Annual
AnnualReport
Report2018
2018

OKUMURAOKUMURACORPORATIONCORPORATION
2-2-2,
2-2-2,
Matsuzaki-cho,
Matsuzaki-cho,
Abeno-ku,
Abeno-ku,
Osaka
Osaka
545-8555,
545-8555,
Japan
Japan
TEL:
TEL:
+81-6-6621-1101+81-6-6621-1101
FAX:
FAX:
+81-6-6627-5295+81-6-6627-5295
http://www.okumuragumi.co.jp
http://www.okumuragumi.co.jp

PrintedPrintedin Japanin JapanBoard of Directors

Investor Information(As of June 29, 2018)(As of March 31, 2018)
Okumura Corporation Annual Report 2018

Directors

Corporate Data

President and Representative Director
Takanori Okumura
Representative Director
Atsushi Tanaka

EstablishedFebruary 22, 1907

Directors
Seiichi Fujioka
Yuichi Mizuno
Keiji Yamaguchi
Yutaka Maruyama
Kenji Kotera

Capital¥19.8 billion

Director (Full-time Audit and Supervisory Committee Member)
Harumitsu Yoshimura
Directors (Audit and Supervisory Committee Member)
Shuji Abe
Hiroyo Yashiro
Hideshi Nio
Tetsuo Kodera
Note: Shuji Abe, Hiroyo Yashiro, Hideshi Nio and Tetsuo Kodera are outside directors.

Okumura was established in 1907 based on two key principles enshrined in the corporate mottos “steadfast
management” and “sincere operation.” The steady growth achieved over the years has been made possible throughthe unflagging support of our customers.
Okumura’s main business activities include civil engineering projects for railways, roads, power station facilities,
sewage and water works, and others. In the area of construction are projects such as houses, public facilities, medical
facilities, and office buildings. The Company has developed technology at the highest level, with achievements
including the seismic isolation system used to construct Japan’s first earthquake-absorbing building. In the area ofenvironment-related technology, Okumura has developed techniques for 100% recycling of demolished concrete, andnatural greening of concrete surfaces on buildings.
Okumura understands what an important mission it is to provide a better environment for the future. Accordingly,
the Company is dedicated to contributing to meaningful social infrastructure investment and to always being a
corporation regarded highly by society. It will achieve this by continuing to develop as an all-around construction
company based on steadfast business management.

Contents
1
2
4
6
8
10
11

Financial Highlights
To Our Shareholders
Review of Operations
TopicsConsolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income

12
13
14
32
33
34
35

Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report
Breakdown of Orders (Nonconsolidated)
Network
Board of Directors / Investor Information

Stock Information
Stock Exchange Listings
Tokyo
Transfer Agent
Sumitomo Mitsui Trust Bank, Limited

Shareholder

Executive Vice Presidents
Wataru Watanabe
Senior Managing Executive Officers
Hiroomi Iida
Seiichi Fujioka*
Yuichi Mizuno*
Keiji Yamaguchi*
Managing Executive Officers
Yutaka Maruyama*
Hitoshi Miyamoto
Kenji Kotera*
Atsushi Tanaka*
Executive Officers
Takanori Hayashi
Noriyuki Machida
Osamu Harada
Shunso Iijima
Hiromu Miyazaki
Akira Tanaka
Masaaki Iwakura
Kaoru Kuniyuki

35

Group Employees
2,032

Major Shareholders

Executive Officers

ProfileHead Office	OKUMURA CORPORATION
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295

Hiroyuki Hayashi
Akira Okada
Naoki Magoori
Hirohide Taniguchi
Toru Osumi
Nobuyasu Kawai
Sawayuki Kawatani
Kazuyuki Yoshimi

Note: Those officers marked with an asterisk (*) work as directors.

Shares held Shareholding(thousands)
ratio

The Master Trust Bank ofJapan, Ltd. (Trust Account)

2,093

5.26%

Japan Trustee Services Bank,
Ltd. (Trust Account)

2,029

5.10

Okumura Employees’
Shareholding Association

1,499

3.77

Resona Bank, Limited.

1,214

3.05

Sumitomo Realty &Development Co., Ltd.

1,210

3.04

Sumitomo Mitsui Banking
Corporation

1,113

2.80

Japan Trustee Services Bank,
Ltd. (Trust Account 9)

1,076

2.70

Northern Trust Co. (AVFC) Re
Silchester International Investors
International Value Equity Trust

715

1.80

Japan Trustee Services Bank,
Ltd. (Trust Account 5)

704

1.77

Nippon Life Insurance Company

643

1.61

Note:
1. The Company holds 5,832,570 shares of treasury stock, which are excluded
from the above.
2. Shareholding ratio is computed excluding treasury stock.

Financial Highlights
Okumura Corporation Annual Report 2018

For the years ended March 31

2016

2017

Consolidated:

2018

2018
Thousands of
U.S. dollars

Millions of yen¥205,291¥203,091¥223,928$2,107,157

Operating income

8,423

11,67915,854

149,186

Net income attributable to owners of the parent

8,626

13,614

15,164

142,690

Total assets

266,681

289,475

316,5442,978,679

Total equity

143,279

152,959

167,724

1,578,277

Net sales

Per Share:

Yen

U.S. dollars

Basic net income*¥216.39¥341.69¥380.65$3.58

Cash dividends applicable to the year*

105.00165.00184.001.73*Per share figures have been restated, as appropriate, to reflect the consolidation of shares at the rate of five shares to one share of the Company’s common stock effective October 1, 2017.
Note:	The U.S. dollar amounts included herein are presented solely for convenience of the reader. Such dollar amounts have been translated from yenat the approximate exchange rate in Tokyo on March 31, 2018, of ¥106.27=$1.

Net Sales

Net income attributable to owners of the parent(Millions of Yen)

250,000(Millions of Yen)

20,000Total Equity(Millions of Yen)

175,000
150,000

200,000

16,000150,000

12,000100,000

8,000

50,0004,000

125,000
100,000
75,00050,00025,000
0

0

0

2016

2017

2018

2016

2017

2018

2016

2017

2018

Disclaimer Regarding Forecasts and Projections
This Annual Report includes forecasts, projections and other predictive statements that represent Okumura’s assumptions and expectations in light of currently available information. These forecasts, etc., are based on industry trends, circumstances involving clients and other factors, and involve risks, variables and uncertainties.
The Okumura Group’s actual performance results may differ from those projected in this Annual Report. Consequently, no guarantee is presented or implied as tothe accuracy of specific forecasts, projections or predictive statements contained herein.

1

To Our Shareholders

2

We would like to thank our shareholders for their continuing support and encouragement, and wish
each one of them the greatest success in their endeavors.
A general overview of our business performance for the fiscal period of March 2018 (April 1,2017 to March 31, 2018) is provided below.

Fiscal 2018 Results
During the period under review, the Japanese economy showed weakness in some areas, but underwent
a moderate recovery trend, as reflected in developments such as exports picking up due to the growthin overseas economies and heightened domestic demand on the back of improvements in corporate
earnings. In this climate, the operating environment surrounding the construction industry remained
stable due to resilient public-sector investment and a recovery in capital investment.
In these circumstances, the Company’s consolidated net sales increased 10.3% year on year to¥223,928 million. Meanwhile, as a result of factors such as an improvement in gross profit from civilengineering projects and construction work, consolidated gross profit increased 21.1% year on year to¥32,766 million, operating income increased 35.8% year on year to ¥15,854 million, and net income
attributable to owners of the parent increased 11.4% year on year to ¥15,164 million. As such, sales andprofit increased from the previous year.
The Company decided to pay a dividend of ¥184.00 per share for the period ended March 31,2018 based on its basic policy regarding profit sharing.

Looking Ahead and Key Strategies
The Japanese economy is expected to continue on a gradual recovery trajectory, driven by growth in thecorporate sector such as improvements in production and exports. In the construction industry, despite
concerns over rising construction costs such as material prices, the business environment is expected toremain solid, given that construction investment is expected to continue to show underlying strength
due in part to the rush demand stemming from the increase in the consumption tax rate.

Okumura Corporation Annual Report 20183

Under these circumstances, the Okumura Group has been engaged in efforts to enhance
productivity of the construction business and its brand as well as diversified our earnings base inaccordance with the Medium Term Business Plan, in which fiscal 2016 has been set as the first year.
Combined with the robust business environment, such efforts are gradually starting to yield results.
Reaching the last year of the Medium Term Business Plan, we will make concerted efforts to achieve theperformance objectives set in the Plan while moving forward with our initiatives aimed at building asolid management base.
Specifically, in the construction business, we will continue to promote technology developmentthat will lead to streamlining and labor-cost saving, increase business efficiency through the utilizationof ICT and the accelerated adoption of Construction Information Modeling (CIM) and Building
Information modeling (BIM), reinforce our design capabilities and ability to propose solutions to ourcustomers, promote technology development that meets the needs of our clients, and refine ourproprietary technology.
In real estate operations, we will be expanding the rental business by acquiring quality,
revenue-generating real estate and effectively utilizing the properties in our portfolio, while making
strategic investments in order to expand our business domains.

