2021

FINANCIALSTATEMENTS
MARCH 31, 2020-2021

KITANO CONSTRUCTION CORP.

Contents

Financial Statements

Consolidated Balance Sheets................................................................................................. 2

Consolidated Statements of Income..................................................................................... 4

Consolidated Statements of Comprehensive Income......................................................... 5

Consolidated Statements of Changes in Equity................................................................... 6

Consolidated Statements of Cash Flows.............................................................................. 7

Notes to Consolidated Financial Statements....................................................................... 8

Board of Directors, Statutory Auditors and Executive Officers........................... 221

K I TA N O C O N S T R U C T I O N C O R P.

Consolidated Balance Sheets
As of March 31, 2020 and 2021
Millions of yen
March 31,
2020

2021

ASSETS
Current Assets:
Cash in hand and in banks.................................................................
Notes and accounts receivable..........................................................
Securities..............................................................................................
Real estate for sale..............................................................................
Cost of construction in progress.......................................................
Cost of uncompleted development projects....................................
Inventories............................................................................................
Other current assets............................................................................
Less: allowance for doubtful accounts.............................................
Total current assets......................................................................

¥

9,425
14,753
24
3,260
1,029
67
59
2,322
(33)
30,910¥ 12,998
18,975
16
3,242
1,307
78
53
2,192
(29)
38,834Non-current Assets:
Tangible Fixed Assets:
Buildings and structures..............................................................
Machinery and equipment...........................................................
Tools, furniture and fixtures.......................................................
Golf course....................................................................................
Land................................................................................................
Construction in progress.............................................................
Other non-current assets.............................................................
Less: accumulated depreciation.................................................
Total tangible fixed assets....................................................

12,491
2,721
2,935
770
10,032518
73(11,501)
18,042

16,196
2,649
2,980
770
10,073
0
97(11,770)
20,998Intangible fixed assets........................................................................

233

201

Investments:
Investment securities...................................................................
Long-term loans............................................................................
Net defined benefit asset.............................................................
Deferred tax assets.......................................................................
Other investments........................................................................
Less: allowance for doubtful accounts......................................
Total investments..................................................................
Total non-current assets.......................................................
Total assets.............................................................................

5,534
65
569
51
1,588
(33)
7,775
26,051¥56,961

6,729
75
923
30
1,888
(33)
9,613
30,814¥69,649

The accompanying notes are an integral part of these statements.
K I TA N O C O N S T R U C T I O N C O R P.

2

Consolidated Balance Sheets
As of March 31, 2020 and 2021
Millions of yen
March 31,
2020

2021

¥12,979
—
—
60
4,972
5
284
50
40
35
1,220
19,650¥11,094
6,773
4,000
1,046
4,741
10
324
50
29
—
1,974
30,045

60
1,950
749
290
3,051
22,701

60
1,836
1,000
303
3,200
33,246

9,116

9,116

3,188
22,201(1,918)32,5883,188
23,384(1,938)33,751

Unrealized gain (loss) on other securities.......................................
Deferred gain (loss) on hedging derivatives....................................
Foreign currency translation adjustment.........................................
Remeasurements of defined benefit plans.......................................
Total accumulated other comprehensive income....................

1,132
(25)
166
(91)
1,182

1,985
16
26
124
2,153

Non-controlling interests.............................................................................

490

498

Total net assets.............................................................................................

34,26036,403

Total liabilities and net assets.....................................................................

¥56,961¥69,649

LIABILITIESCurrent Liabilities:
Notes and accounts payable..............................................................
Electronically recorded obligations - operating..............................
Short-term borrowings.......................................................................
Income taxes payable.........................................................................
Advances received on construction in progress.............................
Advances received on uncompleted development business.........
Accrued bonuses to employees.........................................................
Accrued bonuses to directors and statutory auditors....................
Accrued warranty................................................................................
Allowance for loss on reconstruction of company buildings........
Other current liabilities......................................................................
Total current liabilities................................................................
Non-current Liabilities:
Net defined benefit liability................................................................
Membership deposit............................................................................
Deferred tax liabilities........................................................................
Other non-current liabilities...............................................................
Total non-current liabilities.........................................................
Total liabilities..............................................................................
NET ASSETS
Shareholders’ Equity:
Common stock.....................................................................................
Authorized — 20,000,000 shares
Issued — 6,836,853 shares as of March 31, 2020 and
6,836,853 shares as of March 31, 2021
Capital surplus.....................................................................................
Retained earnings................................................................................
Treasury shares...................................................................................
Total shareholders’ equity...........................................................
Accumulated Other Comprehensive Income:The accompanying notes are an integral part of these statements.
3

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Consolidated Statements of Income
For the years ended March 31, 2020 and 2021
Millions of yen
March 31,
2020

2021

¥57,411
4,540
61,951¥72,661
2,604
75,265Gross profit..................................................................................................

51,202
3,079
54,281
7,669

65,871
2,131
68,002
7,262

Selling, General and Administrative Expenses.......................................
Operating income.......................................................................................

4,625
3,043

4,492
2,770

163
—
40
(48)
(70)
(0)
—
78
3,207

159
0
49
(52)
(35)
—
(17)
78
2,952

Special Items:
Gain on sales of non-current assets................................................
Gain on sales of investment securities...........................................
Loss on disposal of non-current assets...........................................
Loss on valuation of investment securities....................................
Income before income taxes.....................................................

