Consolidated Financial Statements
KYUDENKO CORPORATION
Year ended March 31, 2020
with Independent Auditor’s Report

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Financial Statements
Year ended March 31, 2020

Contents
Consolidated Financial Statements
Independent Auditor’s Report ............................................................................................... 1
Consolidated Balance Sheet .................................................................................................. 4
Consolidated Statement of Income........................................................................................ 6
Consolidated Statement of Comprehensive Income ............................................................. 7
Consolidated Statement of Changes in Net Assets ............................................................... 8
Consolidated Statement of Cash Flows ............................................................................... 10
Notes to Consolidated Financial Statements ....................................................................... 12

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2020
March 31,2019
2020
(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 3, 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 4 and 16)
Machinery, vehicles, tools, furniture and fixtures(Notes 4 and 16)
Leased assets
Land (Note 16)
Construction in progress
Accumulated depreciation
Total property and equipment
Intangible assets:
Goodwill (Note 22)
Other intangible assets
Total intangible assets
Investments and other assets:
Investments in securities (Notes 16, 18 and 19)
Investments in unconsolidated subsidiaries andaffiliates (Notes 16 and 18)
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

4

2020(Thousands of
U.S. dollars)(Note 1)

¥ 41,017¥ 55,851$ 513,201

150,612
20
5,106
1,765
979
6,791
(23)
206,268

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

1,284,083
9,255
66,941
14,038
10,52889,349(170)
1,987,226

66,15569,346637,204

41,0956,126
28,874
1,757(60,259)
83,75040,7097,043
28,911
772(64,158)
82,625374,066
64,716
265,655
7,102(589,530)
759,216

343
986
1,329

182
1,465
1,648

1,679
13,46815,14842,684

44,486

408,774

11,088
1,179
1,646
5,720
5,291
(1,688)65,922
151,002¥ 357,271

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

106,072
11,115
7,785
60,09044,518(14,095)
624,260
1,398,625$ 3,385,852

March 31,
2019
2020
(Millions of yen)
Liabilities
Current liabilities:
Notes payable, accounts payable on construction
contracts and other accounts payable(Notes 3 and 18)
Electronically recorded obligations (Notes 3 and 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 (Note 13)
Advances received on uncompleted construction
contracts (Note 23)
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 and 13)
Total long-term liabilities
Total liabilities
Commitments and contingencies (Note 15)

Net assets (Note 8)
Shareholders’ equity:
Common stock:
Authorized – 250,000,000 shares
Issued – 71,165,783 and 70,864,961 shares in2019 and 2020, respectively
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

2020(Thousands of
U.S. dollars)(Note 1)

¥ 88,360
21,09487¥ 73,584
27,89430

12,909–8,434
142,144

23,44012
8,586
142,723

215,384
115
78,901
1,311,431

13,6602,596

11,8903,016

109,256
27,718

1,902
942
8,412

1,769
1,147
6,257

$

676,140
256,309275

16,263
10,54057,500324
13,9362,432
32,949175,094

337
10,7142,357
28,316
171,039

3,100
98,454
21,660260,190
1,571,622

12,561
13,012
159,401(10)
184,965

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

115,423
119,293
1,632,296(73)
1,866,940

3,585
(423)
179
(7,988)(4,647)1,858
182,176¥ 357,271

See accompanying notes to consolidated financial statements.

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

6,851(4,964)
1,950(73,377)(69,539)
16,8291,814,230$ 3,385,852

5KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Income
Year ended March 31, 2020

Net sales (Note 22):
Construction contracts (Note 9)
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
Compensation expenses
Provision of allowance for doubtful accounts ofsubsidiary
Other, net
Ordinary income
Extraordinary income (loss):
Gain on sales of property and equipment
Loss on disposal and sales of fixed assets
Gain on sales of investments in securities (Note 19)
Impairment loss on investments in securities(Note 19)
Impairment loss on investment in unconsolidated
subsidiary
Loss on sales of investments in securities (Note 19)
Loss on valuation of utility rights
Profit before income taxes
Income taxes (Note 13):
Current
DeferredProfitProfit (loss) attributable to:Non-controlling interests
Owners of parent

Year ended March 31,
2019
2020
2020
(Millions of yen)(Thousands of
U.S. dollars)(Note 1)

¥ 388,327
19,816408,143¥ 407,506
21,432428,939$ 3,744,436
196,932
3,941,369

56,935
3,625
60,561

55,986
4,106
60,093

514,442
37,737552,180

331,391
16,191
347,582

23,81336,747

62
564
(372)
754
976
312
(80)
–

351,520
17,325368,845

24,071
36,022

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

3,229,993
159,195
3,389,189

221,186
330,993614
6,091(3,539)6,300
10,265
2,972(555)(1,188)

(153)
1,113
39,924(92)433
38,643(850)
3,980
355,084

(185)

(294)

(2,705)

63
(553)
40

6
(172)
241

56
(1,588)
2,217

(0)
(15)
(13)
39,260–(0)–38,423–(5)–353,058(1)¥ 26,691

76¥ 26,245

706$ 241,161

12,001
569
26,68911,805295
26,322

108,476
2,714
241,8676

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31, 2020

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

Year ended March 31
2019
2020
2020
(Millions of yen)(Thousands of
U.S. dollars)(Note 1)
¥ 26,689¥ 26,322$ 241,867
(678)
254
(143)
(231)

(2,832)(25)
33
3(26,026)
(236)
304
28

Comprehensive income

(106)
(904)
¥ 25,785(98)(2,919)¥ 23,402(900)(26,830)$ 215,037

Comprehensive (loss) income attributable to:
Owners of parent
Non-controlling interests¥ 25,803¥(17)¥ 23,325¥77$ 214,326$710

See accompanying notes to consolidated financial statements.

7

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
Year ended March 31, 2020

Commonstock

Balance at April 1, 2018
Issuance of new shares
Cash dividends paid

Profit attributable toowners of parent for the

CapitalsurplusTreasury

Retainedstock,

earnings

at cost¥ 12,555¥ 12,853¥ 139,809––(7,116)6

6–

period––26,691

Disposal of treasury stock

–

–

–

Purchase of treasury stock
Transfer to capital surplus

–

–

¥ (8)
–

Total

shareholders’accumulated

Translation

liability

comprehensive

controllinginterests

net assets

benefit

instruments adjustments adjustments

other

Total

¥ 165,209¥ 4,261¥ (570)¥ 306¥ (7,757)¥ (3,759)¥ 2,689¥ 164,139(7,116)

–

–

–

–

–

–

(7,116)–

26,691––(Millions of yen)

13

–

–

–

–

–

–

–

–

–

–

loss

Non-

on securities

26,691(1)

loss onhedging

Total

Retirement

equity––Unrealized

holding gain

Unrealized

–

–

–

(1)

–

–

–

–

–

–

–

–

–

–

–

13

(1)

from retained earnings

–

–

–

–

–

–

–

–

–

–

–

–

of consolidated subsidiary

–

2

–

–

2

–

–

–

–

–

–

2

consolidated subsidiaries

–

150

–

–

150

–

–

–

–

–

–

150

–

–

16

–

16

–

–

–

–

–

–

16

–

(676)

147

(127)

(231)

(887)

(830)

184,965

3,585

(423)

179

(7,988)(4,647)1,858

182,176(7,101)

–

–

–

–

–

–

(7,101)–

26,245––Purchase of treasury stock
Purchase of shares of
Increase in retained

earnings due to change inaccounting period of a
subsidiary

Net changes in items otherthan those inshareholders’ equity–

Balance at April 1, 201912,561

13,012

159,401––(7,101)

