Consolidated Financial Statements
KYUDENKO CORPORATION
Year ended March 31, 2022with Independent Auditor’s Report

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Financial Statements
Year ended March 31, 2022

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, 2022
March 31,2021
2022
(Millions of yen)

AssetsCurrent assets:
Cash on hand and in banks (Notes 15, 17 and 20)
Notes receivable, accounts receivable on completed
construction contracts and other accounts
receivable (Notes 17, 22 and 25)
Short-term investments (Notes 17 and 18)
Costs of uncompleted construction contracts
Merchandise
Raw materials and supplies
Other current assets (Notes 15 and 25)
Allowance for doubtful accounts (Note 17)
Total current assets

2022(Thousands of
U.S. dollars)(Note 1)

¥ 50,905¥ 39,021$ 318,830

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

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

1,116,725
8,069
45,692
9,048
186,21388,553(279)
1,772,854

Fixed assets:
Property and equipment:
Buildings and structures (Notes 3 and 15)
Machinery, vehicles, tools, furniture and fixtures(Notes 3 and 15)
Leased assets
Land (Note 15)
Construction in progress
Accumulated depreciation
Total property and equipment

70,68173,060596,947

40,771
7,190
28,887
1,061(67,894)
80,69841,0597,628
29,677
1,112(71,694)
80,844335,480
62,329242,481
9,090(585,785)
660,544

Intangible assets:
Goodwill (Notes 21 and 24)
Customer-related intangible assets (Note 24)
Other intangible assets
Total intangible assets

–
–
1,729
1,729

755
1,739
1,873
4,368

6,174
14,213
15,30735,69550,59746,006375,897

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

15,169
313
6,124
4,288
5,279
(979)
76,203
161,416¥ 378,396

123,9432,564
50,04335,04043,139(8,000)622,629
1,318,868$ 3,091,723

Investments and other assets:
Investments in securities (Notes 15, 17 and 18)
Investments in unconsolidated subsidiaries andaffiliates (Notes 15 and 18)
Long-term loans receivable (Note 15)
Retirement benefits asset(Note 5)
Deferred tax assets (Note 12)
Other (Note 15)
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

1

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Balance Sheet (continued)
March 31, 2022
March 31,2021
2022
(Millions of yen)
Liabilities
Current liabilities:
Notes payable, accounts payable on construction
contracts and other accounts payable (Note 17)
Electronically recorded obligations (Note 17)
Short-term borrowings (Notes 4 and 15)
Current portion of long-term debt
(Notes 4, 15 and 17)
Lease obligations (Note 4)
Income taxes payable (Note 12)
Advances received on uncompleted construction
contracts (Notes 22 and 25)
Provision for loss on construction contracts
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 4, 15 and 17)
Lease obligations (Note 4)
Provision for retirement benefits for directors andaudit and supervisory board members
Liability for retirement benefits (Note 5)
Other long-term liabilities (Notes 6 and 12)
Total long-term liabilities
Total liabilities

2022(Thousands of
U.S. dollars)(Note 1)

¥ 63,559
23,59325¥ 66,669
22,07818$544,731180,393
150

1,749
1,145
7,145

6,847
1,117
7,309

55,9489,127
59,724

15,38160
12,700125,361

11,463
187
7,755
123,446

93,6601,530
63,366
1,008,632

10,140
2,711

3,494
2,782

28,55022,731

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

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

2,686
32,80825,609112,385
1,121,018

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

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

102,635
106,112
1,753,864(78)
1,962,534

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

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

15,107(1,785)
1,703(23,685)(8,660)16,8301,970,705$ 3,091,723

Commitments and contingencies (Note 14)
Net assets (Note 7)
Shareholders’ equity:
Common stock:
Authorized – 250,000,000 shares
Issued – 70,864,961 shares in 2021 and 2022
Capital surplus
Retained earnings
Treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive loss
Unrealized holding gain on securities
Unrealized loss on hedging instruments
Translation adjustments
Retirement benefit liability adjustments (Note 5)
Total accumulated other comprehensive loss
Non-controlling interests
Total net assets
Total liabilities and net assets

See accompanying notes to consolidated financial statements.

2

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Income
Year ended March 31, 2022
Year ended March 31,
2021
2022
2022
(Millions of yen)(Thousands of
U.S. dollars)(Note 1)
Net sales (Notes 21 and 25):
Construction contracts (Note 8)
Other
Total net sales
Cost of sales (Notes 9 and 11):
Construction contracts
Other
Total cost of sales
Gross profit:
Construction contracts
Other
Total gross profit
Selling, general and administrative expenses(Notes 10 and 11)
Operating income (Note 21)
Non-operating income (expenses):
Interest income
Dividend income
Interest expenses
Equity in earnings of affiliates
Gain on investments in partnership
Rent income
Extra retirement payments
Commission expenses
Provision of allowance for doubtful accounts ofsubsidiary
Other, net
Ordinary income
Extraordinary income (loss):
Gain on sales of property and equipment
Loss on disposal and sales of fixed assets
Gain on sales of investments in securities (Note 18)
Gain on sales of subsidiary shares (Note 18)
Impairment loss on investments in securities(Note 18)
Impairment loss on investment in unconsolidated
subsidiary (Note 18)
Loss on sales of investments in securities (Note 18)
Penalty
Profit before income taxes
Income taxes (Note 12):Current
DeferredProfitProfit attributable to:Non-controlling interests
Owners of parent¥ 377,331
14,570391,901¥ 364,440
12,123
376,563$ 2,977,696
99,054
3,076,750

324,266
11,003335,269

310,6158,586
319,201

2,537,913
70,1572,608,071

53,064
3,567
56,63153,824
3,536
57,361

439,782
28,896468,678

23,63332,99824,22433,137

197,926
270,752

91
723
(411)
694
1,054
313
(90)
(6)

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

399
6,109
(3,162)
12,375
7,437
2,694
(689)
(620)

(236)
774
35,906(35)722
36,828(285)
5,902
300,912

55
(184)
1,282
12

4
(286)
811
–

40
(2,338)
6,632
–

(17)

(489)

(4,000)

(115)
(66)
(89)
36,784–(36)–
36,833–(295)–
300,951

11,337258
25,18811,365(871)
26,33992,860(7,121)
215,213145¥ 25,042

123¥ 26,216

1,007$ 214,206

See accompanying notes to consolidated financial statements.

3

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31, 2022

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

Year ended March 31
2021
2022
2022
(Millions of yen)(Thousands of
U.S. dollars)(Note 1)
¥ 25,188¥ 26,339$ 215,213
3,243
(120)
2,928

(2,146)
131
2,158(17,541)
1,073
17,633Comprehensive income

171
6,223
¥ 31,411

159
302¥ 26,641

1,302
2,467
$ 217,680

Comprehensive income attributable to:
Owners of parent
Non-controlling interests¥ 31,276
134¥ 26,490
151$ 216,445
1,235

See accompanying notes to consolidated financial statements.