For the future, Okumura will continue to apply all of its resources with the aim of responding quickly andflexibly to the changing operating environment, thereby reinforcing and diversifying our earnings basein accordance with our corporate philosophy, which has endured through the many years since theCompany’s founding. This will enable Okumura to maintain the trust and confidence of our shareholders.
The Company looks forward to the continued support and guidance of our shareholders.
June 2018

Takanori Okumura
President and Representative Director

Review of Operations
Major Projects Completed
CIVIL ENGINEERING

4
Shin-Meishin Expressway Higashiuneno Tunneling

Yokohama Ring Expressway North Line Shield TunnelingWork period: July 2012 to January 2018
Construction length: 2,624m
Tunnel: 4,121m of excavation and 427,000m3 of mucking
Embankment: 243,000m3
Bridge substructure: 4 abutments and 5 piers
Fly-rock protection: 305m

Work period: June 2008 to June 2017
Earth pressure shield machine diameter: φ12.49m
Segment outer diameter: φ12.3m
Shield tunneling: 11,030m
4 sections of diverging/merging widening work
Precast slab construction: 10,821m
1 launch shaft structural work
Removal of surplus soil: 1,362,374m3

Road Construction on National Route 45 in Tsugaruishi

2015 Iruma River Shishikai Sluice Reconstruction

Work period: November 2014 to September 2017
Tunnel length: 491m
Excavation: 387,000m3
Embankment: 220,000m3
Slope: 33,000m2
6 box culverts
1 retaining wall and drainage structure construction
Bridge substructure: 2 abutments for Nanata River Bridge (60 cast-inplace piles)
1 electrical room

Work period: February 2016 to March 2018
Newly constructed sluice: 76m (single channel 2.1m in base and 2.1m high)Hydraulic engineering: 32,900m3 of embankment fill
Ground improvement: 1 deep mixing treatment
Sluice structure: 76m of box culvert with 600m3 of concrete
Floodgate facility: 1 operation control equipment and auxiliary equipment
Hydraulic engineering: Bank protection foundation work, slope pavementbank protection, restoration of water channel at the bank foot, auxiliaryroad construction, removal of existing sluice

BUILDING

Suginami Incineration Plant(Clean Authority of Tokyo)
Work period: September 2012 to
September 2017
Structure: Steel, RC, SRC
Total floor space: 32,211.77m2

Mapletree Chiba New Town
Logistics Center(Distribution warehouse)
Work period: September 2016 to
December 2017
Structure: Steel
Total floor space: 100,906.26m2

Heijokyu Izanai-kan
Work period: August 2015 to February
2018
Structure: RC
Total floor space: 6,755.59m2

Iyo City Government Office
Building
Work period: October 2014 to
July 2017
Structure: RC (seismic isolation
structure)
Total floor space: 6,284.21m2

Okumura Corporation Annual Report 2018

Orders Received
CIVIL ENGINEERING

5
Soil Storage Facility Construction for Futaba 1 Interim
Storage Facility

National Route 45 Kanuka Area Road Improvement
Work

Work period: May 2017 to March 2021
Reception and separation facility: Design and construction,
reception and separation work
Soil storage facility: Design and construction, site preparation,soil storage
Soil transportation

Work period: November 2017 to February 2020
Excavation: 3,300m3
Embankment: 450,000m3
Slope: 36,470m2
1 retaining wall, 5 box culverts
1 ground improvement and subgrade drainage
Bridge substructure:1 abutment, 3 piersNational Route 106 Katasu Area Road Work

Improvement of Hanshin Umeda Station andExpansion of the East-West Underpass

Work period: December 2017 to October 2019
Tunnel: 559m of excavation and 44,500m3 of surplus soil
removalBridge superstructure: 1 span
Bridge substructure: 1 abutment
1 temporary road

Work period: February 2015 to March 2023
Implementation of soil contamination countermeasures(natural contaminants)
Earth retaining wall (SMW)
Temporary decking
Ground improvement (jet grouting)Removal of existing structures
Cut-off wall installation
Reconstruction of stairs (No. 18 exit stairs)

BUILDING

Hotel Kyoto Ekimae
Hachijoguchi
Work period: January 2018 toMarch 2019
Structure: Steel
Total floor space: 17,347.79m2

Meiji Sakado Factory Bldg. 2
Work period: December 2017 to
September 2019
Structure: Steel
Total floor space: 32,731.82m2

Toyo Shinyaku Intelligence Park
Factory 1
Work period: March 2018 to May 2019
Structure: RC
Total floor space: 21,798.02m2

Higashi Washinomiya HospitalWork period: June 2017 to
October 2018
Structure: Steel
Total floor space: 9,872.90m2

Topics
Main polishing unit
Dust collector
Generator

Application of Automated Polishing Equipment toRailway Infrastructure Repairs
For the first time, Okumura used its automated dry polishing equipment
for repair work on railway infrastructure. The Company had developed
the equipment to enhance the efficiency of concrete grinding
operations in infrastructure repairs and reinforcement. The equipment
provides a mechanical solution for grinding off dirt and fragile parts
from concrete surfaces, a process performed manually in the past. This
improves the working environment by preventing dust and particles

6Disc-shaped
polishing head

Motor car
Wheel truck
Wheel truck
Polishing equipment onboard

from scattering, while streamlining repair workon in-service railway infrastructure subject totime constraints. Along with this model,
Okumura has several other types of automatedpolishing equipment to meet various purposes
and locations, and is actively utilizing thetechnology to improve the productivity of repair
and reinforcement operations.

Anti-scattering frame(urethane)

Vacuum port
Anti-scattering frame(brush-type)
Exterior of polishing machine

Polishing equipment in operation

Development of Tile Inspection Support System

Wearable terminal
Control switch
Laser range scanner
Mobile battery

Regulations require that exterior tiles be thoroughly inspected on a periodic basis
using hammering or other techniques to protect pedestrians from the hazard of fallingtiles. Traditionally, inspection personnel conducting a tile hammering inspection
manually recorded the inspection results on site, and the process, including the sortingof records, required considerable time and effort. To reduce the amount of work
involved in inspection, Okumura developed a tile inspection support system.
Composed of a wearable terminal and a small sensor, the system can
immediately convert inspection results such as the position of the hammering
instrument and tile conditions detected by the sensor into digital data on the spot.
Its superb portability saves time and effort needed for inspection operations.

Inspection work (example)
Inspection results
recorded manually

Wi-Fi router
RecorderInspector

Sensor holder

Real-time conversion
into digital data

System components

Sponsorship of Osaka Women’s Marathon: Supporting the Global Strides of Female Athletes from OsakaFor four years from 2018 through 2021,
Okumura will be sponsoring the Osaka
Women’s Marathon.*1 Our decision to sponsor
the event was driven by the athletes’
dedication to the race, which mirrored andresonated with our commitment to work. In
addition, the Company’s contributions to thedevelopment of Osaka and theempowerment of women havestrengthened our desire to bringexcitement to the streets of Osaka throughthe event, as well as our determination to
support the global success of female
athletes from Osaka.

Osaka Women’s Marathon website:

http://www.okumuragumi.co.jp/
osaka-marathon/

Photo: SANKEI SHIMBUN CO., LTD.

The 37th Osaka Women’s Marathon*1 The competition has attracted attention since
2018 as part of the Marathon Grand
Championship (MGC) Series, a qualifying process
for the 2020 Tokyo Olympics.

Okumura Corporation Annual Report 2018

Production of a TV Commercial: Communicating a
Corporate Message “We Love Construction”
Okumura produced its first corporate TV commercials since theCompany’s founding: “We Love Construction,” a concept
commercial (with 30- and 60-second versions), and “I’m Okumura
Kumi and I Love Construction,” a series commercial (in four
episodes, 30 seconds each). The commercials were aired on“We Love Construction”“I’m Okumura Kumi and I Love
Construction,” first episode“I’m Okumura Kumi and I Love
Construction,” second episode“I’m Okumura Kumi and I Love
Construction,” third episode“I’m Okumura Kumi and I Love
Construction,” fourth episode

For more information, see the Commercial Gallery (Commercial videos)

http://www.okumuragumi.co.jp/movie/

Okumura’s Narara Komachi Won the Grand Prize at the
Kensetsu-Komachi Empowerment Awards Hosted by
the Japan Federation of Construction Contractors
Narara Komachi, a team of female construction workers formed at
Okumura’s New Nara Medical Center joint venture construction site,
won the grand prize at the 3rd Kensetsu-Komachi Empowerment
Awards hosted by the Japan Federation of Construction Contractors on
March 12, 2018.
Narara Komachi was headed by a female electrical engineer
serving as the construction manager of the ICT system work incidental
to the main construction project. In addition to improving physicalenvironment of the workplace, harassment prevention workshops wereconducted at the construction office. The award recognized these
efforts to create an open and transparent workplace that allows
employees to work with enthusiasm and energy, and emitting themessage that women are thriving at construction sites dominated bymen through on-site visits inviting a wide range of participants. The
award was a second win for the Company, which won the excellence
award at the 1st Kensetsu-Komachi Empowerment Awards for “Yahata
Himawari,” its Kensetsu-Komachi construction team.

January 28, 2018 during the broadcast of the 37th Osaka Women’s
Marathon, which the Company sponsored.
Through the corporate message “We Love Construction,”the commercial expresses Okumura’s passion and sincerecommitment to construction founded on its corporate mottos,“steadfast management” and “sincere operation.” A song entitled“Ikuze! Ikuka! Ikoyo!”, written and composed by singer andsongwriter Takehara Pistol, was used as the soundtrack. In theseries commercial (“I’m Okumura Kumi and I Love Construction”),
actress Aoi Morikawa plays Okumura Kumi, a female Okumura
freshman, a science major who loves construction, with her skillfulacting highly praised through movie and TV drama roles. The
script takes place in a range of Okumura construction sites
including logistics centers and tunnels.

Hosting a Construction Engineering
SeminarOn November 1, 2017, Okumura hosted the 29th
Construction Engineering Seminar at the Tokyo
International Forum in Tokyo’s Chiyoda Ward. The
seminar was attended by approximately 200 participantsfrom various fields, including clients of Okumura.
Okumura began hosting the seminar in 1988 aspart of a collaboration among industrial, governmental
and academic sectors related to the constructionindustry. This year’s theme was “Preparations for aLarge-scale Urban Fire” with a keynote speech deliveredby Yoshiteru Murosaki, Professor and Head of Graduate
School of Disaster Resilience and Governance,
University of Hyogo.
During the panel discussion, lively debates were
held from various perspectives on specific examples
and mechanisms of earthquakes and fires andpreparations for protecting lives from fire and smoke
while maintaining urban functions.

