Branch (Hakata-ku, Fukuoka),
Chuetsu Branch (Nagaoka, Niigata Prefecture),
Hokkaido Branch (Chuo-ku, Sapporo)
Sales Offices
Morioka, Chiba, Yokohama, Murakami,
Jouetsu, Hiroshima and six other locations
Main subsidiaries: FUKUDA ROAD CONSTRUCTION CO., LTD.

Kenichi Yazawa
Yoshinao Nakata
Vice President of the Board Hideaki Fujiyama
Executive Officer
Koichi Yakuwa
Executive Officer
Kiyomi Ozaki

Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

Full-Time Audit &Supervisory Board Shoichi Takakuwa
MemberFull-Time Audit &Supervisory Board Takeshi Yamamoto
MemberAudit &
Supervisory Board Tetsuya Sunada
MemberAudit &
Supervisory Board Michiaki Miyajima
MemberNotes:
1.	Messrs. Kenichi Yazawa and Yoshinao Nakata are Outside Directors pursuant to Article 2,
Paragraph 15 of the Companies Act.
2.	Messrs. Tetsuya Sunada and Michiaki Miyajima are Outside Audit & Supervisory Board
Members pursuant to Article 2, Paragraph 16 of the Companies Act

Stock Information (as of December 31, 2020)
Total Number of Shares Authorized to be Issued: 20,000,000 shares
Total Number of Shares Outstanding (excluding treasury shares):
Number of Shareholders:Name of shareholder

RECS CORPORATIONFUKUDA ASSET & SERVICE CO., LTD.

Fukudasekizai Co., Ltd.

FUKUDA HOUSING CO., LTD.

NigataZouen Corporation
FUKUDA RENEWAL CORPORATION
Kita Nihon Construction Material Leasing Co., Ltd.
Re Earth Corporation

8,607,762 shares
5,811

Major Shareholders(Public Interest Incorporated Foundation)
Fukuda Ikueikai
Naomi Fukuda
THE DAISHI BANK, LTD.
Kazuko Ozawa

KOWA Co., Ltd.

Hiroyuki Oiki
Mikio Yamamoto
Hiroshi Shimizu
Satoshi Yugami
Tsuyoshi Tamiya
Kazunori Konno
Shuichi Sunada
Toshio Omi

Number of shares Shareholding
held (thousands)
ratio (%)

688

8.0

431
419
321

5.0
4.9
3.7

286

3.3

Note 1. Shareholding ratio is calculated after deducting the number of treasury shares (76,742
shares).The number of treasury shares does not include the shares of the Company(70,300 shares) held by Trust & Custody Services Bank, Ltd. (trust account E) as thetrust assets of the Employee Stock Ownership Plan (J-ESOP) and Board Benefit Trust(BBT).
2. THE DAISHI BANK, LTD. merged with The Hokuetsu Bank, Ltd. on January 1, 2021
and was renamed Daishi Hokuetsu Bank, Ltd.

10

Information for Shareholders
Fiscal Year:

From January 1 to December 31

Ordinary General March
Meeting of
Shareholders:Record Date

Stock Transfer Agent /Account Management
Institution for Special
Accounts:

Ordinary General Meeting of Shareholders:
December 31
Year-End Dividend: December 31
Interim Dividend: June 30

Shareholder Benefit Program
To express our gratitude for the constant support of ourshareholders and with the aim of encouraging shareholders tomaintain their shareholding over a long period, the Company
has introduced a Shareholder Benefit Program.
Number ofshares held

Shareholder
benefit

200 shares A ¥2,000
or moreQUO card

Mitsubishi UFJ Trust and Banking Corporation
Contact Information
Mitsubishi UFJ Trust and Banking Corporation
Stock Transfer Agency Department
1-1 Nikkocho, Fuchu, Tokyo
Tel: 0120-232-711 (Toll-free)
Addressee
Shin-Tokyo PostOffice,Po box No.29,
Tokyo 137-8081 Japan

Number of
Shares Per Unit:

100

Listed on:First Section of Tokyo Stock Exchange

200 shares A ¥5,000
or moreQUO card

Benefit criteria
Shareholder benefit presented inaccordance with the details
registered or recorded in the
Shareholder Registry as ofDecember 31 each year.
Shareholder benefit presented inaccordance with the details(registered or recorded three times
or more in the Shareholder
Registry) for shares held for one
year or more.

Presentation period: Scheduled to be sent in late March each year

Method of Public Public notices will be made electronically.
Notice:However, when electronic public notices cannot
be made due to circumstances beyond ourcontrol, we will post a notice in the Nihon Keizai
Shimbun.
URL for Public Notices: https://www.fkd.co.jp/
Notes:
Please contact the securities company where you have your accountregarding procedures for matters such as change of address ofshareholders and requests for purchase of shares. These procedures are
not handled by the Stock Transfer Agent (Mitsubishi UFJ Trust andBanking Corporation). Unclaimed dividends are payable at the main
office/branches of Mitsubishi UFJ Trust and Banking Corporation.
Procedures related to shares recorded in special accounts are handledby Mitsubishi UFJ Trust and Banking Corporation as the accountmanagement institution. Shareholders are therefore requested to contact
the account management institution (Mitsubishi UFJ Trust and Banking
Corporation) for the aforementioned special accounts.
The services are also provided at nationwide branches of Mitsubishi UFJ
Trust and Banking Corporation.

FUKUDA Corporation Searchhttps://www.fkd.co.jp/

Head office: 3-10 Ichibanboridoricho,
Chuo-ku, Niigata
Tel: 025-266-9111 (Main line)