0
0
(1)
(2)
3,204

1
9
(9)
—
2,953

Income Taxes:
Current................................................................................................
Deferred..............................................................................................
Profit.............................................................................................................
Profit attributable to non-controlling interests......................................

788
245
2,170
17

1,309
(171)
1,815
11

Net Sales:
Construction contracts.....................................................................
Real estate development and other.................................................
Cost of Sales:
Construction contracts.....................................................................
Real estate development and other.................................................

Non-operating Income (Expenses):
Interest and dividend income..........................................................
Reversal of allowance for doubtful accounts................................
Surrender value of insurance policies............................................
Interest expenses...............................................................................
Foreign exchange losses..................................................................
Provision of allowance for doubtful accounts...............................
Commitment fee................................................................................
Other, net............................................................................................

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

¥

2,152

¥

1,804

The accompanying notes are an integral part of these statements.
K I TA N O C O N S T R U C T I O N C O R P.

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Consolidated Statements of Comprehensive Income
For the years ended March 31, 2020 and 2021
Millions of yen
March 31,

Profit.............................................................................................................
Other Comprehensive Income:Unrealized gain (loss) on other securities.....................................
Deferred gain (loss) on hedging derivatives..................................
Foreign currency translation adjustment.......................................
Remeasurements of defined benefit plans.....................................
Total other comprehensive income................................................
Comprehensive Income.............................................................................
Comprehensive income attributable to:
Owners of parent...............................................................................
Non-controlling interests..................................................................

2020

2021

¥2,170¥1,815

(554)
(25)
(42)
(123)
(746)
1,424

852
42
(140)
215
970
2,786

1,406
17

2,775
10

The accompanying notes are an integral part of these statements.
5

K I TA N O C O N S T R U C T I O N C O R P.

Consolidated Statements of Changes in Equity
For the years ended March 31, 2020 and 2021
Millions of yen
Accumulated other comprehensive income

Shareholders’ equity
Number ofshares of

Unrealized Deferred

Foreign

gain (loss) gain (loss) currency Remeasurements

common Common Capital Retained Treasury on other on hedging translation of defined Non-controlling Total net
stock surplus earnings shares securities derivatives adjustment benefits plans interests assets
stock(thousands)
Balance at March 31, 2019......
Dividends of surplus........
Profit attributable toowners of parent............
Purchase of treasury
shares...............................
Net changes of
items other thanshareholders’ equity.......
Total changes of items
during period..................

6,836
—

9,116
—

3,188 20,677 (1,725)
—
(629)
—

1,687
—

—
—

208
—

31
—

475 33,660
—
(629)

—

—

—

2,152

—

—

—

—

—

—

2,152

—

—

—

—

(193)

—

—

—

—

—

(193)

—

—

—

—

—

(554)

(25)

(42)

(123)

14

(731)

—

—

—

1,523

(193)

(554)

(25)

(42)

(123)

14

599

Balance at March 31, 2020......

6,836

9,116

3,188 22,201(1,918)

1,132

(25)

166

(91)

490 34,260

Balance at March 31, 2020......
Dividends of surplus........
Profit attributable toowners of parent............
Purchase of treasury
shares...............................
Net changes of
items other thanshareholders’ equity.......
Total changes of items
during period..................

6,836
—

9,116
—

3,188 22,201 (1,918)
—
(621)
—

1,132
—

(25)
—

166
—

(91)
—

490 34,260
—
(621)

—

—

—

1,804

—

—

—

—

—

—

1,804

—

—

—

—

(20)

—

—

—

—

—

(20)

—

—

—

—

—

852

42

(139)

215

8

979

—

—

—

1,183

(20)

852

42

(139)

215

8

2,142

Balance at March 31, 2021......

6,836

9,116

3,188 23,384(1,938)

1,985

16

26

124

498 36,403

The accompanying notes are an integral part of these statements.
K I TA N O C O N S T R U C T I O N C O R P.

6

Consolidated Statements of Cash Flows
For the years ended March 31, 2020 and 2021
Millions of yen
2020

2021

¥3,204¥2,953

698
(163)
48
23
(0)
(0)
1
(135)
(47)
(43)
0
2

702
(159)
52
107
(9)
(1)
9
(79)
(11)
39
—
(4)

(193)
4,050

(35)
(4,223)

(485)
237
(179)
(735)
72
(456)
(55)
5,843
163
(49)
(1,466)
4,491

(289)
23
72
4,892
(231)
701
(284)
4,225
183
(53)
(350)
4,003

Cash flows from investing activities:
Payment into time deposit...........................................................................................
Proceeds from withdrawal of time deposit...............................................................
Payments for purchase of tangible fixed assets.......................................................
Proceeds from sale of tangible fixed assets..............................................................
Payments for purchase of intangible fixed assets....................................................
Payments for purchase of investment securities......................................................
Proceeds from sales of investment securities...........................................................
Proceeds from redemption of investment securities...............................................
Payments for loans.......................................................................................................
Proceeds from recovery of loans................................................................................
Other...............................................................................................................................
Net cash provided by (used in) investing activities....................................

(791)
841
(4,594)
0
(7)
(0)
0
50
(51)
5
(32)
(4,579)(1,011)
1,041(3,714)
2
(15)
(0)
14
24
(20)
10
52
(3,617)

Cash flows from financing activities:
Increase (decrease) in short-term loans, net............................................................
Purchase of treasury shares........................................................................................
Cash dividends paid......................................................................................................
Cash dividends paid to non-controlling interests.....................................................
Other...............................................................................................................................
Net cash provided by (used in) financing activities...................................

