Consolidated Financial Statements
KYUDENKO CORPORATION
Year ended March 31, 2023
with Independent Auditor’s Report

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Financial Statements
Year ended March 31, 2023

Contents
Consolidated Financial Statements
Consolidated Balance Sheet .................................................................................................. 1
Consolidated Statement of Income........................................................................................ 3
Consolidated Statement of Comprehensive Income ............................................................. 4
Consolidated Statement of Changes in Net Assets ............................................................... 5
Consolidated Statement of Cash Flows ................................................................................. 7
Notes to Consolidated Financial Statements ......................................................................... 9KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2023
March 31,2022
2023
(Millions of yen)

AssetsCurrent assets:
Cash on hand and in banks (Notes 16, 18 and 21)
Notes receivable, accounts receivable on completed
construction contracts and other accounts
receivable (Notes 18 and 23)
Short-term investments (Notes 18 and 19)
Costs of uncompleted construction contracts
Merchandise
Raw materials and supplies
Other current assets (Note 16)
Allowance for doubtful accounts (Note 18)
Total current assets
Fixed assets:
Property and equipment:
Buildings and structures (Notes 3 and 16)
Machinery, vehicles, tools, furniture and fixtures(Notes 3 and 16)
Land (Note 16)
Leased assets
Construction in progress
Accumulated depreciation
Total property and equipment
Intangible assets:
Goodwill (Note 4 and 22)
Customer-related intangible assets
Other intangible assets
Total intangible assets
Investments and other assets:
Investments in securities (Notes 16, 18 and 19)
Investments in unconsolidated subsidiaries andaffiliates (Note 16 and 19)
Long-term loans receivable (Note 16)
Asset for retirement benefits (Note 6)
Deferred tax assets (Note 13)
Other (Note 16)
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

2023(Thousands of
U.S. dollars)(Note 1)

¥ 39,021¥ 67,534$ 505,763

136,676
987
5,592
1,107
22,79010,838(34)
216,979

148,902
–
7,428
1,203
31,364
21,790(3)
278,220

1,115,122–
55,632
9,013
234,885
163,188(25)
2,083,581

73,06076,168570,425

41,05929,677
7,628
1,112(71,694)
80,84445,607
29,914
8,087
382(78,415)
81,745341,553
224,027
60,5672,865(587,253)
612,186

755
1,739
1,873
4,368

821
1,518
1,938
4,278

6,149
11,374
14,51632,04142,14844,817

335,635

19,026
313
6,124
4,288
5,279
(979)
76,203
161,416¥ 378,396

19,67789
10,445
2,468
5,652
(985)
82,166
168,189¥ 446,410

147,363672
78,22918,48442,331(7,377)615,339
1,259,566$ 3,343,148

1

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Balance Sheet (continued)
March 31, 2023
March 31,2022
2023
(Millions of yen)
Liabilities
Current liabilities:
Notes payable, accounts payable on construction
contracts and other accounts payable (Note 18)
Electronically recorded obligations (Note 18)
Short-term borrowings (Notes 5 and 16)
Current portion of long-term debt
(Notes 5, 16 and 18)
Lease obligations (Note 5)
Income taxes payable and other (Note 13)
Advances received on uncompleted construction
contracts (Note 23 and 25)
Provision for loss on construction contracts
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 5, 16 and 18)
Lease obligations (Note 5)
Provision for retirement benefits for directors andaudit and supervisory board members
Liability for retirement benefits (Note 6)
Other long-term liabilities (Notes 7)
Total long-term liabilities
Total liabilities

2023(Thousands of
U.S. dollars)(Note 1)

¥ 66,669
22,07818¥ 69,832
28,762
1,200$

522,975
215,402
8,986

6,847
1,117
7,309

1,261
1,153
5,984

9,445
8,641
44,81911,463
187
7,755
123,446

26,550
21
6,923
141,691

198,835160
51,852
1,061,120

3,494
2,782

30,604
3,341

229,196
25,021

328
4,015
3,134
13,754
137,201

327
3,980
3,448
41,702
183,393

2,453
29,80625,827
312,305
1,373,425

12,561
12,987
214,655(9)
240,194

12,561
13,046
233,918(10)
259,516

94,072
97,705
1,751,806(81)
1,943,503

1,848
(218)
208
(2,898)(1,059)2,059
241,194¥ 378,396

2,428
(16)
688
(1,774)1,325
2,175
263,017¥ 446,410

18,184(125)
5,158(13,291)
9,926
16,292
1,969,722$ 3,343,148

Commitments and contingencies (Note 15)
Net assets (Note 8)
Shareholders’ equity:
Common stock:
Authorized – 250,000,000 shares
Issued – 70,864,961 shares in 2022 and 2023
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 6)
Total accumulated other comprehensive loss
Non-controlling interests
Total net assets
Total liabilities and net assets

See accompanying notes to consolidated financial statements.

2

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Income
Year ended March 31, 2023
Year ended March 31,
2022
2023
2023
(Millions of yen)(Thousands of
U.S. dollars)(Note 1)
Net sales (Note 9, 22 and 25):
Construction contracts
Other
Total net sales
Cost of sales (Notes 10 and 12):Construction contracts
Other
Total cost of sales
Gross profit:
Construction contracts
Other
Total gross profit
Selling, general and administrative expenses(Notes 11 and 12)
Operating income (Note 22)
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
Commission expenses
Provision of allowance for doubtful accounts ofsubsidiary
Settlement package
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 19)
Impairment loss on investments in securities(Note 19)
Impairment loss (Note 4 and 22)
Loss on sales of investments in securities (Note 19)
Loss on liquidation of subsidiary
Profit before income taxes
Income taxes (Note 13):
Current
DeferredProfitProfit attributable to:Non-controlling interests
Owners of parent¥ 364,440
12,123
376,563¥ 380,355
15,428395,783$ 2,848,462
115,5422,964,004

310,6158,586
319,201

326,874
11,019337,894

2,447,948
82,5272,530,475

53,824
3,536
57,36153,4804,408
57,889400,51433,014
433,528

24,22433,13725,80632,083

193,260
240,268

48
747
(387)
1,514
910
329
(84)
(75)

63
716
(424)
732
1,427
322
(58)
(99)

476
5,366
(3,177)
5,486
10,694
2,416
(439)
(745)

(35)
–
722
36,828

(17)
(87)
803
35,462

(131)
(655)
6,019
265,579

4
(286)
811

310
(223)
4,247

2,324
(1,670)31,812

(489)
–
(36)
–
36,833

(602)
(326)
–
(74)
38,793(4,513)(2,448)–(560)
290,524

11,365(871)
26,33911,157
1,198
26,437

83,558
8,974
197,991

123¥ 26,216

88¥ 26,349

659$ 197,331

3

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31, 2023

ProfitOther comprehensive income (Note 14):
Unrealized holding (loss) gain on securities
Translation adjustments
Retirement benefit liability adjustments (Note 6)
Share of other comprehensive income of affiliates
accounted for by the equity method
Total other comprehensive income

Year ended March 31
2022
2023
2023
(Millions of yen)(Thousands of
U.S. dollars)(Note 1)
¥ 26,339¥ 26,437$ 197,991(2,146)
131
2,158

577
535
1,124

4,327
4,008
8,418

Comprehensive income

159302¥ 26,641

204
2,441¥ 28,879

1,532
18,286$ 216,278

Comprehensive income attributable to:
Owners of parent
Non-controlling interests¥ 26,490
151¥ 28,735
144$ 215,195
1,082

See accompanying notes to consolidated financial statements.

