Consolidated Financial Statements
KYUDENKO CORPORATION
Year ended March 31, 2021
with Independent Auditor’s Report

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Financial Statements
Year ended March 31, 2021

Contents
Consolidated Financial Statements
Independent Auditor’s Report ............................................................................................... 1
Consolidated Balance Sheet .................................................................................................. 6
Consolidated Statement of Income........................................................................................ 8
Consolidated Statement of Comprehensive Income ............................................................. 9
Consolidated Statement of Changes in Net Assets ............................................................. 10
Consolidated Statement of Cash Flows ............................................................................... 12
Notes to Consolidated Financial Statements ....................................................................... 14KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2021
March 31,2020
2021
(Millions of yen)

AssetsCurrent assets:
Cash on hand and in banks (Notes 15, 17 and 20)
Notes receivable, accounts receivable on completed
construction contracts and other accounts
receivable (Notes 17 and 22)
Short-term investments (Notes 17 and 18)
Costs of uncompleted construction contracts
Merchandise
Raw materials and supplies
Other current assets (Note 15)
Allowance for doubtful accounts (Note 17)
Total current assets
Fixed assets:
Property and equipment:
Buildings and structures (Notes 3 and 15)
Machinery, vehicles, tools, furniture and fixtures(Notes 3 and 15)
Leased assets
Land (Note 15)
Construction in progress
Accumulated depreciation
Total property and equipment
Intangible assets:
Goodwill (Note 21)
Other intangible assets
Total intangible assets
Investments and other assets:
Investments in securities (Notes 15, 17 and 18)
Investments in unconsolidated subsidiaries andaffiliates (Note 15)
Long-term loans receivable (Note 15)
Asset for retirement benefits (Note 5)
Deferred tax assets (Note 12)
Other (Note 15)
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

2021(Thousands of
U.S. dollars)(Note 1)

¥ 55,851¥ 50,905$ 459,805

139,746
1,007
7,285
1,527
1,145
9,723
(18)
216,269

130,705
–
5,910
1,040
14,5799,451(18)212,574

1,180,608–
53,3869,401
131,691
85,371(165)
1,920,100

69,34670,681

638,438

40,7097,043
28,911
772(64,158)
82,62540,771
7,190
28,887
1,061(67,894)
80,698368,274
64,953260,9299,586(613,268)
728,913

182
1,465
1,648

–
1,729
1,729

–
15,622
15,622

44,48650,597457,029

11,543
1,209
847
6,539
4,844
(1,534)67,938152,212¥ 368,482

12,596
1,256
554
3,507
4,781
(1,764)71,530
153,957¥ 366,532

113,781
11,352
5,007
31,67943,189(15,935)
646,105
1,390,641$ 3,310,742

6

March 31,
2020
2021
(Millions of yen)
Liabilities
Current liabilities:
Notes payable, accounts payable on construction
contracts and other accounts payable (Note 17)
Electronically recorded obligations (Note 17)
Short-term borrowings (Notes 4 and 15)
Current portion of long-term debt
(Notes 4, 15 and 17)
Lease obligations (Note 4)
Income taxes payable (Note 12)
Advances received on uncompleted construction
contracts (Note 22)
Provision for loss on construction contracts
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 4, 15 and 17)
Lease obligations (Note 4)
Provision for retirement benefits for directors andaudit and supervisory board members
Liability for retirement benefits (Note 5)
Other long-term liabilities (Notes 6 and 12)
Total long-term liabilities
Total liabilities

2021(Thousands of
U.S. dollars)(Note 1)

¥ 73,584
27,89430¥ 63,559
23,593
25$

574,108
213,112
225

1,769
1,147
6,257

1,749
1,145
7,145

15,806
10,34664,53823,44012
8,586
142,723

15,38160
12,700125,361

138,938549
114,714
1,132,341

11,8903,016

10,1402,711

91,59324,495337
10,7142,357
28,316
171,039

300
4,051
2,225
19,429144,790

2,712
36,591
20,102
175,496
1,307,837

12,561
12,982
177,642(8)
203,179

12,561
12,987
195,601(8)
221,141

113,463
117,308
1,766,790(76)
1,997,485

745
(540)
212
(7,985)(7,567)
1,831
197,442¥ 368,482

3,998
(381)
105
(5,057)(1,334)
1,933
221,741¥ 366,532

36,116(3,441)
953(45,678)(12,049)
17,4682,002,904$ 3,310,742

Commitments and contingencies (Note 14)
Net assets (Note 7)
Shareholders’ equity:
Common stock:
Authorized – 250,000,000 shares
Issued – 70,864,961 shares in 2020 and 2021
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive loss
Unrealized holding gain on securities
Unrealized loss on hedging instruments
Translation adjustments
Retirement benefit liability adjustments (Note 5)
Total accumulated other comprehensive loss
Non-controlling interests
Total net assets
Total liabilities and net assets

See accompanying notes to consolidated financial statements.

7

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Income
Year ended March 31, 2021
Year ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 1)
Net sales (Note 21):
Construction contracts (Note 8)
Other
Total net sales
Cost of sales (Notes 9 and 11):
Construction contracts
Other
Total cost of sales
Gross profit:
Construction contracts
Other
Total gross profit
Selling, general and administrative expenses(Notes 10 and 11)
Operating income (Note 21)
Non-operating income (expenses):
Interest income
Dividend income
Interest expenses
Equity in earnings of affiliates
Gain on investments in partnership
Rent income
Extra retirement payments
Compensation expenses
Provision of allowance for doubtful accounts ofsubsidiary
Other, net
Ordinary income
Extraordinary income (loss):
Gain on sales of property and equipment
Loss on disposal and sales of fixed assets
Gain on sales of investments in securities (Note 18)
Gain on sales of subsidiary shares (Note 18)
Impairment loss on investments in securities(Note 18)
Impairment loss on investment in unconsolidated
subsidiary (Note 18)
Loss on sales of investments in securities (Note 18)
Penalty
Profit before income taxes
Income taxes (Note 12):Current
DeferredProfitProfit attributable to:Non-controlling interests
Owners of parent¥ 407,506
21,432428,939¥ 377,331
14,570391,901$ 3,408,285
131,6093,539,895

351,520
17,325368,845

324,266
11,003335,269

2,928,973
99,387
3,028,361

55,986
4,106
60,09353,064
3,567
56,631

479,31232,221
511,534

24,071
36,022

23,63332,998

213,467
298,066

66
662
(385)
685
1,117
323
(60)
(129)

91
723
(411)
694
1,054
313
(90)
–

822
6,533
(3,717)
6,269
9,528
2,829
(815)
–

(92)
433
38,643(236)
768
35,906(2,132)
6,940
324,326

6
(172)
241
–

55
(184)
1,282
12

505
(1,662)
11,583
108

(294)

(17)

(160)

–
(0)
–
38,423

(115)
(66)
(89)
36,784(1,041)(597)(804)
332,257

11,805295
26,322

11,337258
25,188102,4102,331
227,51576¥ 26,245

145¥ 25,042

1,312$ 226,202

8

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31, 2021

ProfitOther comprehensive (loss) income (Note 13):
Unrealized holding (loss) gain on securities
Unrealized loss on hedging instruments
Translation adjustments
Retirement benefit liability adjustments (Note 5)
Share of other comprehensive (loss) income ofaffiliates accounted for by the equity method
Total other comprehensive (loss) income

Year ended March 31
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 1)
¥ 26,322¥ 25,188$ 227,515(2,832)
(25)
33
3

3,243
–
(120)
2,928

29,296–(1,084)26,452Comprehensive income(98)(2,919)¥ 23,402

171
6,223¥ 31,411

1,546
56,212$ 283,727

Comprehensive income attributable to:
Owners of parent
Non-controlling interests¥ 23,325¥77¥ 31,276¥
134$ 282,512$ 1,215

See accompanying notes to consolidated financial statements.

9

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
Year ended March 31, 2021
Total
Unrealized
Treasury

Total

Unrealized

loss onCommonCapitalRetainedstock,

shareholders’holding gain

hedging

stock

surplusearnings

at costequityon securities

Retirement

Translation

accumulated

benefit

other

Non-

liability

comprehensive

controlling

Total

loss

interests

net assets

instruments adjustments adjustments(Millions of yen)
Balance at April 1, 2019
Cash dividends paid

¥ 12,561¥ 13,012¥ 159,401¥ (10)¥ 184,965¥ 3,585¥ (423)¥ 179¥ (7,988)¥ (4,647)¥ 1,858¥ 182,176––(7,101)–(7,101)

–

–

–

–

–

–

(7,101)

Profit attributable toowners of parent for theperiod––26,245–26,245

–

–

–

–

–

–

26,245Purchase of treasury stock

–

–

–

(995)

(995)

–

–

–

–

–

–

(995)

Disposal of treasury stock

–

(997)

–

997

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

929

(929)

–

–

–

–

–

–

–

–

–

–

10

–

–

10

–

–

–

–

–

–

10

–

27

–

–

27

–

–

–

–

–

–

27

–

–

27

–

27

–

–

–

–

–

–

27

Change in scope of
consolidation
Transfer to capital surplus
from retained earnings
Purchase of treasury stockof consolidated subsidiary
Purchase of shares of
consolidated subsidiaries
Increase in retained
earnings due to change inaccounting period of a
subsidiary
Net changes in items otherthan those inshareholders’ equity