—
(193)
(629)
(2)
(8)
(833)

4,000
(20)
(620)
(2)
(6)
3,350

Effect of exchange rate changes on cash and cash equivalents....................................
Net increase (decrease) in cash and cash equivalents...................................................
Cash and cash equivalents of beginning of year..............................................................
Cash and cash equivalents of end of year........................................................................

(36)
(958)
9,792
¥8,834

(133)
3,602
8,834
¥12,436

Cash flows from operating activities:
Income before income taxes................................................................................
Adjustments for:
Depreciation...........................................................................................................
Interest and dividend income...............................................................................
Interest expenses...................................................................................................
Foreign exchange (gains) losses..........................................................................
(Gain) loss on sales of investment securities.....................................................
(Gain) loss on sales of non-current assets..........................................................
Loss on disposal of non-current assets...............................................................
Increase (decrease) in net defined benefit asset and liability................................
Increase (decrease) in accrued warranty..................................................................
Increase (decrease) in accrued bonuses to employees...........................................
Increase (decrease) in accrued bonuses to directors and statutory auditors......
Increase (decrease) in allowance for doubtful accounts........................................
Increase (decrease) in allowance for loss on reconstruction ofcompany buildings.................................................................................................
(Increase) decrease in notes and accounts receivable............................................
(Increase) decrease in cost of construction in progress and cost of
uncompleted development projects....................................................................
(Increase) decrease in real estate for sale and inventories.....................................
Increase (decrease) in other current assets..............................................................
Increase (decrease) in notes and accounts payable................................................
Increase (decrease) in advances received on construction in progress................
Increase (decrease) in other current and non-current liabilities...........................
Other...............................................................................................................................
Sub-total...........................................................................................................
Interest and dividend income received......................................................................
Interest expenses paid.................................................................................................
Income taxes paid.........................................................................................................
Net cash provided by (used in) operating activities...................................

The accompanying notes are an integral part of these statements.
7

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Notes to Consolidated
Financial Statements
1. Basis of Presenting Consolidated Financial Statements(a) Accounting principles
The accompanying consolidated financial statements have been prepared based on the accounts maintainedby Kitano Construction Corp. (the “Company”) and its subsidiaries prepared in accordance with accounting
principles generally accepted in Japan, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan.
(b) Scope of consolidation
The Company had 4 subsidiaries (majority-owned companies) as at March 31, 2021 (4 for 2020). The
consolidated financial statements in the fiscal year ended March 31, 2021 include the accounts of the Company
and 4 (4 for 2020) of its subsidiaries (the “Companies”), which are listed below:•Kawanakajima Tochi Kaihatsu Co., Ltd.......................................... 91.7% owned•Solomon Kitano Mendana Hotel Limited........................................ 100.0% owned•Sakura Hanoi Plaza Investment Co., Ltd. ....................................... 99.5% owned•Asahi Agency Inc. .............................................................................. 59.5% owned
The above consolidated subsidiaries, except for Solomon Kitano Mendana Hotel Limited and Sakura Hanoi
Plaza Investment Co., Ltd., which have a fiscal year ending at December 31 of each year, have a fiscal year endingat March 31 of each year, which is the same as the fiscal year of the Company.
2. Summary of Significant Accounting Policies(a) Principles of consolidation
All significant intercompany balances, intercompany transactions and unrealized profits among theCompanies have been eliminated in consolidation and the portion thereof attributable to non-controlling interests
is charged to non-controlling interests.
(b) Recognizing revenues and costs of construction contracts
Revenues and costs of construction contracts that commenced on or after April 1, 2009, of which thepercentage of completion can be reliably estimated, are recognized by the percentage-of-completion method. The
percentage of completion is calculated based on the cost incurred to date as a percentage of the estimated total
cost. The completed-contract method is applied to all other construction contracts.
(c) Inventory valuation
The cost of construction in progress, real estate for sale and the cost of uncompleted development projects
are stated at cost, as determined on a specific project basis.
Materials and supplies are stated at cost, as determined based on an average method.
The net book value of inventories in the balance sheet is written down if the net realizable value declines.
(d) Depreciation
Depreciation is computed by the declining-balance method; provided however, buildings (excluding
leasehold improvements and auxiliary facilities attached to buildings), facilities attached to buildings andstructures acquired on or after April 1, 2016 and real estate for leasing are depreciated by the straight-line method
at rates based on the estimated useful lives of the assets, as prescribed by Japanese income tax laws. The range ofuseful lives is principally from 2 to 50 years for buildings and structures and from 2 to 17 years for machinery andequipment.
(e) Allowance for doubtful accounts
The balance of allowance for doubtful accounts represents the amount deemed necessary to cover possible
losses estimated on an individual doubtful account basis. The amount is calculated using a certain percentage
based on past experience for other accounts.
(f) Accrued warranty
Accrued warranty is provided for against the future costs of warranty from completed construction.
(g) Accrued bonuses to employees
Accrued bonuses are computed by estimating the payment required in order to provide for the payment ofbonuses to employees.
(h) Accrued bonuses to directors and statutory auditors
Accrued bonuses are computed by estimating the payment required in order to provide for the payment ofbonuses to directors and statutory auditors.
(i) Reserve for retirement benefits to employees
The Company recognizes accrued pension and severance costs to employees based on the actual valuationof projected benefit obligation and plan assets at fair value.
Actuarial gains and losses were recognized using mainly the straight-line method over a period of 10 years.
Prior service costs were amortized using mainly the straight-line method over a period of 10 years, the period
within the estimated average remaining service life of the employees.
K I TA N O C O N S T R U C T I O N C O R P.