4

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
Year ended March 31, 2022
Total
Unrealized
Treasury

Total

Unrealized

loss onCommonCapitalRetainedstock,

shareholders’holding gain

hedging

stock

surplusearnings

at costequityon securities

Retirement

Translation

accumulated

benefit

other

Non-

liability

comprehensive

controlling

Total

loss

interests

net assets

instruments adjustments adjustments(Millions of yen)
Balance at April 1, 2020

¥ 12,561¥ 12,982¥ 177,642¥ (8)¥ 203,179745¥ (540)¥ 212¥ (7,985)¥ (7,567)¥ 1,831¥ 197,442––(7,086)–(7,086)

–

–

–

–

–

–

(7,086)

period––25,042–

25,042

–

–

–

–

–

–

25,042

Purchase of treasury stock

–

–

–

(0)

(0)

–

–

–

–

–

–

(0)

–

–

2

–

2

–

–

–

–

–

–

2

–

3

–

–

3

–

–

–

–

–

–

3

–

1

–

–

1

–

–

–

–

–

–

1

shareholders’ equity

–

–

–

–

–

3,252

159

(106)

2,928

6,233

102

6,336

Net changes during the year–4

17,958(0)

17,962

3,252

159

(106)

2,928

6,233

102

24,29812,561

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

Cash dividends paid¥

Profit attributable toowners of parent for the

Change in scope of
consolidation
Purchase of treasury stockof consolidated subsidiary
Purchase of shares of
consolidated subsidiaries
Net changes in items otherthan those inBalance at April 1, 2021
Cash dividends paid
Profit attributable toowners of parent for the

Change in scope of
consolidation
Net changes in items otherthan those inBalance at March 31, 2022

5

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets (continued)
Year ended March 31, 2022
Total
Unrealized

Unrealized

TreasuryTotalholding

loss onCommonCapitalRetainedstock,

shareholders’gain onhedging

stock

surplusearnings

at costequitysecurities$ 102,635$ 106,112$ 1,598,181$ (69)$ 1,806,860$ 32,670$ (3,113)––(57,900)–(57,900)––

period––214,206–

214,206–

Purchase of treasury stock

–

–

–

(8)

(8)

–

–

–

(622)

–

(622)

–

–

–

–

–

Retirement

accumulated

benefit

other

Non-

liability

comprehensive

controllingTotal

adjustments

loss

interests

net assets

862$ (41,318)$ (10,899)$ 15,801$ 1,811,762

–

–

–

–

(57,900)

–

–

–

–

–

214,206

–

–

–

–

–

(8)

–

–

–

–

–

–

(622)

(17,562)

1,328

840

17,633

2,239

1,029

3,269

Translation

instruments adjustments(Thousands of U.S. dollars) (Note 1)
Balance at April 1, 2021
Cash dividends paid$

Profit attributable toowners of parent for the

Change in scope of
consolidation
Net changes in items otherthan those inshareholders’ equity
Net changes during the year––

155,683(8)

155,674(17,562)

1,328

840

17,633

2,239

1,029

158,943

Balance at March 31, 2022

$ 102,635$ 106,112$ 1,753,864$ (78)$ 1,962,534$ 15,107$ (1,785)$ 1,703$ (23,685)$ (8,660)$ 16,830$ 1,970,705

See accompanying notes to consolidated financial statements.

6

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31, 2022
2021
2022
(Millions of yen)

Cash flows from operating activities
Profit before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful
accounts
Increase in retirement benefits asset
Decrease in liability for retirement benefits andprovision for retirement benefits for directors andaudit and supervisory board members
Increase in provision for loss on construction
contracts
Gain on investments in partnership
Interest and dividend income
Interest expenses
Foreign exchange 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
Decrease (increase) in notes and accounts receivable
on completed construction contracts
Decrease in costs of uncompleted construction
contracts
Increase in inventories(Decrease) increase in notes and accounts payable on
construction contracts
Decrease in advances received on uncompleted
construction contracts
Decrease in long-term accounts payable
Increase (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

2022(Thousands of
U.S. dollars)(Note 1)

¥ 36,784
5,739¥ 36,833
5,791$ 300,951
47,316

233
–

(152)
(2,860)(1,243)(23,369)(3,343)(907)(7,411)48(1,054)
(814)
411
(60)
(431)
(29)
157
133
(1,228)

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

1,008
(7,437)(6,508)3,162(1,034)(9,820)
(39)
2,310
4,000
(6,337)

8,915(4,786)(39,108)

1,374(12,964)585(8,266)

4,786(67,541)(14,206)

153

1,252

(8,043)
(11)
4,020
3,706
19,335793(411)(10,533)¥ 9,184(3,923)(2)(6,036)
2,298
16,193796(387)(11,350)¥ 5,252(32,061)(24)(49,323)
18,781
132,309
6,510(3,162)(92,739)$ 42,917

7

KYUDENKO CORPORATION and Consolidated Subsidiaries
Consolidated Statement of Cash Flows (continued)
Year ended March 31, 2022
2021
2022
(Millions of yen)

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property and equipment
Proceeds from sales of property and equipment
Payments of disposal of property, plant andequipment
Purchase of investments in securities
Proceeds from sales of investments in securities
Payments for purchase of investments in subsidiaries
resulting in changes in scope of consolidation
Payments for sales of investments in subsidiaries
resulting in changes in scope of consolidation
Payments of long-term loans receivableCollection of long-term loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling shareholders
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 decrease 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 20)

2022
(Thousands of
U.S. dollars)(Note 1)¥ (1,137)
921(2,945)103¥ (1,352)
1,732(3,931)169$ (11,050)
14,156(32,124)
1,386(4)(6,458)
6,534

(210)
(4,817)
3,992(1,718)(39,364)
32,621–(2,871)(23,462)

(47)
(167)
93
(1,124)(4,232)

–
(127)
153
(273)
(7,536)–(1,039)1,252(2,236)(61,581)(5)
55(1,769)(0)(7,084)
(4)
(21)

(34)
–
(1,811)(1)(7,086)
(2)
(22)

(285)
–
(14,799)(8)(57,897)
(21)
(184)

(1)
(1,232)(10,064)–(1,233)(10,191)–(10,077)(83,274)(51)(5,164)54,964301(12,175)
49,8002,459(99,478)
406,896

–

166

1,363

¥ 49,800¥ 37,791$ 308,781

See accompanying notes to consolidated financial statements.

8

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2022
1.

Basis of Presentation

KYUDENKO CORPORATION (the “Company”) and its domestic subsidiaries maintaintheir accounting records and prepare their financial statements in accordance with accounting
principles generally accepted in Japan, and its foreign subsidiaries maintain their books ofaccount in conformity with those of their countries of domicile.
The accompanying consolidated financial statements of the Company and consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted in Japan,
which are different in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from the consolidated
financial statements prepared by the Company as required by the Financial Instruments andExchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications
and rearrangements have been made to the consolidated financial statements issued
domestically in order to present them in a format which is more familiar to readers outside
Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements have beentranslated from yen amounts solely for the convenience of the reader, as a matter of arithmetic
computation only, at ¥122.39 = U.S.$1.00, the rate of exchange prevailing on March 31, 2022.
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, 2022 and 2021 have been omitted.
Consequently, the totals shown in the accompanying consolidated financial statements forthe years ended March 31, 2022 and 2021 (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, 2022, the numbers of consolidated subsidiaries and affiliates accounted
for by the equity method were 58 and 10 (46 and 9 in 2021), respectively.
During the year ended March 31, 2022, the following events and/or transactions haveoccurred, which resulted in changes in the scope of consolidation. Kyudenko Vietnam
Co., Ltd., Kyudenko Malaysia Sdn., Bhd. and Kyudenko (Thailand) Co., Ltd. were
newly included in the scope of consolidation from the perspective of materiality fromthis fiscal year. The Company acquired shares of Chuorika kougyo Co., Ltd., which islocated in Tokyo prefecture, on September 22, 2021, and this subsidiary and its eightsubsidiaries were newly included in the scope of consolidation. Kyushudenko home Co.,
Ltd. changed its name to Kyudenko home Co., Ltd. on February 24, 2022. Central
General Development Co., Ltd. was accounted for by the equity method through an
acquisition by the Company on August 3, 2021.
Chuorika kougyo Co., Ltd. and its eight consolidated subsidiaries, Kyulien Environment
Improving Co., Ltd., Asia Projects Engineering Pte. Ltd., Kyudenko Vietnam Co., Ltd.,
Kyudenko Malaysia SDN.BHD., Kyudenko (Thailand) Co., LTD. and Kyudenko South
East Asia Pte. Ltd. are consolidated by using their financial statements as of theirrespective fiscal year end, which falls on December 31. Necessary adjustments are madeto 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 andaffiliates 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.
10

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.