4

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
Year ended March 31, 2023
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(income) loss

interests

net assets

instruments adjustments adjustments(Millions of yen)
Balance at April 1, 2021

¥ 12,561¥ 12,987¥ 195,601¥ (8)¥ 221,141¥ 3,998¥ (381)¥ 105¥ (5,057)¥ (1,334)¥ 1,933¥ 221,741––(7,086)–(7,086)

–

–

–

–

–

–

(7,086)

period––26,216–

26,216

–

–

–

–

–

–

26,216

Purchase of treasury stock

–

–

–

(1)

(1)

–

–

–

–

–

–

(1)

–

–

(76)

–

(76)

–

–

–

–

–

–

(76)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

shareholders’ equity

–

–

–

–

–

(2,149)

162

102

2,158

274

125

400

Net changes during the year––

19,054(1)

19,052(2,149)

162

102

2,158

274

125

19,453

12,561

12,987

214,655(9)

240,194

1,848

(218)

208

(2,898)(1,059)2,059

241,194––(7,086)–(7,086)

–

–

–

–

–

–

(7,086)

period––26,349–26,349

–

–

–

–

–

–

26,349Purchase of treasury stock

–

–

–

(1)

(1)

–

–

–

–

–

–

(1)

–

–

–

–

–

–

–

–

–

–

–

–

–

0

–

–

0

–

–

–

–

–

–

0

–

59

–

–

59

–

–

–

–

–

–

59

Cash dividends paid
Profit attributable toowners of parent for the

Change in scope of
consolidation
Purchase of treasury stockof consolidated subsidiary
Sales of shares of
consolidated subsidiary
Net changes in items otherthan those inBalance at April 1, 2022
Cash dividends paid
Profit attributable toowners of parent for the

Change in scope of
consolidation
Purchase of treasury stockof consolidated subsidiary
Sales of shares of
consolidated subsidiary
Net changes in items otherthan those inshareholders’ equity

–

–

–

–

–

579

201

480

1,124

2,385

115

2,500

Net changes during the year–

59

19,263(1)

19,321

579

201

480

1,124

2,385

115

21,822¥ 12,561¥ 13,046¥ 233,918¥ (10)¥ 259,516¥ 2,428¥ (16)¥ 688¥ (1,774)¥ 1,325¥ 2,175¥ 263,017

Balance at March 31, 2023

5

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets (continued)
Year ended March 31, 2023
Total
Unrealized

Unrealized

TreasuryTotalholding

loss onCommonCapitalRetainedstock,

shareholders’gain onhedging

stock

surplusearnings

at costequitysecurities$ 94,072$ 97,260$ 1,607,544$ (71)$ 1,798,806$ 13,846$ (1,636)––(53,069)–(53,069)––

period––197,331–

197,331–

Purchase of treasury stock

–

–

–

(9)

(9)

–

–

–

–

–

–

–

3

–

–

–

442

–

–

–

–

Retirement

accumulated

benefit

other

Non-

liability

comprehensive

controllingTotal

adjustments(income) loss

interests

net assets$ 1,561$ (21,709)$ (7,937)$ 15,426$ 1,806,295

–

–

–

–

(53,069)

–

–

–

–

–

197,331

–

–

–

–

–

(9)

–

–

–

–

–

–

–

3

–

–

–

–

–

–

3

–

442

–

–

–

–

–

–

442

–

–

4,337

1,510

3,597

8,418

17,864865

18,729Translation

instruments adjustments(Thousands of U.S. dollars) (Note 1)
Balance at April 1, 2022
Cash dividends paid
Profit attributable toowners of parent for the

Change in scope of
consolidation
Purchase of treasury stockof consolidated subsidiary
Sales of shares of
consolidated subsidiary
Net changes in items otherthan those inshareholders’ equity
Net changes during the year–445

144,261(9)

144,697

4,377

Balance at March 31, 2023

$ 94,072$ 97,705$ 1,751,806$ (81)$ 1,943,503$ 18,184

$

1,510

3,597

8,418

17,864865

163,427(125)$ 5,158$ (13,291)$ 9,926$ 16,292$ 1,969,722

See accompanying notes to consolidated financial statements.

6

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31, 2023
2022
2023
(Millions of yen)

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

2023(Thousands of
U.S. dollars)(Note 1)

¥ 36,833
5,791
–
(152)
(2,860)¥ 38,793
6,018
326
(24)
(3,064)$ 290,524
45,071
2,448(186)(22,946)

(907)

1,544

11,564

123
(910)
(796)
387
(126)
(1,201)
(4)
282
489
(775)

(170)
(1,427)
(780)
424
(168)
(414)
(310)
208
602
(4,247)(1,276)(10,694)(5,843)
3,177(1,264)(3,104)(2,323)
1,563
4,513(31,812)(4,786)(11,791)(88,304)585(8,266)(1,689)(8,545)(12,651)(63,996)

153

9,552

71,534(3,923)(2)(6,036)
2,298
16,193796(387)(11,350)¥ 5,252

15,07687(4,090)(6,386)29,522763(424)(12,474)¥ 17,386

112,910652(30,631)(47,831)
221,093
5,714(3,177)(93,422)$ 130,208

7

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Cash Flows (continued)
Year ended March 31, 2023
2022
2023
(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 and equipment
Purchase of investments in securities
Proceeds from sales of investments in securities
Payments for purchase 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 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
Repayments to non-controlling shareholders
Proceeds from sales of shares of subsidiaries not
resulting in change in scope of consolidation
Other, net
Net cash (used) provided in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Increase in cash and cash equivalents resulting from
inclusion of subsidiaries in consolidation
Cash and cash equivalents at the end of the year
(Note 21)

2023
(Thousands of
U.S. dollars)(Note 1)¥ (1,352)
1,732(3,931)
169(210)(4,817)3,992¥ (3,738)
1,503(2,940)445(126)(3,415)5,754$ (28,001)
11,258(22,021)
3,339
(946)
(25,577)
43,096(2,871)
(127)
153
(273)
(7,536)

(97)
(34)
366
(831)
(3,113)

(727)
(256)
2,744
(6,223)(23,316)(34)–(1,811)(1)(7,086)
(2)
(22)

(18)
27,000(7,057)(2)(7,087)
(2)
(22)

(137)
202,201(52,853)(20)(53,077)
(17)
(171)

–
(1,233)(10,191)60(1,253)
11,615449(9,386)86,986301(12,175)
49,800171
26,06037,791

1,284
195,162
283,020166––¥ 37,791¥ 63,851$ 478,183

See accompanying notes to consolidated financial statements.

8

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2023
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 (the “Group”) 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 of International Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as required by the Financial
Instruments and Exchange 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 ¥133.53 = U.S.$1.00, the rate of exchange prevailing on March 31, 2023.
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, 2023 and 2022 have been omitted.
Consequently, the totals shown in the accompanying consolidated financial statements forthe years ended March 31, 2023 and 2022 (both in yen and in U.S. dollars) do not necessarily
agree with the sum of the individual amounts.