8

(j)

Allowance for losses on construction contracts
The Company prepares reasonable estimated amount for future losses from construction works outstanding
at fiscal year-end.
(k) Allowance for loss on reconstruction of company buildings
A reasonably estimated allowance is provided for future loss on reconstruction of the Company’s head
office.
(l) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows are composed of cash in hand, bankdeposits able to be withdrawn on demand and short-term investments with an original maturity of three months
or less and which represent a minor risk of fluctuations in value.
(m) Income taxes
The income taxes of the Company and its domestic subsidiaries consist of corporate income taxes, local
inhabitants’ taxes and enterprise taxes.
The Company and its subsidiaries account for deferred taxes in accordance with the regulations for
preparation of consolidated financial statements in Japan. Deferred income taxes are determined using the asset
and liability approach, whereby deferred tax assets and liabilities are recognized in respect of temporary
differences between the tax basis of assets and liabilities and those as reported in the financial statements.
(n) Securities valuation
Held-to-maturity debt securities are carried at amortized cost.
Available-for-sale securities are classified into two categories where: (1) the fair value is available and (2) the
fair value is not available.
(1)	Securities whose fair value is available are valued at the quoted market price prevailing at the fiscal yearend. Net unrealized gains or losses on these securities are reported as a separate component of net
assets at a net-of-tax amount. Cost of sales is determined by the moving-average method.
(2) Securities whose fair value is not available are valued at cost, determined by the moving-average method.
(o) Hedge accounting
Gains or losses arising from changes in the fair value of the derivatives designated as “hedging instruments”
are deferred as an asset or liability and included in net profit or loss in the same period during which the gains
and losses on the hedged items or transactions are recognized.
The derivatives designated as hedging instruments by the Company are principally forward exchange
contracts. The related hedged items are finance for the overseas construction business. The Company is able tofix future cash flows and mitigate the deterioration of income from the construction business due to yen
depreciation. The Company obtains management approval before making forward exchange contracts, andsubsequently the accounting department executes and controls the contract. Evaluation of effectiveness has been
omitted for forward exchange contracts because these are expected to completely offset cash-flow fluctuations
resulting from exchange rate fluctuations as the hedging instrument and the hedged item are in the same
currency.
(p) Reclassification of accounts
Certain prior year amounts have been reclassified to conform with the current year’s presentation.
Significant accounting estimates•Estimate of percentage of completiona. Amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2021
Construction contracts............................¥71,257 million
b. Information on details of significant accounting estimates for identified items
The Company applies the percentage-of-completion method for construction contracts for which thepercentage of completion by the end of the fiscal year can be reliably estimated, and adopts the cost-to-cost
method to estimate the percentage of completion.
The percentage of completion is calculated based on what percentage of total construction work costs havebeen expended in the work performed up to the fiscal year closing date. The total construction work costs is theestimated amount based on the information available as of the fiscal year closing date. However, given thevariability arising from the various factors of uncertainty, such as future additions or alterations to contracts,changes in prices of materials, wages, etc., and weather, the actual final total cost of construction work may bedifferent from the estimate.
Changes in accounting policies(New Accounting Standards Not Yet Applied)•“ Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020, AccountingStandards Board of Japan)•“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30,
March 26, 2021, Accounting Standards Board of Japan)•“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.
19, March 31, 2020, Accounting Standards Board of Japan)

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a.

Overview
The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board(FASB) jointly developed comprehensive accounting standards for revenue recognition and issued “Revenue fromContracts with Customers” in May 2014 (IASB’s IFRS 15 and FASB’s Topic 606). Considering that IFRS 15 shallapply to fiscal years beginning on or after January 1, 2018, and Topic 606 shall apply to fiscal years beginning after
December 15, 2017, the ASBJ developed a comprehensive accounting standard for revenue recognition and thus
issued the accounting standard together with the implementation guidance.
The ASBJ established the accounting standard for revenue recognition by determining the basic policies fordeveloping it based on the following. Firstly, ASBJ incorporated the basic principle of IFRS 15 as the starting
point from the perspective to ensure consistency with IFRS 15 and thereby facilitate comparability among
financial statements as one of benefits. Secondly, to an extent that it does not impair comparability, ASBJ shall
add alternative treatments for items warranting consideration of conventional practice in Japan.
b.

Scheduled date of application
ASBJ statements and accompanying guidances will be applied at the start of the fiscal year beginning on
April 1, 2021.
c.