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
Securities other than equity securities issued by unconsolidated subsidiaries andaffiliates are classified into three categories: trading, held-to-maturity or other securities.
Trading securities are carried at fair value and held-to-maturity securities are carried atamortized cost. Marketable securities classified as other securities are carried at fairvalue with changes in unrealized holding gain or loss, net of the applicable income taxes,
included directly in net assets. In cases where an embedded derivative in a compound
financial instrument cannot be separately measured, the entire compound financial
instrument is measured at fair value with changes in value charged or credited to profit
or loss.
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.

12

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. 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.
(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.

13

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 or loss as incurred.
(o) Basis for recording significant revenues and expenses
Revenues from contracts with customers are recognized based on the following five-stepmodel:
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 Company and consolidated subsidiaries are mainly engaged in utilities engineering
services. In the utilities engineering service business, the Group enters into construction
contracts with customers. For such contracts, control of the goods or services is
considered to have been transferred to the customer over a certain period of time if theperformance obligation meets certain requirements. Therefore, the Group recognizes
revenue over the construction period based on the degree of completion related to thefulfillment of performance obligations 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 the Group over the construction period and the transfer of control of goods
or services to the customer, the percentage-of-completion measurement is based on theratio 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 performanceobligation cannot be reasonably estimated, but the costs incurred are expected to be
recovered, revenue shall be recognized on a cost recovery basis. For utilities engineering
services for which the time between the transaction commencement date and the point
in time when the contractual performance obligation is expected to be fully satisfied isvery short, revenue is recognized when the performance obligation is fully satisfied.

14

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 (continued)
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.
(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 Company and its
consolidated subsidiaries do not enter into derivative transactions for speculative
purposes.
Hedging instruments are interest-rate swaps and interest and currency rate swaps.
Hedged items are interest payments on loans, foreign currency loans and associatedinterest payments.
Derivative financial instruments are carried at fair value with changes in unrealized gainor loss charged or credited to profit or loss, except for those which meet the criteria fordeferral hedge accounting under which unrealized gain or loss is deferred as a componentof net assets.
Deferral hedge accounting is adopted for derivatives which qualify as hedges, underwhich unrealized gain or loss is deferred. Simplified methods, “special treatment” and“allocation method,” under which either the net amounts to be paid or received under theinterest rate swap contract are added to or deducted from the interest on the liability or
the foreign currency liabilities are translated at the corresponding currency swap contract
rates, are applied for interest and currency rate swaps which qualify for such treatment.
Hedge effectiveness is not assessed if the substantial terms and conditions of the hedging
instruments and the hedged items are the same. An assessment of hedge 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, 2021 and 2022, respectively
Revenue arising from construction contracts accounted for by the percentage-ofcompletion method was ¥221,286 and ¥196,386 million ($1,604,595 thousand) for
the years ended March 31, 2021 and 2022, respectively.
The figure the year ended March 31, 2021 is consistent with the figure recognized
for completed construction contracts based on the percentage-of-completion method
for the previous fiscal year.
(2) Other information that enhances the understanding of users of the consolidated
financial statements
1.

Method used to calculate the amount
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, determined based on theratio of actual costs incurred for a project up to the end of the fiscal year to theestimated total costs of the construction project. The estimates of total cost of
construction are based on operating budgets prepared by incorporating the latest
status of construction under internal controls established by the Company. The
operating budgets are prepared by construction personnel who identify thedetails and quantity of materials required, the quantity of work required basedon the work schedule, etc., considering basic specifications and work details as
instructed by customers, and are determined after obtaining the approval ofmanagement 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, there may
be an impact on the consolidated financial statements for the following fiscal
period.

(r) Accounting changes
Application of “Accounting Standard for Revenue Recognition”
The Company and its consolidated subsidiaries adopted “Accounting Standard for
Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement
No.29 issued on March 31, 2020). As a result, revenue is recognized at the time whencontrol of the promised goods or services is transferred to the customer based on theamount expected to be received in exchange for those goods or services from the
beginning of the current fiscal year.
The Company and its consolidated subsidiaries previously used the percentage-ofcompletion accounting method for construction contracts where the outcome of theconstruction activity for the portion of work in progress could be reliably estimated.
However, where control of a good or service is transferred to the customer over time, theCompany has changed its method of accounting to recognizing revenue over time as theperformance obligations to transfer the goods or services to the customer are satisfied.
Progress toward satisfaction of a performance obligation is measured based on thepercentage of construction costs incurred by the end of each reporting period against the
total estimated construction costs. If the progress toward satisfaction of a performanceobligation cannot be reasonably estimated, but the Company expects to recover all costs
incurred, revenue is recognized on a cost recovery basis.
In addition, for certain revenues related to equipment sales, etc., the Company previously
recognized revenues on a gross basis, but has changed its method of accounting so thatit recognizes revenue on a net basis when it is acting as an agent in a transaction inproviding goods and services to customers.
In accordance with the transitional treatment prescribed in Paragraph 84 of the
Accounting Standard for Revenue Recognition, the cumulative effects of retrospectively
applying new accounting policies have been reflected in the beginning balance ofretained earnings for the current fiscal year.
17

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

Summary of Significant Accounting Policies (continued)(r) Accounting changes (continued)
Application of “Accounting Standard for Revenue Recognition” (continued)
As a result, sales and costs of sales decreased by ¥2,372 million ($19,384 thousand) inthe current fiscal year, but there was no impact on operating income, ordinary income,and profit before income taxes.
There is no effect on the balance of retained earnings at the beginning of the current
fiscal year.
Furthermore, in accordance with the transitional treatment stipulated in Paragraph 89-3of the Accounting Standard for Revenue Recognition, related notes on revenue
recognition for the previous fiscal year are not presented.
Application of “Accounting Standard for Fair Value Measurement.”
The Company and its consolidated subsidiaries adopted “Accounting Standard for Fair
Value Measurement.” ((ASBJ Statement No.30, July 4, 2019), hereinafter “Fair Value
Measurement Standard”) from the beginning of the current fiscal year, and new
accounting policies prescribed by the Fair Value Measurement Standard have been
adopted prospectively in accordance with the transitional treatment prescribed in
Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph44-2 of the Accounting Standard for Financial Instruments. There is no effect on the
consolidated financial statements.
In addition, related notes are included on the breakdown of the fair value of financial
instruments by level of fair value and other items. However, notes for the prior fiscal
year have not been included in accordance with the transitional treatment prescribed in
Paragraph 7-4 of the Implementation Guidance on Disclosures about Fair Value of
Financial Instruments (ASBJ Guidance No. 19, July 4, 2019).
(s) Change in presentation“Commission expenses” in “Non-operating income (expenses)” were included in “Other,
net” for the fiscal year ended March 31, 2021, but due to the increase in materiality forthe fiscal year ended March 31, 2022, they are presented separately. In order to reflect
this change in presentation, the consolidated financial statements for the fiscal year
ended March 31, 2021 have been reclassified. As a result, in the consolidated statementof income for the fiscal year ended March 31, 2021, ¥115 million that was presented in“Other, net” has been reclassified as ¥6 million and ¥109 million presented in“Commission expenses” and “Other, net”.

18

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

Summary of Significant Accounting Policies (continued)(t) Additional information
As for the impact of the new coronavirus infection, the Company is continuing its
business activities by implementing strict measures, and at this time, the Company ismaintaining the same level of utilization as usual. In terms of the future outlook, theCompany estimates that economic activities will continue to be restrained in the fiscal
year ending March 31, 2023, as various measures are implemented to prevent the spreadof the infection, including the pre-emergency measures taken by the government.
Although certain impacts are expected on order activity, price competition, andconstruction delays, and so on, the Company believes that they will not be significant.

3.