9

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, 2023, the numbers of consolidated subsidiaries and affiliates accounted
for by the equity method were 60 and 9 (58 and 10 in 2022), respectively.
During the year ended March 31, 2023, the following events and/or transactions haveoccurred, which resulted in changes in the scope of consolidation.
The Company acquired a portion of shares of Kirishima mokushitsu hatsuden Co., Ltd.
which is located in Kagoshima prefecture on April 1, 2022, and this subsidiary and its
subsidiary Kirishima mokushitsu nenryou Co., Ltd. were newly included in the scope of
consolidation. Atsumi green power Co., Ltd., an affiliate which had been accounted forby the equity method affiliate, became a consolidated subsidiary because the Company’sownership increased as a result of the purchase of the affiliates treasury shares on June29, 2022. Kyudenko south east asia Pte. Ltd. which had been overseas consolidated
subsidiary, was excluded from the scope of consolidation due to completion ofliquidation on November 9, 2022.
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 interests were not material either individually or inaggregate to the consolidated financial statements.
Unrealized intercompany gains among the Group has 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.
10

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 are classified into three categories: trading, heldto-maturity or other securities. Trading securities are carried at fair value and held-tomaturity securities are carried at amortized cost. Marketable securities classified as othersecurities are carried at fair value with changes in unrealized holding gain or loss, net ofthe applicable income taxes, included directly in net assets. When securities are sold,these book value of such securities is determined by the moving-average method. 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.

11

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 Group 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 and domestic consolidated subsidiaries, which are
depreciated by the straight-line method. Facilities attached to buildings and other nonbuilding structures acquired on or after April 1, 2016 are also depreciated by the straightline 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.

12

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 thebenefit 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.

13

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

Summary of Significant Accounting Policies (continued)(o) Basis for recording significant revenues and expenses
Revenues from contracts with customers.
The following five-step model applied to revenues 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

The Group is mainly engaged in the utilities engineering services. In the utilities
engineering service business, the Group enters into construction contracts withcustomers. For such contracts, control of the goods or services is considered to have beentransferred to the customer over a certain period of time if the performance obligation
meets the requirements. Therefore, the Group recognizes revenue over the construction
period based on the degree of completion related to the fulfillment of performanceobligations measured at the end of the current fiscal year. Since there is a direct
relationship between cost elements such as material and labor costs invested by theGroup over the construction period and the transfer of control of goods or services to thecustomer, the percentage-of-completion measurement is based on the ratio of the cost
incurred to the estimated total cost (total construction cost) using the input method.
However, if the degree of progress toward satisfying the performance obligation cannot
be reasonably estimated, but the costs incurred are expected to be recovered, revenue
shall be recognized on a cost recovery basis. For utility engineering services for which
the time between the transaction commencement date and the point in time when thecontractual performance obligation is expected to be fully satisfied is very short, revenue
is recognized when the performance obligation is fully satisfied.
In addition, the Group sells construction-related materials and equipment. For sales of
construction-related materials and equipment for which the Group acts as an agent, theGroup recognizes revenue based on the judgment that the customer has acquired control
over the materials and equipment at the time of delivery and that the performanceobligation (Arrangements for delivery of materials and equipment) has been satisfied.

14

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

Summary of Significant Accounting Policies (continued)(p) 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 Group does 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 effectiveness isomitted for interest and currency rate swaps accounted for using simplified methods.

15

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

Summary of Significant Accounting Policies (continued)(q) Significant accounting estimates
Estimating the total cost of construction in revenue recognized when performanceobligations are satisfied over a specified period of time(1) Amounts recognized in the consolidated financial statements for the years ended
March 31, 2022 and 2023, respectively
Revenue arising from construction contracts accounted for by the percentage-ofcompletion method was ¥196,386 and ¥211,377 million ($1,582,992 thousand) for
the years ended March 31, 2022 and 2023, respectively.
(2) Other information that enhances the understanding of users of the consolidated
financial statements
1.

Method used to calculate the amounts recognized
Revenue recognized by the method of satisfying performance obligations andrecognizing revenue over a specified period of time is measured based on the
degree of completion of the performance obligation, and which 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, the quantity of workrequired based on the work schedule, etc., considering basic specifications andwork details as instructed by customers, and are determined after obtaining theapproval of management with appropriate authority other than the construction
personnel.

2.

Key assumptions
The estimates of the total cost of construction for revenue recognized when
performance obligations are satisfied over a period of time are subject tospecific assumptions and determinations made by construction personnel withspecialized 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 to modifications of the construction
contracts or modification of the construction period while construction is stillin progress, as a result of, for example, suspensions or significant delays inconstruction because of natural disasters or pandemics, etc.

16

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

Summary of Significant Accounting Policies (continued)(q) Significant accounting estimates (continued)(2) Other information that enhances the understanding of users of the consolidated
financial statements (continued)
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.

(r) Accounting changes
Application of “Accounting Standard for Fair Value Measurement”
The Group adopted “Implementation Guidance on Accounting Standard for Fair Value
Measurement” ((ASBJ Guidance No. 31, June 17, 2021), hereinafter the “Guidance”)
from the beginning of the current fiscal year, and adopted new accounting policies
prospectively in accordance with the transitional treatment prescribed in Paragraph 272 of the Guidance. There is no impact on the consolidated financial statements.
(s) Additional information
The Group expects that COVID-19 is on a trend toward containment and that further
normalization of economic activities will occur. Although there are many uncertainties
regarding the impact of COVID-19, the Group is operating as usual, and the impact onorder activity, price competition, and construction delays is limited and is not expected
to be significant in the future.

17

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
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,
2022 and 2023 are as follows:
2022
2023
(Millions of yen)
Structures
Machinery

4.

¥ 283
2,762
¥ 3,046

¥ 283
2,762
¥ 3,046

2023(Thousands of
U.S. dollars)$ 2,121
20,690$ 22,811

Impairment Loss

The Group determines whether to recognize an impairment loss by grouping business assets
mainly based on the management accounting unit of each branch office and consolidated
subsidiaries, and by grouping property for rent and idle assets individually. The Group
recognized the impairment loss of the following group for the year ended March 31, 2023.

Location
Classification
Kirishima city
Goodwill
Kagoshima prefecture2023(Millions of yen)(Thousands of
U.S. dollars)¥ 326$ 2,448

For the year ended March 31, 2023, as profitability of Kirishima Mokushitsu Hatsuden Co.,
Ltd. decreased, the carrying value of goodwill resulting from the acquisition of this company
was partly written down due to declining profitability and impairment loss on goodwill of¥326 million ($2,448) was recognized in the consolidated statement of income.
The recoverable amount of goodwill was measured at value in use based on estimated future
cash flows discounted at rate of 2.8%.

18

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

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 0.28% and 1.00% for the years ended March 31,
2022 and 2023, respectively.
Long-term debt and lease obligations at March 31, 2022 and 2023 consisted of the following:
2022
2023
(Millions of yen)
Loans from banks due through 2033
with interest rates ranging from
0.000% to 1.475%
Lease obligations due through 2036
Less current portion¥ 10,341
3,899
14,240(7,964)¥ 6,276

2023(Thousands of
U.S. dollars)¥ 31,865
4,495
36,360(2,415)¥ 33,945$ 238,642
33,663272,305(18,087)$ 254,218

The aggregate annual maturities of long-term debt and lease obligations as of March 31, 2023
are summarized as follows:

Years ending March 31,
2024
2025
2026
2027
2028
2029 and thereafter(Millions of yen)(Thousands of
U.S. dollars)¥ 2,415
28,576
1,331
1,126
983
1,927
¥ 36,360$ 18,087
214,008
9,971
8,437
7,368
14,431$ 272,305

19

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
6.