–

–

–

–

–

(2,839)

(116)

32

3

(2,920)(27)(2,947)

Net changes during the year

–

(30)

18,241

2

18,213(2,839)

(116)

32

3

(2,920)(27)

15,266

12,561

12,982

177,642(8)

203,179

745

(540)

212

(7,985)(7,567)

1,831

197,442––(7,086)–(7,086)

–

–

–

–

–

–

(7,086)

Balance at April 1, 2020
Cash dividends paid
Profit attributable toowners of parent for theperiod––25,042–

25,042

–

–

–

–

–

–

25,042

Purchase of treasury stock

–

–

–

(0)

(0)

–

–

–

–

–

–

(0)

Disposal of treasury stock

–

–

–

–

–

–

–

–

–

–

–

Change in scope of
–

–

2

–

2

–

–

–

–

–

–

2

–

–

–

–

–

–

–

–

–

–

–

–

–

3

–

–

3

–

–

–

–

–

–

3

–

1

–

–

1

–

–

–

–

–

–

1

–

–

–

–

–

–

–

–

–

–

–

–

shareholders’ equity

–

–

–

–

–

3,252

159

(106)

2,928

6,233

102

6,336

Net changes during the year–4

17,958(0)

17,962

3,252

159

(106)

2,928

6,233

102

24,298¥ 12,561¥ 12,987¥ 195,601¥ (8)¥ 221,141¥ 3,998¥ (381)¥ 105¥ (5,057)¥ (1,334)¥ 1,933¥ 221,741

consolidation
Transfer to capital surplus
from retained earnings
Purchase of treasury stockof consolidated subsidiary
Purchase of shares of
consolidated subsidiaries
Increase in retained
earnings due to change inaccounting period of a
subsidiary
Net changes in items otherthan those inBalance at March 31, 2021

10

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets (continued)
Year ended March 31, 2021
Total
Unrealized

Unrealized

TreasuryTotalholding

loss onCommonCapitalRetainedstock,

shareholders’gain onhedging

stock

surplusearnings

at costequitysecurities

Balance at April 1, 2020

$ 113,463$ 117,267$ 1,604,578$ (72)$ 1,835,237$ 6,735$ (4,880)

Issuance of new shares

–

–

–

–

–

–

–

Cash dividends paid––

(64,009)–(64,009)–

Retirement

accumulated

benefit

other

Non-

liability

comprehensive

controllingTotal

adjustments

loss

interests

net assets$ 1,917$ (72,130)$ (68,358)$ 16,543$ 1,783,422

–

–

–

–

–

–

–

–

–

–

(64,009)

Translation

instruments adjustments(Thousands of U.S. dollars) (Note 1)

Profit attributable toowners of parent for theperiod––226,202–226,202

–

–

–

–

–

–

226,202

Purchase of treasury stock

–

–

–

(4)

(4)

–

–

–

–

–

–

(4)

Disposal of treasury stock

–

–

–

–

–

–

–

–

–

–

–

–

–

–

19

–

19

–

–

–

–

–

–

19

–

–

–

–

–

–

–

–

–

–

–

–

–

27

–

–

27

–

–

–

–

–

–

27

–

12

–

–

12

–

–

–

–

–

–

12

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

29,381

1,438

(963)

26,45256,309924

57,233

Change in scope of
consolidation
Transfer to capital surplus
from retained earnings
Purchase of treasury stockof consolidated subsidiary
Purchase of shares of
consolidated subsidiaries
Increase in retained
earnings due to change inaccounting period of a
subsidiary
Net changes in items otherthan those inshareholders’ equity
Net changes during the year–40

162,212(4)

162,248

29,381

1,438

Balance at March 31, 2021

$ 113,463$ 117,308$ 1,766,790$ (76)$ 1,997,485$ 36,116$ (3,441)

See accompanying notes to consolidated financial statements.

$

(963)

26,45256,309924

219,482953$ (45,678)$ (12,049)$ 17,468$ 2,002,904

11

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31, 2021
2020
2021
(Millions of yen)

Cash flows from operating activities
Profit before income taxes
Depreciation and amortization(Decrease) increase in allowance for doubtful
accounts
Decrease in liability for retirement benefits andprovision for retirement benefits for directors andaudit and supervisory board members
Increase in provision for loss on construction
contracts
Gain on investments in partnership
Interest and dividend income
Interest expenses
Foreign exchange loss (gain)
Equity in earnings of affiliates
Loss (gain) on sales of property and equipment, net
Loss on disposal of fixed assets
Impairment loss on investments in securities
Gain on sales of investments in securities
Decrease in notes and accounts receivable oncompleted construction contracts(Increase) decrease in costs of uncompleted
construction contracts
Decrease (increase) in inventories
Decrease in notes and accounts payable on
construction contracts
Increase (decrease) in advances received on
uncompleted construction contracts
Increase (decrease) in long-term accounts payable
Increase in consumption taxes payable, net
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

2021(Thousands of
U.S. dollars)(Note 1)

¥ 38,423
5,961¥ 36,784
5,739$ 332,257
51,839

(13)

233

2,108

(3,319)(3,343)(30,201)12(1,117)
(729)
385
46
(306)
25
140
294
(240)

48
(1,054)
(814)
411
(60)
(431)
(29)
157
133
(1,228)436(9,528)(7,356)
3,717(543)(3,896)
(268)
1,425
1,201
(11,094)

11,011

8,915

80,531(2,302)
71

1,374(12,964)

12,417(117,103)(7,981)(14,206)(128,322)

10,678
26
1,566
(976)
51,657762(385)(13,812)¥ 38,222(8,043)
(11)
4,020
3,706
19,335793(411)(10,533)¥ 9,184(72,657)(107)
36,31833,476
174,650
7,168(3,716)(95,146)$ 82,955

12

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Cash Flows (continued)
Year ended March 31, 2021
2020
2021
(Millions of yen)

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property and equipment
Proceeds from sales of property and equipment
Payments of disposal of property, plant andequipment
Purchase of investments in securities
Proceeds from sales of investments in securities
Payments for sales of investments in subsidiaries
resulting in changes in scope of consolidation
Payments of long-term loans receivableCollection of long-term loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling shareholders
Proceeds from stock issuance to non-controllingshareholders
Repayments to non-controlling shareholders
Purchase of subsidiaries’ shares not resulting inchanges in scope of consolidation
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Decrease in cash and cash equivalents resulting fromchanges in accounting period of consolidated
subsidiary
Cash and cash equivalents at the end of the year
(Note 20)

2021
(Thousands of
U.S. dollars)(Note 1)¥ (1,014)
954(3,998)279¥ (1,137)
921(2,945)103$ (10,270)
8,322(26,601)932(78)(8,649)1,076(4)(6,458)6,534(36)(58,337)
59,020

–
(381)
222
(546)
(12,136)

(47)
(167)
93
(1,124)(4,232)(432)(1,514)846(10,159)(38,230)

3–(1,963)(998)(7,099)(4)(5)
55(1,769)(0)(7,084)
(4)

(45)
496
(15,987)(4)(63,989)
(44)

8
(22)

–
(21)

–
(192)

(46)
(1,125)(11,250)(1)(1,232)(10,064)(11)(11,133)(90,912)(2)
14,83340,192(51)(5,164)54,964(461)(46,648)
496,473

(61)

–

–

¥ 54,964¥ 49,800$ 449,824

See accompanying notes to consolidated financial statements.

13

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2021
1.

Basis of Presentation

KYUDENKO CORPORATION (the “Company”) and its domestic subsidiaries maintaintheir accounting records and prepare their financial statements in accordance with accounting
principles generally accepted in Japan, and its foreign subsidiaries maintain their books ofaccount in conformity with those of their countries of domicile.
The accompanying consolidated financial statements of the Company and consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted in Japan,
which are different in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from the consolidated
financial statements prepared by the Company as required by the Financial Instruments andExchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications
and rearrangements have been made to the consolidated financial statements issued
domestically in order to present them in a format which is more familiar to readers outside
Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements have beentranslated from yen amounts solely for the convenience of the reader, as a matter of arithmetic
computation only, at ¥110.71 = U.S.$1.00, the rate of exchange prevailing on March 31, 2021.
This translation should not be construed as a representation that the yen amounts have been,
could have been, or could in the future be, converted into U.S. dollars at the above or any
other rate.
As permitted by the Financial Instruments and Exchange Act of Japan, amounts of less than
one million yen for the years ended March 31, 2021 and 2020 have been omitted.
Consequently, the totals shown in the accompanying consolidated financial statements forthe years ended March 31, 2021 and 2020 (both in yen and in U.S. dollars) do not necessarily
agree with the sum of the individual amounts.

14

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
2.