Effects of application of the accounting standards
The impact of the application of the Accounting Standard for Revenue Recognition and the other above on
the consolidated financial statements is currently under evaluation.
•“ Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019, AccountingStandards Board of Japan)•“Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019, AccountingStandards Board of Japan)•“ Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019, AccountingStandards Board of Japan)•“Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4, 2019,
Accounting Standards Board of Japan)•“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.
19, March 31, 2020, Accounting Standards Board of Japan)
a. Overview
In light of the situation in which the International Accounting Standards Board (IASB) and the US Financial
Accounting Standards Board (FASB) have established detailed guidance on fair value measurement with almost
the same content (IFRS 13 “Fair Value Measurement” in International Financial Reporting Standards (IFRS), andAccounting Standards Codification Topic 820 “Fair Value Measurement” in the US GAAP), the AccountingStandards Board of Japan (ASBJ) worked to ensure consistency of the Japanese GAAP with international
accounting standards mainly for guidance and disclosures on fair value of financial instruments and published“Accounting Standard for Fair Value Measurement” and others.
The ASBJ’s basic policy for the development of the accounting standard for fair value measurement is toincorporate basically all the provisions of IFRS 13 from the perspective of increasing comparability of financial
statements among companies in Japan and overseas by using the unified measurement method, and to establish
other treatments of individual items to the extent that consideration is given to practices, etc. that have been
conducted to date in Japan and comparability among financial statements is not undermined largely.
b.

Scheduled date of application
ASBJ statements and accompanying guidances will be applied at the start of the fiscal year beginning on
April 1, 2021.
c.

Effects of application of the accounting standards
The effects of the application of the Accounting Standard for Fair Value Measurement, etc. on the
consolidated financial statements are yet to be determined at this time.
Changes in presentation•Application of “Accounting Standard for Disclosure of Accounting Estimates”
The Company applies “Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No.
31, March 31, 2020) from the consolidated financial statements for the fiscal year ended March 31, 2021, andpresents notes to significant accounting estimates in the consolidated financial statements.
Such notes are not presented in content for the previous fiscal year in accordance with the transitional
treatment set forth in the proviso of paragraph 11 of the aforementioned accounting standard.

K I TA N O C O N S T R U C T I O N C O R P.

10

3.

Notes to Consolidated Balance Sheets
Millions of yen
March 31,
2020
2021

(1) Items relating to non-consolidated subsidiaries and associates
Investment securities.............................................................................
(2) Inventories
Materials and supplies............................................................................
Merchandise............................................................................................
(3) The guarantee of housing construction flaw security
Securities..................................................................................................
Investment securities.............................................................................
(4) Assets pledged as collateral and secured liabilities
Assets pledged as collateralLand...................................................................................................
Buildings...........................................................................................
Secured liabilities
Short-term borrowings....................................................................
4.

¥23

¥23

54
5

48
4

24
84

16
68

—
—

1,160
394

—

2,000

Notes to Consolidated Statements of Income
Millions of yen
for the year ended March 31,
2020
2021

(1) Write-down of inventories included in cost of
sales on real estate development and other.................................
(2) The major components of “Selling, general andadministrative expenses”
Payroll......................................................................................................
Retirement benefit expenses.................................................................
Allowance for accrued bonuses............................................................
Provision of allowance for doubtful accounts....................................
Depreciation............................................................................................
5.

11

¥6

¥15

1,521
47
135
2
366

1,384
61
145
(1)
372

Notes to Consolidated Statements of Comprehensive Income
Reclassification adjustments and tax effects related to other comprehensive income were as follows:
Millions of yen
for the year ended March 31,
Net unrealized gain (loss) on other securities, net of taxes
2020
2021
Gains (losses) arising during the year..............................................
¥1,205¥(788)
Reclassification adjustments.............................................................
29
		
Total before tax effect.................................................................
(786)
1,215
		
Tax effect......................................................................................
231
(362)
		
Net unrealized gain (loss) on other securities, net of taxes...
(554)
852
Deferred gain (loss) on hedging derivatives, net of taxes
Gains (losses) arising during the year..............................................
		Tax effect......................................................................................
		
Deferred gain (loss) on hedging derivatives, net of taxes......

¥(36)
11
(25)

¥61
(18)
42

Foreign currency translation adjustment
Gains (losses) arising during the year..............................................

¥(42)¥(140)Remeasurements of defined benefit plans, net of tax
Gains (losses) arising during the year..............................................
Reclassification adjustments.............................................................
		
Amount before income tax effect..............................................
		
Income tax effect.........................................................................
		
Remeasurements of defined benefit plans, net of tax.............

¥(168)
(8)
(176)
53
(123)

¥280
29
309
(94)
215

		

¥(746)¥970

Total other comprehensive income...........................................

K I TA N O C O N S T R U C T I O N C O R P.

6.

Notes to Consolidated Statements of Changes in Equity(a) Type and number of outstanding shares
March 31, 2020
Number of shares
Type of shares
Balance atIncrease in shares
beginning of year
during the year
Issued stock
Common stock
6,836,853—
Total
6,836,853—
Treasury shares
Common stockTotal

544,279544,279

80,15080,150Decrease in shares
during the year——

6,836,853
6,836,853——

624,429
624,429

The summary of the main change reason
Increase by the acquisition of treasury sharesby a resolution of the Board of Directors............................................................................
Increase by the repurchase of shares less than one unit........................................................

Type of shares

Balance at
beginning of year

March 31, 2021
Number of shares
Increase in shares
during the year

Balance at
end of year

Decrease in shares
during the year

79,400 shares
750 shares

Balance at
end of year

Issued stock
Common stock
Total

6,836,853
6,836,853

—
—

—
—

6,836,853
6,836,853

Treasury shares
Common stock
Total

624,429
624,429

7,619
7,619

—
—

632,048
632,048

The summary of the main change reason
Increase by the repurchase of shares less than one unit........................................................