Net changes during the year
Issuance of new shares
Cash dividends paid

Profit attributable toowners of parent for the

6
–

–

159
–

–

19,591–

period––26,245

Disposal of treasury stock

–

(997)

–

from retained earnings–of consolidated subsidiaryconsolidated subsidiaries

Purchase of treasury stock
Transfer to capital surplus
Purchase of treasury stock
Purchase of shares of
Increase in retained

–

–

–

(1)

(10)
–

19,755––26,245

997

–

–

(995)

929

(929)

–

10

–

–

(676)
–

–

147

–

–

(127)
–

–

(231)
–

–

(887)
–

(830)
–

–

(1,718)18,037

–

(995)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

10

–

–

–

–

–

–

10

27

–

–

27

–

–

–

–

–

–

27

–

27

–

27

–

–

–

–

–

–

27

–

–

–

(2,839)

(116)

32

3

(2,920)(27)¥ 177,642

¥ (8)

745

¥ (540)¥ 212¥ (7,985)¥ (7,567)¥ 1,831

–

–

–

–

–

(995)

earnings due to change inaccounting period of a
subsidiary

Net changes in items otherthan those inshareholders’ equity

Net changes during the year
Balance at March 31, 2020––

¥ 12,561–(30)¥ 12,982

18,241

2

18,213¥ 203,179¥(2,839)

(116)

32

3

(2,920)(27)

8(2,947)

15,266¥ 197,442

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets (continued)
Year ended March 31, 2020

CommonBalance at April 1, 2019
Issuance of new shares
Cash dividends paid

Profit attributable toowners of parent for thestock

CapitalsurplusRetained$ 115,423––

controllinginterests

net assets$ (96)$ 1,699,579–(65,253)–(65,253)–

241,161

–

–

–

–

9,168

–

–

–

–

–

–

–

–

(9,168)–from retained earnings–of consolidated subsidiaryconsolidated subsidiaries

Increase in retained

comprehensive

benefit$ 1,464,680––

equity–(9,145)

Translation

liability$ 119,571

Disposal of treasury stock

Purchase of shares ofloss onat cost241,161

Purchase of treasury stock

hedging

accumulated

earnings–

Transfer to capital surplus

gain onholding

Total

Retirement

shareholders’

–
–

Total

Unrealized

stock,

periodPurchase of treasury stock

Treasury

Unrealized

other

Total

securities

instruments adjustments

adjustments$ 32,944$ (3,892)$ 1,647$ (73,405)$ (42,705)$ 17,080$ 1,673,955

–

–

–

–

–

–

(65,253)––

241,161–––(Thousands of U.S. dollars) (Note 1)
–

–

–

–

–

–

–

–

loss

Non-

–

–

–

–

–

–

(9,145)(9,145)8,541(8,541)

–

–

–

–

–

–

–

–

–

–

100

–

–

100

–

–

–

–

–

–

100

–

248

–

–

248

–

–

–

–

–

–

248

249

–

249

–

–

–

–

–

–

249

–

(26,092)(1,072)302

28(26,834)(251)$ 1,866,940$ 6,851$ (4,964)$ 1,950$ (73,377)$ (69,539)$ 16,829

earnings due to change inaccounting period of a
subsidiary

Net changes in items otherthan those inshareholders’ equity

Net changes during the year
Balance at March 31, 2020–––

$ 115,423

–

(277)

$ 119,293–

167,616$ 1,632,296–

22$ (73)

167,361(26,092)(1,072)

See accompanying notes to consolidated financial statements.

302

28

(26,834)(251)

9(27,086)

140,274$ 1,814,230

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31, 2020
2019
2020
(Millions of yen)
Cash flows from operating activities
Profit before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful
accounts
Decrease in liability for retirement benefits andprovision for retirement benefits for directors andaudit and supervisory board members
Increase in provision for loss on construction
contracts
Loss on valuation of utility rights
Gain on investments in partnership
Interest and dividend income
Interest expenses
Foreign exchange loss
Equity in earnings of affiliates(Gain) loss 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(Increase) decrease in notes and accounts receivable
on completed construction contracts
Decrease (increase) in costs of uncompleted
construction contracts
Decrease in inventories
Increase (decrease) in notes and accounts payable on
construction contracts
Increase in advances received on uncompleted
construction contracts
Increase in long-term accounts payable(Decrease) increase in consumption taxes payable,
net
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

2020(Thousands of
U.S. dollars)(Note 1)

¥ 39,260
6,074¥ 38,423
5,961$ 353,058
54,778

575

(13)

(120)

(3,295)(3,319)(30,502)

–
13
(976)
(626)
372
22
(541)
(63)
553
185
(24)

12
–
(1,117)
(729)
385
46
(306)
25
140
294
(240)

115
–
(10,265)(6,706)3,539
429(2,813)
236
1,294
2,705
(2,211)(23,007)

11,011

101,176

1,585
3,597

(2,302)
71(21,152)655

10,751(7,981)(73,343)

6,073
20

10,67826

98,119243(1,896)(2,866)35,786604(384)(9,952)¥ 26,054

1,566
(976)
51,657762(385)(13,812)¥ 38,222

14,396(8,969)474,663
7,008(3,539)(126,922)$ 351,210

10

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Cash Flows (continued)
Year ended March 31, 2020
2019
2020
(Millions of yen)
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property and equipment
Proceeds from sales of property and equipment
Payments of disposal of property, plant andequipment
Purchase of investments in securities
Proceeds from sales of investments in securities
Payments 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) increase in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling shareholders
Proceeds from stock issuance to non-controllingshareholders
Repayments to non-controlling shareholders
Purchase of subsidiaries’ shares not resulting inchanges in scope of consolidation
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Increase (decrease) in cash and cash equivalents
resulting from changes in accounting period of
consolidated subsidiary
Cash and cash equivalents at the end of the year
(Note 21)¥

2020
(Thousands of
U.S. dollars)(Note 1)(644)
488
(2,877)211¥ (1,014)
954(3,998)279$ (9,325)
8,768(36,741)
2,569

(501)
(9,334)
2,405
(289)
181
(938)
(11,298)(78)(8,649)
1,076
(381)
222
(546)
(12,136)(717)(79,478)
9,887(3,502)
2,043(5,018)(111,514)

(348)
7,496
(8,040)(1)(7,108)(6)

3–(1,963)(998)(7,099)(4)

27–(18,043)(9,177)(65,232)
(42)

–
(22)

8
(22)

73
(208)

(0)
(988)
(9,021)(46)(1,125)(11,250)(430)(10,344)(103,378)

(48)
5,686
34,505(2)
14,83340,192(19)
136,298369,316

1

(61)

(565)

¥ 40,192¥ 54,964$ 505,049

See accompanying notes to consolidated financial statements.

11

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2020
1.

Basis of Presentation

KYUDENKO CORPORATION (the “Company”) and its domestic subsidiaries maintaintheir accounting records and prepare their financial statements in accordance with accounting
principles generally accepted in Japan, and its foreign subsidiaries maintain their books ofaccount in conformity with those of their countries of domicile.
The accompanying consolidated financial statements of the Company and consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted in Japan,
which are different in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from the consolidated
financial statements prepared by the Company as required by the Financial Instruments andExchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications
and rearrangements have been made to the consolidated financial statements issued
domestically in order to present them in a format which is more familiar to readers outside
Japan.
Certain amounts in the prior year’s consolidated financial statements have been reclassified
to conform to the current year’s presentation. Such reclassifications had no effect on
consolidated profit or net assets.
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 ¥108.83 = U.S.$1.00, the rate of exchange prevailing on March 31, 2020.
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, 2020 and 2019 have been omitted.
Consequently, the totals shown in the accompanying consolidated financial statements forthe years ended March 31, 2020 and 2019 (both in yen and in U.S. dollars) do not necessarily
agree with the sum of the individual amounts.