Summary of Significant Accounting Policies(a) Principles of consolidation and accounting for investments in unconsolidated
subsidiaries and affiliates
The accompanying consolidated financial statements include the accounts of theCompany and any significant companies controlled directly or indirectly by theCompany
Investments in companies over which the Company exercises significant influence interms of their operating and financial policies have been accounted for by the equity
method.
As of March 31, 2021, the numbers of consolidated subsidiaries and affiliates accounted
for by the equity method were 46 and 9 (48 and 9 in 2020), respectively.
Quatec Co., Ltd., which was a consolidated subsidiary, has been absorbed into theCompany on April 1, 2020. In addition, Systec Co., Ltd., which was a consolidated
subsidiary, has been excluded from the scope of the consolidation on March 31, 2021
due to the sale of its shares.
Kyulien Environment Improving Co., Ltd., Asia Projects Engineering Pte. Ltd. and
Kyudenko South East Asia Pte. Ltd. are consolidated by using their financial statements
as of their respective fiscal year end, which falls on December 31. Necessary
adjustments are made to their financial statements to reflect any significant transactions
between their fiscal year-ends and March 31.
All significant intercompany balances and transactions have been eliminated inconsolidation.
Certain subsidiaries were excluded from the scope of consolidation because the effect of
their sales, net profit or loss, total assets and retained earnings on the accompanying
consolidated financial statements was immaterial. Such unconsolidated subsidiaries
and affiliates are accounted for by the equity method, unless they are clearly immaterial.
Certain unconsolidated subsidiaries and affiliates were excluded from the scope of
application of the equity method because their profit or loss and retained earnings
attributable to the Company’s interest were not material either individually or inaggregate to the consolidated financial statements.
Unrealized intercompany gains among the Company and the consolidated subsidiaries
have been eliminated and the portion attributable to non-controlling interests has been
charged to non-controlling interests.
Investments in subsidiaries and affiliates which are neither consolidated nor accounted
for by the equity method are carried at cost or less. Where there has been a permanent
decline in the value of such investments, the Company has written down the investments.
15

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
2.

Summary of Significant Accounting Policies (continued)(b) Foreign currency translation
All monetary assets and liabilities denominated in foreign currencies are translated into
yen at the rates of exchange in effect at the balance sheet date, except that receivables
and payables hedged by qualified forward foreign exchange contracts are translated at
the corresponding contract rates. All other assets and liabilities denominated in foreign
currencies are translated at their historical rates. Gain or loss on each translation iscredited or charged to profit (loss).
The balance sheet accounts and income statement accounts of the foreign consolidated
subsidiaries are translated into yen at the rates of exchange in effect at the balance sheet
date, except for the components of net assets excluding non-controlling interests which
are translated at their historical exchange rates. Differences arising from the translation
are presented as translation adjustments and non-controlling interests in the consolidated
financial statements.
(c) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, cash in banks which can bewithdrawn at any time and short-term investments with a maturity of three months orless when purchased which can easily be converted to cash and are subject to little riskof change in value.
(d) Inventories
Costs on uncompleted construction contracts are stated at cost determined on an
individual project basis. Merchandise and raw materials and supplies are statedprincipally at the lower of cost or market, cost being determined principally by theperiodic average method.
(e) Short-term investments and investments in securities
Securities other than equity securities issued by unconsolidated subsidiaries andaffiliates are classified into three categories: trading, held-to-maturity or other securities.
Trading securities are carried at fair value and held-to-maturity securities are carried atamortized cost. Marketable securities classified as other securities are carried at fairvalue with changes in unrealized holding gain or loss, net of the applicable income taxes,
included directly in net assets. In cases where an embedded derivative in a compound
financial instrument cannot be separately measured, the entire compound financial
instrument is measured at fair value with changes in value charged or credited to profit
or loss.

16

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
2.

Summary of Significant Accounting Policies (continued)(e) Short-term investments and investments in securities (continued)
Non-marketable securities classified as other securities are carried at cost determined by
the moving average method. Investments in limited liability partnerships and othersimilar partnerships, which are deemed to be securities under Article 2, Clause 2 of the
Financial Instruments and Exchange Act of Japan, are valued at the amount of theunderlying equity in their net assets based on the latest financial statements available asof the closing date stipulated in the partnership agreement.
(f) Property and equipment and depreciation (excluding leased assets)
Depreciation of property and equipment (excluding leased assets) of the Company andits consolidated subsidiaries is calculated principally by the declining-balance method
based on the estimated useful lives and the residual value in accordance with the
Corporation Tax Law of Japan, except for certain buildings of the Company anddomestic consolidated subsidiaries, which are depreciated by the straight-line method.
Facilities attached to buildings and other non-building structures acquired on or after
April 1, 2016 are also depreciated by the straight-line method.
(g) Intangible assets (excluding leased assets)
Intangible assets (excluding leased assets) are amortized by the straight-line method.
Computer software for internal use is amortized by the straight-line method over theestimated useful life of five years.
(h) Goodwill
Goodwill is amortized by the straight-line method over reasonable periods, considering
each individual condition.
(i) Leases
Leased assets under finance lease contracts which do not transfer ownership to the lessee
are depreciated to a residual value of zero by the straight-line method over the respective
lease terms. Leased assets mainly consist of construction vehicles (machinery, vehicles,
tools, furniture and fixtures) in the utilities engineering service segment.
(j) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on past experience for normal
receivables and on an estimate of collectability of receivables from companies infinancial difficulty.

17

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
2.

Summary of Significant Accounting Policies (continued)(k) Provision for loss on construction contracts
Provision for loss on construction contracts is provided with respect to uncompleted
construction projects for which anticipated future losses are expected and a reasonableestimate of the amount can be made at the fiscal year end.
(l) Retirement benefits
Asset and liability for retirement benefits for employees have been provided at an
amount calculated based on the retirement benefit obligation after the fair value of thepension plan assets are deducted. Retirement benefits are attributed to each period by
the benefit formula method over the estimated years of service of the eligible employees.
Prior service cost is being amortized as incurred by the straight-line method over periods
within the estimated average remaining years of service of the eligible employees.
Actuarial gain or loss is amortized in the years following the year in which the gain orloss is recognized primarily by the straight-line method over periods within the estimatedaverage remaining years of service of the eligible employees.
All of the consolidated subsidiaries use a simplified method for calculating retirement
benefit expenses and liabilities mainly based on the assumption that the benefits payable,
which are mainly calculated as if all eligible employees voluntarily terminated theiremployment at fiscal year-end, approximate the retirement benefit obligation at year-end.
In addition, provision for retirement benefits for directors and audit and supervisoryboard members of certain consolidated subsidiaries are provided at the amount payableat year-end in accordance with each company’s internal regulations.
(m) Income taxes
Income taxes are calculated based on taxable income and charged to income on an
accrual basis. Deferred tax assets and liabilities are computed based on the temporary
differences between the financial reporting and the tax bases of the assets and liabilities
that will result in taxable or deductible amounts in the future. Computations of deferred
tax assets and liabilities are based on the tax rates which have been enacted as of thebalance sheet date.
(n) Research and development costs
Research and development costs are charged to profit or loss as incurred.

18

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
2.

Summary of Significant Accounting Policies (continued)(o) Recognizing revenues and costs of construction contracts
Revenues and costs of construction contracts for which completion is deemed to becertain are recognized by the percentage-of-completion method. The percentage ofcompletion is calculated at the cost incurred as a percentage of the estimated total cost.
The completed-contract method continues to be applied for construction contracts forwhich the percentage-of-completion cannot be reliably estimated.
(p) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive ofconsumption taxes.
(q) Derivative financial instruments
The Company and certain subsidiaries enter into interest-rate swaps in order to hedge
the risk arising from fluctuations in interest rates on certain loans from financial
institutions and interest and currency rate swaps in order to hedge the risk arising fromfluctuations in foreign currency exchange rates and interest rates on all loans
denominated foreign currencies from financial institutions. The Company and its
consolidated subsidiaries do not enter into derivative transactions for speculative
purposes.
Hedging instruments are interest-rate swaps and interest and currency rate swaps.
Hedged items are interest payments on loans, foreign currency loans and associatedinterest payments.
Derivative financial instruments are carried at fair value with changes in unrealized gainor loss charged or credited to profit or loss, except for those which meet the criteria fordeferral hedge accounting under which unrealized gain or loss is deferred as a componentof net assets.
Deferral hedge accounting is adopted for derivatives which qualify as hedges, underwhich unrealized gain or loss is deferred. Simplified methods, “special treatment” and“allocation method,” under which either the net amounts to be paid or received under theinterest rate swap contract are added to or deducted from the interest on the liability or
the foreign currency liabilities are translated at the corresponding currency swap contract
rates, are applied for interest and currency rate swaps which qualify for such treatment.
Hedge effectiveness is not assessed if the substantial terms and conditions of the hedging
instruments and the hedged items are the same. An assessment of hedge effectivenessis omitted for interest and currency rate swaps accounted for using simplified methods.

19

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
2.

Summary of Significant Accounting Policies (continued)(r) Significant accounting estimates
Estimates of total construction costs accounted for by the percentage-of-completion method(1) Amounts recognized in the consolidated financial statements for the year ended
March 31, 2021
Revenue arising from construction contracts accounted for by the percentage-ofcompletion method was ¥221,286 million ($1,998,795 thousand).
(2) Other information that enhances the understanding of users of the consolidated
financial statements
1.

Method used to calculate the amounts recognized
Revenue for which the percentage-of-completion method is applied is measured
based on construction progress, and the construction progress is determinedbased on the ratio of actual costs incurred for a project up to the end of the fiscal
year to the estimated total costs of the construction project. The estimates of
total cost of construction are based on operating budgets prepared byincorporating the latest status of construction under internal controls establishedby the Company. The operating budgets are prepared by construction
personnel who identify the details and quantity of materials required, thequantity of work required based on the work schedule, etc., considering basic
specifications and work details as instructed by customers, and are determined
after obtaining the approval of management with appropriate authority otherthan the construction personnel.