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 Group 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, 2022
and 2023 were as follows:
2022
2023
(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

¥ 45,003
2,084
270(1,488)(2,452)–¥ 43,416¥ 43,416
2,020
348(2,081)(2,248)–¥ 41,455

2023(Thousands of
U.S. dollars)$ 325,144
15,127
2,606(15,586)(16,837)–$ 310,454

2) The changes in the plan assets for the years ended March 31, 2022 and 2023 wereas follows:
2022
2023
(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

¥ 42,155
843
574
4,770
(2,325)57¥ 46,075¥ 46,075
922(1,163)4,810(2,135)58¥ 48,567

2023(Thousands of
U.S. dollars)$ 345,058
6,904(8,711)
36,023(15,988)435$ 363,722

20

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
6.

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, 2022 and 2023 for theGroup’s defined benefit plans:
2022
2023
(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¥ 40,604(46,075)(5,470)2,811¥ 38,733(48,567)(9,834)
2,721

2023(Thousands of
U.S. dollars)$ 290,072(363,722)(73,649)
20,381(2,659)(7,112)(53,267)

2,811(5,470)2,721(9,834)

20,381(73,649)¥ (2,659)¥ (7,112)$ (53,267)

4) The components of retirement benefit expenses for the years ended March 31, 2022
and 2023 were as follows:
2022
2023
(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¥ 2,026
270
(843)
508
531
84
¥ 2,577¥ 1,961
348
(922)
166
531
58
¥ 2,144

2023(Thousands of
U.S. dollars)$ 14,691
2,606(6,904)
1,246
3,984
439
$ 16,063

Contributions from employees of ¥57 million and ¥58 million ($435 thousand) for
the years ended March 31, 2022 and 2023 are excluded from the above service cost.

21

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
6.

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, 2022 and2023 were as follows:
2022
2023
(Millions of yen)
Prior service cost
Actuarial gain and loss
Total

¥

(531)
(2,571)¥ (3,103)¥(531)(1,084)¥ (1,616)

2023(Thousands of
U.S. dollars)$ (3,984)(8,121)$ (12,105)

6) The components of retirement benefit liability adjustments included in accumulated
other comprehensive income (before tax effect) as of March 31, 2022 and 2023 wereas follows:
2022
2023
(Millions of yen)
Unrecognized prior service cost
Unrecognized actuarial gain and loss
Total

¥ 6,865(2,696)¥ 4,168¥ 6,333(3,780)¥ 2,552

2023(Thousands of
U.S. dollars)$ 47,428(28,314)$ 19,113

7) The fair value of plan assets, by major category, as a percentage of total plan assets
at March 31, 2022 and 2023 was as follows:

Bonds
StocksGeneral accounts of life insurance
Alternative investments
Other
Total

2022

2023

45%
25%
4%
25%
1%
100%

45%
22%
4%
25%
4%
100%

The expected rates of return on plan assets have been estimated based on the present
and anticipated allocation to each pension asset and the expected long-term returns
on pension assets consist of each category asset at present and in the future.

22

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
6.

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

2022

2023

0.8%
2.0%

1.3%
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, 2022 and 2023 were as follows:
2022
2023
(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

¥ 647
451
(146)
(456)
52
¥ 549

¥ 549
626
(91)
(458)
20
¥ 646

2023
(Thousands of
U.S. dollars)$ 4,115
4,692(688)(3,430)155$ 4,8452) 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, 2022 and 2023 for the defined benefit plans:
2022
2023
(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

2023(Thousands of
U.S. dollars)$ 37,659(34,765)
2,894
1,950

¥ 4,815(4,477)337
212¥ 5,028(4,642)
386
260

549

646

4,845

1,203
(653)

1,258
(611)

9,424
(4,579)646$ 4,845

¥

549

¥

23

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
6.

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¥451 million and ¥626 million ($4,692 thousand) for the years ended March 31,
2022 and 2023, respectively(c) Defined contribution plans
Contributions made to defined contribution plans by the Company for the years ended
March 31, 2022 and 2023 were ¥500 million and ¥509 million ($3,816 thousand),
respectively.

7.

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 0.286% to 1.994% corresponding with 5 years or 17 years, whichis the estimated 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, 2022 and 2023:
2022
2023
(Millions of yen)
Balance at the beginning of the year
Increase due to acquisition of fixed
assetsIncrease due to acquisition ofsubsidiary
Adjustment due to passage of time
Balance at the end of the year

2023
(Thousands of
U.S. dollars)$ 10,613¥ 1,356¥ 1,417

40

–

–

–
20
¥ 1,417227
24¥ 1,669

1,702
186$ 12,502

24

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

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 shares asadditional 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, 2022 and 2023
amounted to ¥12,543 million ($93,940 thousand).
There was no legal reserve for the years ended March 31, 2022 and 2023.
(a) Shares issued and outstanding / Treasury shares
For the year ended March 31, 2022:

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

Number ofshares at
April 1, 2021

Increase
Decrease(Number of Shares)

Number ofshares at
March 31, 2022

70,864,961––

70,864,961

19,025307–

19,332

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

307 shares(b) Share subscription rights
No share subscription rights were outstanding.

25

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

Net Assets (continued)(a) Shares issued and outstanding / Treasury shares
For the year ended March 31, 2023:

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

Number ofshares at
April 1, 2022

Increase
Decrease(Number of Shares)

Number ofshares at
March 31, 2023

70,864,961––

70,864,961

19,332411–

19,743

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

411 shares(b) Share subscription rights
No share subscription rights were outstanding.
(c) Dividends
1) Dividends paid
For the year ended March 31, 2022:

Resolution: Meeting of the Boardof Directors on April 28, 2021
Cash dividends (¥50.00 per share)
Resolution: Meeting of the Boardof Directors on October 28, 2021
Cash dividends (¥50.00 per share)

Total dividends(Millions of yen)

Record date

Effective date

¥ 3,543

March 31, 2021

June 4, 2021

3,543

September 30,
2021

December 1,
2021

26

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

Net Assets (continued)(c) Dividends (continued)
1) Dividends paid (continued)
For the year ended March 31, 2023:
Recorddate

Total dividends(Thousands(Millions ofof U.S.
yen)
dollars)
Resolution: Meeting of the Boardof Directors on April 28, 2022
Cash dividends (¥50.00 ($0.37) per
share)
Resolution: Meeting of the Boardof Directors on October 26, 2022
Cash dividends (¥50.00 ($0.37) per
share)

9.

¥ 3,543

3,543

Effectivedate$ 26,534

March 31,2022

June 7,2022

26,534September
30, 2022

December
1, 2022Net Sales

Revenues are not presented separately for revenues arising from contracts with customers
and other revenues. Revenue from contracts with customers is shown on Note 25.

10. 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, 2022 and 2023 represents a provision of ¥126 million and ¥(165) million ($(1,241)
thousand), respectively.