12

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, 2020, the numbers of consolidated subsidiaries and affiliates accounted
for by the equity method were 48 and 9 (48 and 7 in 2019), respectively.

Kyudenko New Energy Co., Ltd., which had been a major consolidated subsidiary,
merged into the Company on April 1, 2019. The Company established RYUHOUSOGO SETSUBI Co., Ltd., which was newly included in the scope of consolidation on
April 1, 2019. UKUJIMA MIRAI ENERGY HOLDINGS LIMITED LIABILITY CO.
and UKUJIMA MIRAI ENERGY GODOKAISHA were newly accounted for by equity
method because their materiality has been increasing.
Effective April 1, 2019, Sanyudensetsu Co., Ltd. changed its fiscal year end fromJanuary 31 to March 31 to conform with the consolidated fiscal year end. Profit or lossof the subsidiary for the two months from February 1 to March 31, 2019 has beenrecognized in retained earnings. Corresponding changes in cash and cash equivalents
are indicated as “Increase (decrease) in cash and cash equivalents resulting from changesof accounting period of consolidated subsidiaries” in the consolidated statement of cash
flows.

Kyulien Environment Improving Co., Ltd., Asia Projects Engineering Pte. Ltd. and
Kyudenko South East Asia Pte. Ltd. are consolidated by using their financial statements
as of their respective fiscal year end, which falls on December 31. Necessary
adjustments are made to their financial statements to reflect any significant transactions
between their fiscal year-ends and March 31.
All significant intercompany balances and transactions have been eliminated inconsolidation.

Certain subsidiaries were excluded from the scope of consolidation because the effect of
their sales, net profit or loss, total assets and retained earnings on the accompanying
consolidated financial statements was immaterial. Such unconsolidated subsidiaries
and affiliates are accounted for by the equity method, unless they are clearly immaterial.
Certain unconsolidated subsidiaries and affiliates were excluded from the scope of
application of the equity method because their profit or loss and retained earnings
attributable to the Company’s interest were not material either individually or inaggregate to the consolidated financial statements.
13

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

Summary of Significant Accounting Policies (continued)(a) Principles of consolidation and accounting for investments in unconsolidated
subsidiaries and affiliates (continued)
Unrealized intercompany gains among the Company and the consolidated subsidiaries
have been eliminated and the portion attributable to non-controlling interests has been
charged to non-controlling interests.
Investments in subsidiaries and affiliates which are neither consolidated nor accounted
for by the equity method are carried at cost or less. Where there has been a permanent
decline in the value of such investments, the Company has written down the investments.
(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.

14

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
Securities other than equity securities issued by unconsolidated subsidiaries andaffiliates are classified into three categories: trading, held-to-maturity or other securities.
Trading securities are carried at fair value and held-to-maturity securities are carried atamortized cost. Marketable securities classified as other securities are carried at fairvalue with changes in unrealized holding gain or loss, net of the applicable income taxes,
included directly in net assets. In cases where an embedded derivative in a compound
financial instrument cannot be separately measured, the entire compound financial
instrument is measured at fair value with changes in value charged or credited to profit(loss).
Non-marketable securities classified as other securities are carried at cost determined by
the moving average method. Investments in limited liability partnerships and othersimilar partnerships, which are deemed to be securities under Article 2, Clause 2 of the
Financial Instruments and Exchange Act of Japan, are valued at the amount of theunderlying equity in their net assets based on the latest financial statements available asof the closing date stipulated in the partnership agreement.
(f) Property and equipment and depreciation (excluding leased assets)
Depreciation of property and equipment (excluding leased assets) of the Company andits consolidated subsidiaries is calculated principally by the declining-balance method
based on the estimated useful lives and the residual value in accordance with the
Corporation Tax Law of Japan, except for certain buildings of the Company anddomestic consolidated subsidiaries, which are depreciated by the straight-line method.
Facilities attached to buildings and other non-building structures acquired on or after
April 1, 2016 are also depreciated by the straight-line method.
(g) Intangible assets (excluding leased assets)
Intangible assets (excluding leased assets) are amortized by the straight-line method.
Computer software for internal use is amortized by the straight-line method over theestimated useful life of five years.
(h) Goodwill
Goodwill is amortized by the straight-line method over reasonable periods, considering
each individual condition.

15

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

Summary of Significant Accounting Policies (continued)(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.
(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.
(k) Provision for loss on construction contracts
Provision for loss on construction contracts is provided with respect to uncompleted
construction projects for which anticipated future losses are expected and a reasonableestimate of the amount can be made at the fiscal year end.
(l) Retirement benefits
Asset and liability for retirement benefits for employees have been provided at an
amount calculated based on the retirement benefit obligation after the fair value of thepension plan assets are deducted. Retirement benefits are attributed to each period by
the benefit formula method over the estimated years of service of the eligible employees.
Prior service cost is being amortized as incurred by the straight-line method over periods
within the estimated average remaining years of service of the eligible employees.
Actuarial gain or loss is amortized in the years following the year in which the gain orloss is recognized primarily by the straight-line method over periods within the estimatedaverage remaining years of service of the eligible employees.
All of the consolidated subsidiaries use a simplified method for calculating retirement
benefit expenses and liabilities mainly based on the assumption that the benefits payable,
which are mainly calculated as if all eligible employees voluntarily terminated theiremployment at fiscal year-end, approximate the retirement benefit obligation at year-end.
In addition, provision for retirement benefits for directors and audit and supervisoryboard members of certain consolidated subsidiaries are provided at the amount payableat year-end in accordance with each company’s internal regulations.

16

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

Summary of Significant Accounting Policies (continued)(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 (loss) as incurred.
(o) Recognizing revenues and costs of construction contracts
Revenues and costs of construction contracts for which contract revenues, contract costs
and the percentage of completion can be reliably estimated are recognized by thepercentage-of-completion method. The percentage of completion is calculated at thecost incurred as a percentage of the estimated total cost. The completed-contract
method continues to be applied for construction contracts for which the percentage-ofcompletion cannot be reliably estimated.
(p) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive ofconsumption taxes.
(q) Derivative financial instruments
The Company and certain subsidiaries enter into forward foreign exchange contracts inorder to hedge the risk arising from fluctuations in foreign currency exchange rates ontransactions denominated in foreign currencies and interest-rate swaps in order to hedge
the risk arising from fluctuations in interest rates on certain loans from financial
institutions and interest and currency rate swaps in order to hedge the risk arising fromfluctuations in foreign currency exchange rates and interest rates on all loans
denominated foreign currencies from financial institutions. The Company and its
consolidated subsidiaries do not enter into derivative transactions for speculative
purposes.
Hedging instruments are interest-rate swaps, interest and currency rate swaps andforward foreign exchange contracts. Hedged items are interest payments on loans,foreign currency loans and associated interest payments and forecasted transactions inforeign currencies.
17