2.

Key assumptions
Estimates of total construction costs accounted for under the percentage-ofcompletion method are subject to specific assumptions and determinations
made by construction personnel with specialized knowledge and construction
experience. Further, given that construction is generally long-term in nature,
there may be fluctuations in unit costs of materials and labor, etc., due tomodifications of the construction contracts or modification of the construction
period while construction is still in progress, as a result of, for example,
suspensions or significant delays in construction because of natural disasters or
pandemics, etc.

3.

Impacts on the consolidated financial statements for the following fiscal period
The estimates of unit costs for materials and labor, etc., described in “2. Key
assumptions,” may be revised as construction progress, as a result, may have
impacts on the consolidated financial statements for the following fiscal period.
20

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
2.

Summary of Significant Accounting Policies (continued)(s) Accounting standards issued but not yet effective
Accounting Standard and Implementation Guidance on Revenue Recognition
On March 26, 2021, the Accounting Standard Board of Japan (hereinafter referred to as
the “ASBJ”) revised “Accounting Standard for Revenue Recognition” (ASBJ Statement
No.29) and “Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No.30).
(1) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically,
the accounting standard establishes the following five-step model that will apply torevenue from customers:
1.
2.
3.
4.
5.

Identify the contract(s) with a customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contract
Recognize revenue when (or as) the entity satisfies a performance obligation(2) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation
guidance from the beginning of the fiscal year ending March 31, 2022.
(3) Impact of the adoption of accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of this accounting
standard and implementation guidance on its consolidated financial statements.

21

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
2.

Summary of Significant Accounting Policies (continued)(t) Change in presentation
Adoption of “Accounting Standard for Disclosure of Accounting Estimates”
The Company adopted the “Accounting Standard for Disclosure of Accounting
Estimates” (ASBJ Statement No.31, March 31, 2020) effective from the year ended
March 31, 2021 and significant accounting estimates are disclosed in Note 2 to theconsolidated financial statements.
However, comparative information for the previous fiscal year has not been disclosed inaccordance with the transitional treatment set forth in the proviso of Section 11 of thestandard.
(u) Additional information
As for the impact of the new coronavirus infection, the Company is continuing its
business activities by implementing strict measures, and at this time, the Company ismaintaining the same level of utilization as usual. In terms of the future outlook, theCompany estimates that economic activities will continue to be restrained in the fiscal
year ending March 31, 2022, as various measures are implemented to prevent the spreadof the infection, including the pre-emergency measures taken by the government.
Although certain impacts are expected on order activity, price competition, andconstruction delays, and so on, the Company believes that they will not be significant.
3.

Reductions in Acquisition Costs Due to Subsidies and Capital GainsThe amounts of the Company received from the Japanese national government and capitalgains recognized upon the expropriation by the government and the exchange for similartransactions and deducted from the acquisition costs of property and equipment at March 31,
2020 and 2021 are as follows:
2020
2021
(Millions of yen)
Structures
Machinery

¥ 283
2,809
¥ 3,092

¥ 283
2,762
¥ 3,046

2021(Thousands of
U.S. dollars)$ 2,558
24,955$ 27,513

22

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
4.

Short-Term Borrowings, Long-Term Debt and Lease Obligations

The annual weighted-average interest rates applicable to short-term borrowings (excluding
the current portion of long-term debt) were 0.03% and 1.00% for the years ended March 31,
2020 and 2021, respectively.
Long-term debt and lease obligations at March 31, 2020 and 2021 consisted of the following:
2020
2021
(Millions of yen)
Loans from banks due through 2033
with interest rates ranging from
0.116% to 1.500%
Lease obligations due through 2030
Less current portion¥ 13,660
4,163
17,824(2,917)¥ 14,906

2021(Thousands of
U.S. dollars)¥ 11,890
3,857
15,747(2,895)¥ 12,852$ 107,400
34,842
142,243(26,153)$ 116,089

The aggregate annual maturities of long-term debt and lease obligations as of March 31, 2021
are summarized as follows:

Years ending March 31,
2022
2023
2024
2025
2026
2027 and thereafter(Millions of yen)(Thousands of
U.S. dollars)¥ 2,895
7,694
1,702
850
638
1,966
¥ 15,747$ 26,153
69,504
15,373
7,679
5,766
17,765$ 142,24323

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
5.

Retirement Benefit Plans

The Company has defined benefit plans (corporate pension plans), defined contribution plans(corporate pension plans) and lump-sum payment plans, and the consolidated subsidiaries
also have defined benefit plans (multiple-employer pension plans), defined contributionplans (corporate pension plans) and lump-sum payment plans. The Company and its
consolidated subsidiaries may pay additional retirement benefits under certain circumstances.
For the defined benefit plans and lump-sum payment plans of most of consolidated
subsidiaries, liabilities and expenses for retirement benefits are calculated using thesimplified method.
(a) Defined benefit plans (excluding the retirement benefit obligation calculated by thesimplified method)
1) The changes in the retirement benefit obligation for the years ended March 31, 2020
and 2021 were as follows:
2020
2021
(Millions of yen)
Balance at the beginning of the year
Service cost
Interest cost
Actuarial gain and loss
Retirement benefit paid
Prior service cost
Balance at the end of the year

¥ 45,389
2,129
272
(653)
(2,198)–¥ 44,939¥ 44,939
2,087
270
(395)
(2,046)148¥ 45,003

2021(Thousands of
U.S. dollars)$ 405,919
18,856
2,441(3,576)(18,484)
1,345$ 406,501

2) The changes in the plan assets for the years ended March 31, 2020 and 2021 wereas follows:
2020
2021
(Millions of yen)
Balance at the beginning of the year
Expected return on plan assets
Actuarial gain and loss
Contributions by the Company
Retirement benefit paid
Other
Balance at the end of the year

¥ 33,932
678(1,283)
4,397(1,873)55¥ 35,906¥ 35,906
718
2,737
4,667
(1,931)56¥ 42,155

2021(Thousands of
U.S. dollars)$ 324,329
6,486
24,73042,156(17,442)509$ 380,77024

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
5.

Retirement Benefit Plans (continued)(a) Defined benefit plans (excluding the retirement benefit obligation calculated by thesimplified method) (continued)
3) The following table sets forth the funded status of the plans and the amounts
recognized in the consolidated balance sheets at March 31, 2020 and 2021 for theCompany’s and its consolidated subsidiaries’ defined benefit plans:
2020
2021
(Millions of yen)
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits inthe consolidated balance sheet
Liability for retirement benefits
Asset for retirement benefits
Net liability for retirement benefits inthe consolidated balance sheet¥ 35,540(35,906)
(365)
9,398

¥ 42,162(42,155)
7
2,841

2021
(Thousands of
U.S. dollars)$ 380,835(380,770)
65
25,665

9,032

2,848

25,731

9,398
(365)

2,848
–

25,731–¥ 9,032¥ 2,848$ 25,731

4) The components of retirement benefit expenses for the years ended March 31, 2020
and 2021 were as follows:
2020
2021
(Millions of yen)
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain and loss
Amortization of prior service cost
Other
Retirement benefit expenses¥ 2,073
272
(678)
459
175
60
¥ 2,362¥ 2,031
270
(718)
696
529
90
¥ 2,900

2021(Thousands of
U.S. dollars)$ 18,347
2,441(6,486)
6,291
4,786
815
$ 26,194

Contributions from employees of ¥55 million and ¥56 million ($509 thousand) for
the years ended March 31, 2020 and 2021 are not included in above service cost.

25

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
5.

Retirement Benefit Plans (continued)(a) Defined benefit plans (excluding the retirement benefit obligation calculated by thesimplified method) (continued)5) The components of retirement benefit liability adjustments included in othercomprehensive income (before tax effect) for the years ended March 31, 2020 and
2021 were as follows:
2020
2021
(Millions of yen)
Prior service cost
Actuarial gain and loss
Total

¥ 175
(170)
¥
4

¥

(380)
(3,830)¥ (4,211)

2021(Thousands of
U.S. dollars)$ (3,440)(34,598)$ (38,039)

6) The components of retirement benefit liability adjustments included in accumulated
other comprehensive income (before tax effect) as of March 31, 2020 and 2021 wereas follows:
2020
2021
(Millions of yen)
Unrecognized prior service cost
Unrecognized actuarial gain and loss
Total

¥ 7,778
3,705¥ 11,483¥ 7,397(125)¥ 7,272

2021(Thousands of
U.S. dollars)$ 66,815(1,129)$ 65,686

7) The fair value of plan assets, by major category, as a percentage of total plan assets
at March 31, 2020 and 2021 was as follows:

Bonds
StocksGeneral accounts of life insurance
Alternative investments
Other
Total

2020

2021

50%
23%
7%
18%
2%
100%

46%
22%
6%
17%
9%
100%

The expected return on assets has been estimated based on the present andanticipated allocation to each asset class and the expected long-term returns on
assets held in each category at present and in the future.

26

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
5.