27

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. Selling, General and Administrative Expenses
Major items included in selling, general and administrative expenses for the years ended
March 31, 2022 and 2023 were as follows:
2022
2023
(Millions of yen)
Salaries and wages
Retirement benefit expenses
Retirement benefits expenses for
directors and audit andsupervisory board members
Depreciation and amortization¥ 10,297
543¥ 10,575
478

2023(Thousands of
U.S. dollars)$ 79,196
2,984

49
1,397

62
1,550

464
11,612

12. Research and Development Costs
Research and development costs included in cost of sales and selling, general andadministrative expenses for the years ended March 31, 2022 and 2023 amounted to ¥267
million and ¥290 million ($2,177 thousand), respectively.

13. 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, 2022 and2023, 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 year ended March 31, 2023 has been omitted as the difference wasless than 5% of the statutory tax rate. The reconciliation between the effective tax rate
reflected in the consolidated statement of income and the effective statutory tax rate for theyear ended March 31, 2022 is as follows.

Effective statutory tax rate
Effect of:Permanently non-deductible expenses
Permanently non-taxable dividend income
and others
Capita levy on inhabitant tax
Valuation allowance
Other, net
Effective tax rate2022
30.46%
0.91(0.52)
0.53(1.88)(1.01)
28.49%
28

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. Income Taxes (continued)
The significant components of deferred tax assets and liabilities as of March 31, 2022 and2023 were as follows:
2022
2023
(Millions of yen)

2023
(Thousands of
U.S. dollars)

Deferred tax assets:
Accrued bonuses
Liability for retirement benefits
Unrealized profits on fixed assets
Provision for loss on construction
contract
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Prepaid pension costs
Reserve for deductions inacquisition costs of property andequipment
Unrealized holding gain on othersecurities
Other
Total deferred tax liabilities
Net deferred tax assets¥ 2,452
2,034
1,178

¥ 2,710
1,605
1,247

$ 20,299
12,026
9,341

384
3,727
9,777
(157)
9,619

517
4,106
10,188(1,168)
9,019

3,879
30,75576,301(8,752)
67,549(2,398)(3,328)(24,928)(1,182)(1,166)(8,734)(877)(1,817)(6,275)¥ 3,344(1,136)(1,915)(7,546)¥ 1,473(8,508)(14,344)(56,516)$ 11,032

29

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. Other Comprehensive Income
Reclassification adjustments and tax effects allocated to each component of othercomprehensive income for the years ended March 31, 2022 and 2023 were as follows:
2022
2023
(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¥ (2,377)

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 income ofaffiliates accounted for by the equity
method:Amount arising during the year
Reclassification adjustments for gain
and loss included in profit attributableto owners of parent
Share of other comprehensive income ofaffiliates accounted for by the equity
method:Total other comprehensive income

¥

¥

2023
(Thousands of
U.S. dollars)821$ 6,153(713)(3,090)
943

(0)
821
(243)

(4)
6,149
(1,821)(2,146)

577

4,327

131

535

4,008

2,063

918

6,875

1,040
3,103
(945)

698
1,616
(492)

5,230
12,105(3,687)

2,158

1,124

8,418

160

204

1,532

(0)

–

–

159
302

204
¥ 2,441

1,532$ 18,286

30

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
15. Commitments and Contingencies
At March 31, 2022 and 2023, the Group was contingently liable for guarantees as follows:
Commitments for non-consolidated companies, affiliates not accounted for by the equity
method and third parties
2022
2023
(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.)
Total

¥

31

¥

–

2023
(Thousands of
U.S. dollars)
$

–

55

17

130

1,837
¥ 1,923

1,691¥ 1,70912,669$ 12,779

Atsumi Greenpower Co., Ltd. was included in the scope of consolidation from 1st quarter ofthis consolidated fiscal year.
Endorsement for transfer of notes receivable
2022
2023
(Millions of yen)
¥ 12

¥ 10

2023
(Thousands of
U.S. dollars)$ 81

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, 2022 and 2023, the Company had loan commitment agreements with 8
companies and 8 companies, respectively. The unused balances under the loan commitment
contracts at March 31, 2022 and 2023 were as follows:
2022
2023
(Millions of yen)
Total loan commitments
Aggregated borrowings
Unused balances

¥ 145
–
¥ 145

¥ 145
–
¥ 145

2023
(Thousands of
U.S. dollars)$ 1,091–$ 1,09131

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
16. Pledged Assets
The assets pledged as collateral for short-term borrowings of ¥426 million and ¥384 million($2,879 thousand) and long-term debt of ¥2,817 million and ¥2,433 million ($18,222
thousand) of the Company’s investees involved in the renewable energy generation business
and/or PFI business at March 31, 2022 and 2023, respectively, were as follows:
2022
2023
(Millions of yen)
Cash on hand and in banks
Short-term loans receivable includedin Other current assets
Buildings and structures
Machinery, vehicles, tools, furnitureand fixtures
Land
Investments in securities
Long-term loans receivable
Assets-rental deposit included ininvestment and other assets
Total

¥

711

¥

694

2023
(Thousands of
U.S. dollars)$ 5,200

2
159

2
147

22
1,102

1,801
214
13,351
57

1,595
523
13,40454

11,947
3,922
100,388405

15¥ 16,31215¥ 16,437

112$ 123,100

17. Amounts Per Share
Per share information as of March 31, 2022 and 2023 and for the years then ended is asfollows:
2022

2023
(Yen)

Profit attributable to owners of parent:
Basic
Net assets¥

370.05
3,375.43¥

2023(U.S. dollars)

371.93$ 2.793,681.85

27.57

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.

32

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Amounts Per Share (continued)(a) The bases for the calculation of basic profit attributable to owners of parent per share areas follows:
2022
2023
(Thousands of shares)
Weighted average number of shares for basic
profit attributable to owners of parent

70,84570,845The entire amounts of profit attributable to owners of parent of ¥26,216 million and¥26,349 million ($197,331 thousand) for the years ended March 31, 2022 and 2023 were
attributable to common shareholders.
(b) The bases for the calculation of net assets per share are as follows:
2022
2023
(Millions of yen)
Total net assets
Amounts deducted from total
net assets:
Non-controlling interests
Net assets attributable to sharesof common stock¥ 241,194¥ 263,017

2023(Thousands of
U.S. dollars)$ 1,969,722(2,059)(2,175)(16,292)¥ 239,134¥ 260,841$ 1,953,430

2022
2023
(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(19)(19)

70,84570,84533

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments
Overview(a) Policy for financial instruments
The Group utilizes highly secure financial assets for short-term fund management. In
addition, it obtains borrowings from financial institutions such as banks for short-term
operating funds and capital expenditures. Derivative transactions are only used to reducerisks arising from future fluctuations in foreign currency exchange rates and interest rates,
except for certain highly secure embedded derivatives in compound financial
instruments used for surplus funds. The Group does not enter into derivative transactions
for speculative purposes.
Furthermore, the Group examines their utilization based on internal rules and regulations
each time.
(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 Group monitors the due dates and outstandingbalances per customer and makes efforts to identify at an early point and mitigate risksof 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 Group reviews the fair values of equity securities and thefinancial condition of the issuing entities regularly.
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 Group manages the risk by preparing and updating its cash flow plans monthly. In
order to avoid interest rate fluctuation risk and foreign exchange fluctuation risk, theCompany uses interest rate swaps for certain loans borrowed from financial institutions,interest rate and currency swaps are used for all loans denominated in foreign currencies
from financial institutions. Furthermore, the Group examines the utilization of eachhedge transaction based on internal rules and regulations.