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

Summary of Significant Accounting Policies (continued)(q) Derivative financial instruments (continued)
Derivative financial instruments are carried at fair value with changes in unrealized gainor loss charged or credited to profit (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” which is the net amounts to be paid or received under the interest
rate swap contract are added to or deducted from the interest on the liabilities and foreign
currency liabilities are translated at the corresponding currency swap contract rates, isapplied for interest and currency rate swaps which qualify for such treatment. The
allocation method, “Allocation method” which requires that recognized foreign currency
receivables and payables be translated at the corresponding forward foreign exchange
rates, is applied for forward foreign exchange contracts which qualify for such treatment.
Hedge effectiveness is not assessed if the substantial terms and conditions of the hedging
instruments and the hedged items are the same. An assessment of hedge effectivenessis omitted for interest and currency rate swaps which meet certain conditions. No
evaluation is performed for hedge effectiveness of forward foreign exchange contracts
since the derivative contracts are based on forecasted transactions which are certain to
be executed.
(r) Accounting standards issued but not yet effective

Accounting Standard and Implementation Guidance on Revenue Recognition
On March 31, 2020, the Accounting Standard Board of Japan (hereinafter referred to as
the “ASBJ”) revised “Accounting Standard for Revenue Recognition” (ASBJ Statement
No.29) and “Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No.30).
(1) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically,
the accounting standard establishes the following five-step model that will apply torevenue from customers:
1.
2.
3.
4.
5.

Identify the contract(s) with a customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contract
Recognize revenue when (or as) the entity satisfies a performance obligation
18

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

Summary of Significant Accounting Policies (continued)(r) Accounting standards issued but not yet effective (continued)(2) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation
guidance from the beginning of the fiscal year ending March 31, 2022.
(3) Impact of the adoption of accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of this accounting
standard and implementation guidance on its consolidated financial statements.
Accounting Standard for Disclosure of Accounting Estimates
On March 31, 2020, the ASBJ issued the “Accounting Standard for Disclosure of
Accounting Estimates” (ASBJ Statement No.31).
(1) Overview
This accounting standard has been released to provide guidance on disclosure of
information that deepens the understanding of users of the financial statements about
estimates that have a risk of a significant impact on the financial statements for thefollowing accounting period.
(2) Scheduled date of adoption
The Company expects to adopt the accounting standard from the end of the fiscal year
ending March 31, 2021.
(s) Change in presentation“Insurance and dividend income” of “Non-operating income (expenses)” was presented
as a separate account for the fiscal year ended March 31, 2019, but because it amounted
to 10% or less of total non-operating income for the fiscal year ended March 31, 2020,
it was included in “Other, net.” In order to reflect this change in preparation method, theconsolidated financial statements for the fiscal year ended March 31, 2019 have been
reclassified. As a result, in the consolidated statement of income for the fiscal year
ended March 31, 2019, ¥443 million and ¥670 million that were presented in “Insurance
and dividend income” account and “Other, net” account of “Non-operating income(expenses)” have been reclassified as ¥1,113 million in “Other, net.”

19

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

Summary of Significant Accounting Policies (continued)(t) Additional information
At this time, the Company has implemented strict measures to address the impact of the
new coronavirus infection. The Company is continuing its business activities and iscurrently maintaining the same level of utilization as usual. However, this infectious
disease has had a wide impact on the economy and corporate activities, and it is difficult
to predict its future spread and when it will be brought under control, the Company
estimates the total cost of construction based on the percentage-of-completion method,
the provision for loss on construction contracts, and the collectability of deferred tax
assets based on the assumption that these effects will continue in the fiscal year ending
March 31, 2021, based on external information available at the end of March 31, 2020.
3.

Notes Receivable, Notes Payable and Electronically recorded obligations

The balance sheet date for the year ended March 31, 2019 fell on a bank holiday.
Consequently, the following notes receivable, notes payable and Electronically recorded
obligations with the due date of March 31 were included in the respective balances and settled
on the next business day.
2019
2020
(Millions of yen)
Notes receivable
Notes payable
Electronically recorded obligations
4.

¥ 844
2,776
3,560

¥–
–
–

2020
(Thousands of
U.S. dollars)$–––

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,
2019 and 2020 are as follows:
2019
2020
(Millions of yen)
Structures
Machinery

¥ 283
2,809
¥ 3,092

¥ 283
2,809
¥ 3,092

2020(Thousands of
U.S. dollars)$ 2,60225,816$ 28,419

20

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 0.26% and 0.03% for the years ended March 31,
2019 and 2020, respectively.
Long-term debt, convertible bond-type bonds with share subscription rights and leaseobligations at March 31, 2019 and 2020 consisted of the following:
2019
2020
(Millions of yen)
Loans from banks due through 2033
with interest rates ranging from
0.116% to 3.137%
Lease obligations due through 2028
Less current portion¥ 15,563
3,538
19,101(2,845)¥ 16,256

2020(Thousands of
U.S. dollars)¥ 13,660
4,163
17,824(2,917)¥ 14,906$ 125,519
38,259163,779(26,804)$ 136,974

The aggregate annual maturities of long-term debt and lease obligations as of March 31, 2020are summarized as follows:
Years ending March 31,
2021
2022
2023
2024
2025
2026 and thereafter(Millions of yen)
¥ 2,917
2,749
7,551
1,557
696
2,352
¥ 17,824(Thousands of
U.S. dollars)$ 26,804
25,266
69,38914,311
6,395
21,611$ 163,779

21

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 Company and its
consolidated subsidiaries may pay additional retirement benefits under certain circumstances.
For the defined benefit plans and lump-sum payment plans of most of consolidated
subsidiaries, liabilities and expenses for retirement benefits are calculated using thesimplified method.

(a) Defined benefit plans (excluding the retirement benefit obligation calculated by thesimplified method)
1) The changes in the retirement benefit obligation for the years ended March 31, 2019and 2020 were as follows:
2019
2020
(Millions of yen)
Balance at the beginning of the year
Service cost
Interest cost
Actuarial gain and loss
Retirement benefit paid
Balance at the end of the year

¥ 46,052
2,100
277
94
(3,134)¥ 45,389¥ 45,389
2,129
272
(653)
(2,198)¥ 44,939

2020(Thousands of
U.S. dollars)$ 417,070
19,5642,502(6,003)(20,202)$ 412,931

2) The changes in the plan assets for the years ended March 31, 2019 and 2020 wereas follows:
2019
2020
(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

¥ 31,454
629
(165)
4,530
(2,570)54¥ 33,932¥ 33,932
678(1,283)
4,397(1,873)55¥ 35,906

2020(Thousands of
U.S. dollars)$ 311,795
6,235(11,793)
40,404(17,218)507$ 329,931

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)
3) The following table sets forth the funded status of the plans and the amounts
recognized in the consolidated balance sheets at March 31, 2019 and 2020 for theCompany’s and its consolidated subsidiaries’ defined benefit plans:
2019
2020
(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¥ 36,017(33,932)
2,085
9,371

¥ 35,540(35,906)
(365)
9,398

2020
(Thousands of
U.S. dollars)$ 326,572(329,931)(3,359)86,35911,457

9,032

82,99911,457
–

9,398
(365)

86,359(3,359)¥ 11,457¥ 9,032$ 82,999

4) The components of retirement benefit expenses for the years ended March 31, 2019and 2020 were as follows:
2019
2020
(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¥ 2,045
277
(629)
100
(172)
80
¥ 1,701¥ 2,073
272
(678)
459
175
60
¥ 2,362

2020(Thousands of
U.S. dollars)$ 19,056
2,502(6,235)
4,219
1,611
555
$ 21,709

Contributions from employees of ¥54 million and ¥55 million ($507 thousand) for
the years ended March 31, 2019 and 2020 are not included in above service cost.