7,619 shares

K I TA N O C O N S T R U C T I O N C O R P.

12

(b) Dividends		(1) Dividends paid to shareholders
Resolution
AmountDate ofapproved
Type of(Thousands
approvalbysharesof yen)June 26,2020		Commonstock

621,242

Retainedearnings

Annualgeneralmeeting ofshareholders

Commonstock

682,528

Retainedearnings

March 31,2020

June 29,
2020

110.0

March 31,2021

June 25,
2021

Notes to Consolidated Statements of Cash Flows

Cash in hand and in banks.....................................................................
Time deposits with a deposit term of over 3 months.........................
Cash and cash equivalents.....................................................................

13

100.0

Effectivedate(2)	Dividends with a shareholders’ cut-off date during the current fiscal year but an effective date
subsequent to the current fiscal year
Resolution
AmountAmountDate ofapproved
Type of(Thousands
per share Shareholders’ Effective
approvalbysharesof yen)Paid from(Yen)
cut-off datedate
June 24,2021

7.

Annualgeneralmeeting ofshareholders

Paid fromAmountper share Shareholders’(Yen)
cut-off date

K I TA N O C O N S T R U C T I O N C O R P.

Millions of yen
March 31,2020
2021
¥12,998¥9,425(591)(561)¥8,834¥12,436

8. Fair Value of Financial Instruments
	The fair values and book values of financial instruments as of March 31, 2020 and March 31, 2021, other thanitems of which fair value are not practically available, are as follows:
Millions of yen
March 31, 2020
Book value
Fair value
Difference
Cash in hand and in banks................................
9,425
¥
9,425
¥
—
¥
14,753
14,753—
Notes and accounts receivable........................
4,005
4,005
—
Securities and investment securities...............
¥28,185¥
28,185¥—Total.............................................................
Notes and accounts payable.............................
Total.............................................................
Derivative transactions.....................................

¥
¥
¥

12,97912,979
(25)

¥
¥
¥

12,97912,979
(25)

¥
¥
¥

¥

¥

—

¥
¥

—
—
—
—

Cash in hand and in banks................................
Notes and accounts receivable........................
Securities and investment securities...............
Total.............................................................

¥Book value
12,99818,9755,190¥
37,164

Millions of yen
March 31, 2021
Fair value¥12,99818,9755,190¥
37,164

Notes and accounts payable.............................
Electronically recorded obligations- operating........................................................
Short-term borrowings......................................
Total.............................................................
Derivative transactions.....................................

¥

11,094¥

11,094

¥
¥

6,773
4,000
21,868
24

¥
¥

6,773
4,000
21,86824———

Difference
—
—
—
¥
—

(a) Financial instruments for which it is extremely difficult to determine the fair value
Millions of yen
March 31, 2020
March 31, 2021
Book value
Book value
Non-listed shares *......................................................................................... ¥1,552¥1,554
1,950
1,836
Membership deposit *...................................................................................
* I t is extremely difficult to determine the fair values thereof because neither market quoted prices areavailable nor future cash flows can be estimated.

K I TA N O C O N S T R U C T I O N C O R P.

14

(b) Redemption schedule for money claims and securities with maturities
Millions of yen
March 31, 2020
Due in 1 year orDue after 1 year
Due after 5 years
lessthrough 5 years
through 10 years
Cash in hand and in banks ¥9,425
¥
—
¥
—
Notes and accounts
14,753——
receivable.............................
Securities and investment
securities
24
50
34
Government bonds........
Corporate bonds............
——
50

Cash in hand and in banks
Notes and accounts
receivable.............................
Securities and investment
securities
Government bonds........
Corporate bonds............

15

K I TA N O C O N S T R U C T I O N C O R P.

Millions of yen
March 31, 2021
Due in 1 year orDue after 1 year
lessthrough 5 years¥12,998¥—Due after 10
years
¥
—
—

—
—

Due after 5 years
through 10 years¥—

Due after 10
years
¥
—

18,975

—

—

—

16
—

57
—

11
50

—
—

9. Investment Securities
	The following tables summarize the acquisition cost and book value of available-for-sale securities withmarket value as of March 31, 2020 and 2021:
Millions of yen
March 31, 2020
Book value
Acquisition cost
Difference
Securities with book value exceedingacquisition cost:
2,835
¥
1,194
¥
1,640
Equity securities..................................................... ¥Government bonds.................................................
108
106
2
—
—
—
Corporate bonds.....................................................
Sub-total.............................................................. ¥
2,943
¥
1,301
¥
1,642
Securities with book value not exceedingacquisition cost:
Equity securities..................................................... ¥Government bonds.................................................
Corporate bonds.....................................................
Sub-total..............................................................
Total............................................................................. ¥

1,011
—
49
1,061
4,005

Book value

¥

¥

1,087
—
51
1,139
2,440

¥

¥

Millions of yen
March 31, 2021
Acquisition cost

Securities with book value exceedingacquisition cost:
Equity securities..................................................... ¥Government bonds.................................................
Corporate bonds.....................................................
Sub-total.............................................................. ¥

5,039
84
—
5,123

¥

Securities with book value not exceedingacquisition cost:
Equity securities..................................................... ¥Government bonds.................................................
Corporate bonds.....................................................
Sub-total..............................................................
Total............................................................................. ¥

16
—
50
66
5,190

¥

¥

¥

(76)
—
(1)
(77)
1,565

Difference

2,254
82
—
2,337

¥

23
—
51
75
2,412

¥

¥

¥

2,784
1
—
2,786

(7)
—
(1)
(8)
2,778

K I TA N O C O N S T R U C T I O N C O R P.