Retirement Benefit Plans (continued)(a) Defined benefit plans (excluding the retirement benefit obligation calculated by thesimplified method) (continued)8) Weighted average assumptions used in accounting for the above plans were as
follows:

Discount rates
Expected rates of return on plan assets

2020

2021

0.6%
2.0%

0.6%
2.0%

(b) Defined benefit plans accounted for using the simplified method
1) The changes in liability for retirement benefits calculated using the simplified
method for the years ended March 31, 2020 and 2021 were as follows:
2020
2021
(Millions of yen)
Balance at the beginning of the year
Retirement benefit expenses
Retirement benefit paid
Contributions
Other
Balance at the end of the year

¥ 833
566
(120)
(444)
0
¥ 834

¥ 834
337
(119)
(431)
27
¥ 647

2021
(Thousands of
U.S. dollars)$ 7,539
3,046(1,079)(3,899)246$ 5,8532) The following table sets forth the funded status of the plans accounted for using thesimplified method and the amounts recognized in the consolidated balance sheet atMarch 31, 2020 and 2021 for the defined benefit plans:
2020
2021
(Millions of yen)
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits inthe consolidated balance sheet
Liability for retirement benefits
Asset for retirement benefits
Net liability for retirement benefits inthe consolidated balance sheet

2021(Thousands of
U.S. dollars)$ 40,907(37,101)
3,806
2,046

¥ 4,455(3,866)588
245¥ 4,528(4,107)
421
226

834

647

5,853

1,316
(481)

1,202
(554)

10,860(5,007)647$ 5,853

¥

834

¥

27

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
5.

Retirement Benefit Plans (continued)(b) Defined benefit plans accounted for using the simplified method (continued)
3) Retirement benefit expenses calculated using the simplified method amounted to¥566 million and ¥337 million ($3,046 thousand) for the years ended March 31,
2020 and 2021, respectively(c) Defined contribution plans
Contributions made to defined contribution plans by the Company for the years ended
March 31, 2020 and 2021 were ¥453 million and ¥476 million ($4,301 thousand),
respectively.

6.

Asset Retirement Obligations

Asset retirement obligations which are included in the other long-term liabilities mainly
represent future obligations to restore leased property to its original condition associated withthe removal of the consolidated subsidiaries’ renewable energy generation facilities.
The asset retirement obligations are measured at the present value of the future liabilities
applying discount rates of 0.604% to 1.994% corresponding with 17 years, which is theestimated useful life of those facilities from the acquisition date.
The following table indicates the changes in asset retirement obligations included in “Other
long-term liabilities” for the years ended March 31, 2020 and 2021:
2020
2021
(Millions of yen)
Balance at the beginning of the year
Adjustment due to passage of time
Balance at the end of the year

¥ 1,31619¥ 1,336¥ 1,33620¥ 1,356

2021(Thousands of
U.S. dollars)$ 12,070
181$ 12,25128

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
7.

Net Assets

Under the Corporate Law of Japan (the “Corporate Law”), the entire amount paid for new
shares is required to be designated as common stock, in principle. However, a company
may designate an amount not exceeding 50% of the proceeds of the issuance of new sharesas additional paid-in-capital, which is included in capital surplus.
The Corporate Law provides that an amount equal to 10% of the amount to be distributed as
distributions of capital surplus (other than capital reserve) and retained earnings (other thanlegal reserve) be transferred to capital reserve and legal reserve, respectively, until the sumof capital reserve and legal reserve equals 25% of the stated common stock. Such
distributions can be made at any time by resolution of the shareholders or by the Board of
Directors, if certain conditions are met, but neither capital reserve nor legal reserve isavailable for distributions.
The Company’s capital reserve included in capital surplus at March 31, 2020 and 2021
amounted to ¥12,543 million ($113,303 thousand).
There was no legal reserve for the years ended March 31, 2020 and 2021.
(a) Shares issued and outstanding / Treasury shares
For the year ended March 31, 2020:

Types of shares
Shares issued:
Common stock
Treasury stock:
Common stock

Number ofshares at
April 1, 2019

Increase
Decrease(Number of Shares)

Number ofshares at
March 31, 2020

71,165,783–

300,82270,864,961

19,331

300,361

300,822

18,870Detail of the decrease in shares issued is as follows:
Decrease due to the resolution of retirement of treasury stockat the Board Meeting held on June 10, 2019
Details of the increase and decrease in treasury stock are as follows:
Increase due to purchase of shares of less than one standard unit
Increase due to the resolution of acquisition of treasury stockat the Board Meeting held on June 10, 2019
Decrease due to the resolution of retirement of treasury stockat the Board Meeting held on June 10, 2019

300,822361
300,000
300,82229

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
7.

Net Assets (continued)(a) Shares issued and outstanding / Treasury shares (continued)
For the year ended March 31, 2021:

Types of shares
Shares issued:
Common stock
Treasury stock:
Common stock

Number ofshares at
April 1, 2020

Increase
Decrease(Number of Shares)

Number ofshares at
March 31, 2021

70,864,961––

70,864,961

18,870155–

19,025

Details of the increase and decrease in treasury stock are as follows:
Increase due to purchase of shares of less than one standard unit

155(b) Share subscription rights
No share subscription rights were outstanding.

30

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
7.

Net Assets (continued)(c) Dividends
1) Dividends paid
For the year ended March 31, 2020:

Resolution: Meeting of the Boardof Directors on April 26, 2019
Cash dividends (¥50.00 per share)
Resolution: Meeting of the Boardof Directors on October 31, 2019
Cash dividends (¥50.00 per share)

Total dividends(Millions of yen)

Record date

Effective date

¥ 3,558

March 31, 2019

June 5, 2019

¥ 3,543

September 30,
2019

December 2,
2019

For the year ended March 31, 2021:

Total dividends(Thousands(Millions ofof U.S.
yen)
dollars)
Resolution: Meeting of the Boardof Directors on April 28, 2020
Cash dividends (¥50.00 ($0.45) per
share)
Resolution: Meeting of the Boardof Directors on October 30, 2020
Cash dividends (¥50.00 ($0.45) per
share)

Recorddate

Effectivedate¥ 3,543$ 32,004

March 31,2020

June 4,2020¥ 3,543$ 32,004

September
30, 2020

December
1, 202031

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
8.

Net Sales from Construction Contracts Recognized by Percentage-of-Completion
MethodNet sales from construction contracts recognized by the percentage-of-completion method
for the years ended March 31, 2020 and 2021 amounted to ¥248,034 million and ¥221,286
million ($1,998,795 thousand), respectively.

9.

Provision (Reversal of Provision) for Loss on Construction Contracts

Provision for loss on construction contracts included in cost of sales for the years ended
March 31, 2020 and 2021 represents a provision of ¥12 million and ¥48 million ($436
thousand), respectively.

10. Selling, General and Administrative Expenses
Major items included in selling, general and administrative expenses for the years ended
March 31, 2020 and 2021 were as follows:
2020
2021
(Millions of yen)
Salaries and wages
Retirement benefit expenses
Retirement benefits expenses for
directors and audit andsupervisory board members
Depreciation and amortization¥ 10,420520¥ 10,391
661

2021(Thousands of
U.S. dollars)$ 93,858
5,978

54
1,054

52
1,093

474
9,879

11. Research and Development Costs
Research and development costs included in cost of sales and selling, general andadministrative expenses for the years ended March 31, 2020 and 2021 amounted to ¥290
million and ¥254 million ($2,300 thousand), respectively.

32

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. Income Taxes
Income taxes in Japan applicable to the Company and its domestic consolidated subsidiaries
consist of corporation tax, inhabitants’ taxes and enterprise tax, which, in the aggregate,
resulted in a statutory rate of approximately 30.46% for the years ended March 31, 2020 and
2021, respectively. Income taxes of the foreign consolidated subsidiaries are based
generally on the tax rates applicable in their countries of incorporation.
The reconciliation for the years ended March 31, 2020 and 2021 has been omitted as thedifferences were less than 5% of the statutory tax rate.
The significant components of deferred tax assets and liabilities as of March 31, 2020 and
2021 were as follows:
2020
2021
(Millions of yen)
Deferred tax assets:
Liability for retirement benefits
Accrued bonuses
Unrealized profits on fixed assets
Enterprise tax payable
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized holding gain on othersecurities
Prepaid pension costs
Reserve for deductions inacquisition costs of property andequipment
Other
Total deferred tax liabilities
Net deferred tax assets

2021(Thousands of
U.S. dollars)¥ 4,568
2,350
782
431
3,360
11,494(913)
10,581¥ 2,924
2,427
1,249
457
2,839
9,898
(849)
9,049

$ 26,413
21,924
11,2894,128
25,65089,405(7,669)81,736(390)(1,363)(1,823)(1,603)(16,469)(14,481)(1,216)(1,199)(10,833)(1,310)(4,281)¥ 6,300(1,096)(5,722)¥ 3,326(9,907)(51,691)$ 30,044