23

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, 2019 and2020 were as follows:
2019
2020
(Millions of yen)

Prior service cost
Actuarial gain and loss
Total

¥ (172)(159)¥ (332)

¥ 175
(170)
¥
4

2020
(Thousands of
U.S. dollars)$ 1,611(1,570)$416) The components of retirement benefit liability adjustments included in accumulated
other comprehensive income (before tax effect) as of March 31, 2019 and 2020 wereas follows:
2019
2020
(Millions of yen)

Unrecognized prior service cost
Unrecognized actuarial gain and loss
Total

¥ 7,9533,534¥ 11,487¥ 7,778
3,705¥ 11,483

2020(Thousands of
U.S. dollars)$ 71,469
34,047$ 105,517

7) The fair value of plan assets, by major category, as a percentage of total plan assets
at March 31, 2019 and 2020 was as follows:
Bonds
StocksGeneral accounts of life insurance
Alternative investments
Other
Total

2019

54%
26%
8%
7%
5%
100%

2020

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

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

24

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:
2019

Discount rates
Expected rates of return on plan assets

2020

0.6%
2.0%

0.6%
2.0%

(b) Defined benefit plans accounted for using the simplified method
1) The changes in liability for retirement benefits calculated using the simplified
method for the years ended March 31, 2019 and 2020 were as follows:
2019
2020
(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

¥ 794
655
(160)
(450)
(6)
¥ 833

¥ 833
566
(120)
(444)
0
¥ 834

2020
(Thousands of
U.S. dollars)$ 7,654
5,207(1,111)(4,081)
2$ 7,6692) 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, 2019 and 2020 for the defined benefit plans:
2019
2020
(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

2020(Thousands of
U.S. dollars)$ 40,936(35,525)
5,411
2,258

¥ 4,323(3,693)630
202¥ 4,455(3,866)
588
245

833

834

7,669

1,228
(395)

1,316
(481)

12,095(4,425)

¥

833

¥

834

$ 7,66925

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¥655 million and ¥566 million ($5,207 thousand) for the years ended March 31,
2019 and 2020, respectively(c) Defined contribution plans
Contributions made to defined contribution plans by the Company for the years ended
March 31, 2019 and 2020 were ¥440 million and ¥453 million ($4,164 thousand),
respectively.
7.

Asset Retirement Obligations

Asset retirement obligations which are included in the other liabilities mainly represent future
obligations to restore leased property to its original condition associated with the removal of
the consolidated subsidiaries’ renewable energy generation facilities.
The asset retirement obligations are measured at the present value of the future liabilities
applying discount rates of 0.604% to 1.994% corresponding with 17 years, which is theestimated useful life of those facilities from the acquisition date.
The following table indicates the changes in asset retirement obligations included in “Other
long-term liabilities” for the years ended March 31, 2019 and 2020:
2019
2020
(Millions of yen)
Balance at the beginning of the year
Increase due to acquisition ofproperty and equipment
Adjustment due to passage of time
Balance at the end of the year

¥ 1,157¥ 1,316

2020(Thousands of
U.S. dollars)$ 12,096140
19¥ 1,316–19¥ 1,336–181$ 12,278

26

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 sharesas additional paid-in-capital, which is included in capital surplus.
The Corporate Law provides that an amount equal to 10% of the amount to be distributed as
distributions of capital surplus (other than capital reserve) and retained earnings (other thanlegal reserve) be transferred to capital reserve and legal reserve, respectively, until the sumof capital reserve and legal reserve equals 25% of the stated common stock. Such
distributions can be made at any time by resolution of the shareholders or by the Board of
Directors, if certain conditions are met, but neither capital reserve nor legal reserve isavailable for distributions.
The Company’s capital reserve included in capital surplus at March 31, 2019 and 2020
amounted to ¥12,543 million and ¥12,543 million ($115,261 thousand), respectively.
There was no legal reserve for the years ended March 31, 2019 and 2020.
(a) Shares issued and outstanding / Treasury shares
For the year ended March 31, 2019:
Types of shares
Shares issued:
Common stock
Treasury stock:
Common stock

Number ofshares at
April 1, 2018

Increase
Decrease(Number of Shares)

Number ofshares at
March 31, 2019

71,158,510

7,273

–

71,165,783

18,891

440–

19,331

Detail of the increase in shares issued is as follows:
Issuance of new shares due to exercise of share subscription rights
2nd unsecured convertible bond-type bonds with share subscription rights
Details of the increase and decrease in treasury stock are as follows:
Increase due to purchase of shares of less than one standard unit

7,273
440

27

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

Net Assets (continued)(a) Shares issued and outstanding / Treasury shares (continued)
For the year ended March 31, 2020:
Types of shares
Shares issued:
Common stock
Treasury stock:
Common stock

Number ofshares at
April 1, 2019

Increase
Decrease(Number of Shares)

Number ofshares at
March 31, 2020

71,165,783–

300,82270,864,961

19,331

300,361

300,822

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

300,822361
300,000
300,822(b) Share subscription rights
For the year ended March 31, 2019

IssuerDescription

The
Company

2nd unsecured
convertiblebond-type bonds
with sharesubscription
rights1.
2.

Type ofsharesCommonstock

Number of sharessubject to share subscription rights
At April 1,
At March
2018
Increase
Decrease
31, 2019(Number of Shares)
7,216
57
7,273
–

Number of shares subject to share subscription rights represents the number ofshares to be issued upon exercise of the share subscription rights.
The increase during the year was due to adjustments to the conversion value, andthe decrease was due to exercise of the share subscription rights.
28

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

Net Assets (continued)(c) Dividends
1) Dividends paid
For the year ended March 31, 2019:

Resolution: Meeting of the Boardof Directors on April 27, 2018
Cash dividends (¥50.00 per share)
Resolution: Meeting of the Boardof Directors on October 26, 2018
Cash dividends (¥50.00 per share)

Total
dividends(Millions of yen)

Recorddate¥ 3,557

March 31, 2018

June 6, 2018

¥ 3,558

September 30,
2018

December 3,
2018

Effective date

For the year ended March 31, 2020:

Resolution: Meeting of the Boardof Directors on April 26, 2019
Cash dividends (¥50.00 ($0.45) per
share)
Resolution: Meeting of the Boardof Directors on October 31, 2019
Cash dividends (¥50.00 ($0.45) per
share)
9.

Total dividends(Thousands(Millions ofof U.S.
yen)
dollars)

Recorddate¥ 3,558$ 32,695

March 31,2019

¥ 3,543$ 32,557

September
30, 2019

Effective
date

June 5,2019
December2, 2019

Net Sales from Construction Contracts Recognized by Percentage-of-Completion
MethodNet sales from construction contracts recognized by the percentage-of-completion method
for the years ended March 31, 2019 and 2020 amounted to ¥224,182 million and ¥248,034
million ($2,279,096 thousand), respectively.