16

10. Reserve for Retirement Benefits to Employees	Employees of the Company are covered by a defined-benefit corporate pension plan and definedcontribution allowance plan. Employees of its subsidiaries are covered by termination allowance plan ordefined-contribution pension plan.
Defined benefit plans(a) Movements in retirement benefit obligations (except (c) below)
Balance at April 1, 2020.......................................................................................................
Service cost.........................................................................................................................
Interest cost........................................................................................................................
Actuarial loss (gain)..........................................................................................................
Benefits paid.......................................................................................................................
Balance at March 31, 2021..................................................................................................

Millions of yen
¥
2,326
159
11
(96)
(291)
2,109
¥

(b) Movements in plan assets (except (c) below)
Balance at April 1, 2020.......................................................................................................
Expected return on plan assets.......................................................................................
Actuarial loss (gain)..........................................................................................................
Contributions paid by the employer................................................................................
Benefits paid.......................................................................................................................
Balance at March 31, 2021..................................................................................................

Millions of yen
¥
2,895
57
183
186
(291)
3,033
¥

(c) Movements in net defined benefit liability based on the simplified method
Balance at April 1, 2020.......................................................................................................
Retirement benefit costs...................................................................................................
Benefits paid.......................................................................................................................
Balance at March 31, 2021..................................................................................................

Millions of yen
¥
60
3
(4)
60
¥

(d)	Reconciliation between net defined benefit obligations and plan assets, and net defined benefit liability
and net defined benefit asset
Millions of yen¥2,118
Funded retirement benefit obligations.............................................................................
(3,033)
Plan assets............................................................................................................................
(914)
51
Unfunded retirement benefit obligations.........................................................................
Total net defined benefit liability (asset) at March 31, 2021..........................................
(863)
Net defined benefit liability.........................................................................................
Net defined benefit asset.............................................................................................
Total net defined benefit liability (asset) at March 31, 2021...................................

17

K I TA N O C O N S T R U C T I O N C O R P.

¥

60
(923)
(863)

(e) Retirement benefit costs
Service cost...........................................................................................................................
Interest cost..........................................................................................................................
Expected return on plan assets.........................................................................................
Net actuarial loss amortizations........................................................................................
Past service cost amortization...........................................................................................
Retirement benefit costs calculated by simplified method............................................
Total retirement benefit costs for the year ended March 31, 2021................................

Millions of yen
¥
159
11
(57)
29
—
3
146
¥

(f) Remeasurements of defined benefit plans, before tax
Past service cost..................................................................................................................
Actuarial gains / losses........................................................................................................
Total................................................................................................................................

Millions of yen
¥
—
309
309
¥

(g) Breakdown of items recognized in accumulated other comprehensive income
Unrealized past service cost...............................................................................................
Unrecognized actuarial differences...................................................................................
Total................................................................................................................................

Millions of yen
¥
—
(178)
(178)
¥

(h) Plan assets
Bonds.....................................................................................................................................
Securities..............................................................................................................................
General accounts.................................................................................................................
Other......................................................................................................................................
Total................................................................................................................................

23%
16%
44%
17%
100%

(i) Long-term expected rate of return
Current and target asset allocations as well as historical and expected returns on various categories ofplan assets have been considered in determining the long-term expected rate of return.
(j) Actuarial assumptions
Discount rate........................................................................................................................
Rate of expected return on plan assets.............................................................................

0.5%
2.0%

(k) Defined contribution plans
Amount of contributions to defined contribution plans by the Company and its subsidiaries was ¥50
million.

K I TA N O C O N S T R U C T I O N C O R P.

18

11. Income Taxes(a)	The tax effects of temporary differences that give rise to significant portions of the deferred tax assets
and deferred tax liabilities are presented below:
Millions of yen
March 31,2020
2021
Deferred tax assets:
¥
738
¥
728
Write-down of fixed assets.................................................................
Allowance for doubtful accounts......................................................
26
24
159
158
Write-down of marketable securities................................................
189
176
Intercompany profits..........................................................................
318
307
Loss on valuation of real estate for sale...........................................
11—
Deferred gains (loss) on hedging derivatives..................................
62
155
Operating tax loss carry forwards (Note)........................................
11
11
Net defined benefit liability................................................................
522
709
Other.....................................................................................................
Total gross deferred tax assets..................................................
2,039
2,272
Valuation allowance related to operating
tax loss carry forwards (Note).........................................................
(25)
(136)
Valuation allowance related to total(1,377)(1,357)
deductible temporary differences, etc............................................
(1,403)(1,493)
Total valuation allowance...........................................................
636
779
Deferred tax liabilities:
(173)
(281)
Net defined benefit asset....................................................................
(87)
(87)
Reserve for advanced depreciation...................................................
(23)—
Reserve for special depreciation.......................................................
Unrealized gain (loss) on other securities........................................
(464)
(826)
—
(7)
Deferred gain (loss) on hedging derivatives....................................
(585)
(546)
Difference from fair value of subsidiaries........................................
(1,335)(1,749)Total gross deferred tax liabilities.............................................
Net deferred tax assets (liabilities)............................................