33

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. Other Comprehensive Income (Loss)
Reclassification adjustments and tax effects allocated to each component of othercomprehensive income (loss) for the years ended March 31, 2020 and 2021 were as follows:
2020
2021
(Millions of yen)
Unrealized holding (loss) gain on
securities:
Amount arising during the year
Reclassification adjustments for gain
and loss included in profit attributableto owners of parent
Amount before tax effectTax effectUnrealized holding (loss) gain on
securities
Unrealized loss on hedging instruments:
Amount arising during the year
Reclassification adjustments for gain
and loss included in profit attributableto owners of parent
Amount before tax effectTax effectUnrealized loss on hedging
instruments:
Translation adjustments:
Amount arising during the year
Retirement benefit liability adjustments:
Amount arising during the year
Reclassification adjustments for gain
and loss included in profit attributableto owners of parent
Amount before tax effectTax effect
Retirement benefits liability
adjustments
Share of other comprehensive (loss)
income of affiliates accounted for by theequity method:Amount arising during the year
Total other comprehensive (loss) income

2021(Thousands of
U.S. dollars)¥ (4,060)¥ 4,985$ 45,031

51(4,009)
1,176

(308)
4,676
(1,433)(2,787)42,244(12,947)(2,832)

3,243

29,296

(36)

–

–

–
(36)
11

–
–
–

–
–
–

(25)

–

–

33

(120)

(1,084)

(630)

2,984

26,962

634
4
(1)

1,226
4,211
(1,282)

11,07738,039(11,586)

3

2,928

26,452(98)¥ (2,919)

171¥ 6,223

1,546$ 56,21234

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. Commitments and Contingencies
At March 31, 2020 and 2021, the Company and its consolidated subsidiaries were
contingently liable for guarantees as follows:
Commitments for non-consolidated companies, affiliates not accounted for by the equity
method and third parties
2020
2021
(Millions of yen)
Debt guarantee:
Mizuho Bank, Ltd.
(Atsumi Greenpower Co.)
Development Bank of Japan Inc.
(Nagashima Windhill Co.)
The Hokuriku Bank, Ltd. and others(Matusima Fuuryoku Co.)
Bond insurance:
Sumitomo Mitsui Banking Corporation(KYUDENKO MALAYSIA SDN. BHD.)
Sumitomo Mitsui Banking Corporation(KYUDENKO (THAILAND) CO., LTD.)
MUFG Bank, Ltd.
(KYUDENKO VIETNAM CO., LTD.)
Total

¥

205

¥

2021
(Thousands of
U.S. dollars)118$ 1,067

131

93

844

2,127

1,982

17,904

40

8

80

0

–

–

93
¥ 2,598101¥ 2,304918$ 20,815

Endorsement for transfer of notes receivable
2020
2021
(Millions of yen)
¥ 18

¥3

2021
(Thousands of
U.S. dollars)
$ 31

35

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. Commitments and Contingencies (continued)
The Company has entered into subordinated loan commitment contracts as a subordinatedcreditor in joint financing for companies involved in the PFI business. (PFI is a private
finance initiative which is a method of providing funds for major capital investments, whereby private firms are contracted to complete and manage public projects.)
At March 31, 2020 and 2021, the Company had loan commitment agreements with 9
companies and 8 companies, respectively. The unused balances under the loan commitment
contracts at March 31, 2020 and 2021 were as follows:
2020
2021
(Millions of yen)
Total loan commitments
Aggregated borrowings
Unused balances

¥ 153
–
¥ 153

¥ 145
–
¥ 145

2021
(Thousands of
U.S. dollars)$ 1,316–$ 1,316

15. Pledged Assets
The assets pledged as collateral for short-term borrowings of ¥327 million and ¥327 million($2,958 thousand) and long-term debt of ¥3,378 million and ¥3,051 million ($27,560
thousand) of the Company’s investees involved in the renewable energy generation business
and/or PFI business at March 31, 2020 and 2021, respectively, were as follows:
2020
2021
(Millions of yen)
Cash on hand and in banks
Other current assets included in
short-term loans receivable
Buildings and structures
Machinery, vehicles, tools, furnitureand fixtures
Land
Investments in securities andinvestments in unconsolidated
subsidiaries and affiliates
Long-term loans receivable
Investments and other assets-rental
deposit included in other assets
Total

¥ 583

¥

556

2021
(Thousands of
U.S. dollars)$ 5,026

6
26

4
30

41
271

2,290
0

2,020
0

18,251
3

6,728
64

12,07759

109,090541

15¥ 9,71615¥ 14,764

135$ 133,362

36KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
16. Amounts Per Share
Per share information as of March 31, 2020 and 2021 and for the years then ended is asfollows:
2020

2021
(Yen)

Profit attributable to owners of parent:
Basic

¥

Net assets¥ 2,761.07

370.00¥2021(U.S. dollars)

353.48$ 3.19¥ 3,102.61$ 28.02

Basic profit attributable to owners of parent per share is computed based on the profit
attributable to owners of parent available for distribution to shareholders of common stockand the weighted average number of shares of common stock outstanding during the year.
Net assets per share are computed based on the net assets excluding non-controlling interests
and the number of shares of common stock outstanding at the year end.
(a) The bases for the calculation of basic profit attributable to owners of parent per share areas follows:
2020
2021
(Thousands of shares)
Weighted average number of shares forbasic profit attributable to owners ofparent

70,93370,846The entire amounts of profit attributable to owners of parent of ¥26,245 million and¥25,042 million ($226,202 thousand) for the years ended March 31, 2020 and 2021 were
attributable to common shareholders.

37

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
16. Amounts Per Share (continued)(b) The bases for the calculation of net assets per share are as follows:
2020
2021
(Millions of yen)
Total net assets
Amounts deducted from total
net assets:
Non-controlling interests
Net assets attributable to sharesof common stock¥ 197,442¥ 221,741

2021(Thousands of
U.S. dollars)$ 2,002,904(1,831)(1,933)(17,468)¥ 195,611¥ 219,807$ 1,985,436

2020
2021
(Thousands of shares)
Number of shares of common
stock in issue
Less: Number of shares oftreasury stock
Number of shares of common
stock used for the calculationof net assets per share

70,86470,864(18)(19)

70,846

70,845

17. Financial Instruments
Overview(a) Policy for financial instruments
The Company and its consolidated subsidiaries utilize highly secure financial assets for
short-term fund management. In addition, they obtain borrowings from financial
institutions such as banks for short-term operating funds and capital expenditures.
Derivative transactions are only used to reduce risks arising from future fluctuations inforeign currency exchange rates and interest rates, except for certain highly secure
embedded derivatives in compound financial instruments used for surplus funds. The
Company and its consolidated subsidiaries do not enter into derivatives for speculative
purposes.
Furthermore, the Company and its consolidated subsidiaries examine their utilization
based on internal rules and regulations each time.

38

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Overview (continued)(b) Details of financial instruments, related risk and risk management system
Trade receivables, such as notes receivable, accounts receivable on completed
construction contracts and other accounts receivable, are exposed to credit risk in relation
to customers. With regard to this risk, the Company and its consolidated subsidiaries
monitor the due dates and outstanding balances and make efforts to identify at an earlypoint and mitigate risks of bad debts from customers who have financial difficulties.
Investments in securities mainly consist of equity securities and are exposed to market
price fluctuation risk. The Company and its consolidated subsidiaries review the fairvalues of listed equity securities quarterly and the financial condition of the issuingentities.
Trade payables, such as notes payable, accounts payable on construction contracts andother accounts payable, and electronically recorded obligations, have payment due dates
mainly within one year.
Short-term borrowings are taken out mainly to obtain funds for operating activities.
Long-term debt is used mainly for the purposes of capital investments.
Trade payables, short-term borrowings and long-term debt are exposed to liquidity risk.
The Company and its consolidated subsidiaries manage the risk by preparing andupdating its cash flow plans monthly. In order to avoid interest rate fluctuation risk andforeign exchange fluctuation risk, the Company uses interest rate swaps for certain loans
borrowed from financial institutions, interest rate and currency swaps are used for allloans denominated in foreign currencies.
Furthermore, the Company and its
consolidated subsidiaries examine the utilization of hedge transactions based on internal
rules and regulations each time.
(c) Supplemental explanation on estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available.
When there is no quoted market price available, the fair value is reasonably estimated.
As the estimation of the fair value relies on various assumptions and factors, different
assumptions and factors could result in different fair value.

39

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Estimated fair value of financial instruments
The carrying value of financial instruments on the consolidated balance sheet as of March 31,
2020 and 2021, the estimated fair value and the difference between them are shown in thefollowing table. The table does not include financial instruments for which it is extremely
difficult to determine the fair value:

Cash on hand and in banks
Notes receivable, accounts
receivable on completed
construction contracts
and other accounts
receivable
Less: Allowance for
doubtful accounts (*1)
Investments in securities
Total assets
Notes payable, accounts
payable on construction
contracts and otheraccounts payable
Electronically recorded
obligations
Long-term debt (*2)
Total liabilities
Derivatives

Carrying
value

2020
Estimated
fair value(Millions of yen)

¥ 55,851¥ 55,851¥ –(18)
139,728
19,001¥ 214,581

139,728
19,001¥ 214,581––¥ –73,58473,584–27,894
13,660¥ 115,138¥–

27,894
13,688¥ 115,167
¥
–

–
28
¥ 28
¥ –

Difference

139,74640

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
2021
Carrying
value
Cash on hand and in banks
Notes receivable, accounts
receivable on completed
construction contracts
and other accounts
receivable
Less: Allowance for
doubtful accounts (*1)
Investments in securities
Total assets
Notes payable, accounts
payable on construction
contracts and otheraccounts payable
Electronically recorded
obligations
Long-term debt (*2)
Total liabilities
Derivatives¥ 50,905

Estimated
fair value
Difference(Millions of yen)
¥ 50,905¥ –Carrying
Estimatedvalue
fair value
Difference(Thousands of U.S. dollars)$ 459,805$ 459,805

$

–

$

–
–
–

130,705

1,180,608(18)
130,686
24,278¥ 205,870

130,686
24,278¥ 205,870

–
–
¥ –

(165)
1,180,442
219,296$ 1,859,544

1,180,442
219,296$ 1,859,544

63,55963,559–574,108

574,108–

23,593
11,890¥ 99,043

23,593
11,877¥ 99,030–(13)¥ (13)

213,112
107,400$ 894,621

213,112107,281$ 894,502–(119)$ (119)

–

¥ –

$

¥

–

¥

–

$

–

$

(*1) The allowance for doubtful accounts was deducted from the notes receivable, accounts
receivable on completed construction contracts and other accounts receivable.
(*2) The balances include the current portion of long-term debt.