Reductions in Acquisition Costs Due to Subsidies and Capital GainsThe amounts of the Company received from the Japanese national government and capitalgains recognized upon the expropriation by the government and the exchange for similartransactions and deducted from the acquisition costs of property and equipment at March 31,
2021 and 2022 are as follows:
2021
2022
(Millions of yen)
Structures
Machinery

¥ 283
2,762
¥ 3,046

¥ 283
2,762
¥ 3,046

2022(Thousands of
U.S. dollars)$ 2,314
22,573$ 24,887

19

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

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

The annual weighted-average interest rates applicable to short-term borrowings (excluding
the current portion of long-term debt) were 1.00% and 0.28% for the years ended March 31,
2021 and 2022, respectively.
Long-term debt and lease obligations at March 31, 2021 and 2022 consisted of the following:
2021
2022
(Millions of yen)
Loans from banks due through 2033
with interest rates ranging from
0.116% to 1.500%
Lease obligations due through 2036
Less current portion¥ 11,890
3,857
15,747(2,895)¥ 12,852

2022(Thousands of
U.S. dollars)¥ 10,341
3,899
14,240(7,964)¥ 6,276$ 84,499
31,858116,357(65,075)$ 51,281

The aggregate annual maturities of long-term debt and lease obligations as of March 31, 2022
are summarized as follows:

Years ending March 31,
2023
2024
2025
2026
2027
2028 and thereafter(Millions of yen)(Thousands of
U.S. dollars)¥ 7,964
1,954
1,077
843
640
1,760
¥ 14,240$ 65,075
15,969
8,803
6,889
5,236
14,382$ 116,357

20

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

Retirement Benefit Plans

The Company has defined benefit plans (corporate pension plans), defined contribution plans(corporate pension plans) and lump-sum payment plans, and the consolidated subsidiaries
also have defined benefit plans (multiple-employer pension plans), defined contributionplans (corporate pension plans) and lump-sum payment plans. The Company and its
consolidated subsidiaries may pay additional retirement benefits under certain circumstances.
For the defined benefit plans and lump-sum payment plans of most of consolidated
subsidiaries, liabilities and expenses for retirement benefits are calculated using thesimplified method.
(a) Defined benefit plans (excluding the retirement benefit obligation calculated by thesimplified method)
1) The changes in the retirement benefit obligation for the years ended March 31, 2021
and 2022 were as follows:
2021
2022
(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

¥ 44,939
2,087
270
(395)
(2,046)148¥ 45,003¥ 45,003
2,084
270(1,488)(2,452)–¥ 43,416

2022(Thousands of
U.S. dollars)$ 367,707
17,0272,206(12,163)(20,038)–$ 354,739

2) The changes in the plan assets for the years ended March 31, 2021 and 2022 wereas follows:
2021
2022
(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

¥ 35,906
718
2,737
4,667
(1,931)56¥ 42,155¥ 42,155
843
574
4,770
(2,325)57¥ 46,075

2022(Thousands of
U.S. dollars)$ 344,432
6,888
4,694
38,981(19,003)472$ 376,465

21

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

Retirement Benefit Plans (continued)(a) Defined benefit plans (excluding the retirement benefit obligation calculated by thesimplified method) (continued)
3) The following table sets forth the funded status of the plans and the amounts
recognized in the consolidated balance sheets at March 31, 2021 and 2022 for theCompany’s and its consolidated subsidiaries’ defined benefit plans:
2021
2022
(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¥ 42,162(42,155)7
2,841¥ 40,604(46,075)(5,470)2,811

2022(Thousands of
U.S. dollars)$ 331,764(376,465)(44,701)
22,9752,848(2,659)(21,725)

2,848
–

2,811
(5,470)22,975(44,701)¥ 2,848¥ (2,659)$ (21,725)

4) The components of retirement benefit expenses for the years ended March 31, 2021
and 2022 were as follows:
2021
2022
(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¥ 2,031
270
(718)
696
529
90
¥ 2,900¥ 2,026
270
(843)
508
531
84
¥ 2,577

2022(Thousands of
U.S. dollars)$ 16,554
2,206(6,888)
4,152
4,346
689
$ 21,061

Contributions from employees of ¥56 million and ¥57 million ($472 thousand) for
the years ended March 31, 2021 and 2022 are not included in above service cost.

22

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

Retirement Benefit Plans (continued)(a) Defined benefit plans (excluding the retirement benefit obligation calculated by thesimplified method) (continued)5) The components of retirement benefit liability adjustments included in othercomprehensive income (before tax effect) for the years ended March 31, 2021 and2022 were as follows:
2021
2022
(Millions of yen)
Prior service cost
Actuarial gain and loss
Total

¥

(380)
(3,830)¥ (4,211)¥(531)(2,571)¥ (3,103)

2022(Thousands of
U.S. dollars)$ (4,346)(21,010)$ (25,357)

6) The components of retirement benefit liability adjustments included in accumulated
other comprehensive income (before tax effect) as of March 31, 2021 and 2022 wereas follows:
2021
2022
(Millions of yen)
Unrecognized prior service cost
Unrecognized actuarial gain and loss
Total

¥ 7,397(125)¥ 7,272¥ 6,865(2,696)¥ 4,168

2022(Thousands of
U.S. dollars)$ 56,092(22,031)$ 34,060

7) The fair value of plan assets, by major category, as a percentage of total plan assets
at March 31, 2021 and 2022 was as follows:

Bonds
StocksGeneral accounts of life insurance
Alternative investments
Other
Total

2021

2022

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

45%
25%
4%
25%
1%
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.

23

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

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

Discount rates
Expected rates of return on plan assets

2021

2022

0.6%
2.0%

0.8%
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, 2021 and 2022 were as follows:
2021
2022
(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

¥ 834
337
(119)
(431)
27
¥ 647

¥ 647
451
(146)
(456)
52
¥ 549

2022
(Thousands of
U.S. dollars)$ 5,294
3,689(1,193)(3,728)427$ 4,4902) 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, 2021 and 2022 for the defined benefit plans:
2021
2022
(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

2022(Thousands of
U.S. dollars)$ 39,341(36,584)
2,756
1,733

¥ 4,528(4,107)421
226¥ 4,815(4,477)
337
212

647

549

4,490

1,202
(554)

1,203
(653)

9,832
(5,342)549$ 4,490

¥

647

¥

24

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

Retirement Benefit Plans (continued)(b) Defined benefit plans accounted for using the simplified method (continued)
3) Retirement benefit expenses calculated using the simplified method amounted to¥337 million and ¥451 million ($3,689 thousand) for the years ended March 31,
2021 and 2022, respectively(c) Defined contribution plans
Contributions made to defined contribution plans by the Company for the years ended
March 31, 2021 and 2022 were ¥476 million and ¥500 million ($4,089 thousand),
respectively.

6.

Asset Retirement Obligations

Asset retirement obligations, which are included in the other long-term liabilities, mainly
represent future obligations to restore leased property to its original condition associated withthe removal of 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, 2021 and 2022:
2021
2022
(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

¥ 1,336¥ 1,356

2022(Thousands of
U.S. dollars)$ 11,082–20¥ 1,35640
20¥ 1,417330
167$ 11,580

25

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

Net Assets

Under the Corporate Law of Japan (the “Corporate Law”), the entire amount paid for new
shares is required to be designated as common stock, in principle. However, a company may
designate an amount not exceeding 50% of the proceeds of the issuance of new 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, 2021 and 2022
amounted to ¥12,543 million ($102,491 thousand).
There was no legal reserve for the years ended March 31, 2021 and 2022.
(a) Shares issued and outstanding / Treasury shares
For the year ended March 31, 2021:

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

Number ofshares at
April 1, 2020

Increase
Decrease(Number of Shares)

Number ofshares at
March 31, 2021

70,864,961––

70,864,961

18,870155–

19,025

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

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

26

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

Net Assets (continued)(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(b) Share subscription rights
No share subscription rights were outstanding.
(c) Dividends
1) Dividends paid
For the year ended March 31, 2021:

Resolution: Meeting of the Boardof Directors on April 28, 2020
Cash dividends (¥50.00 per share)
Resolution: Meeting of the Boardof Directors on October 30, 2020
Cash dividends (¥50.00 per share)

Total dividends(Millions of yen)

Record date

Effective date

¥ 3,543

March 31, 2020

June 4, 2020

3,543

September 30,
2020

December 1,
2020

27

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

Net Assets (continued)(c) Dividends (continued)
Dividends paid (continued)
For the year ended March 31, 2022:
Recorddate

Total dividends(Thousands(Millions ofof U.S.
yen)
dollars)
Resolution: Meeting of the Boardof Directors on April 28, 2021
Cash dividends (¥50.00 ($0.41) per
share)
Resolution: Meeting of the Boardof Directors on October 28, 2021
Cash dividends (¥50.00 ($0.41) per
share)

8.