Panel discussion

Kensetsu-Komachi Empowerment Awards Ceremony

Inside the seminar hall

7

Consolidated Balance Sheet
Okumura Corporation and Consolidated Subsidiaries
March 31, 2018ASSETS

Millions of yen

Thousands of
U.S. dollars(Note 1)

2018

2017

2018

¥ 54,487¥ 55,959$ 512,722

2,455

1,663

23,104Current assets:
Cash and cash equivalents (Note 12)
Time deposits (Note 12)
Receivables:

8

4,329

1,485

40,736

105,703

94,941

994,665

Unconsolidated subsidiaries and associated companies (Note 12)

2,260

855

21,268Other

11,224

10,586105,618

(787)

(950)

(7,405)Inventories (Note 4)

10,376

10,763

97,639Deferred tax assets (Note 9)

2,716

1,838

25,557

Trade notes (Note 12)
Trade accounts (Note 12)

Allowance for doubtful receivables (Note 12)

Prepaid expenses and other

424

538

3,981

Total current assets

193,187

177,678

1,817,885

Property, plant and equipment (Notes 5 and 6):
Land (Note 14)

31,25030,736

294,066

Buildings and structures (Note 14)

13,07010,695

122,991

Machinery and equipment

557

583

5,239

Furniture and fixtures

406

249

3,821

Lease assets (Note 11)

9

22

88

Construction in progress

22

367

203

45,31442,652426,408

74,52265,964

701,255

Investments in and advances to unconsolidated subsidiaries and associated companies (Notes 12 and 14)

337

333

3,171

Long-term loans receivable (Note 12)

75

74

709

Total property, plant and equipment

Investments and other assets:
Investment securities (Notes 3, 12 and 14)

Asset for retirement benefits (Note 7)

2,409

2,114

22,670

Other assets

2,761

2,802

25,973

Allowance for doubtful receivables (Note 12)(2,061)(2,142)(19,392)

Total investments and other assets
Total
See notes to consolidated financial statements.

78,043

69,145734,386¥316,544¥289,475$2,978,679

Okumura Corporation Annual Report 2018

Millions of yen

Thousands of
U.S. dollars(Note 1)

2018

2017

2018

Short-term bank loans including current portion of long-term debt (Notes 6, 11, 12 and 13) ¥ 11,667¥ 13,104$ 109,784

LIABILITIES AND EQUITYCurrent liabilities:
Payables:Trade notes (Note 12)

6,102

4,759

57,417

Trade accounts (Note 12)52,88453,472497,638

813

306

7,652

Advances received on construction projects in progress

16,013

14,900150,684

Income taxes payable

2,707

1,348

25,473

674

639

6,344

Other

Allowance for warranty work on construction projects
Allowance for losses on construction contracts

2,345

3,367

22,066

Deposits received

17,226

11,565

162,099

19,42518,751

182,795

129,856

122,2111,221,952

Long-term debt (Notes 6, 11, and 12)

3,145

1,166

29,591

Deferred tax liabilities (Note 9)

15,70913,012

147,821

Other (Note 14)
Total current liabilities
Long-term liabilities:

110

127

1,038

Total long-term liabilities

18,96414,305

178,450

Total liabilities

148,820

136,516

1,400,402

Other

Commitments and contingent liabilities (Notes 11 and 14)

Equity (Notes 8, 15 and 16):
Common stock
19,83919,839186,684

Capital surplus

25,33025,329238,357

Retained earnings

98,26689,676924,679(12,689)(12,654)(119,401)

Unrealized gain on available-for-sale securities

34,83928,747

327,832

Defined retirement benefit plans

2,139

2,022

20,12636,97830,769347,958

authorized, 96,000,000 shares; issued, 45,665,226 shares*

Treasury stock—at cost
5,832,570 shares in 2018 and 5,824,344 shares in 2017*
Accumulated other comprehensive income:

Total
Total equity

167,724

152,959

1,578,277

Total¥316,544¥289,475$2,978,679*Number of shares have been restated, as appropriate, to reflect the consolidation of shares at the rate of five shares to one share of the Company’s common
stock effective October 1, 2017.

9

Consolidated Statement of Income
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 2018

Millions of yen

Thousands of
U.S. dollars(Note 1)

2018

2017

2018

¥223,928
191,162
32,766¥203,091
176,028
27,063$2,107,157
1,798,834
308,323

Selling, general and administrative expenses (Note 10)
Operating income

16,91215,854

15,384
11,679159,137
149,186

Other income (expenses):
Interest and dividend income
Interest expense
Other—net
Other income —net

1,206
(135)
670
1,741

1,098
(155)
664
1,607

11,351(1,272)
6,309
16,388

Income before income taxes

17,595

13,286

165,574

Income taxes (Note 9):
Current
Deferred
Total income taxes

3,240
(809)
2,431

1,432
(1,760)(328)

30,485(7,601)
22,884

15,164¥ 15,164

13,614¥ 13,614

142,690$ 142,690

Yen

U.S. dollars(Note 1)

¥ 341.69
165.00$ 3.58
1.73

Net sales
Cost of sales
Gross profit

10

Net income
Net income attributable to owners of the parent

Per share of common stock (Notes 2.p and 16):
Basic net income*Cash dividends applicable to the year*¥ 380.65
184.00See notes to consolidated financial statements.
*Per share figures have been restated, as appropriate, to reflect the consolidation of shares at the rate of five shares to one share of the Company’s common stock
effective October 1, 2017.

Consolidated Statement of Comprehensive Income
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 2018

Net income
Other comprehensive income (Note 15):
Unrealized gain on available-for-sale securities
Defined retirement benefit plans
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Noncontrolling interests
See notes to consolidated financial statements.

Okumura Corporation Annual Report 2018

Millions of yen

Thousands of
U.S. dollars(Note 1)

2018

2017

2018

¥15,164¥13,614$142,690

6,092
117
6,209
¥21,373

417
(148)
269
¥13,883

57,327
1,098
58,425$201,115¥21,373—¥13,883—$201,115—

11

Consolidated Statement of Changes in Equity
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 2018

Thousands

Millions of yen
Accumulated othercomprehensive income

12

BALANCE, APRIL 1, 2016
Net income attributable to owners of the parent
Cash dividends, ¥105 per share*
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2017
Net income attributable to owners of the parent
Cash dividends, ¥165 per share*
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2018

Number ofshares ofcommonstock
outstanding*Commonstock

CapitalsurplusRetainedearnings

39,847——(6)
0—39,841——(9)
1—39,833¥19,839—————
19,839—————¥19,839¥25,329———
0—
25,329———1—¥25,330¥80,246 (¥12,634) ¥28,329
13,614——(4,184)
—
—
—
(20)
—
—
0
—
—
—
418
89,676 (12,654) 28,747
15,164——(6,574)
—
—
—
(36)
—
—
1
—
—
—
6,092
¥98,266 (¥12,689) ¥34,839

Unrealized
gain onDefinedavailable- retirement
Treasury
for-salebenefitstock securities
plans¥2,170
—
—
—
—
(148)
2,022
—
—
—
—
117
¥2,139Total
equity¥143,279
13,614(4,184)(20)
0
270
152,959
15,164(6,574)
(36)
2
6,209
¥167,724

Thousands of U.S. dollars (Note 1)
Accumulated othercomprehensive income

Commonstock

BALANCE, MARCH 31, 2017
Net income attributable to owners of the parent
Cash dividends, $1.55 per share*
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2018

CapitalsurplusRetainedearnings

Unrealized
gain onDefinedavailable- retirement
Treasury
for-salebenefitstock securities
plans$186,684 $238,349 $843,848 ($119,075) $270,506—— 142,690———— (61,859)
—
—
—
—
—
(335)
—
—
8
—
9
—
—
—
—
—
57,326$186,684 $238,357 $924,679 ($119,401) $327,832¥19,027
—
—
—
—
1,099
$20,126

Total
equity$1,439,339
142,690(61,859)(335)
17
58,425$1,578,277

See notes to consolidated financial statements.
*Number of shares and per share figures have been restated, as appropriate, to reflect the consolidation of shares at the rate of five shares to one share of theCompany’s common stock effective October 1, 2017.

Consolidated Statement of Cash Flows
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 2018

Okumura Corporation Annual Report 2018

Millions of yen

Thousands of
U.S. dollars(Note 1)

2018

2017

2018

¥ 17,595¥ 13,286$ 165,574(1,792)
1,093

(870)
938

(16,864)
10,286(15,012)
972
(585)
155
1,113
(88)
4,984
(9,160)8,435

15,780(1,813)
(334)
221
8,181
(119)
9,839
31,82345,109(141,261)
9,146(5,502)
1,455
10,474(826)
46,892(86,200)
79,374

Investing activities:
Net increase in time deposits
Payments for purchases of securities
Proceeds from sales of securities
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Investment in loans receivableCollection of loans receivable
Other—net
Net cash used in investing activities

(807)
(170)
400
(3,435)
166
(18)
24
(11)
(3,851)(1,103)(313)
499(2,658)
142
(25)
33
(248)
(3,673)(7,593)(1,597)3,760(32,326)
1,565
(170)
228
(108)
(36,241)

Financing activities:
Increase (decrease) in short-term bank loans—net
Proceeds from long-term debt
Repayments of long-term debt
Purchase of treasury stock
Disposal of treasury stock
Dividends paid
Other—net
Net cash used in financing activities

2,572
2,000
(4,017)(36)
2(6,560)(14)(6,053)(5,585)—(1,116)(20)
0(4,175)(22)(10,918)

24,201
18,820(37,799)(336)
17(61,729)(129)(56,955)(3)(1,472)
55,959¥ 54,48762
30,58025,379¥ 55,959(29)(13,851)526,573$ 512,722

Operating activities:
Income before income taxes
Adjustments for:
Income taxes—paidDepreciation and amortization
Changes in assets and liabilities:
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in accumulated costs of construction projects in progress
Increase in other inventories
Increase in trade notes and accounts payable
Increase in advances received on construction projects in progress
Increase in asset for retirement benefits
Other—net
Total adjustments
Net cash provided by operating activities

Foreign currency translation adjustments on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See notes to consolidated financial statements.