34

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Overview (continued)(c) Supplemental explanation on estimated fair value of financial instruments
Since variable factors are incorporated in the estimation of the fair value of financial
instruments, such values may change due to the adoption of different assumptions andother factors.
Estimated fair value of financial instruments
The carrying value of financial instruments on the consolidated balance sheet as of March 31,
2022 and 2023, 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

2022
Estimated
fair value(Millions of yen)

¥ 39,021¥ 39,021

Difference
¥

–

¥

–
–
–

136,676(34)
136,641
18,995¥ 194,658

136,641
18,995¥ 194,658

66,66966,669–22,078
10,341¥ 99,089¥–

22,078
10,325¥ 99,073
¥
–

–
(16)
¥ (16)¥ –35

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
2023
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¥ 67,534

Estimated
fair value
Difference(Millions of yen)
¥ 67,534¥–

Carrying
Estimatedvalue
fair value
Difference(Thousands of U.S. dollars)$ 505,763$ 505,763

$

–

$

–
–
–

148,902

1,115,122(3)
148,898
19,929¥ 236,363

148,898
19,929¥ 236,363

–
–
–

(25)
1,115,097
149,253$ 1,770,114

1,115,097
149,253$ 1,770,114

69,832

69,832–522,975

522,975–

28,762
31,865¥ 130,461

28,762
31,829¥ 130,424–(36)¥ (36)

215,402
238,642$ 977,019

215,402238,368$ 976,746–(273)$ (273)

¥

–

¥

–

¥

¥

–

$

–

$

–

$

(*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.
Note 1: Unlisted equity securities of ¥26,851 million and ¥25,640 million ($192,022
thousand) and investment in investment partnership and others of ¥15,329 millionand ¥18,924 million ($141,722 thousand) as of March 31, 2022 and 2023,
respectively, were not included in investments in securities in the above table.

36–

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
Note 2: Redemption schedule for receivables and marketable securities with maturities at
March 31, 2022 and 2023 were as follows:2022
Due inone yearor less
Cash on hand and 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¥ 39,021

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

136,676

–

–

–

1,000

1

–

253

–
¥ 176,697

675
¥ 676

205
¥ 205

22,048¥ 22,301

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

2023
Due inone yearor less
Cash on hand and 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¥ 67,534¥–

148,902

–

–

–

–

1

–

253

–
¥ 216,436

553
¥ 554

1,017
¥ 1,01722,804¥ 23,057

37

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)2023
Due inone yearor less
Cash on hand and 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$ 505,763

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

Due after
ten years$–

1,115,122

–

–

–

–

7

–

1,894

–
$ 1,620,885

4,143$ 4,151

7,619$ 7,619

170,779$ 172,673

The redemption schedule for long-term debt is disclosed in Note 5.

38

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Breakdown of fair value of financial instruments by level
The fair value of financial instruments is classified into the following three levels, dependingon the observability and materiality of the inputs used to determine fair value
Fair value (Level 1): Fair value calculated based on quoted market prices (unadjusted)in active markets for identical assets or liabilities.
Fair value (Level 2): Fair value calculated using directly or indirectly observable inputs
other than Level 1 inputs.
Fair value (Level 3): Fair value calculated using significant unobservable inputs.
When multiple inputs that have a significant impact on the calculation of fair value areused, fair value is classified to the level with the lowest priority in the calculation of fairvalue among the levels to which each of those inputs belongs.
(a) Financial instruments carried on the consolidated balance sheet at fair value
2022

Investment securities
Other securities:
StocksGovernment andcorporate bonds

Level 1

Level 2
Level 3
(Millions of yen)

¥ 18,728

¥

–

Total

–

¥–

¥ 18,728

266

–

266

2023

Investment securities
Other securities:
StocksGovernment andcorporate bonds

Level 1

Level 2
Level 3
(Millions of yen)

¥ 19,646

¥

–

Total

–

¥–

¥ 19,646

283

–

283

2023
Level 1
Investment securities
Other securities:
StocksGovernment andcorporate bonds

Level 2
Level 3(Thousands of U.S. dollars)$ 147,130
–

$

Total

–

$–

$ 147,130

2,123

–

2,123
39

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Breakdown of fair value of financial instruments by level (continued)(b) Financial instruments other than financial instruments carried on the consolidatedbalance sheet at fair value
2022
Level 1Long-term debt¥–

Level 2
Level 3
(Millions of yen)
¥ 10,325¥–

Total¥ 10,325

2023
Level 1Long-term debt¥–

Level 2
Level 3
(Millions of yen)
¥ 31,829¥–

Total¥ 31,829

2023
Level 1Long-term debt$–

Level 2
Level 3(Thousands of U.S. dollars)$ 238,368$–

Total$ 238,368

Description of valuation methods and inputs used in the calculation of fair value.
(a) Investment securities
Listed stocks are valued using quoted market prices. Since listed stocks are traded in
active markets, their fair value is classified as Level 1 fair value. The fair values ofgovernment and corporate bonds are measured based on prices obtained from third
parties and are classfied into Level 2 if inputs used for the obtained prices areobservable or the impact of unobservable inputs is immaterial.
(b) Long-term debt
The fair value of long-term debt is calculated using the discounted present value
method based on the total amount of principal and interest, and an interest rate thattakes into account the remaining term of the debt and credit risk, and is classified as
Level 2 fair value. The fair value of long-term debt with floating interest rates subject
to the special treatment of interest rate swaps (simplified method) is calculated basedon the sum of the principal and interest accounted for together with the interest rate
swaps.
(c) Derivative transactions
The fair value of interest rate swaps that qualify for special treatment (simplified
method) is included in the fair value of the relevant long-term debt because ofderivative transactions are accounted for as an integral part of the long-term debt
hedged.
40

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
19. Securities(a) Information regarding marketable securities classified as other securities as of March
31, 2022 and 2023 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¥ 12,603

2022
Acquisition
cost
Difference(Millions of yen)

¥ 7,801¥ 4,801

–

–

–

262
12
12,878

209
8
8,019

53
3
4,858

6,102

8,100

(1,998)

4

4

–

–

–
–

10
6,116
¥ 18,995

108,114¥ 16,134(0)(1,998)¥ 2,860
2023

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¥ 13,957

Acquisition
cost
Difference(Millions of yen)

¥ 9,395¥ 4,562

Carrying
Acquisition
value
cost
Difference(Thousands of U.S. dollars)$ 104,524$ 70,359$ 34,164

–

–

–

–

–

–

279
12
14,248

209
8
9,613

69
3
4,635

2,093
90
106,707

1,569
62
71,992523
27
34,715

5,666

6,643

(977)

42,43649,756(7,319)

4

4

29

–

–
–

29

–

–

–

–
–

10
5,681
¥ 19,929

10
6,658¥ 16,271(0)(977)¥ 3,658

79
42,546$ 149,253

80
49,866$ 121,858(0)(7,320)$ 27,395

41

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
19. Securities (continued)(b) Information regarding sales of securities classified as other securities for the years ended
March 31, 2022 and 2023 was as follows:

Equity securities
Debt securities:
Corporate bonds
OthersOthers2022
Proceeds
Gain onLoss onfrom sales
sales
sales
(Millions of yen)
¥ 1,041
¥ 698
¥ 4
800
–
189
¥ 2,030

–
–
113
¥ 811

31
–
–
¥ 36
2023

Proceeds
from sales

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

Proceeds
from sales¥ 4,533¥ 4,247¥–$ 33,949

Gain onsales(Thousands of
U.S. dollars)$ 31,812

1,000––¥ 5,533–––¥ 4,247

–
–
–
¥–

7,488
–
–
$ 41,438–––$ 31,812

Loss on
sales

–
–
–
$–

$–

(c) Impairment losses on securities classified as other securities of ¥489 million and ¥602
million ($4,513 thousand) were recognized for the years ended March 31, 2022 and2023, 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.