Effectivedate¥ 3,543$ 28,950

March 31,2021

June 4,
2021

3,543

28,950

September
30, 2021

December
1, 2021

Net Sales

Revenues arising from contracts with customers and revenues from other sources are notpresented separately. Information on revenues arising from contracts with customers isshown in Note 25.

9.

Provision (Reversal of Provision) for Loss on Construction Contracts

Provision for loss on construction contracts included in cost of sales for the years ended
March 31, 2021 and 2022 represents a provision of ¥48 million and ¥126 million ($1,032
thousand), respectively.

28

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. Selling, General and Administrative Expenses
Major items included in selling, general and administrative expenses for the years ended
March 31, 2021 and 2022 were as follows:
2021
2022
(Millions of yen)
Salaries and wages
Retirement benefit expenses
Retirement benefits expenses for
directors and audit andsupervisory board members
Depreciation and amortization¥ 10,391
661¥ 10,297
543

2022(Thousands of
U.S. dollars)$ 84,138
4,443

52
1,093

49
1,397

402
11,419

11. Research and Development Costs
Research and development costs included in cost of sales and selling, general andadministrative expenses for the years ended March 31, 2021 and 2022 amounted to ¥254
million and ¥267 million ($2,188 thousand), respectively.

12. Income Taxes
Income taxes in Japan applicable to the Company and its domestic consolidated subsidiaries
consist of corporation tax, inhabitants’ taxes and enterprise tax, which, in the aggregate,
resulted in a statutory rate of approximately 30.46% for the years ended March 31, 2021 and
2022, respectively. Income taxes of the foreign consolidated subsidiaries are based generally
on the tax rates applicable in their countries of incorporation.
The reconciliation between the effective tax rates reflected in the consolidated statement ofincome and the effective statutory tax rates for year ended March 31, 2022 is as follows. The
reconciliation for the year ended March 31, 2021 has been omitted as the difference was lessthan 5% of the statutory tax rate.

Effective statutory tax rate
Effect of:Permanently non-tax-deductible expenses
Permanently non-taxable income
Per capita inhabitant tax
Valuation allowance
Other
Effective tax rate2022
30.46%
0.91(0.52)
0.53(1.88)(1.01)
28.49%

29

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. Income Taxes (continued)
The significant components of deferred tax assets and liabilities as of March 31, 2021 and2022 were as follows:
2021
2022
(Millions of yen)

2022
(Thousands of
U.S. dollars)

Deferred tax assets:
Accrued bonuses
Liability for retirement benefits
Unrealized profits on fixed assets
Enterprise tax payable
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¥ 2,427
2,924
1,249
457
2,839
9,898
(849)
9,049

¥ 2,452
2,034
1,178
448
3,663
9,777
(157)
9,619

$ 20,039
16,624
9,627
3,662
29,93579,890(1,289)78,600(1,603)(2,398)(19,596)(1,199)(1,182)(9,663)(1,823)(1,096)(5,722)¥ 3,326(877)(1,817)(6,275)¥ 3,344(7,165)(14,849)(51,275)$ 27,324

30

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. Other Comprehensive Income (Loss)
Reclassification adjustments and tax effects allocated to each component of othercomprehensive income (loss) for the years ended March 31, 2021 and 2022 were as follows:
2021
2022
(Millions of yen)
Unrealized holding gain (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 gain (loss) on
securities
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 income2022(Thousands of
U.S. dollars)¥ 4,985¥ (2,377)$ (19,424)

(308)
4,676
(1,433)(713)(3,090)943(5,826)(25,250)
7,709

3,243

(2,146)(17,541)

(120)

131

1,073

2,984

2,063

16,8571,226
4,211(1,282)

1,040
3,103
(945)

8,499
25,357(7,723)

2,928

2,158

17,633

171

160

1,309

–

(0)

(6)

171
¥ 6,223

159
302

1,302
2,467

¥

$

31

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. Commitments and Contingencies
At March 31, 2021 and 2022, 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
2021
2022
(Millions of yen)
Debt guarantee:
Mizuho Bank, Ltd.
(Atsumi Greenpower Co.)
Development Bank of Japan Inc.
(Nagashima Windhill Co.)
The Hokuriku Bank, Ltd. and others(Matusima Fuuryoku Co.)
Bond insurance:
Sumitomo Mitsui Banking Corporation(KYUDENKO MALAYSIA SDN. BHD.)MUFG Bank, Ltd.
(KYUDENKO VIETNAM CO., LTD.)
Total

¥

118

¥

31

2022
(Thousands of
U.S. dollars)

$

256

93

55

452

1,982

1,837

15,009

8

–

–

101
¥ 2,304–¥ 1,923–$ 15,718

Kyudenko Vietnam Co., Ltd. and Kyudenko Malaysia Sdn., Bhd. were included in the scopeof consolidation from the first quarter of this fiscal year.
Endorsement for transfer of notes receivable
2021
2022
(Millions of yen)Endorsement for transfer of notes receivable

¥3

¥ 12

2022
(Thousands of
U.S. dollars)
$ 101

32

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. Commitments and Contingencies (continued)
The Company has entered into subordinated loan commitment contracts as a subordinatedcreditor in joint financing for companies involved in the PFI business. (PFI is a private
finance initiative which is a method of providing funds for major capital investments, whereby private firms are contracted to complete and manage public projects.)
At March 31, 2021 and 2022, the Company had loan commitment agreements with 8
companies and 8 companies, respectively. The unused balances under the loan commitment
contracts at March 31, 2021 and 2022 were as follows:
2021
2022
(Millions of yen)
Total loan commitments
Aggregated borrowings
Unused balances

¥ 145
–
¥ 145

¥ 145
–
¥ 145

2022
(Thousands of
U.S. dollars)$ 1,190–$ 1,190

15. Pledged Assets
The assets pledged as collateral for short-term borrowings of ¥327 million and ¥426 million($3,487 thousand) and long-term debt of ¥3,051 million and ¥2,817 million ($23,023
thousand) of the Company’s investees involved in the renewable energy generation business
and/or PFI business at March 31, 2021 and 2022, respectively, were as follows:
2021
2022
(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

¥ 556

¥

711

2022
(Thousands of
U.S. dollars)$ 5,816

4
30

2
159

23
1,300

2,020
0

1,801
214

14,715
1,750

12,07759

13,351
57

109,090466

15¥14,76415¥ 16,312

122$ 133,286

33

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
16. Amounts Per Share
Per share information as of March 31, 2021 and 2022 and for the years then ended is asfollows:
2021

2022

2022
(U.S. dollars)¥ 370.05
3,375.43$ 3.02
27.58(Yen)
Profit attributable to owners of parent:
Basic
Net assets¥ 353.48
3,102.61

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.
As described in Note 2, “Summary of Significant Accounting Policies, (r) Accountingchanges,” the Accounting Standard for Revenue Recognition has been adopted, but there isno effect on per share information.
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:
2021
2022
(Thousands of shares)
Weighted average number of shares forbasic profit attributable to owners ofparent

70,846

70,845The entire amounts of profit attributable to owners of parent of ¥25,042 million and¥26,216 million ($214,206 thousand) for the years ended March 31, 2021 and 2022 were
attributable to common shareholders.