13

Notes to Consolidated Financial Statements
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 201814

1. Basis of Presentation of Consolidated Financial
Statements
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its
related accounting regulations and in accordance withaccounting principles generally accepted in Japan, which are
different in certain respects as to the application and disclosure requirements of International Financial ReportingStandards.
In preparing these consolidated financial statements,
certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domesticallyin order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications
have been made in the 2017 consolidated financial statements to conform to the classifications used in 2018.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which Okumura
Corporation (the “Company”) is incorporated and operates.
The translations of Japanese yen amounts into U.S. dollar
amounts are included solely for the convenience of readers
outside Japan and have been made at the rate of ¥106.27 to$1, the rate of exchange at March 31, 2018. Such translations should not be construed as representations that theJapanese yen amounts could be converted into U.S. dollars atthat or any other rate.
2. Summary of Significant Accounting Policies
a. Consolidation — The consolidated financial statements
as of March 31, 2018, include the accounts of the Company
and its 2 (2 in 2017) significant subsidiaries (together, the“Group”).
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated, andthose companies over which the Group has the ability to
exercise significant influence are accounted for by the equity
method.
Investments in 9 (9 in 2017) unconsolidated subsidiaries
and 4 (3 in 2017) associated companies are stated at cost. If
the equity method of accounting had been applied to theinvestments in these companies, the effect on the accompanying consolidated financial statements would not bematerial.
All significant intercompany balances and transactions
have been eliminated in consolidation. All material unrealized
profit included in assets resulting from transactions within theGroup is also eliminated.
b. Business Combinations — Business combinations areaccounted for using the purchase method. Acquisitionrelated costs, such as advisory fees or professional fees, areaccounted for as expenses in the periods in which the costs
are incurred. If the initial accounting for a business combination is incomplete by the end of the reporting period inwhich the business combination occurs, an acquirer shallreport in its financial statements provisional amounts for theitems for which the accounting is incomplete. During themeasurement period, which shall not exceed one year fromthe acquisition, the acquirer shall retrospectively adjust theprovisional amounts recognized at the acquisition date toreflect new information obtained about facts and circumstances that existed as of the acquisition date and that would
have affected the measurement of the amounts recognized
as of that date. Such adjustments shall be recognized as if
the accounting for the business combination had been completed at the acquisition date. The acquirer recognizes any
bargain purchase gain in profit or loss immediately on theacquisition date after reassessing and confirming that all of
the assets acquired and all of the liabilities assumed havebeen identified after a review of the procedures used in thepurchase price allocation. A parent’s ownership interest in a
subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of
noncontrolling interest is adjusted to reflect the change in theparent’s ownership interest in its subsidiary while the parent
retains its controlling interest in its subsidiary. Any difference
between the fair value of the consideration received or paid
and the amount by which the noncontrolling interest is
adjusted is accounted for as capital surplus as long as theparent retains control over its subsidiary.
c. Cash Equivalents — Cash equivalents are short-term
investments that are readily convertible into cash andexposed to insignificant risk of changes in value.
Cash equivalents include time deposits, certificates ofdeposit and commercial paper, all of which mature or
become due within 3 months of the date of acquisition.
d. Inventories — Construction projects in progress are stated at cost, determined by the specific identification method.
Real estate held for sale and development projects inprogress are stated at the lower of cost, determined by the
specific identification method, or net selling value, which isdefined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses.
e. Marketable and Investment Securities — Marketable
and investment securities are classified and accounted for,depending on management’s intent, as follows:(1) held-to-maturity debt securities, for which there is a positive intent and ability to hold to maturity, are reported atamortized cost; and(2) available-for-sale securities, which are not classified as
held-to-maturity, are reported at fair value, with unrealized
gains and losses, net of applicable taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated atcost determined by the moving-average method. For otherthan-temporary declines in fair value, investment securities
are reduced to net realizable value by a charge to income.

Okumura Corporation Annual Report 2018

Investments in limited partnerships, which are consideredsecurities under Article 2, Clause 2 of the Japanese Financial
Instruments and Exchange Act, are recorded under the equity
method and based on the latest consolidated financial statements available on the reportable date ruled by thepartnership contracts.
f. Property, Plant and Equipment — Property, plant andequipment are stated at cost. Depreciation, except for leaseassets, is computed by the declining-balance method basedon the estimated useful lives of the assets, while the straightline method is applied to buildings acquired on or after April
1, 1998 and building improvements and structures acquiredon or after April 1, 2016, and lease assets. The range of useful lives is principally from 3 to 60 years for buildings andstructures, from 4 to 17 years for machinery and equipment,
and from 2 to 20 years for furniture and fixtures. Lease assets
under finance lease arrangements are depreciated using thestraight-line method over the terms of the respective leases
without any salvage value.
”Accumulated depreciation” had been presented separately as a contra-asset account which is subtracted from thegross amounts of property, plant and equipment at cost in
the previous years, but effective from the year ended March
31, 2018, it has been directly deducted from each asset itemin order to enhance the clarity of the consolidated balance
sheet. Accordingly, the consolidated financial statements forthe year ended March 31, 2017 were reclassified to reflect
this change in the presentation method.
Accumulated depreciation totaled ¥14,896 million($140,173 thousand) and ¥14,363 million as of March 31,2018 and 2017, respectively.
g. Long-Lived Assets — The Group reviews its long-lived
assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset
group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows
expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss
would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is
the higher of the discounted cash flows from the continued
use and eventual disposition of the asset or the net selling
price at disposition.
h. Allowance for Doubtful Receivables — The allowancefor doubtful receivables is stated in amounts considered to beappropriate based on the Group’s past credit loss experienceand an evaluation of estimated losses in the receivables outstanding.
i. Allowance for Warranty Work on Construction
Projects — The allowance for warranty costs for completed
work is provided at the amount of warranty costs based on
past loss experience.

j. Allowance for Losses on Construction Contracts — An
allowance for losses on construction contracts is provided
with respect to construction projects for which eventual losses are reasonably expected and estimated.
k. Employees’ Retirement Benefits — The Company has acontributory funded pension plan covering substantially all of
its employees.
The Company accounts for the liability for retirement
benefits based on the projected benefit obligations and plan
assets at the balance sheet date. The projected benefit obligations are attributed to periods on a benefit formula basis.
Actuarial gains and losses and past service costs that are yet
to be recognized in profit or loss are recognized within equity(accumulated other comprehensive income), after adjustingfor tax effects, and are recognized in profit or loss over 10
years but no longer than the expected average remaining service period of the employees.
l. Asset Retirement Obligations — An asset retirement
obligation is recorded for a legal obligation imposed either by
law or contract that results from the acquisition, construction, development and normal operation of a tangible fixed
asset and is associated with the retirement of such tangible
fixed asset. The asset retirement obligation is recognized as
the sum of the discounted cash flows required for the future
asset retirement and is recorded in the period in which the
obligation is incurred if a reasonable estimate can be made. If
a reasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation isincurred, the liability should be recognized when a reasonable estimate of the asset retirement obligation can be made.
Upon initial recognition of a liability for an asset retirement
obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by theamount of the liability. The asset retirement cost is subsequently allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is
accreted to its present value each period. Any subsequent
revisions to the timing or the amount of the original estimateof undiscounted cash flows are reflected as an adjustment tothe carrying amount of the liability and the capitalized
amount of the related asset retirement cost.
m. Construction Contracts — Construction revenue andconstruction costs are recognized by the percentage-of-completion method, if the outcome of a construction contract
can be estimated reliably. When total construction revenue,
total construction costs and the stage of completion of thecontract at the balance sheet date can be reliably measured,
the outcome of a construction contract is deemed to be estimated reliably. If the outcome of a construction contract
cannot be reliably estimated, the completed-contract methodshould be applied. When it is probable that the total construction costs will exceed total construction revenue, anestimated loss on the contract should be immediately recognized by providing for a loss on such construction contracts.

15

The revenues recognized by the percentage-of-completion method for the years ended March 31, 2018 and 2017
were ¥208,650 million ($1,963,394 thousand) and ¥188,945
million, respectively.