29

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. Provision (Reversal of Provision) for Loss on Construction Contracts
Provision for loss on construction contracts included in cost of sales for the year ended March
31, 2020 represents a provision of ¥12 million ($115 thousand). There was no provision orreversal of provision recognized for the year ended March 31, 2019.
11. Selling, General and Administrative Expenses
Major items included in selling, general and administrative expenses for the years ended
March 31, 2019 and 2020 were as follows:
2019
2020
(Millions of yen)
Salaries and wages
Retirement benefit expenses
Retirement benefits expenses for
directors and audit andsupervisory board members
Depreciation and amortization¥10,070423¥ 10,420
520

2020(Thousands of
U.S. dollars)$ 95,746
4,784

(48)
932

54
1,054

497
9,688

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, 2019 and 2020 amounted to ¥326
million and ¥290 million ($2,671 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, 2019 and2020, respectively. Income taxes of the foreign consolidated subsidiaries are based
generally on the tax rates applicable in their countries of incorporation.

30

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. Income Taxes (continued)
The reconciliation between the effective tax rates reflected in the consolidated statement ofincome and the effective statutory tax rates for year ended March 31, 2019 is as follows.
The reconciliation for the year ended March 31, 2020 has been omitted as the difference wasless than 5% of the statutory tax rate.
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 rate

2019
30.46%
1.02(0.28)
0.50
0.42(0.10)
32.02%The significant components of deferred tax assets and liabilities as of March 31, 2019 and2020 were as follows:
2019
2020
(Millions of yen)
Deferred tax assets:
Liability for retirement benefits
Accrued bonuses
Unrealized profits on fixed assets
Enterprise tax payable
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets

Deferred tax liabilities:
Unrealized holding gain on othersecurities
Reserve for deductions inacquisition costs of property andequipment
Reserve for special depreciation
Other
Total deferred tax liabilities
Net deferred tax assets

2020(Thousands of
U.S. dollars)¥ 4,204
2,252
970
498
3,305
11,231(1,210)10,021¥ 4,568
2,350
782
431
3,360
11,494(913)
10,581$ 41,979
21,6007,194
3,964
30,881
105,620(8,392)
97,228(1,568)(390)(3,585)(1,233)(431)(1,385)(4,619)¥ 5,402(1,216)(207)(2,466)(4,281)¥ 6,300(11,179)(1,907)(22,666)(39,339)$ 57,888
31

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 (loss) for the years ended March 31, 2019 and 2020 were as follows:

Unrealized holding loss 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 on securities

2019
2020
(Millions of yen)
¥ (1,180)¥ (4,060)

197
(982)
304
(678)

51
(4,009)1,176(2,832)473(36,841)
10,814(26,026)

365

(36)

(339)

–
365
(111)

–
(36)
11

–
(339)
103

254

(25)

(236)

(143)

33

304

(259)

(630)

(5,790)

(72)
(332)
101

634
4
(1)

5,831
41
(12)

(231)

3

28

(106)
(904)

(98)
¥ (2,919)(900)$ (26,830)

Unrealized gain (loss) on hedging
instruments:
Amount arising during the year
Reclassification adjustments for gain
and loss included in profit attributableto owners of parent
Amount before tax effectTax effectUnrealized gain (loss) on hedging
instruments:
Translation adjustments:
Amount arising during the year

Retirement benefit liability adjustments:
Amount arising during the year
Reclassification adjustments for gain
and loss included in profit attributableto owners of parent
Amount before tax effectTax effect
Retirement benefits liability
adjustments
Share of other comprehensive loss ofaffiliates accounted for by the equity
method:Amount arising during the year
Total other comprehensive loss

2020
(Thousands of
U.S. dollars)¥$ (37,314)

32

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
15. Commitments and Contingencies
At March 31, 2019 and 2020, the Company and its consolidated subsidiaries were
contingently liable for guarantees as follows:
Commitments for non-consolidated companies, affiliates not accounted for by the equity
method and third parties

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.)

Amount borne by other joint obligors out of
joint obligation for payments concerning
fuel supply agreement:
Sumitomo Corporation(Aible Energy LCC)

Bond insurance:
Sumitomo Mitsui Banking Corporation(KYUDENKO MALAYSIA SDN. BHD.)
Sumitomo Mitsui Banking Corporation(KYUDENKO (THAILAND) CO., LTD.)
MUFG Bank, Ltd.
(KYUDENKO VIETNAM CO., LTD.)
Total
Endorsement for transfer of notes receivable

2019
2020
(Millions of yen)
¥

291

205

$ 1,883

1,880

2,127

19,547

333

–

–

43

40

370

77
¥ 2,81293¥ 2,598858$ 23,877

179

7

¥

2020
(Thousands of
U.S. dollars)

131

0

2019
2020
(Millions of yen)
¥3

¥ 18

1,209

7

2020
(Thousands of
U.S. dollars)
$ 167

33

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
15. Commitments and Contingencies (continued)
The Company has entered into subordinated loan commitment contracts as a subordinatedcreditor in joint financing for companies involved in the PFI business. (PFI is a private
finance initiative which is a method of providing funds for major capital investments, whereby private firms are contracted to complete and manage public projects.)
At March 31, 2019 and 2020, the Company had loan commitment agreements with 10
companies and 9 companies, respectively. The unused balances under the loan commitment
contracts at March 31, 2019 and 2020 were as follows:
2019
2020
(Millions of yen)
¥ 155
–
¥ 155

Total loan commitments
Aggregated borrowings
Unused balances

¥ 153
–
¥ 153

2020
(Thousands of
U.S. dollars)$ 1,412–$ 1,412

16. Pledged Assets
The assets pledged as collateral for short-term borrowings of ¥475 million and ¥327 million($3,009 thousand) and long-term debt of ¥3,706 million and ¥3,378 million ($31,046
thousand) of the Company’s investees involved in the renewable energy generation business
and/or PFI business at March 31, 2019 and 2020 were as follows:
2019
2020
(Millions of yen)
Cash on hand and in banks
Other current assets short-termloans receivable
Buildings and structures
Machinery, vehicles, tools, furnitureand fixtures
Land
Investments in securities andinvestments in unconsolidated
subsidiaries and affiliates
Long-term loans receivable
Investments and other assets-rental
deposit
Total

¥

536

¥

583

2020
(Thousands of
U.S. dollars)$ 5,362

6
35

6
26

57
247

2,596
0

2,290
0

21,047
4

6,845
70

6,728
64

61,829593

15¥ 10,10615¥ 9,716137$ 89,281

34

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Amounts Per Share
Per share information as of March 31, 2019 and 2020 and for the years then ended is asfollows:
2019

Profit attributable to owners of parent:
Basic

¥

Net assets¥ 2,534.46

2020

(Yen)

375.17¥

2020(U.S. dollars)

370.00$ 3.40¥ 2,761.07$ 25.37

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.
Diluted profit attributable to owners of parent per share for the years ended March 31, 2020
and 2019 has not been presented because no potentially dilutive shares of common stock
were outstanding.
Net assets per share are computed based on the net assets excluding non-controlling interests
and the number of shares of common stock outstanding at the year end.
(a) The bases for the calculation of basic profit attributable to owners of parent per share areas follows:

Weighted average number of shares forbasic profit attributable to owners ofparent2019
2020(Thousands of shares)
71,14370,933The entire amounts of profit attributable to owners of parent of ¥26,691 million and¥26,245 million ($241,161 thousand) for the years ended March 31, 2019 and 2020 were
attributed to common shareholders.