34

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
16. Amounts Per Share (continued)(b) The bases for the calculation of net assets per share are as follows:
2021
2022
(Millions of yen)
Total net assets
Amounts deducted from total
net assets:
Non-controlling interests
Net assets attributable to sharesof common stock¥ 221,741¥ 241,194

2022(Thousands of
U.S. dollars)$ 1,970,705(1,933)(2,059)(16,830)¥ 219,807¥ 239,134$ 1,953,874

2021
2022
(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)

70,84570,845

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

35

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Overview (continued)(b) Details of financial instruments, related risk and risk management system
Trade receivables, such as notes receivable, accounts receivable on completed
construction contracts and other accounts receivable, are exposed to credit risk in relation
to customers. With regard to this risk, the Company and its consolidated subsidiaries
monitor the due dates and outstanding balances and make efforts to identify at an earlypoint and mitigate risks of bad debts from customers who have financial difficulties.
Investments in securities mainly consist of equity securities and are exposed to market
price fluctuation risk. The Company and its consolidated subsidiaries review the fairvalues of listed equity securities quarterly and the financial condition of the issuingentities.
Trade payables, such as notes payable, accounts payable on construction contracts andother accounts payable, and electronically recorded obligations, have payment due dates
mainly within one year.
Short-term borrowings are taken out mainly to obtain funds for operating activities.
Long-term debt is used mainly for the purposes of capital investments.
Trade payables, short-term borrowings and long-term debt are exposed to liquidity risk.
The Company and its consolidated subsidiaries manage the risk by preparing andupdating its cash flow plans monthly. In order to avoid interest rate fluctuation risk andforeign exchange fluctuation risk, the Company uses interest rate swaps for certain loans
borrowed from financial institutions, interest rate and currency swaps are used for allloans denominated in foreign currencies. Furthermore, the Company and its consolidated
subsidiaries examine the utilization of hedge transactions based on internal rules andregulations each time.
(c) Supplemental explanation on estimated fair value of financial instruments
Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and other factors could result in different fair value.

36

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Estimated fair value of financial instruments
The carrying value of financial instruments on the consolidated balance sheet as of March 31,
2021 and 2022, 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

2021
Estimated
fair value(Millions of yen)

¥ 50,905¥ 50,905

Difference
¥

–

¥

–
–
–

130,705(18)
130,686
24,278¥ 205,870

130,686
24,278¥ 205,870

63,55963,559–23,593
11,890¥ 99,043¥–

23,593
11,877¥ 99,030
¥
–

–
(13)
¥ (13)¥ –37

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
2022
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¥ 39,021

Estimated
fair value
Difference(Millions of yen)
¥ 39,021¥–

Carrying
Estimatedvalue
fair value
Difference(Thousands of U.S. dollars)$ 318,830$ 318,830

$

–

$

–
–
–

136,676

1,116,725(34)
136,641
18,995¥ 194,658

136,641
18,995¥ 194,658

–
–
–

(279)
1,116,446
155,200$ 1,590,477

1,116,446
155,200$ 1,590,477

66,66966,669–544,731544,731–

22,078
10,341¥ 99,089

22,078
10,325¥ 99,073–(16)¥ (16)

180,393
84,499$ 809,624

180,393
84,362$ 809,487–(136)$ (136)

¥

–

¥

–

¥

¥

–

$

–

$

–

$

(*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 ¥38,916 million and ¥42,180 million ($344,639
thousand) as of March 31, 2021 and 2022, respectively, were not included in theabove table because it was extremely difficult to determine the fair value.

38–

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)
Note 2: Redemption schedule for receivables and marketable securities with maturities at
March 31, 2021 and 2022 were as follows:2021
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¥ 50,905

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

130,705

–

–

–

–

1,001

831

253

657
¥ 182,267

10¥ 1,01144¥ 876

21,749¥ 22,002

Due after
Due after
one yearfive years
throughthroughfive years
ten years(Millions of yen)¥ –¥ –Due after
ten years2022
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¥–

136,676

–

–

–

1,000

1

–

253

–
¥ 176,697

675
¥ 676

205
¥ 205

22,048¥ 22,301

39

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Estimated fair value of financial instruments (continued)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$ 318,830

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

Due after
ten years$–

1,116,725

–

–

–

8,170

8

–

2,067

–
$ 1,443,727

5,521$ 5,529

1,679$ 1,679

180,147$ 182,214

The redemption schedule for long-term debt is disclosed in Note 4.
Breakdown of fair value of financial instruments by level
Fair value of financial instruments are categorized into three levels as described below on thebasis of the observability and the materiality of the inputs used in the fair value measurement.
Fair value (level 1): Fair values measured using quoted market prices (unadjusted) in active
markets for identical assets or liabilities.
Fair value (level 2): Fair values measured using directly or indirectly observable inputs otherthan Level 1 inputs.
Fair value (level 3): Fair values measured using significant unobservable valuation inputs.
When several inputs that have significant impact on fair value measurement are used andthose inputs are categorized into different levels, the fair value is categorized into the lowest
hierarchy level for fair value measurement among those in which each of the inputs belongs.

40

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Financial Instruments (continued)
Breakdown of fair value of financial instruments by level (continued)(a) Financial instruments measured at fair value
2022
Level 1
Investment securities¥ 18,995

Level 2
Level 3
(Millions of yen)
¥–
¥–

Total
¥ 18,995

2022
Level 1
Investment securities$ 155,200

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

Total
$ 155,200(b) Financial instruments other than those measured at fair value
2022
Level 1Long-term debt¥–

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

Total¥ 10,325

2022
Level 1Long-term debt$–

Level 2
Level 3(Thousands of U.S. dollars)$ 84,362$–

Total$ 84,362

Description of valuation methods and inputs used in the calculation of fair value.
(a) Investments in securities
The fair values of listed shares are determined by using quoted prices. Fair valuesof listed shares are categorized as Level 1 since it is traded in active markets.
(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 categorized
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 using 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.
41

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Securities(a) Information regarding marketable securities classified as other securities as of March
31, 2021 and 2022 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

2021
Acquisition
cost
Difference(Millions of yen)

¥ 16,084¥ 8,477¥ 7,606

1,001
253
188
17,527

1,000
209
84
9,771

1
43
103
7,755

5,934

7,754

(1,820)

805

835

(29)

–

–

–

10
6,750
¥ 24,278

108,601¥ 18,372(0)(1,850)¥ 5,905
2022

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

Acquisition
cost
Difference(Millions of yen)

¥ 7,801¥ 4,801

Carrying
Acquisition
value
cost
Difference(Thousands of U.S. dollars)$ 102,975$ 63,744$ 39,231

–

–

–

–

–

–

262
12
12,878

209
8
8,019

53
3
4,858

2,146
100
105,223

1,712
68
65,525434
3139,697

6,102

8,100

(1,998)49,857

66,183(16,325)
(100)

4

4

8,203

–

–
–

8,102

–

–

–

–

10
6,116
¥ 18,995

108,114¥ 16,134(0)(1,998)¥ 2,86087
58,047$ 163,270

87
74,474$ 139,999(0)(16,426)$ 23,271

42

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Securities (continued)(b) Information regarding sales of securities classified as other securities for the years ended
March 31, 2021 and 2022 was as follows:

Equity securities
Debt securities:
Corporate bonds
OthersOthers2021
Proceeds
Gain onLoss onfrom sales
sales
sales
(Millions of yen)
¥1,053
¥ 360
¥66
1,000
2,005
18
¥4,077–926
7¥1,294

–
–
–
¥66
2022

Proceeds
from sales

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

Proceeds
from sales¥ 1,041

¥ 698

¥ 4

$ 8,509

Gain onsales(Thousands of
U.S. dollars)$ 5,709

800–
189¥ 2,030

–
–
113
¥ 811

31
–
–
¥ 36

6,536
–
1,544
$ 16,590––
923$ 6,632

Loss on
sales

257
–
–
$ 295

$ 37

(c) Impairment losses on securities classified as other securities of ¥17 million and ¥489
million ($4,000 thousand) were recognized for the years ended March 31, 2021 and
2022, respectively. Also, impairment losses on securities classified as investments inunconsolidated subsidiaries and affiliates of ¥115 million was recognized for the year
ended March 31, 2021.
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.