16

n. Income Taxes — The provision for income taxes is computed based on the pretax income included in the
consolidated statements of income. The asset and liability
approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basesof assets and liabilities. Deferred taxes are measured byapplying currently enacted income tax rates to the temporary
differences.
o. Derivatives and Hedging Activities — The Group uses
derivative financial instruments to manage its exposures tofluctuations in foreign exchange and interest rates. Currency
and interest rate swaps are utilized by the Group to reduce
foreign currency exchange and interest rate risks. The Group
does not enter into derivatives for trading or speculative purposes.
Currency and interest rate swaps that qualify for hedge
accounting and meet specific matching criteria are notremeasured at market value, but the differential paid or
received under the swap agreements is recognized andincluded in interest expense or income, and hedge items
denominated in a foreign currency are translated at the contracted rates.
p. Per Share Information — Basic net income per share iscomputed by dividing net income attributable to commonshareholders by the weighted-average number of commonshares outstanding for the period, retroactively adjusted forstock splits.
Diluted net income per share is not disclosed because
there are no securities with a dilutive effect upon exercise orconversion into common stock.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends
applicable to the respective fiscal years, including dividends
to be paid after the end of the year.
The Company implemented a consolidation of shares at
the rate of five shares to one share of the Company’s common stock effective October 1, 2017 based on the resolution
at the annual shareholders’ meeting held on June 29, 2017.
Per share figures have been calculated on the assumptionthat the consolidation of shares was implemented at the
beginning of the previous fiscal year.
q. Accounting Changes and Error Corrections — Under
Accounting Standards Board of Japan (“ASBJ”) Statement
No. 24, “Accounting Standard for Accounting Changes andError Corrections,” and ASBJ Guidance No. 24, “Guidanceon Accounting Standard for Accounting Changes and Error
Corrections,” accounting treatments are required as follows:(1) Changes in Accounting Policies:
When a new accounting policy is applied following revisionof an accounting standard, the new policy is applied retrospectively unless the revised accounting standard includes
specific transitional provisions, in which case the entity shallcomply with the specific transitional provisions.
(2) Changes in Presentation:
When the presentation of financial statements is changed,
prior-period financial statements are reclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates:
A change in an accounting estimate is accounted for in the
period of the change if the change affects that period only,
and is accounted for prospectively if the change affects boththe period of the change and future periods.
(4) Corrections of Prior-Period Errors:
When an error in prior-period financial statements is discovered, those statements are restated.
r. New Accounting Pronouncements — On March 30,
2018, the ASBJ issued ASBJ Statement No. 29, “AccountingStandard for Revenue Recognition,” and ASBJ Guidance No.
30, “Implementation Guidance on Accounting Standard for
Revenue Recognition.” The core principle of the standard andguidance is that an entity should recognize revenue to depict
the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. An entity should recognize revenue in accordance withthat core principle by applying the following steps:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performanceobligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a
performance obligation
The accounting standard and guidance are effective forfiscal years beginning on or after April 1, 2021. Earlier application is permitted for fiscal years beginning on or after April
1, 2018.
The Company expects to apply the accounting standard
and guidance for fiscal years beginning on or after April 1,
2021, and is in the process of measuring the effects of applying the accounting standard and guidance in futureapplicable periods.

Okumura Corporation Annual Report 2018

3. Marketable and Investment Securities
Marketable and investment securities as of March 31, 2018 and 2017, consisted of the following:

Non-current:
Marketable equity securities
Government and corporate bonds
Non-marketable equity securities and other
Total

Millions of yen

Thousands of
U.S. dollars

2018

2017

2018

¥73,009
120
1,393¥74,522¥64,451
118
1,395¥65,964$687,017
1,125
13,113$701,255

The costs and aggregate fair values of marketable and investment securities at March 31, 2018 and 2017, were as follows:
Millions of yen

March 31, 2018

Securities classified as:
Available-for-sale:
Equity securities
Held-to-maturity:
Debt securities

Cost

Unrealized
Gains

Unrealized
LossesFair
Value¥24,900¥48,180¥71¥73,009

120

5

—

125

¥24,971¥39,528¥48¥64,451

118

7

—

125

Cost

Unrealized
Gains

Unrealized
LossesFair
Value$234,312$453,376$671$687,017

1,125

48

—

1,173

March 31, 2017

Securities classified as:
Available-for-sale:
Equity securities
Held-to-maturity:
Debt securities

Thousands of U.S. dollars

March 31, 2018

Securities classified as:
Available-for-sale:
Equity securities
Held-to-maturity:
Debt securities

17

The information for available-for-sale securities which were sold during the years ended March 31, 2018 and 2017 is asfollows:
Millions of yen

Proceeds

Realized
Gains

Realized
Losses

¥400

¥181

¥—

Proceeds

Realized
Gains

Realized
Losses

¥498

¥37

¥56

March 31, 2018

Proceeds

Realized
Gains

Realized
LossesAvailable-for-sale:
Equity securities$3,760$1,700$—Millions of yen

Thousands of
U.S. dollars

March 31, 2018

Available-for-sale:
Equity securities

Millions of yen

18

March 31, 2017

Available-for-sale:
Equity securities

Thousands of U.S. dollars

No impairment losses were recognized on securities for the years ended March 31, 2018 and 2017.
4. Inventories
Inventories at March 31, 2018 and 2017, consisted of the following:

Construction projects in progress
Real estate held for sale
Development projects in progress
Other
Total

2018

2017

2018

¥5,548
705
3,215
908
¥10,376¥6,520
322
3,391
530
¥10,763$52,204
6,638
30,254
8,543$97,639

Okumura Corporation Annual Report 2018

5. Investment Property
The Group owns certain rental properties such as residential buildings, warehouses, and land in Osaka and other areas. Somerental warehouses leased to third parties, of which the Company utilizes a part, are classified as rental properties in part.
The net of rental income and operating expenses for those rental properties was ¥2,969 million ($27,935 thousand) and¥2,905 million for the years ended March 31, 2018 and 2017, respectively.
In addition, the carrying amounts, changes in such balances and market prices of such properties were as follows:
Millions of yen
Fair Value

Carrying AmountRental properties
Rental properties in part
Total

April 1,
2017

Increase/
Decrease

March 31,2018

March 31,2018

¥32,209337¥32,546¥353
915¥1,268¥32,562
1,252¥33,814¥57,474
2,019¥59,493
Millions of yen
Fair Value

Carrying AmountRental properties
Rental properties in part
Total

April 1,
2016

Increase/
Decrease

March 31,2017

March 31,2017

¥31,443829¥32,272

¥766
(492)
¥274

¥32,209337¥32,546¥56,882
1,126¥58,008
Thousands of U.S. dollars
Fair Value

Carrying AmountRental properties
Rental properties in part
Total

April 1,
2017

Increase/
Decrease

March 31,2018

March 31,2018

$303,085
3,177$306,262$3,324
8,604$11,928$306,409
11,781$318,190$540,826
18,998$559,824

Notes:(1) Carrying amount recognized in the consolidated balance sheets is net of accumulated depreciation and accumulated
impairment losses, if any.
(2) Fair value of properties as of March 31, 2018 and 2017 is measured in accordance with real-estate appraisal performed byreal-estate appraisers for primary properties. The amount measured by the Group is in accordance with its Real-EstateAppraisal Standard for other properties (including those measured using indicators).

19

6. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans at March 31, 2018 and 2017, consisted of notes to banks and bank overdrafts. The annual interest rates
applicable to the short-term bank loans ranged from 0.7% to 2.8% at March 31, 2018 and 0.7% to 1.5% at March 31, 2017.
Long-term debt at March 31, 2018 and 2017, consisted of the following:

20

Loans from banks and other financial institutions, due serially to 2031
with interest rates ranging from 0.6% to 3.5%
Collateralized
Unsecured
Obligations under finance leases
Total
Less current portionLong-term debt, less current portion

Millions of yen

Thousands of
U.S. dollars

2018

2017

2018

¥0
3,149
10
3,159
(14)
¥3,145¥2,001
3,164
24
5,189
(4,023)¥1,166$3
29,62798
29,728(137)$29,591

Annual maturities of long-term debt, excluding finance leases (see Note 11), at March 31, 2018, were as follows:Year Ending March 31

Millions of yen

Thousands of
U.S. dollars

2019
2020
2021
2022
2023
2024 and thereafter
Total

¥7
7
1,107
6
2,004
18
¥3,149$68
65
10,41652
18,859170$29,630

The carrying amounts of assets pledged as collateral for the above collateralized long-term debt at March 31, 2018, was as follows:
Property, plant and equipment—net of accumulated depreciation

Millions of yen

Thousands of
U.S. dollars¥154$1,453

As is customary in Japan, the Company maintains substantial deposit balances with banks with which it has borrowings. Suchdeposit balances are not legally or contractually restricted as to withdrawal.
General agreements with respective banks provide, as is customary in Japan, that additional collateral must be provided
under certain circumstances if requested by such banks and that certain banks have the right to offset cash deposited withthem against any long-term or short-term debt or obligation that becomes due and, in case of default and certain other specified events, against all other debt payable to the banks. The Group has never been requested to provide any additional
collateral.