35

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Amounts Per Share (continued)(b) The bases for the calculation of net assets per share are as follows:
2019
2020
(Millions of yen)
Total net assets
Amounts deducted from total
net assets:
Non-controlling interests
Net assets attributable to sharesof common stock

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¥ 182,176¥ 197,442

2020(Thousands of
U.S. dollars)$ 1,814,230(1,858)(1,831)(16,829)¥ 180,317¥ 195,611$ 1,797,400

2019
2020
(Thousands of shares)
71,16570,864

71,146

70,846(19)(18)

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

36

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

37

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Estimated fair value of financial instruments
The carrying value of financial instruments on the consolidated balance sheet as of March 31,
2019 and 2020, 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:
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¥ 41,017

2019
Estimated
fair value(Millions of yen)

Difference¥ 41,017¥ –(23)
150,589
21,772¥ 213,378

150,589
21,772¥ 213,378––¥ –88,36088,360–21,094
15,563¥ 125,018¥
36

21,094
15,611¥ 125,066
¥
36

–
48
¥ 48
¥ –

150,61238

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
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¥ 55,851

2020

Estimated
fair value
Difference(Millions of yen)
¥ 55,851¥ –139,746

139,728
19,001¥ 214,581

73,58427,894
13,660¥ 115,138–$ 513,201$ 513,201

$

–

$

–
–
–

1,284,083(18)
139,728
19,001¥ 214,581¥

Carrying
Estimatedvalue
fair value
Difference(Thousands of U.S. dollars)

–
–
¥ –

(170)
1,283,913
174,602$ 1,971,716

1,283,913
174,602$ 1,971,716

73,584–

676,140

676,140–

27,894
13,688¥ 115,167

–
28
¥ 28

256,309125,519$ 1,057,969

256,309125,783$ 1,058,233

–
263
$ 263

¥

–

¥ –

$

–

$

–

$

(*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.

39–

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
Note 1: Valuation methods to determine the estimated fair value of financial instruments andother matters related to securities and derivative transactions are as follows:
AssetsCash on hand and in banks, notes receivable, accounts receivable on completed
construction contracts and other accounts receivable
Since all these items are settled in a short period of time, the carrying value approximatesfair value.
Investments in securities
The fair value of equity securities is based on quoted market prices. The fair value ofdebt securities is based on either quoted market prices or prices provided by the financial
institutions making markets in these securities. The fair value of investment trusts isbased on publicly available information.
Liabilities
Notes payable, accounts payable on construction contracts and other accounts payable andelectronically recorded obligations
Since all these items are settled in a short period of time, the carrying value approximatesfair value.
Long-term debt
The fair value of long-term debt is based on the present value of the total of principal andinterest discounted by the interest rate to be applied if similar new borrowings are enteredinto.
Derivative transactions
The fair value of derivative transactions is based on prices provided by the counterparty
financial institutions. The fair value of the interest rate and currency swaps was includedin that of the hedged long-term debt as they are accounted for together with underlying
hedged items under the simplified method.
Note 2: Unlisted equity securities of ¥32,000 million and ¥37,028 million ($340,244
thousand) as of March 31, 2019 and 2020, respectively, were not included in theabove table because it was extremely difficult to determine the fair value.

40

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
Note 3: Redemption schedule for receivables and marketable securities with maturities at
March 31, 2019 and 2020 were as follows:2019

Due inone yearor less
Cash in banks
Notes receivable, accounts
receivable on completed
construction contracts andother accounts receivable
Short-term investments andinvestments in securities
Other securities withmaturities (debt securities)
Other securities withmaturities (Other)
Total¥ 40,928

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

150,612

–

–

–

–

2,050

832

253

10
¥ 191,551

375¥ 2,425–¥ 832

16,683¥ 16,936

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

2020

Due inone yearor less
Cash in banks
Notes receivable, accounts
receivable on completed
construction contracts andother accounts receivable
Short-term investments andinvestments in securities
Other securities withmaturities (debt securities)
Other securities withmaturities (Other)Total¥ 55,793¥–

139,746

–

–

–

1,000

1,050

832

253

10
¥ 196,550534¥ 1,58426¥ 858

20,805¥ 21,058

41

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

Due inone yearor less
Cash in banks
Notes receivable, accounts
receivable on completed
construction contracts andother accounts receivable
Short-term investments andinvestments in securities
Other securities withmaturities (debt securities)
Other securities withmaturities (Other)Total$ 512,6642020
Due after
Due after
one yearfive years
throughthroughfive years
ten years(Thousands of U.S. dollars)$–$–

Due after
ten years$–

1,284,083

–

–

–

9,188

9,648

7,649

2,324

96
$ 1,806,033

4,913$ 14,561

239$ 7,889

191,175$ 193,500

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

42

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, 2019 and 2020 is as follows:
Carrying
value
Securities whose carrying
value exceeds theiracquisition cost
Equity securities
Debt securities
OthersSubtotal
Securities whose carrying
value does not exceed
their acquisition cost
Equity securities
Debt securities
OthersSubtotal
Total¥ 15,561
1,243
167
16,972¥ 9,997
1,209
95
11,302¥ 5,563
34
71
5,669

2,943
1,856
20
4,820
¥ 21,792

3,338
1,885
20
5,244
¥ 16,546

(394)
(29)
(0)
(423)
¥ 5,245

Carrying
value
Securities whose carrying
value exceeds theiracquisition cost
Equity securities
Debt securities
OthersSubtotal
Securities whose carrying
value does not exceed
their acquisition cost
Equity securities
Debt securities
OthersSubtotal
Total

2019
Acquisition
cost
Difference(Millions of yen)2020

Acquisition
cost
Difference(Millions of yen)

Carrying
Acquisition
value
cost
Difference(Thousands of U.S. dollars)¥ 7,630
241
147
8,019

¥ 4,686
209
95
4,991

¥ 2,943
32
51
3,027

$ 70,110
2,222
1,356
73,688$ 43,064
1,926
878
45,868$ 27,046
296
477
27,819

9,210
2,768
10
11,989¥ 20,009

10,8872,885
1013,784¥ 18,775(1,677)(116)(0)(1,794)¥ 1,233

84,62925,441
98
110,169$ 183,857

100,044
26,51498
126,656$ 172,525(15,415)(1,072)(0)(16,487)$ 11,331

43

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, 2019 and 2020 was as follows:
Proceeds
from sales
Equity securities
Others

¥ 40
24
¥ 65
Proceeds
from sales

Equity securities
Debt securities
Others

¥ 11
947
9
¥ 967

2019
Gain onLoss onsales
sales(Millions of yen)
¥ 40
¥ –
0
15
¥ 40
¥ 15
Gain onLoss onsales
sales(Millions of yen)
¥ 11
230
–
¥ 241

¥–
–
0
¥0

2020

Proceeds
from sales
$

101
8,705
86
$ 8,892

Gain onsales(Thousands of
U.S. dollars)
$ 101
2,116
–
$ 2,217

Loss on
sales
$–
–
5
$5

(c) Impairment losses on securities classified as other securities of ¥185 million and ¥61
million ($564 thousand) were recognized for the years ended March 31, 2019 and 2020,
respectively. Also, impairment losses on securities classified as investments inunconsolidated subsidiaries and affiliates of ¥232 million ($2,140 thousand) was
recognized for the year ended March 31, 2020.
The securities whose fair value has declined by 30% or more are classified as securities
whose fair value declined significantly.
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.

44

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, 2019 and 2020, for which hedge accounting has been
applied.
a.

Currency-related transactions

Method of hedge
accounting
Allocation
methodHedging instruments
Forwardforeignexchange
contracts

Buy: USD

Hedged items
Forecasted
transactions
denominatedin foreign
currencies

Notional
amounts¥ 3,3932019
Due after
one year
Fair value(Millions of yen)
¥–

¥ 36

There were no applicable transactions for the year ended March 31, 2020.
The fair value was calculated based on prices provided by the counterparty financial
institutions.
b.