41–

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
Note 1: Valuation methods to determine the estimated fair value of financial instruments andother matters related to securities and derivative transactions are as follows:
AssetsCash on hand and in banks, notes receivable, accounts receivable on completed
construction contracts and other accounts receivable
Since all these items are settled in a short period of time, the carrying value approximatesfair value.
Investments in securities
The fair value of equity securities is based on quoted market prices. The fair value ofdebt securities is based on either quoted market prices or prices provided by the financial
institutions making markets in these securities. The fair value of investment trusts isbased on publicly available information.
Liabilities
Notes payable, accounts payable on construction contracts and other accounts payable andelectronically recorded obligations
Since all these items are settled in a short period of time, the carrying value approximatesfair value.
Long-term debt
The fair value of long-term debt is based on the total of principal and interest discounted
by the interest rate to be applied if similar new borrowings are entered into.
Derivative transactions
The fair value of derivative transactions is based on prices provided by the counterparty
financial institutions. The fair value of the interest rate and currency rate swaps was
included in that of the hedged long-term debt as they are accounted for together with
underlying hedged items under the simplified method.
Note 2: Unlisted equity securities of ¥37,028 million and ¥38,916 million ($351,515
thousand) as of March 31, 2020 and 2021, respectively, were not included in theabove table because it was extremely difficult to determine the fair value.

42

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
Note 3: Redemption schedule for receivables and marketable securities with maturities at
March 31, 2020 and 2021 were as follows:2020
Due inone yearor less
Cash in banks
Notes receivable, accounts
receivable on completed
construction contracts andother accounts receivable
Short-term investments andinvestments in securities:
Other securities withmaturities (debt securities)
Other securities withmaturities (Other)Total¥ 55,793

Due after
Due after
one yearfive years
throughthroughfive years
ten years(Millions of yen)¥–¥ –Due after
ten years¥–

139,746

–

–

–

1,000

1,050

832

253

10
¥ 196,550534¥ 1,58426¥ 858

20,805¥ 21,058

Due after
Due after
one yearfive years
throughthroughfive years
ten years(Millions of yen)¥–¥ –Due after
ten years

2021
Due inone yearor less
Cash in banks
Notes receivable, accounts
receivable on completed
construction contracts andother accounts receivable
Short-term investments andinvestments in securities:
Other securities withmaturities (debt securities)
Other securities withmaturities (Other)
Total¥ 50,841¥–

130,705

–

–

–

–

1,001

831

253

657
¥ 182,20410¥ 1,01144¥ 876

21,749¥ 22,002

43

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)2021
Due inone yearor less
Cash in banks
Notes receivable, accounts
receivable on completed
construction contracts andother accounts receivable
Short-term investments andinvestments in securities:
Other securities withmaturities (debt securities)
Other securities withmaturities (Other)Total$ 459,235

Due after
Due after
one yearfive years
throughthroughfive years
ten years(Thousands of U.S. dollars)$–$–

Due after
ten years$–

1,180,608

–

–

–

–

9,041

7,511

2,285

5,938
$ 1,645,781

93$ 9,134401$ 7,912

196,453$ 198,738

The redemption schedule for long-term debt is disclosed in Note 4.

44

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Securities(a) Information regarding marketable securities classified as other securities as of March
31, 2020 and 2021 is as follows:

Carrying
value
Securities whose carrying
value exceeds theiracquisition cost
Equity securities
Debt securities:
Corporate bonds
OthersOthersSubtotal
Securities whose carrying
value does not exceed
their acquisition cost
Equity securities
Debt securities:
Corporate bonds
OthersOthersSubtotal
Total¥ 7,630

2020
Acquisition
cost
Difference(Millions of yen)

¥ 4,686¥ 2,943

–

–

–

241
147
8,019

209
95
4,991

32
51
3,027

9,210

10,887(1,677)

2,768

2,885

(116)

–

–

–

10
11,989¥ 20,009

10
13,784¥ 18,775(0)(1,794)¥ 1,233
2021

Carrying
value
Securities whose carrying
value exceeds theiracquisition cost
Equity securities
Debt securities:
Corporate bonds
OthersOthersSubtotal
Securities whose carrying
value does not exceed
their acquisition cost
Equity securities
Debt securities:
Corporate bonds
OthersOthersSubtotal
Total

Acquisition
cost
Difference(Millions of yen)

Carrying
Acquisition
value
cost
Difference(Thousands of U.S. dollars)¥ 16,084¥ 8,477¥ 7,606$ 145,281$ 76,573$ 68,707

1,001
253
188
17,527

1,000
209
84
9,771

1
43
103
7,755

9,047
2,290
1,699
158,318

9,032
1,893
762
88,26214396
937
70,056

5,934

7,754

(1,820)53,60270,045(16,442)

805

835

(29)

7,278

7,547

(268)

–

–

–

–

–

–

10
6,750
¥ 24,278

108,601¥ 18,372(0)(1,850)¥ 5,90596
60,978$ 219,296

96
77,689$ 165,951(0)(16,711)$ 53,34445

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18.

Securities (continued)(b) Information regarding sales of securities classified as other securities for the years ended
March 31, 2020 and 2021 was as follows:

Equity securities
Debt securities:
Corporate bonds
OthersOthers

2020
Proceeds
Gain onLoss onfrom sales
sales
sales
(Millions of yen)
¥ 11
¥ 11
¥–
–
947
9
¥ 967

–
230
–
¥ 241

–
–
0
¥0
2021

Proceeds
from sales

Equity securities
Debt securities:
Corporate bonds
OthersOthersGain onLoss onsales
sales(Millions of yen)

¥ 1,053

¥ 360

¥ 66

$ 9,518

Gain onsales(Thousands of
U.S. dollars)$ 3,252

1,000
2,005
18
¥ 4,077–926
7¥ 1,294–

9,032
18,110168$ 36,831

–
8,368
70
$ 11,691–¥ 66

Proceeds
from sales

Loss on
sales

$ 597
–
–
$ 597

(c) Impairment losses on securities classified as other securities of ¥61 million and ¥17
million ($160 thousand) were recognized for the years ended March 31, 2020 and 2021,
respectively. Also, impairment losses on securities classified as investments inunconsolidated subsidiaries and affiliates of ¥232 million and ¥115 million ($1,041
thousand) was recognized for the years ended March 31, 2020, and 2021, respectively.
Loss on impairment is recorded on securities whose fair value has declined by 50% or
more, or whose fair value has declined by 30% or more, but less than 50%, if the decline
is deemed to be irrecoverable. Loss on impairment is recorded on securities whose fairvalue is difficult to determine if the decline is deemed to be irrecoverable considering
the financial position of the securities’ issuers.

46

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)

19. Derivative Transactions
Summarized below are the notional amounts and the estimated fair value of the derivative
instruments outstanding at March 31, 2020 and 2021, for which hedge accounting has been
applied.
Interest-related transactions
2020
Method ofhedge
accounting
Principle
methodSimplified
methodHedging instruments
Interest rate
swap
Interest rateand currency
swap

Pay: fixed
Receive: floating
Pay: fixed
Receive: floating
Pay: JPY
Receive: USD

Hedgeditems
Long-termdebtLong-term
debt

Notional
amounts

Due after
one year
Fair value(Millions of yen)
¥10,418¥10,247¥ (585)
1,004

–

753

2021
Method ofhedge
accounting
Principle
methodSimplified
methodHedging instruments
Interest rate
swap
Interest rateand currency
swap

Pay: fixed
Receive: floating
Pay: fixed
Receive: floating
Pay: JPY
Receive: USD

Hedgeditems
Long-termdebtLong-term
debt

Notional
amounts

Due after
one year
Fair value(Millions of yen)
¥10,929¥10,315¥ (416)
753

–

502

2021
Method ofhedge
accounting
Principle
methodSimplified
methodHedging instruments
Interest rate
swap
Interest rateand currency
swap

Pay: fixed
Receive: floating
Pay: fixed
Receive: floating
Pay: JPY
Receive: USD

Hedgeditems
Long-termdebtLong-term
debt

Notional
Due after
amounts
one year
Fair value(Thousands of U.S. dollars)$ 98,722$ 93,178$ (3,760)
6,801

–

4,534

47

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
19. Derivative Transactions (continued)b.