Okumura Corporation Annual Report 2018

7. Employees’ Retirement Benefits
Most of the employees of the Company are covered by a contributory trusted pension plan.
The Company has a cash balance plan (pension plan linked to the market interest rates) based on the Defined Benefit
Corporate Pension Law.
(1) The changes in defined benefit obligations for the years ended March 31, 2018 and 2017, were as follows:

Balance at beginning of year
Current service cost
Interest cost
Actuarial losses
Benefits paid
Balance at end of year

2018

Millions of yen
2017

Thousands of
U.S. dollars
2018¥21,730
1,102
109
23
(1,768)¥21,196¥22,399
1,083
112
52
(1,916)¥21,730$204,475
10,3801,022
220(16,640)$199,457

2018

Millions of yen
2017

Thousands of
U.S. dollars
2018¥23,844214
366
949(1,768)¥23,605¥24,556221
44939(1,916)¥23,844$224,373
2,019
3,446
8,929
(16,640)$222,127(2) The changes in plan assets for the years ended March 31, 2018 and 2017, were as follows:

Balance at beginning of year
Expected return on plan assets
Actuarial gains
Contributions from the employer
Benefits paid
Balance at end of year

(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit
obligation and plan assets was as follows:

Defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation
Net asset arising from defined benefit obligation

Asset for retirement benefits
Net asset arising from defined benefit obligation

2018

Millions of yen
2017

Thousands of
U.S. dollars
2018¥21,196(23,605)(2,409)—¥(2,409)¥ 21,730(23,844)(2,114)—¥(2,114)$199,457(222,127)(22,670)—$(22,670)

2018

Millions of yen
2017

Thousands of
U.S. dollars
2018¥(2,409)¥(2,409)¥(2,114)¥(2,114)$(22,670)$(22,670)(4) The components of net periodic benefit costs for the years ended March 31, 2018 and 2017, were as follows:

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial gains
Amortization of past service costs
Net periodic benefit costs

2018

Millions of yen
2017

Thousands of
U.S. dollars
2018¥1,102
109
(214)
(115)
(21)
¥861

¥1,083
112
(221)
(133)
(21)
¥820

$10,380
1,022(2,019)(1,081)(199)$8,10321

(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans
for the years ended March 31, 2018 and 2017, were as follows:

Actuarial gains (losses)
Past service costs
Total

22

2018

Millions of yen
2017

Thousands of
U.S. dollars
2018

¥228
(21)
¥207

¥(140)(21)¥(161)$2,146(199)$1,947(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement
benefit plans as of March 31, 2018 and 2017, were as follows:

Unrecognized actuarial gains
Unrecognized past service costs
Total

2018

Millions of yen
2017

Thousands of
U.S. dollars
2018¥(2,876)—¥(2,876)¥(2,648)(21)¥(2,669)$(27,063)—$(27,063)(7) Plan assets
a. Components of plan assets
Plan assets as of March 31, 2018 and 2017, consisted of the following:
Debt investments
Equity investments
Life insurance general account assets
Others
Total

2018

2017

44%
11
32
13
100%

45%
10
32
13
100%

b. Method of determining the expected rate of return on plan assets
	
The expected rate of return on plan assets is determined considering allocation of plan assets which are expectedcurrently and in the future and the long-term rates of return which are expected currently and in the future from thevarious components of the plan assets.
(8) Assumptions used for the years ended March 31, 2018 and 2017, are set forth as follows:
Discount rate
Expected rate of return on plan assets

2018

2017

0.5%
0.9

0.5%
0.9

Okumura Corporation Annual Report 2018

8. Equity
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the
Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. Additionally, for companies that meet certain criteria including (1) having
a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service ofthe directors being prescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of
Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the Company has prescribed so in its articles of incorporation. However, the Company does not meet all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles ofincorporation of the Company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders,
but the amount of net assets after dividends must be maintained at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus), depending on the equity accountcharged upon the payment of such dividends, until the aggregate amount of legal reserve and additional paid-in capitalequals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve
may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in
capital, other capital surplus and retained earnings can be transferred among the accounts within equity under certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolutionof the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to theshareholders which is determined by a specific formula. Under the Companies Act, stock acquisition rights are presented as aseparate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisitionrights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted
directly from stock acquisition rights.
The Company implemented a consolidation of shares at the rate of five shares to one share of the Company’s common stock
effective October 1, 2017 based on the resolution of the annual shareholders’ meeting held on June 29, 2017.

23

9. Income Taxes
The Group is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 30.8% for the years ended March 31, 2018 and 2017.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31, 2018 and 2017, are as follows:

24

Deferred tax assets:
Impairment losses on securities
Write-down of inventories
Allowance for bonuses
Allowance for doubtful accounts
Allowance for losses on construction contracts
Tax loss carryforwards
Accrued expenses
Other
Less valuation allowance
Total
Deferred tax liabilities:
Net unrealized gains on available-for-sale securities
Retained earnings appropriated for special allowance
Asset for retirement benefits
Total
Net deferred tax liabilities

Millions of yen

Thousands of
U.S. dollars

2018

2017

2018

¥2,149
1,359
1,305
879
718
357
317
503
(4,871)
2,716¥2,169
1,296
1,358
953
1,036
1,863
384
432
(7,653)
1,838$20,218
12,791
12,284
8,275
6,752
3,358
2,979
4,732
(45,832)
25,557(13,256)(1,716)(737)(15,709)¥(12,993)(10,719)(1,646)(647)(13,012)¥(11,174)(124,735)(16,149)(6,937)(147,821)$(122,264)

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statement of income for the year ended March 31, 2018, with the corresponding figures for 2017, is asfollows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Non-taxable income
Inhabitant tax per capita
Special income tax credits
Valuation allowance
Other—net
Actual effective tax rate

2018

2017

30.8%
0.4
(0.5)
0.8
(2.2)
(16.0)
0.5
13.8%

30.8 %
0.5
(0.5)
0.9
(1.5)
(32.6)(0.1)(2.5)%

Okumura Corporation Annual Report 2018

10. Research and Development Costs
Research and development costs charged to income were ¥1,080 million ($10,164 thousand) and ¥866 million for the years
ended March 31, 2018 and 2017, respectively.
11. Leases(1) Finance leases
The Group leases certain machinery and equipment, office space and other assets.
Total rental expenses including lease payments under finance leases for the years ended March 31, 2018 and 2017, were
¥13 million ($122 thousand) and ¥20 million, respectively.
Obligations under finance leases at March 31, 2018 and 2017, were as follows:

Due within one year
Due after one year
Total

Millions of yen

Thousands of
U.S. dollars

2018

2017

2018

¥7
3
¥10

¥14
10
¥24

$69
29
$98

(2) Operating leases
Future minimum lease receivables or payments under noncancelable operating leases at March 31, 2018 and 2017, were as
follows:

As a lessor:
Due within one year
Due after one year
Total
As a lessee:
Due within one year
Due after one year
Total

Millions of yen

Thousands of
U.S. dollars

2018

2017

2018

¥2,279
15,004¥17,283¥2,242
15,602¥17,844$21,446
141,183$162,629

¥86
673
¥759

¥95
752
¥847

$807
6,335
$7,142

12. Financial Instruments and Related Disclosures(1) Group policy for financial instruments
At the Group level, cash surpluses, if any, are invested in low-risk financial assets. Short-term bank loans are used to fund its
ongoing operations. Derivatives are used, not for speculative purposes, but to manage its exposure to fluctuations in foreign
currency exchange and interest rates.
(2) Nature and extent of risks arising from financial instruments
Receivables, such as trade notes and trade accounts, are exposed to customer credit risk. Marketable and investment securities, mainly held-to-maturity securities and equity instruments of customers and suppliers of the Group, are exposed to therisk of market price fluctuations.
Payment terms of payables, such as trade notes and trade accounts, are mostly less than one year.
(3) Risk management for financial instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include continuously
determining customers’ circumstances from the phase of accepting orders to that of collection of the receivables, along with
monitoring of payment terms and balances of each transaction.
Market risk management (foreign exchange risk and interest rate risk)
Marketable and investment securities are managed by monitoring market values and financial position of issuers on a regularbasis. Also, the Group continuously reviews its possession of those securities, except for held-to-maturity securities.

25

Long-term debt denominated in foreign currencies is exposed to fluctuations in market interest rates and foreign exchange
rates. The Group utilizes derivative instruments (currency and interest rate swaps contracts) as hedging instruments to manage these market risks. The hedge accounting method is described in Note 2.o.
Please see Note 14 for more details about derivatives.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The Groupmanages its liquidity risk by making the appropriate cash schedule on a monthly basis.

26(4) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not available, anotherrational valuation technique is used instead.
(a) Fair value of financial instruments
Millions of yen

March 31, 2018

Carrying
AmountFair Value

Unrealized
Gain/Loss

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Allowance for doubtful receivables
Net
Investment securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable
Net
Total

¥56,942
112,287(719)
111,568
73,129128(1)127¥241,766¥56,942¥0

111,568
73,134—5129¥241,773

2¥7

Short-term bank loans
Long-term bank loans
Payables—trade notes and accounts
Long-term debt—lease obligation including current portion
Total¥11,652
3,100
58,98610¥73,748¥11,652
3,105
58,98610¥73,753

¥—
5
—
(0)
¥5
Millions of yen

March 31, 2017

Carrying
AmountFair Value

Unrealized
Gain/Loss

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Allowance for doubtful receivables
Net
Investment securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable
Net
Total

¥57,622
97,275(863)
96,41264,569115(1)114¥218,717¥57,622¥—96,41264,576—
7115¥218,725

1¥8

Short-term bank loans
Long-term bank loans
Payables—trade notes and accounts
Long-term debt—lease obligation including current portion
Total
Derivatives¥13,080
1,100
58,23124¥72,435¥—¥13,080
1,107
58,23123¥72,441
¥—

¥—
7
—
(1)
¥6
¥—

Okumura Corporation Annual Report 2018

Thousands of U.S. dollars

March 31, 2018

Carrying
AmountFair Value

Unrealized
Gain/Loss

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Allowance for doubtful receivables
Net
Investment securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable
Net
Total

$535,826
1,056,622(6,770)1,049,852
688,142
1,204
(7)
1,197
$2,275,017$535,826$0

1,049,852
688,190

—
48

1,210
$2,275,078

13
$61

Short-term bank loans
Long-term bank loans
Payables—trade notes and accounts
Long-term debt—lease obligation including current portion
Total$109,647
29,171
555,05599$693,972$109,647
29,220555,05597$694,019