Interest-related transactions

Method ofhedge
accounting
Principle
methodSimplified
methodMethod ofhedge
accounting
Principle
methodSimplified
method2019
Hedging 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)
¥ 8,495¥ 8,339¥ (449)
1,255

1,004

–

2020
Hedging instruments
Interest rate
swap
Interest rateand currency
swap

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

Hedgeditems
Long-termdebtLong-term
debt

Notional
amounts

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

753

–

45

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

Interest-related transactions (continued)

Method ofhedge
accounting
Principle
methodSimplified
method2020
Hedging 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)$ 95,729$ 94,157$ (5,376)
9,225

6,919

–

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
of an affiliate accounted for by the equity method, and the notional amount and the fairvalue were based on the Company’s proportionate share.
The fair value was calculated based on prices provided by the counterparty financial
institutions.

46

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, 2019 and 2020 are reconciled to cash on hand and in banks in the consolidatedbalance sheet as follows:
2019
2020
(Millions of yen)
Cash on hand and in banks
Time deposits with maturities ofmore than three months
Cash and cash equivalents¥ 41,017(824)¥ 40,192¥ 55,851(887)¥ 54,964

2020(Thousands of
U.S. dollars)$ 513,201(8,151)$ 505,049(b) Information regarding details of significant non-monetary transactions for the years
ended March 31, 2019 and 2020 is as follows:
Leased assets and lease obligations related to new finance lease transactions recorded
for the years ended March 31, 2019 and 2020 amounted to ¥936 million and ¥1,328
million ($12,207 thousand), respectively. Asset retirement obligations recorded for theyears ended March 31, 2019 amounted to ¥140 million. No asset retirement obligations
recorded for the years ended March 31, 2020.
Exercise of share subscription rights on convertible bond-type bonds with sharesubscription rights is as follows:

Increase in common stock due toexercise of share subscription
rightsIncrease in capital surplus due toexercise of share subscription
rightsDecrease in convertible bond-typebonds with share subscription
rights due to exercise of sharesubscription rights

2019
2020
(Millions of yen)

2020
(Thousands of
U.S. dollars)

¥ 6

¥–

$ –

6

–

–

¥ 13

¥–

$ –

47

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

48

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, 2019 and 2020 are summarized as follows:

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

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

2019

Utilities
engineering
service

Adjustments
andeliminations

Others

Total(Millions of yen)

¥ 388,327¥ 19,816¥ 408,143¥–¥ 408,143

589¥ 388,917¥ 34,949

3,666¥ 23,482¥ 1,7384,256¥ 412,399¥ 36,687¥

3,407¥ 2,861

¥

6,269

¥

(195)

¥

6,074

¥

115

¥

¥

156

¥

–

¥

156

41

2020

Utilities
engineering
service

Others

Total(Millions of yen)

¥ 407,506¥ 21,432¥ 428,939(4,256)¥ (4,256)¥59

Consolidated

Adjustments
andeliminations¥––¥ 408,143¥ 36,747

Consolidated¥ 428,939

731¥ 408,238¥ 33,770

3,803¥ 25,235¥ 2,077

4,534¥ 433,473¥ 35,847(4,534)¥ (4,534)
¥ 174

¥

3,532

¥ 2,556

¥

6,088

¥

(127)

¥

5,961

¥

115

¥

¥

156

¥

–

¥

156

41

–
¥ 428,939¥ 36,022

49

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
22. Segment Information (continued)(a) Business segment information (continued)(3) Net sales, profit or loss and other items by reportable segment for the years ended
March 31, 2019 and 2020 are summarized as follows: (continued)

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

2020

Utilities
engineering
service

Adjustments
andOthersTotaleliminations(Thousands of U.S. dollars)$ 3,744,436
6,719$ 3,751,155$ 310,304$ 196,932

34,946$ 231,879$ 19,089$ 3,941,369

41,665$ 3,983,034$ 329,394(41,665)$ (41,665)$ 1,599$

32,454$ 23,491$

55,946$ (1,168)$

54,778

$

1,059

$

$

1,441

$

$

1,441

381

$

–

–

Consolidated$ 3,941,369–$ 3,941,369$ 330,993

Note 1: “Other” consisted of business segments that were not included in reportablesegments, such as sales business of construction-related materials andequipment for third parties, real estate sales business, renewable energy
generation business, temporary staffing service, software development
business, environmental analysis / measurement business, medical-related
business, golf course management, business hotel management, planningand 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 ¥59 million and¥174 million ($1,599 thousand) for the years ended March 31, 2019and 2020 reflect the elimination of transactions between segments,
respectively.
(iii) Segment income or loss is reconciled to operating income on the
consolidated statement of income.

50

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
22. Segment Information (continued)(b) Related information(1) Geographical information
The disclosure of geographical segment information has been omitted as net sales
to third parties and property and equipment in Japan constituted more than 90% of
the consolidated sales for the years ended March 31, 2019 and 2020.
(2) Information by major customers
The following table presents major customer information for the years ended March
31, 2019 and 2020:
2019
2020
(Millions of yen)
Name of customers:
Kyushu Electric Power Co., Inc.
Reportable segment:
Utilities engineering service and Others
Net sales¥ 52,805¥ 51,749

2020(Thousands of
U.S. dollars)$ 475,506(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, 2019 and 2020 by reportable segment: Information onamortization of goodwill is omitted because the same information is disclosed in Note
22 (a) (3).
Utilities
engineering
service
Balance as of March 31¥ 183
Utilities
engineering
service

Balance as of March 31

¥ 64

2019
Adjustments
andOtherseliminations(Millions of yen)
¥ 159
¥–
2020
Adjustments
andOtherseliminations(Millions of yen)
¥ 118
¥–

Consolidated¥ 343

Consolidated
¥ 182
51

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
22. Segment Information (continued)(c) Amortization of goodwill and remaining balance of goodwill by reportable segment(continued)
Utilities
engineering
service
Balance as of March 31

$ 593

2020
Adjustments
andOtherseliminations(Thousands of U.S. dollars)$ 1,085$–

Consolidated$ 1,679(d) Gain on bargain purchase by reportable segment
No gain on bargain purchase was recorded for the years ended March 31, 2019 and 2020.
23. Related Party Transactions
Transactions and balances with related parties as of and for the years ended March 31, 2019and 2020 were as follows:
2019
2020
(Millions of yen)
Kyushu Electric Power Co., Inc.
Construction orderAccounts receivable on completed
construction contracts
Advances received on uncompleted
construction contracts

2020(Thousands of
U.S. dollars)¥ 48,794¥ 49,446$ 454,349¥ 8,628¥ 10,674$ 98,085

¥

¥

$

191

21

196

The transaction amounts do not include consumption taxes. The balances include
consumption taxes. Kyushu Electric Power Co., Inc. (located in Fukuoka City, with acapital amount of ¥237,304 million ($2,180,509 thousand) engaged in the business of
supplying electric power) is a related company which owned 22.65% and 22.75% of theshares of the Company as of March 31, 2019 and 2020, respectively.
The terms of the transactions referred to above were negotiated and determined on an arm’slength basis similar to third party transactions.

52

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
24. 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, 2020, wasapproved at the meeting of the Board of Directors held on April 28, 2020:

Cash dividends (¥50.00 = $0.45 per share)

Millions of yen¥ 3,543

Thousands of
U.S. dollars$ 32,55753