43

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

19. Derivative Transactions
Summarized below are the notional amounts and the estimated fair value of the derivative
instruments outstanding at March 31, 2021 and 2022, for which hedge accounting has been
applied.
Interest-related transactions
2021
Method ofhedge
accounting
Principle
methodSimplified
methodHedging instruments
Interest rate
swap
Interest rateand currency
swap

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

Hedgeditems
Long-termdebtLong-term
debt

Notional
amounts

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

–

502

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

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
Due after
amounts
one year
Fair value(Thousands of U.S. dollars)$ 84,286$ 79,085$ (1,992)
4,101

–

2,050

44

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
19. Derivative Transactions (continued)
Interest-related transactions (continued)
The interest rate and currency swaps were included in that of the hedged long-term debt as
they are accounted for together with underlying hedged items under the simplified method.
The principle method was applied to the interest rate swaps used to hedge long-term debt ofan affiliate accounted for by the equity method, and the notional amount and the fair value
were based on the Company’s proportionate share.

20. Supplemental Information on Consolidated Statement of Cash Flows(a) Cash and cash equivalents in the consolidated statement of cash flows for the years ended
March 31, 2021 and 2022 are reconciled to cash on hand and in banks in the consolidatedbalance sheet as follows:
2021
2022
(Millions of yen)
Cash on hand and in banks
Time deposits with maturities ofmore than three months
Cash and cash equivalents¥ 50,905¥ 39,021

2022(Thousands of
U.S. dollars)$ 318,830(1,105)¥ 49,800(1,229)¥ 37,791(10,049)$ 308,781(b) A breakdown of assets and liabilities of the newly consolidated companies Chuorika
kougyo Co., Ltd. and its eight consolidated subsidiaries as a result of share acquisition
as follows:
2022(Millions of yen)
Current assets
Fixed assets
Goodwill
Current liabilities
Fixed liabilities
Acquisition cost
Cash and cash equivalents
Balance: Payments for acquisition¥ 2,953
3,554
863(1,675)(1,265)4,431(1,559)¥ 2,871

2022(Thousands of
U.S. dollars)$ 24,132
29,0407,056(13,685)(10,337)
36,205(12,743)$ 23,462

45KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
20. Supplemental Information on Consolidated Statement of Cash Flows (continued)(c) Information regarding details of significant non-monetary transactions for the year ended
March 31, 2021 and 2022 is as follows:
Leased assets and lease obligations related to new finance lease transactions recorded
for the years ended March 31, 2021 and 2022 amounted to ¥844 million and ¥1,143
million ($9,344 thousand), respectively.
Significant asset retirement obligations recorded for the years ended March 31, 2022
amounted to ¥40 million ($330 thousand).

21. Segment Information(a) Business segment information(1) Outline of reportable segments
The reportable segments of the Company and its consolidated subsidiaries (the“Group”) are components for which discrete financial information is available andwhose operating results are regularly reviewed by the Board of Directors to makedecisions on resource allocation and to assess performance.
The Group is primarily engaged in the integrated utilities engineering service
business, based on mid- to long-term business plans developed in the head office of
the Company. The Company’s regional offices mainly offer services 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.

46

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. 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
As described in Note 2, “Summary of Significant Accounting Policies, (r)Accounting changes,” the Accounting Standard for Revenue Recognition has been
adopted from the beginning of this fiscal year and the accounting method forrevenue recognition has been changed, therefore, the calculation method of profit orloss for each segment has been also changed.
As a result of this change, net in the others segment for the current fiscal year
decreased by ¥2,372 million ($19,384 thousand) compared with the previous
method.
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, 2021 and 2022 are summarized as follows:
2021

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

Others

Total(Millions of yen)

¥ 377,331¥ 14,570¥ 391,901¥–¥ 391,901

804¥ 378,136¥ 30,485

4,977¥ 19,548¥ 2,371

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

3,559¥ 2,294

¥

¥

¥

64

41

106

–

106

–

–

–

–

–

5,853

Adjustments
andeliminations(114)

Consolidated

47

5,739

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Segment Information (continued)(a) Business segment information (continued)(3) Information as to net sales, income or loss and other items for each reportablesegment for the years ended March 31, 2021 and 2022 are summarized as follows:(continued)
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

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

¥

¥

¥

107

–

107

–

107

190

–

190

–

190

5,899

Adjustments
andeliminations(108)

Consolidated

5,791

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
andOthersTotaleliminations(Thousands of U.S. dollars)$ 2,977,696$ 99,054$ 3,076,750$–$ 3,076,750

6,699$ 2,984,395$ 249,432

41,453$ 140,507$ 20,439

48,152$ 3,124,903$ 269,872(48,152)$ (48,152)$879–$ 3,076,750$ 270,752$

31,003$ 17,199

$

$

$

882

–

882

–

882

1,555

–

1,555

–

1,555

48,202(884)

Consolidated

48

47,317KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Segment Information (continued)(a) Business segment information (continued)(3) Information as to net sales, income or loss and other items by reportable segment
for the years ended March 31, 2021 and 2022 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 ¥142 million and¥107 million ($879 thousand) for the years ended March 31, 2021 and
2022, respectively, reflect the elimination of transactions between
segments.
(iii) Segment income or loss is reconciled to operating income on the
consolidated statement of income.
(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, 2021 and 2022.
(2) Information by major customers
The following table presents major customer information for the years ended March
31, 2021 and 2022:
2021
2022
(Millions of yen)
Name of customers:
Kyushu Electric Power Transmission
and Distribution Co., Inc.
Reportable segment:
Utilities engineering service and Others
Net sales¥ 45,688¥ 47,109

2022(Thousands of
U.S. dollars)$ 384,916
49

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Segment Information (continued)(c) Amortization of goodwill and remaining balance of goodwill by reportable segment
The following table presents the amortization and balance of goodwill as of and for theyear ended March 31, 2022 by reportable segment: Information on amortization of
goodwill is omitted because the same information is disclosed in Note 21 (a) (3).

Utilities
engineering
service
Balance as of March 31¥

2022
Adjustments
andOtherseliminations(Millions of yen)
¥–

755

¥–

Consolidated¥ 755(Thousands of U.S. dollars)
Balance as of March 31$–$ 6,174$–$ 6,174

There was no balance of goodwill as of March 31, 2021.
(d) Gain on bargain purchase by reportable segment
No gain on bargain purchase was recorded for the years ended March 31, 2021 and 2022.

22. Related Party Transactions
Transactions and balances with related parties as of and for the years ended March 31, 2021
and 2022 were as follows:
2021
2022
(Millions of yen)
Kyushu Electric Power Co., Inc.
Construction orderAccounts receivable on completed
construction contracts
Advances received on uncompleted
construction contracts
Kyushu Electric Power Transmission
and Distribution Co., Inc.
Construction orderAccounts receivable on completed
construction contracts
Advances received on uncompleted
construction contracts

2022(Thousands of
U.S. dollars)¥ 3,504¥ 2,764$ 22,585

490

533

4,355

–

–

–

43,94445,487

371,660

9,012

7,153

58,451–––50

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
22. Related Party Transactions (continued)
The transaction amounts do not include consumption taxes. The balances include
consumption taxes. Kyushu Electric Power Co., Inc. (located in Fukuoka City, with a capitalamount of ¥237,304 million ($1,938,923 thousand) engaged in the business of supplying
electric power) is a related company, which owned 22.75% of the shares of the Company asof March 31, 2021 and 2022, and two people as directors of the Company
double as directors of Kyushu Electric Power Co., Inc..
Kyushu Electric Power Transmission and Distribution Co., Inc. (located in Fukuoka City,
with a capital amount of ¥20,000 million ($163,412 thousand) engaged in the business ofelectric power transmission and distribution) is a subsidiary of a related company which
owned no shares of the Company as of March 31, 2021 and 2022.
The terms of the transactions referred to above were negotiated and determined on an arm’slength basis similar to third party transactions.