$—
49
—
(2)
$47

Amounts due from unconsolidated subsidiaries and associated companies are included in receivables—trade notes andaccounts and long-term loans receivable.
Cash and cash equivalents and time deposits
The carrying values of cash and cash equivalents and time deposits approximate fair value because of their shortmaturities.
Marketable securities and investment securities
The fair values of marketable securities and investment securities are measured at the quoted market price of thestock exchange for the equity instruments and at the quoted price obtained from the financial institution for certain
debt instruments. Fair value information for the marketable securities and the investment securities by classification
is included in Note 3.
Receivables—trade notes and accounts and long-term loans receivable
The fair values of receivables—trade notes and accounts and long-term loans receivable are measured at theamount to be received at maturity, discounted at the Group’s assumed corporate discount rate, such as the rate ofnational bonds at maturity. Also, the amounts of the allowance for doubtful receivables are deducted from the fairvalues.
Payables—trade notes and accounts and short-term bank loans
The carrying values of payables—trade notes and accounts and short-term bank loans approximate fair value
because of their short maturities.
Long-term debt—lease obligation
The fair values of long-term debt—lease obligation are determined by discounting the cash flows related to the debt
at the Group’s assumed corporate borrowing rate.
Long-term bank loans
The fair values of long-term bank loans are determined by the present value calculated by discounting the total
amount of the principal and interest expense at the interest rate considering the remaining maturities of the loans
and credit risk of the Company.
Derivatives
Fair value information for derivatives is included in Note 13.
(b) Carrying amount of financial instruments whose fair value cannot be reliably determined

Investments in equity instruments that do not have a quoted market price in an
active market
Investments in limited partnerships

Millions of yen

Thousands of
U.S. dollars

2018

2017

2018

¥1,309¥1,437$12,311

322

186

3,032

27

(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of yen

March 31, 201828

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Investment securities
Available-for-sale securities with contractual maturities
Long-term loans receivable
Total

Due in 1 Yearor Less

Due after
1 Year through5 Years

Due after
5 Years through10 Years

Due after
10 Years¥56,942
97,705¥
—14,583

¥—
—

¥—
—

—
—
¥154,647

124
74¥14,781

—
73
¥73

—
29
¥29

Due in 1 Yearor Less

Due after
1 Year through5 Years

Due after
5 Years through10 Years

Due after
10 Years$535,826
919,402$—
137,219

$—
—

$—
—

—
—
$1,455,228

1,168
698
$139,085

—
683
$683

—
269
$269

Thousands of U.S. dollars

March 31, 2018

Cash and cash equivalents and time deposits
Receivables—trade notes and accounts
Investment securities
Available-for-sale securities with contractual maturities
Long-term loans receivable
Total

Please see Note 6 for annual maturities of long-term debt and Note 11 for obligations under finance leases.

Okumura Corporation Annual Report 201813. Derivatives
The Group enters into derivatives, in the normal course of business, to reduce the exposure to fluctuations in foreign exchange
and interest rates. The primary classes of derivatives used by the Group are foreign currency forward contracts, currency andinterest rate swaps.
The Group does not hold or issue derivatives for trading purposes.
Because the counterparties to these derivatives are limited to major financial institutions, the Group does not anticipate
any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate theauthorization and credit limit amount.
Derivative transactions to which hedge accounting is not applied:
There were no derivative transactions to which hedge accounting is not applied at March 31, 2018 and 2017.
Derivative transactions to which hedge accounting is applied:
There were no derivative transactions to which hedge accounting is applied at March 31, 2018.
Millions of yen

March 31, 2017

Hedged item

Contract
amountContract
amount due
after one year

Currency and interest rate swaps
Floating-rate receipt, fixed-rate payment
Receipt in U.S. dollars, payment in yen

Short-termbank loans¥2,000¥—Fair value

Note

Note:
Currency and interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured atmarket value but the differential paid or received under the swap agreement is recognized and included in interest expense or
income. The fair value of such currency and interest rate swaps is included in those of the hedged items (i.e., short-term bankloans) in Note 12.
14. Commitments and Contingent Liabilities
Land in the amount of ¥21 million ($196 thousand) is pledged for a deposit received from a lessee related to a fixed-term landleasehold at March 31, 2018. Land in the amount of ¥1,458 million ($13,722 thousand) and buildings in the amount of ¥1,194
million ($11,232 thousand) are pledged as construction assistance funds pursuant to building lease contracts at March 31,
2018. Investment securities in the amounts of ¥120 million ($1,125 thousand), ¥16 million ($149 thousand) and ¥53 million($494 thousand) are pledged as collateral for the guarantee against defect of the house construction, contract performanceobligation of the private finance initiative (PFI) business, and the loans of an affiliate, respectively, at March 31, 2018.

29

15. Other Comprehensive Income
The components of other comprehensive income for the years ended March 31, 2018 and 2017, were as follows:

30

Unrealized gain on available-for-sale securities
Gain arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Defined retirement benefit plans
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive income

Millions of yen

Thousands of
U.S. Dollars

2018

2017

2018

¥8,685(56)
8,629(2,537)¥6,092

¥141
20
161
256
¥417

$81,724(524)
81,200(23,873)$57,327

¥343
(136)
207
(90)
¥117
¥6,209

¥(8)
(153)
(161)
13
¥(148)¥269$3,227(1,280)1,947(849)$1,098$58,425

16. Subsequent Events
Appropriation of Retained Earnings
The following appropriation of retained earnings at March 31, 2018, was approved at the Company’s shareholders’ meeting
held on June 28, 2018:
Year-end cash dividends, ¥184 ($1.73) per share

Millions of yen

Thousands of
U.S. dollars¥7,329$68,968

17. Segment Information
1. Description of Reportable Segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by
the Company’s management is being performed in order to decide how resources are allocated among the Group.
Therefore, the Group’s reportable segments consist of “Civil engineering,” “Architectural construction,” and “Realestate.”2.	Methods of measurement for the amounts of sales, profit, assets, liabilities and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant
Accounting Policies.”Okumura Corporation Annual Report 2018

3. Information about sales, profit, assets, liabilities and other items is as follows:
Millions of yen
2018

Reportable segment

Sales
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit
Other:
Depreciation

Civil
engineering

Architectural
construction

Real estate

Total

Other
(Note 1)

Total

Reconciliations(Note 2)

Consolidated(Note 3)

¥81,230¥131,906¥4,660¥217,796¥6,132¥223,928¥—¥223,928—¥81,230¥5,973—¥131,906¥6,44135¥4,695¥2,85835¥217,831¥15,272848¥6,980¥569

883¥224,811¥15,841(883)¥(883)¥13—¥223,928¥15,854

¥280

¥406

¥384

¥1,070¥30¥1,100¥(7)¥1,093
Millions of yen
2017

Reportable segment

Sales
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit
Other:
Depreciation

Civil
engineering

Architectural
construction

Real estate

Total

Other
(Note 1)

Total

Reconciliations(Note 2)

Consolidated(Note 3)

¥76,728¥116,475¥4,460¥197,663¥5,428¥203,091¥—¥203,091—¥76,728¥4,437—¥116,475¥4,15231¥4,491¥2,64931¥197,694¥11,238210¥5,638¥431

241¥203,332¥11,669(241)¥(241)¥10—¥203,091¥11,679

¥229

¥321

¥372

¥922

¥23

¥945

¥(7)

¥938

Thousands of U.S. dollars
2018

Reportable segment
Architectural
construction

Real estate

Total

Other
(Note 1)

Total

Reconciliations(Note 2)

Consolidated(Note 3)

$764,368 $1,241,236$43,858$2,049,462$57,695

2,107,157$—$2,107,157——$764,368 $1,241,236$56,205 $60,612

328$44,186$26,888

328$2,049,790$143,705

7,978$65,673$5,355

8,306$2,115,463$149,060(8,306)$(8,306)$126—$2,107,157$149,186$2,639 $3,819$3,612$10,070$282$10,352$(66)$10,286

Civil
engineering

Sales
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit
Other:
Depreciation

Notes:
1. “Other” is a business segment which is not included in any reportable segment and includes business related to
manufacturing and sale of construction machinery and materials.
2. Reconciliations to segment profit in the amount of ¥13 million ($126 thousand) and ¥10 million for the years ended March
31, 2018 and 2017, respectively, include eliminations of intersegment transactions.
3. The consolidated amounts of segment profit above correspond to the amounts of operating income in the consolidated
statements of income.

31Independent Auditor‘s Report
Deloitte Touche Tohmatsu LLC
Yodoyabashi Mitsui Building
4-1-1, Imabashi, Chuo-ku
Osaka 541-0042
Japan
Tel: +81 (6) 4560 6000
Fax: +81 (6) 4560 6001
www.deloitte.com/jp

INDEPENDENT AUDITOR’S REPORTTo the Board of Directors of Okumura Corporation:32

We have audited the accompanying consolidated balance sheet of Okumura Corporation and its consolidated subsidiaries as ofMarch 31, 2018, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows
for the year then ended, and a summary of significant accounting policies and other explanatory information, all expressed inJapanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Okumura Corporation and its consolidated subsidiaries as of March 31, 2018, and the consolidated results of
their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted inJapan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S.
dollar amounts are presented solely for the convenience of readers outside Japan.