42

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

20. Derivative Transactions
Summarized below are the notional amounts and the estimated fair value of the derivative
instruments outstanding at March 31, 2022 and 2023, for which hedge accounting has been
applied.
Interest-related transactions
2022
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)
¥ 10,315¥ 9,679¥ (243)
502

251

–

2023
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)
¥ 9,679¥ 9,022¥ (81)
–

251

–

2023
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)$ 72,487$ 67,571$ (607)
1,879–

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.
43–

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. 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, 2022 and 2023 are reconciled to cash on hand and in banks in the consolidatedbalance sheet as follows:
2022
2023
(Millions of yen)
Cash on hand and in banks
Time deposits with maturities ofmore than three months
Cash and cash equivalents¥ 39,021¥ 67,534

2023(Thousands of
U.S. dollars)$ 505,763(1,229)¥ 37,791(3,682)¥ 63,851(27,580)$ 478,183(b) Major breakdown of assets and liabilities of the newly consolidated companies
Information on the newly consolidated companies, Chuorika kougyo Co., Ltd. and its eightsubsidiaries, as a result of a share acquisition for the year ended March 31, 2022 is as follows:

Current assets
Fixed assets
Goodwill
Current liabilities
Fixed liabilities
Acquisition cost of shares
Cash and cash equivalents
Difference: Expenditures for acquisition

2022(Millions of yen)
¥ 2,953
3,554
863(1,675)(1,265)4,431(1,559)¥ 2,871

Information on the newly consolidated companies, Kirishima mokushitsu hatsuden Co., Ltd.
and its subsidiary Kirishima mokushitsu nenryo Co., Ltd., as a result of a shareacquisition for the year ended March 31, 2023 is as follows:
2023(Millions of yen)
Current assets
Fixed assets
Goodwill
Current liabilities
Fixed liabilities
Acquisition cost of shares
Cash and cash equivalents
Difference: Expenditures for acquisition¥ 1,011
2,036
729(1,517)(1,699)
510
(412)
¥
97

2023
(Thousands of
U.S. dollars)$ 7,572
15,254
5,466(11,361)(12,727)
3,819(3,091)$727
44

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Supplemental Information on Consolidated Statement of Cash Flows (continued)(c) Information regarding details of significant non-monetary transactions for the years
ended March 31, 2022 and 2023 is as follows:
Leased assets and lease obligations related to new finance lease transactions recorded
for the years ended March 31, 2022 and 2023 amounted to ¥1,143 million and ¥1,612
million ($12,075 thousand), respectively.
Significant asset retirement obligations recorded for the year ended March 31, 2022
amounted to ¥40 million.

22. Segment Information(a) Business segment information(1) Outline of reportable segments
The reportable segments of the Group are components for which discrete financial
information is available and whose operating results are regularly reviewed by the
Board of Directors to make decisions 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 in cooperation
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.

45

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
22. Segment Information (continued)(a) Business segment information (continued)(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 andtransfers are determined by reference to actual market price.
(3) Information as to net sales, income or loss and other items for each reportablesegment for the years ended March 31, 2022 and 2023 are summarized as follows:2022

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

Utilities
engineering
service

Adjustments
andeliminations

Others

Total(Millions of yen)

¥ 364,440¥ 12,123¥ 376,563¥–¥ 376,563

819¥ 365,260¥ 30,528

5,073¥ 17,196¥ 2,501

5,893¥ 382,456¥ 33,029(5,893)¥ (5,893)¥ 107–¥ 376,563¥ 33,137

3,794

2,104

5,899

(108)

5,791

107

–

107

–

107

190

–

190

–

190

Consolidated

46

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
22. 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, 2022 and 2023 are summarized as follows:(continued)
2023

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

Utilities
engineering
service

Adjustments
andeliminations

Others

Total(Millions of yen)

¥ 380,355¥ 15,428¥ 395,783¥–¥ 395,783

1,265¥ 381,620¥ 28,908

5,074¥ 20,503¥ 3,0156,340¥ 402,123¥ 31,924(6,340)¥ (6,340)¥ 158–¥ 395,783¥ 32,083

3,935

2,188

6,123

(104)

6,018

215

121

337

–

337

220

–

220

–

220

Consolidated

2023

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

Utilities
engineering
service

Adjustments
andOthersTotaleliminations(Thousands of U.S. dollars)$ 2,848,462$ 115,542$ 2,964,004$–$ 2,964,004

9,474$ 2,857,936$ 216,495

38,006$ 153,548$ 22,583

47,480$ 3,011,485$ 239,079(47,480)$ (47,480)$ 1,189–$ 2,964,004$ 240,268

29,471

16,38645,857(786)

45,071

1,617

911

2,528

–

2,528

1,653

–

1,653

–

1,653

Consolidated

47

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
22. Segment Information (continued)(a) Business segment information (continued)(3) Information as to net sales, income or loss and other items by reportable segment
for the years ended March 31, 2022 and 2023 are summarized as follows:(continued)
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 ¥107 million and¥158 million ($1,189 thousand) for the years ended March 31, 2022
and 2023, respectively, reflect the elimination of transactions between
segments.
(iii) Segment income or loss is reconciled to operating income on the
consolidated statement of income.
(iv) Impairment loss of goodwill was recorded in “Others” segment of ¥326
million ($2,448 thousand) for the year ended March 31, 2023.
(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, 2022 and 2023.

48

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
22. Segment Information (continued)(b) Related information (continued)(2) Information by major customers
The following table presents major customer information for the years ended March
31, 2022 and 2023:
2022
2023
(Millions of yen)
Name of customers:
Kyushu Electric Power Transmission
and Distribution Co., Inc.
Reportable segment:
Utilities engineering service and Others
Net sales¥ 47,109¥ 47,368

2023(Thousands of
U.S. dollars)$ 354,742(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 theyears ended March 31, 2022 and 2023 by reportable segment: Information onamortization of goodwill is omitted because the same information is disclosed in Note
22 (a) (3). The “Others” segment represents the renewable energy generation business.