¥

(698)

¥

(970)

(Note) Amount of operating tax loss carry forwards and its deferred tax assets by carryforward period
Millions of yen
March 31, 2021
Due 1 year orDue after 1 year
lessthrough 5 years

Due after 5 years

Total

Operating tax loss
carry forwards (*1)............. ¥
26
¥
129
¥
—
¥
155
(7)
(129)
—
(136)
Valuation allowance.............
18
—
—
*218
Deferred tax assets...............
*1	The amount of operating tax loss carry forwards is multiplied by statutory tax rate.
*2	The recoverability of deferred tax assets related to operating tax loss carry forwards is calculated to theextent that is expected to be recoverable by using the estimated amount of future taxable profit based on
the current business prospect of each company.
(b)	The reconciliation between the statutory tax rate and the effective tax rate as at March 31, 2020 and 2021
is presented below:
As of March 31,
2020
2021
Statutory tax rate.....................................................................................
30.4%
30.4%
0.9
0.8
Permanent differences on expenses not deductible.......................
(0.3)
(0.3)
Permanent differences on income not taxable................................
Accrued bonuses to directors and statutory
auditors not deductible.....................................................................
0.4
0.5
0.7
0.7
Inhabitant taxes per capita.................................................................
(0.7)
4.6
Valuation allowance............................................................................
0.8
1.8
Other......................................................................................................
32.2%
38.5%
Effective tax rate..................................................................................

19

K I TA N O C O N S T R U C T I O N C O R P.

12. Segment Information(a) The Company and its subsidiaries operate principally in the following 4 industrial segments:
		Construction............. Construction, engineering works, development and solar power generation.
		
Golf courses.............. Management of golf courses
		Hotels......................... Management of hotels
		Advertising agent..... Management of advertising agent(b)	The segment information of the Company and its subsidiaries for the years ended March 31, 2020 and
2021 is presented below:
Millions of yen
2020
Golf
Advertisingcourses
Hotelsagent
Total
Construction
Reconciliations Consolidated
Ⅰ. Net sales and operating income
Net sales
Customers
Intersegment ortransfer
Total
Operating income¥58,233¥234¥2,028¥1,454¥61,951¥—¥61,951

1

4

2

74

82

(82)

—

58,234¥2,905

239
¥6

2,031
¥55

1,529
¥48

62,034¥3,016(82)¥27

61,951¥3,043

320

32

357

15

726

(27)

698

Ⅱ. OtherDepreciation

Golf
coursesMillions of yen
2021
Advertising
Hotelsagent¥73,244

¥206

¥606

¥1,208¥75,265¥—¥75,265

1

4

0

53

58

(58)

—

73,245¥3,382

210
¥1

606
¥(672)

1,262
¥32

75,324¥2,743(58)¥27

75,265¥2,770

341

28

345

13

729

(27)

702

Construction

Total

Reconciliations Consolidated

Ⅰ. Net sales and operating income
Net sales
Customers
Intersegment ortransfer
Total
Operating income
Ⅱ. OtherDepreciation

K I TA N O C O N S T R U C T I O N C O R P.

20

13. Per Share Data
Net assets per share and earnings per share for the years ended March 31, 2020 and 2021 are as follows:
Yen
2020
2021
Net assets per share................................................................................
¥5,435.92¥5,786.54
Earnings per share – primary.................................................................
343.92290.71
1.	Basis of net income per share of common stock for the years ended March 31, 2020 and 2021 is asfollows:
Millions of yen
2020
2021
Profit attributable to owners of parent.................................................
¥2,152¥1,804
Profit pertaining to common stock.......................................................
¥2,152¥1,804
Average outstanding shares of common stock....................................
6,259 thousand
6,207 thousand
sharesshares2.

Basis of net assets per share of common stock as of March 31, 2020 and 2021 is as follows:
Millions of yen
2020
2021
Net assets..................................................................................................
¥34,260¥36,403
Amounts deducted from net assets.......................................................
490
498
Non-controlling interests......................................................................
490
498
Net assets applicable to common stock...............................................
33,77035,904
Number of shares of common stock at end of year............................
6,212 thousand
6,204 thousand
sharesshares21

K I TA N O C O N S T R U C T I O N C O R P.

Board of Directors, Statutory Auditors andExecutive Officers
Board of Directors
Chairman and President, Representative Director
		Takahiro Kitano
Directors
		Yoshikatsu Yamazaki

Executive Officers
President and Executive Officer
		 Takahiro Kitano *Senior Executive Officer
		 Yoshikatsu Yamazaki *		Zentaro Ozawa
Managing Executive Officer
Outside Directors

		 Zentaro Ozawa *		Yoshinori Uda
		Fumiko Yazaki

Executive Officers
		Shuichi Moriyasu

Statutory Auditors
Permanent Auditor
		Noboru Takizawa

		Satoshi Kubo
		Mitsuya Minamisawa
		Kenji Yamanaka
		Shinichi Kitamura

Outside Auditors

		Masakatsu Kobayashi

		Yoshichika Owa

		Yoshikazu Tsukada

		Nobuyoshi Sakai

		Tomonari Iwanami		Takashi Nishida		Yuzuru Maruyama
		Sadao Sugimura		* : Member of Board of Directors

K I TA N O C O N S T R U C T I O N C O R P.

22