June 28, 2018

Member of
Deloitte Touche Tohmatsu Limited

Breakdown of Orders (Nonconsolidated)
Okumura Corporation
Year Ended March 31, 2018

Okumura Corporation Annual Report 2018

Construction Orders Awarded

2018

Millions ofyen

Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Total:
Domestic:
Public sector
Private sector
Overseas
Total

59.2

15,663
107,471(48)
123,086

100 %

108,873
129,611
4,398¥242,882

Composition
ratio

Millions of
yen

37.2%

¥ 60,139
16,457132
76,72860.3

38,44077,98550
116,475

97.5
2.5
100 %

98,57994,442
182
193,203
5,081¥198,284

Composition
ratio

Millions of
yen

56.9%

¥129,576
29,884
4,720
164,180

43.1

41,965
95,698—
137,663100 %

171,541
125,582
4,720¥301,843

67,565
129,814
4,747¥202,126
2018

Millions ofyen¥ 60,884
19,893453
81,23037,28994,616
1
131,906
98,173
114,509454
213,136
5,438¥218,574

Year-end Backlog¥120,999
35,421
9,012
165,432
19,934105,468—
125,402140,933
140,889
9,012¥290,834

Composition
ratio

Thousands of
U.S. dollars

49.3%$ 492,205
239,293
44,653776,15150.7

143,582
982,260
12
1,125,854

100 %

635,787
1,221,553
44,665$1,902,005

Composition
ratio

Thousands of
U.S. dollars

38.7%$ 572,919
187,187
4,262
764,36858.7

350,893
890,33112
1,241,236

97.4
2.6
100 %

923,8121,077,518
4,274
2,005,604
51,174$2,056,778

Composition
ratio

Thousands of
U.S. dollars

54.4%$1,138,599
333,31384,804
1,556,716

45.6

187,576
992,450—
1,180,026

100 %

1,326,175
1,325,763
84,804$2,736,742

2018

2017

2018

Millions ofyen

Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Total:
Domestic:
Public sector
Private sector
Overseas
Total

40.8%

¥ 93,210
22,1404,446
119,796

15,258104,385
1
119,644

Net Sales

Projects completed:
Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Subtotal:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Real estate and other
Total

Millions ofyen¥ 52,307
25,4294,746
82,4822018

2017

Composition
ratio

2018

2017

33

Network

Head and Branch Offices

34

Consolidated Subsidiaries

Head Office
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295

Hokuriku Office2-3-26, Higashi Ohdori, Chuo-ku,
Niigata 950-0087, Japan
TEL: +81-25-241-6160 FAX: +81-25-241-6364

Tokyo Head Office
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8103

Nagoya Branch
29-8, Takebashi-cho, Nakamura-ku,
Nagoya 453-8555, Japan
TEL: +81-52-451-1101 FAX: +81-52-452-4331

Technical Research Institute387, Ohsuna, Tsukuba 300-2612, Japan
TEL: +81-29-865-1521 FAX: +81-29-865-1522

Kansai Branch
26F ABENO HARUKAS,1-1-43 Abenosuji,
Abeno-ku, Osaka 545-6026, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6621-1921

East Japan Branch Office
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8111

Nara Office38-3, Takama-cho, Nara 630-8241, Japan
TEL: +81-742-22-5001 FAX: +81-742-27-0192

West Japan Branch Office
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6623-7692

Kobe Office2-2-16, Isobe dori, Chuo-ku,
Kobe 651-0084, Japan
TEL: +81-78-221-9355 FAX: +81-78-251-3374

West Japan Branch Office (HARUKAS Office)
26F ABENO HARUKAS,1-1-43 Abenosuji,
Abeno-ku, Osaka 545-6026, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6621-1921

Hiroshima Branch
1-7-22, Kokutaijimachi, Naka-ku,
Hiroshima 730-0042, Japan
TEL: +81-82-241-2246 FAX: +81-82-243-1416

Sapporo Branch
2-1-18, Kita Shijo Nishi,
Chuo-ku, Sapporo 060-0004, Japan
TEL: +81-11-261-9261 FAX: +81-11-251-5345

Shikoku Branch
2-3-11, Kotobuki-cho,Takamatsu 760-0023, Japan
TEL: +81-87-851-9008 FAX: +81-87-822-9286

Tohoku Branch
2-25, Tsutsumi dori, Amamiya-machi,
Aoba-ku, Sendai 981-8525, Japan
TEL: +81-22-274-1231 FAX: +81-22-273-9805

Kyushu Branch
2-19-1, Sanno, Yahata Higashi-ku,
Kitakyushu 805-8531, Japan
TEL: +81-93-671-3131 FAX: +81-93-661-1543

Tokyo Branch
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8116

Fukuoka Office
1-13-8, Yakuin, Chuo-ku,
Fukuoka 810-0022, Japan
TEL: +81-92-741-4431 FAX: +81-92-741-4740

Higashikanto Office18-14, Shinmachi, Chuo-ku,
Chiba 260-0028, Japan
TEL: +81-43-241-2255 FAX: +81-43-244-5911

Taiwan Branch
7F., No.82, Songjiang.Rd.,
Zhongshan Dist., Taipei City 104, Taiwan(R.O.C.)TEL: +886-2-2567-5010 FAX: +886-2-2567-5171

Yokohama Office
60, Nihon Ohdori, Naka-ku,
Yokohama 231-0021, Japan
TEL: +81-45-662-1361 FAX: +81-45-641-3502

Singapore Branch
175A Bencoolen Street, #05-06 Burlington
Square, Singapore 189650
TEL: +65-6884-6830 FAX: +65-6884-6831

Okumura Machinery Corporation
3-5-26, Himejima, Nishiyodogawa-ku,
Osaka 555-0033, Japan
TEL: +81-6-6472-3461 FAX: +81-6-6477-6801
Business line:Design, manufacture, sales, andrepair of construction/industrial machines anddevices
Taihei Real Estate Corporation[Head Office]5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-5439-5401 FAX: +81-3-5439-5402[Osaka Branch]
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6625-3959 FAX: +81-6-6629-3938
Business line: Real estate, land and building
management

Board of Directors

Investor Information(As of June 29, 2018)(As of March 31, 2018)
Okumura Corporation Annual Report 2018

Directors

Corporate Data

President and Representative Director
Takanori Okumura
Representative Director
Atsushi Tanaka

EstablishedFebruary 22, 1907

Directors
Seiichi Fujioka
Yuichi Mizuno
Keiji Yamaguchi
Yutaka Maruyama
Kenji Kotera

Capital¥19.8 billion

Director (Full-time Audit and Supervisory Committee Member)
Harumitsu Yoshimura
Directors (Audit and Supervisory Committee Member)
Shuji Abe
Hiroyo Yashiro
Hideshi Nio
Tetsuo Kodera
Note: Shuji Abe, Hiroyo Yashiro, Hideshi Nio and Tetsuo Kodera are outside directors.

Okumura was established in 1907 based on two key principles enshrined in the corporate mottos “steadfast
management” and “sincere operation.” The steady growth achieved over the years has been made possible throughthe unflagging support of our customers.
Okumura’s main business activities include civil engineering projects for railways, roads, power station facilities,
sewage and water works, and others. In the area of construction are projects such as houses, public facilities, medical
facilities, and office buildings. The Company has developed technology at the highest level, with achievements
including the seismic isolation system used to construct Japan’s first earthquake-absorbing building. In the area ofenvironment-related technology, Okumura has developed techniques for 100% recycling of demolished concrete, andnatural greening of concrete surfaces on buildings.
Okumura understands what an important mission it is to provide a better environment for the future. Accordingly,
the Company is dedicated to contributing to meaningful social infrastructure investment and to always being a
corporation regarded highly by society. It will achieve this by continuing to develop as an all-around construction
company based on steadfast business management.

Contents
1
2
4
6
8
10
11

Financial Highlights
To Our Shareholders
Review of Operations
TopicsConsolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income

12
13
14
32
33
34
35

Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report
Breakdown of Orders (Nonconsolidated)
Network
Board of Directors / Investor Information

Stock Information
Stock Exchange Listings
Tokyo
Transfer Agent
Sumitomo Mitsui Trust Bank, Limited

Shareholder

Executive Vice Presidents
Wataru Watanabe
Senior Managing Executive Officers
Hiroomi Iida
Seiichi Fujioka*
Yuichi Mizuno*
Keiji Yamaguchi*
Managing Executive Officers
Yutaka Maruyama*
Hitoshi Miyamoto
Kenji Kotera*
Atsushi Tanaka*
Executive Officers
Takanori Hayashi
Noriyuki Machida
Osamu Harada
Shunso Iijima
Hiromu Miyazaki
Akira Tanaka
Masaaki Iwakura
Kaoru Kuniyuki

35

Group Employees
2,032

Major Shareholders

Executive Officers

ProfileHead Office	OKUMURA CORPORATION
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295

Hiroyuki Hayashi
Akira Okada
Naoki Magoori
Hirohide Taniguchi
Toru Osumi
Nobuyasu Kawai
Sawayuki Kawatani
Kazuyuki Yoshimi

Note: Those officers marked with an asterisk (*) work as directors.

Shares held Shareholding(thousands)
ratio

The Master Trust Bank ofJapan, Ltd. (Trust Account)

2,093

5.26%

Japan Trustee Services Bank,
Ltd. (Trust Account)

2,029

5.10

Okumura Employees’
Shareholding Association

1,499

3.77

Resona Bank, Limited.

1,214

3.05

Sumitomo Realty &Development Co., Ltd.

1,210

3.04

Sumitomo Mitsui Banking
Corporation

1,113

2.80

Japan Trustee Services Bank,
Ltd. (Trust Account 9)

1,076

2.70

Northern Trust Co. (AVFC) Re
Silchester International Investors
International Value Equity Trust

715

1.80

Japan Trustee Services Bank,
Ltd. (Trust Account 5)

704

1.77

Nippon Life Insurance Company

643

1.61

Note:
1. The Company holds 5,832,570 shares of treasury stock, which are excluded
from the above.
2. Shareholding ratio is computed excluding treasury stock.

AnnualAnnualReport
Report2018
2018

OKUMURAOKUMURACORPORATIONCORPORATION
2-2-2,
2-2-2,
Matsuzaki-cho,
Matsuzaki-cho,
Abeno-ku,
Abeno-ku,
Osaka
Osaka
545-8555,
545-8555,
Japan
Japan
TEL:
TEL:
+81-6-6621-1101+81-6-6621-1101
FAX:
FAX:
+81-6-6627-5295+81-6-6627-5295
http://www.okumuragumi.co.jp
http://www.okumuragumi.co.jp

PrintedPrintedin Japanin Japan