Utilities
engineering
service
Balance as of March 31¥ 755

Utilities
engineering
service
Balance as of March 31¥ 539

Balance as of March 31$ 4,0422022
Adjustments
andOtherseliminations(Millions of yen)
¥–
¥–
2023
Adjustments
andOtherseliminations(Millions of yen)
¥ 281¥–
(Thousands of U.S. dollars)$ 2,107$–

Consolidated¥ 755

Consolidated¥ 821$ 6,149(d) Gain on bargain purchase by reportable segment
No gain on bargain purchase was recorded for the years ended March 31, 2022 and 2023.
49

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
23. Related Party Transactions
Transactions and balances with related parties as of and for the years ended March 31, 2022
and 2023 were as follows:
2022
2023
(Millions of yen)
Kyushu Electric Power Co., Inc.
Construction orderElectricity sales
Accounts receivable on completed
construction contracts
Advances received on uncompleted
construction contracts
Accounts receivable
Kyushu Electric Power Transmission
and Distribution Co., Inc.
Construction orderElectricity sales
Accounts receivable on completed
construction contracts and otheraccounts receivable

2023(Thousands of
U.S. dollars)¥ 1,183
1,580¥ 1,073
1,558

$

8,041
11,672

533

514

3,851

–
74

15
56

119
423

43,5901,897

43,7492,045

327,637
15,317

7,154

7,453

55,817

The transaction amounts do not include consumption taxes. The balances include
consumption taxes.
Kyushu Electric Power Co., Inc. (located in Fukuoka City, with a capital amount of ¥237,304
million ($1,777,165 thousand) engaged in the business of sales of electric power andcontracting and related construction work) is a related company which owned 22.75% of theshares of the Company as of March 31, 2022 and 2023.
Kyushu Electric Power Transmission and Distribution Co., Inc. (located in Fukuoka City,
with a capital amount of ¥20,000 million ($149,779 thousand) engaged in the business ofsales of electric power and contracting and related construction work is a subsidiary of a
related company which owned no shares of the Company as of March 31, 2022 and 2023.
The terms of the transactions referred to above were negotiated and determined on an arm’slength basis similar to third party transactions.
Electricity sales prices are based on the feed-in tariff system and others.

50

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
24. Revenue Recognition
Disaggregation of revenue arising from contracts with customers
A disaggregation of revenue by type of goods or services for the years ended March 31, 2022
and 2023 was as follows:
2022
Utilities
engineering
service
Power distribution line work
Electrical work
HVAC and sanitary facility work
Others
Revenue arising from contracts
with customers
Revenue to external customers¥ 45,774
198,354
120,311–364,440¥ 364,440

Others(Millions of yen)
¥
–

Total

–
12,123¥ 45,774
198,354
120,311
12,12312,123¥ 12,123

376,563¥ 376,563

2023
Utilities
engineering
service
Power distribution line work
Electrical work
HVAC and sanitary facility work
Others
Revenue arising from contracts
with customers
Revenue to external customers¥ 46,628
199,403134,323–

Others(Millions of yen)¥–––
15,428

Total¥ 46,628
199,403134,323
15,428380,355¥ 380,355

15,428¥ 15,428

395,783¥ 395,783

2023
Utilities
engineering
service

Others

Total(Thousands of U.S. dollars)
Power distribution line work
Electrical work
HVAC and sanitary facility work
Others
Revenue arising from contracts
with customers
Revenue to external customers$ 349,195
1,439,321
1,005,945
–

$

–
–
–
115,542$ 349,195
1,493,321
1,005,945
115,5422,848,462$ 2,848,462

115,542$ 115,542

2,964,004$ 2,964,004

Note: Other segment is a business segment not included in the reportable segments.

51

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
24. Revenue Recognition (continued)
Information that serves as a basis for understanding of revenue arising from contracts
with customers
Information that serves as a basis for understanding of revenue arising from contracts withcustomers is disclosed in Note 2 (q) Significant accounting estimates.
Information about the relationship between the satisfaction of performance obligations
under contracts with customers and cash flows from such contracts, and the amountand timing of revenue expected to be recognized from contracts with customers thatexisted at the end of the current fiscal year and are expected to be recognized in thefollowing fiscal year or later(a) Contract assets and contract liabilities outstanding
Beginning and ending balances of contract assets and contract liabilities outstanding forthe years ending March 31, 2022 and 2023 were as follows:
Beginning ofEnding of2022
2022(Millions of yen)
Receivables arising from contracts withcustomers
Notes receivable
Electronically recorded receivables
Accounts receivable
Other accounts receivable

Contract assets
Contract liabilities¥ 6,282
16,731
61,265
4,866¥ 89,146¥ 4,715
15,41059,123
5,332¥ 84,580¥ 41,558
15,427¥ 52,095
11,546

Beginning ofEnding of2023
2023(Millions of yen)
Receivables arising from contracts withcustomers
Notes receivable
Electronically recorded receivables
Accounts receivable
Other accounts receivable

Contract assets
Contract liabilities¥ 4,715
15,41059,123
5,441¥ 84,690¥ 3,563
19,83863,246
6,260¥ 92,909¥ 52,095
11,546¥ 55,992
26,62752

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
24. Revenue Recognition (continued)
Information about the relationship between the satisfaction of performance obligations
under contracts with customers and cash flows from such contracts, and the amountand timing of revenue expected to be recognized from contracts with customers thatexisted at the end of the current fiscal year and are expected to be recognized in thefollowing fiscal year or later (continued)(a) Contract assets and contract liabilities outstanding (continued)
Beginning ofEnding of2023
2023(Thousands of U.S. dollars)
Receivables arising from contracts withcustomers
Notes receivable
Electronically recorded receivables
Accounts receivable
Other accounts receivable

Contract assets
Contract liabilities$ 35,312
115,404
442,770
40,754$ 634,242$ 26,685
148,571473,649
46,886$ 695,794$ 390,138
86,471$ 419,327
199,412Contract assets are rights to consideration received in exchange for the satisfaction of
performance obligations, measured based on the percentage of completion as of the endof the fiscal year for construction contracts in utilities engineering service, excluding
receivables arising from contracts with customers.
Contract assets are transferred to receivables arising from contracts with customers when
the rights of the Group to the consideration become unconditional. The consideration forsuch construction is mainly received within one year from the time the Company’s
performance obligation is satisfied.
Contract liabilities consist primarily of advances received from customers on
construction contracts. Contract liabilities are included in advances received on
uncompleted construction contracts and other liabilities in the consolidated balance sheet
and are reversed upon revenue recognition.
The amount of revenue recognized in the current fiscal year ended March 31, 2023 thatwas included in the contract liability balance at the beginning of the period was ¥9,875
million ($73,957 thousand).
The amount of revenue recognized in the current period from performance obligations
satisfied (or partially satisfied) in prior periods was not material.
53

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
24. Revenue Recognition (continued)
Information about the relationship between the satisfaction of performance obligations
under contracts with customers and cash flows from such contracts, and the amountand timing of revenue expected to be recognized from contracts with customers thatexisted at the end of the current fiscal year and are expected to be recognized in thefollowing fiscal year or later (continued)(b) Transaction price allocated to remaining performance obligations
The transaction price allocated to the unfulfilled performance obligation recorded for theyears ended March 31, 2022 and 2023 amounted to ¥407,649 million and ¥467,801
million ($3,503,343 thousand), respectively. The remaining performance obligation
relates to a construction contract in the Utilities engineering service and is expected tobe recognized as revenue primarily within five years as the construction progresses.

25. 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, 2023, wasapproved at the meeting of the Board of Directors held on April 28, 2023:
Total dividends paid
(Millions of (Thousands ofyen)
U.S. dollars)
Cash dividends(¥60.00 = $0.45 per share)¥ 4,251$ 31,841

Record date

Effective date

March 31, 2023 June 6, 2023

54