Interest-related transactions (continued)

The interest rate and currency swaps were included in that of the hedged long-term debt as
they are accounted for together with underlying hedged items under the simplified method.
The principle method was applied to the interest rate swaps used to hedge long-term debt ofan affiliate accounted for by the equity method, and the notional amount and the fair value
were based on the Company’s proportionate share.
The fair value was calculated based on prices provided by the counterparty financial
institutions.

20. Supplemental Information on Consolidated Statement of Cash Flows(a) Cash and cash equivalents in the consolidated statement of cash flows for the years ended
March 31, 2020 and 2021 are reconciled to cash on hand and in banks in the consolidatedbalance sheet as follows:
2020
2021
(Millions of yen)
Cash on hand and in banks
Time deposits with maturities ofmore than three months
Cash and cash equivalents¥ 55,851¥ 50,905

2021(Thousands of
U.S. dollars)$ 459,805(887)¥ 54,964(1,105)¥ 49,800(9,981)$ 449,824(b) Information regarding details of significant non-monetary transactions for the years
ended March 31, 2020 and 2021 is as follows:
Leased assets and lease obligations related to new finance lease transactions recorded
for the years ended March 31, 2020 and 2021 amounted to ¥1,328 million and ¥844
million ($7,626 thousand), respectively.

48

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Segment Information(a) Business segment information(1) Outline of reportable segments
The reportable segments of the Company and its consolidated subsidiaries (the“Group”) are components for which discrete financial information is available andwhose operating results are regularly reviewed by the Board of Directors to makedecisions on resource allocation and to assess performance.
The Group is primarily engaged in the integrated utilities engineering service
business, based on mid- to long-term business plans developed in the head office of
the Company.
The Company’s regional offices mainly offer services incooperation with each company of the Group.
Also, some consolidated subsidiaries operate as independent management units andare involved in other industries such as sales business of construction-relatedmaterials and equipment, real estate sales business and renewable energy generation
business.
Thus, the Group consists of the segments based on business activities, with several
businesses that have essentially identical financial characteristics and contents ofservices combined into “Utilities engineering service” as a reportable segment forthe purpose of disclosing appropriate information.
The “Utilities engineering service” segment primarily offers services for the designand construction of electrical works such as power distribution lines, indoor wiring,and electronic communication, and of heating ventilation and air conditioning
mechanical installation works, including the installation of air conditioning, heating
and cooling, water treatment and sanitation equipment.
(2) Method used to calculate net sales, profit or loss, assets, liabilities and other items
by reportable segment
The accounting policies of the reportable segments are substantially the same as
those described in “Note 2. Summary of Significant Accounting Policies.”
Segment performance is evaluated based on operating profit or loss. Intersegment
sales and transfers are determined by reference to actual market price.

49

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Segment Information (continued)(a) Business segment information (continued)(3) Information as to net sales, income or loss and other items for each reportablesegment for the years ended March 31, 2020 and 2021 are summarized as follows:2020

Net sales:
Sales to third parties
Intersegment sales
and transfers
Total
Segment income
Other items:
Depreciation andamortization
Amortization of
goodwill

Utilities
engineering
service

Others

Total(Millions of yen)

¥ 407,506¥ 21,432¥ 428,939¥–¥ 428,939

731¥ 408,238¥ 33,770

3,803¥ 25,235¥ 2,077

4,534¥ 433,473¥ 35,847(4,534)¥ (4,534)¥ 174–¥ 428,939¥ 36,022¥

3,532¥ 2,556

¥

6,088

¥

(127)

¥

5,961

¥

115

¥

¥

156

¥

–

¥

156

41

Adjustments
andeliminations

Consolidated

2021

Net sales:
Sales to third parties
Intersegment sales
and transfers
Total
Segment income
Other items:
Depreciation andamortization
Amortization of
goodwill

Utilities
engineering
service

Others

Total(Millions of yen)

¥ 377,331¥ 14,570¥ 391,901¥–¥ 391,901

804¥ 378,136¥ 30,485

4,977¥ 19,548¥ 2,371

5,782¥ 397,684¥ 32,856(5,782)¥ (5,782)¥ 142–¥ 391,901¥ 32,998¥

3,559¥ 2,294

¥

5,853

¥

(114)

¥

5,739

¥

64

¥

¥

106

¥

–

¥

106

41

Adjustments
andeliminations

Consolidated

50

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Segment Information (continued)(a) Business segment information (continued)(3) Net sales, profit or loss and other items by reportable segment for the years ended
March 31, 2020 and 2021 are summarized as follows: (continued)
2021

Net sales:
Sales to third parties
Intersegment sales
and transfers
Total
Segment income
Other items:
Depreciation andamortization
Amortization of
goodwill

Utilities
engineering
service

Adjustments
andOthersTotaleliminations(Thousands of U.S. dollars)$ 3,408,285$ 131,609$ 3,539,895$–$ 3,539,895

7,269$ 3,415,555$ 275,363

44,961$ 176,570$ 21,418

52,230$ 3,592,125$ 296,782(52,230)$ (52,230)$ 1,284–$ 3,539,895$ 298,066$

32,151$ 20,723$

52,875$ (1,036)$

51,839

$

583

$

$

958

–

$

958

374

$

Consolidated

Note 1: “Others” consisted of business segments that were not included inreportable segments, such as sales business of construction-relatedmaterials and equipment for third parties, real estate sales business,renewable energy generation business, temporary staffing service, softwaredevelopment business, environmental analysis / measurement business,
medical-related business, golf course management, business hotelmanagement, planning and operation of commercial facilities and other.
Note 2: Details of adjustments and eliminations were as follows:(i) Segment assets and segment liabilities are not described since these are
not allocated to each segment(ii) Adjustments and eliminations of segment income of ¥174 million and¥142 million ($1,284 thousand) for the years ended March 31, 2020
and 2021, respectively, reflect the elimination of transactions between
segments.
(iii) Segment income or loss is reconciled to operating income on the
consolidated statement of income.

51

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Segment Information (continued)(b) Related information(1) Geographical information
The disclosure of geographical segment information has been omitted as net sales
to third parties and property and equipment in Japan constituted more than 90% of
the consolidated sales for the years ended March 31, 2020 and 2021.
(2) Information by major customers
The following table presents major customer information for the years ended March
31, 2020 and 2021:
2020
2021
(Millions of yen)
Name of customers:
Kyushu Electric Power Co., Inc.
Reportable segment:
Utilities engineering service and Others
Net sales¥ 51,749

Name of customers:
Kyushu Electric Power Transmission
and Distribution Co., Inc.
Reportable segment:
Utilities engineering service and Others
Net sales

¥

–

¥

2021
(Thousands of
U.S. dollars)–¥ 45,688–$$ 412,686(c) Amortization of goodwill and remaining balance of goodwill by reportable segment
The following table presents the amortization and balance of goodwill as of and for theyear ended March 31, 2020 by reportable segment: Information on amortization of
goodwill is omitted because the same information is disclosed in Note 21 (a) (3).

Utilities
engineering
service
Balance as of March 31

¥ 64

2020
Adjustments
andOtherseliminations(Millions of yen)
¥ 118
¥–

Consolidated¥ 182

There was no balance of goodwill as of March 31, 2021.
52

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Segment Information (continued)(d) Gain on bargain purchase by reportable segment
No gain on bargain purchase was recorded for the years ended March 31, 2020 and 2021.

22. Related Party Transactions
Transactions and balances with related parties as of and for the years ended March 31, 2020
and 2021 were as follows:
2020
2021
(Millions of yen)
Kyushu Electric Power Co., Inc.
Construction orderAccounts receivable on completed
construction contracts
Advances received on uncompleted
construction contracts
Kyushu Electric Power Transmission
and Distribution Co., Inc.
Construction orderAccounts receivable on completed
construction contracts
Advances received on uncompleted
construction contracts

2021(Thousands of
U.S. dollars)¥ 49,446¥ 3,504$ 31,655¥ 10,674

¥

490

$

4,430

¥

21

¥

–

$

–

¥

–

¥ 43,944$ 396,930¥–¥ 9,012$ 81,408

¥

–

¥

–

$

–

The transaction amounts do not include consumption taxes. The balances include
consumption taxes. Kyushu Electric Power Co., Inc. (located in Fukuoka City, with acapital amount of ¥237,304 million ($2,143,481 thousand) engaged in the business of
supplying electric power) is a related company which owned 22.75% of the shares of theCompany as of March 31, 2020 and 2021, and two people have been co-appointed as
directors of Kyushu Electric Power Co., Inc. and the Company.
Kyushu Electric Power Transmission and Distribution Co., Inc. (located in Fukuoka City,
with a capital amount of ¥20,000 million ($180,652 thousand) engaged in the business ofelectric power transmission and distribution) is a subsidiary of a related company which
owned no shares of the Company as of March 31, 2021.
The terms of the transactions referred to above were negotiated and determined on an arm’slength basis similar to third party transactions.

53

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
23. Subsequent Events
Appropriation of retained earnings
The following appropriation of retained earnings of the Company, which has not beenreflected in the consolidated financial statements for the year ended March 31, 2021, wasapproved at the meeting of the Board of Directors held on April 28, 2021:
Total dividends paid
(Millions of (Thousands ofyen)
U.S. dollars)
Cash dividends(¥50.00 = $0.45 per share)¥ 3,543$ 32,004

Record date

Effective date

March 31, 2021 June 4, 2021

54