23. Subsequent Events
Appropriation of retained earnings
The following appropriation of retained earnings of the Company, which has not beenreflected in the consolidated financial statements for the year ended March 31, 2022, wasapproved at the meeting of the Board of Directors held on April 28, 2022:
Total dividends paid
(Millions of (Thousands ofyen)
U.S. dollars)
Cash dividends(¥50.00 = $0.41 per share)¥ 3,543$ 28,950

Record date

Effective date

March 31, 2022 June 7, 2022

51

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
24. Business Combination
Overview of the business combination(a) Name of acquired company and business description
Name:
Business description:

Chuorika kougyo Co., Ltd.
Disaster and fire protection facility construction(b) Main reasons for the business combination
The Company has set the establishment of a management foundation for sustainablegrowth as its main theme (realization of the three reforms), and is making every effort todevelop new business areas and further expand its business through the realization ofreform of productivity, reform of construction capability, reform of governance, in its
mid-term management plan, which concludes in the fiscal year ending March 31, 2025.
Chuorika kougyo Co., Ltd. and its eight subsidiaries operate nationwide, mainly in the
Kanto area, and have built a solid business foundation and a large number of talented
employees built up over 100 years of long business history, establishing a firm positionand credibility in the disaster and fire protection facility construction field.
In recent years, people’s awareness of firefighting and disaster prevention has steadily
increased amidst a situation where various disasters have occurred frequently, andChuorika kougyo Co., Ltd.’s business of providing security and safety to customers is
becoming more important.
The Company’s decision to acquire the shares was based on the judgment that theaddition of the Chuorika kougyo Co., Ltd. group will enable further development of theCompany’s group through collaboration by leveraging the strengths of each group.
The Company believes that further business expansion will be possible by combining
the Company’s group sales network and technical know-how with Chuorika kougyo Co.,
Ltd.’s good relationships with existing clients and excellent sales and technicalcapabilities.
(c) Date of the business combination
September 22, 2021
(d) Legal form of the business combination
Acquisition of shares for cash(e) Name after business combination
No change
52

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
24. Business Combination (continued)
Overview of the business combination (continued)(f) Percentage of voting rights acquired
100.0%(g) Main basis for determining the acquiring company
The Company acquired the shares for cash consideration.
Period of the acquired company’s results included in the consolidated financial
statements
From July 1, 2021 to December 31, 2021
Acquisition cost of the acquired company and breakdown by type of consideration
Consideration for acquisition:
Cost of acquisition:

Cash ¥4,431 million ($36,205 thousand)¥4,431 million ($36,205 thousand)Description and amount of major acquisition-related expenses
Due diligence fees:¥8 million ($66 thousand)Amount of goodwill incurred, reason, amortization method and amortization period
Amount of goodwill incurred:
Reason:¥863 million ($7,056 thousand)Future excess earning power expected from futurebusiness development
Amortization method and amortization period:
Goodwill is being amortized by the straight-line
method over 4 years
Amounts allocated to intangible assets other than goodwill and breakdown by type andamortization period
Type:
Amounts:
Amortization period:

Customer related intangible assets¥1,930 million ($15,769 thousand)
0.5 to 9 years

53

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
24. Business Combination (continued)
Amounts and breakdown of assets acquired and liabilities assumed on the date ofbusiness combination
2022(Millions of yen)
Current assets
Fixed assets
Total assets¥ 2,953
3,554¥ 6,507

2022(Thousands of
U.S. dollars)$ 24,132
29,040$ 53,172

Current liabilities
Fixed liabilities
Total liabilities¥ 1,675
1,265¥ 2,940$ 13,685
10,337$ 24,023

Pro forma amounts and calculation method of the effect of the business combination on
the consolidated statement of income as if the business combination had been completed
on beginning of the fiscal year2022
(Millions of yen)
Sales
Operating income
Ordinary income
Profit before tax
Profit attributable to owners of parent

Earnings per share attributable toowners of parent¥ 3,139
189
191
191
64

2022
(Thousands of
U.S. dollars)$ 25,651
1,550
1,567
1,567
526

(Yen)

(U.S. dollars)¥ 0.91$ 0.01

Note: The difference between the sales and profit and loss information calculated as if thebusiness combination had been completed as of the beginning of the fiscal year andthe sales and profit and loss information in the consolidated statement of income of
the acquiring company is the estimated amount of the impact. In addition, theestimated impact is calculated as if goodwill and other intangible assets recognized at
the time of the business combination had occurred at the beginning of the current
fiscal year. In addition, the note has not been audited.

54

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
25. Revenue Recognition
Information on disaggregated revenue arising from contracts with customers
Information by type of goods or services for the years ended March 31, 2022 were 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–

Others(Millions of yen)¥–––
12,123Total¥ 45,774
198,354
120,311
12,123¥ 364,440¥ 12,123¥ 376,563¥ 364,440¥ 12,123¥ 376,563

2022
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$

374,0021,620,674
983,018–$–––
99,054$

374,0021,620,674
983,018
99,054$ 2,977,696$ 99,054$ 3,076,750$ 2,977,696$ 99,054$ 3,076,750

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

Information providing a basis for understanding revenue arising from contracts withcustomers
Information providing a basis for understanding revenue arising from contracts withcustomers is disclosed in Note 2 (q) Significant accounting estimates.

55

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
25. Revenue Recognition (continued)
Information about the relationship between the satisfaction of performance obligations
under contracts with customers and cash flows from these contracts, and the amountand timing of revenue from contracts with existing customers at the end of the current
fiscal year that are expected to be recognized in the following fiscal year or thereafter(a) Contract assets and contract liabilities outstanding
Contract assets and contract liabilities outstanding for the years beginning and ended
March 31, 2022 were as follows:
Beginning ofEnding offiscal year
fiscal year
ended March
ended March
31, 2022
31, 2022(Millions of yen)
Receivables arising from contracts withcustomers:
Notes receivables
Electronically recorded receivables
Accounts receivables
Other account receivables

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 offiscal year
fiscal year
ended March
ended March
31, 2022
31, 2022(Thousands of U.S. dollars)
Receivables arising from contracts withcustomers:
Notes receivables
Electronically recorded receivables
Accounts receivables
Other account receivables

Contract assets
Contract liabilities$ 51,335
136,706
500,579
39,759$ 728,379$ 38,526
125,908
483,071
43,569$ 691,077$ 339,559
126,053$ 425,648
94,34156

KYUDENKO CORPORATION and Consolidated Subsidiaries
Notes to Consolidated Financial Statements (continued)
25. Revenue Recognition (continued)
Information about the relationship between the satisfaction of performance obligations
under contracts with customers and cash flows from these contracts, and the amountand timing of revenue from contracts with existing customers at the end of the current
fiscal year that are expected to be recognized in the following fiscal year or thereafter(continued)(a) Contract assets and contract liabilities outstanding (continued)
Contract assets are rights to consideration in exchange for the satisfaction of performanceobligations, measured based on the percentage of completion as of the end of 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 Company and its consolidated subsidiaries to the consideration become
unconditional.
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 shall be reversed upon revenue recognition.
The amount of revenue recognized in the current fiscal year ended March 31, 2022 thatwas included in the contract liability balance at the beginning of the period was ¥14,376
million ($117,462 thousand).
The amount of revenue recognized in the current period from performance obligations
satisfied (or partially satisfied) in prior periods was not material.
(b) Transaction price allocated to remaining performance obligations
The transaction price allocated to the unfulfilled performance obligation recorded for theyears ended March 31, 2021 and 2022 amounted to ¥396,614 million and ¥407,649
million ($3,330,738 thousand), respectively. The remaining performance obligation
relates to a construction contract in the utilities engineering service business and is
expected to be recognized as revenue primarily within five years as the construction
progresses.

57