ANNUAL REPORT
2021

CONTENTS
PROFILE

1

THE MESSAGE FROM THE PRESIDENT

2

CONSOLIDATED BALANCE SHEETS

6

CONSOLIDATED STATEMENTS OF INCOME

8

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

9CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

10CONSOLIDATED STATEMENTS OF CASH FLOWS

13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15

INDEPENDENT AUDITOR'S REPORT65

NON-CONSOLIDATED BALANCE SHEETS

74

NON-CONSOLIDATED STATEMENTS OF INCOME

76

NON-CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

77

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS

80

INDEPENDENT AUDITOR'S REPORT99

CORPORATE OUTLINE

104

CORPORATE DATA

105

Disclaimer for Forward-Looking Statements:
This document contains forward-looking statements about the performance and management plans of SMCC Group based on available
information and management’s assumptions in light of their experience and perception of historical trends, current conditions, future
developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they
relate to events and depend on circumstances that will occur in the future and various economic and other factors could cause actual results anddevelopments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the
expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to becorrect and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of thisdocument.

PROFILE

1

THE MESSAGE FROM THE PRESIDENT

2

3

4

Consolidated Financial Statements
Sumitomo Mitsui Construction Co., Ltd.
and Consolidated Subsidiaries
Year ended March 31, 2021
with Independent Auditor’s Report5Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Balance Sheets
and Consolidated Subsidiaries
March 31, 2021
Consolidated Balance Sheets

AssetsCurrent assets:
Cash and deposits (Notes 7-(b), 11 and 12)
Trade notes receivable, accounts receivable on completed
construction contracts and other (Notes 12)
Inventories (Notes 7-(a) and 7-(e))
Other current assets (Note 7-(b))
Allowance for doubtful receivables
Total current assets

Non-current assets:
Property and equipment, at cost:
Land (Notes 7-(b) and 7-(c))
Buildings and structures (Note 7-(b))
Machinery, equipment and vehicles (Note 7-(b))
Construction in progress
Accumulated depreciation
Property and equipment, net
Intangible fixed assets
Investments and other assets:
Investments in securities (Notes 7-(b), 12 and 13)
Deferred tax assets (Note 16)
Investments in unconsolidated subsidiaries and affiliates
Asset for retirement benefits
Other (Note 7-(b))
Allowance for doubtful receivables
Total investments and other assets
Total non-current assets

Total assets

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 3)¥75,532¥ 53,495$ 682,250

190,177
30,496
19,522(1)
315,727

200,794
30,18015,942
300,413

1,717,794
275,458
176,334(9)2,851,838

16,156
15,96926,556
1,009(30,920)
28,772

14,333
16,067
20,468168(27,783)
23,254145,930
144,241
239,869
9,113(279,288)
259,886

3,140

2,504

28,362

18,891
3,968
1,053
160
6,028
(916)
29,18561,09915,048
5,293
1,125
6,690
(919)
27,23852,997

170,634
35,8419,511
1,445
54,448(8,273)
263,616
551,883¥376,826¥353,410$3,403,721

2

6

Sumitomo Mitsui Construction Co., Ltd.
Consolidated Balance Sheets
March 31, 2021

Liabilities and net assets
Current liabilities:
Trade notes payable, accounts payable on construction contracts
and other (Notes 12)
Electronically recorded payable (Note 12)
Short-term bank loans and current portion of long-term debt
(Notes 7-(b), 7-(f), 12 and 22)
Lease obligations
Accrued expenses
Income tax payable
Advances received on construction contracts in progress
Reserve for defects on completed construction projects
Allowance for losses on construction contracts (Note 7-(e))
Allowance for contingency loss
Other current liabilities
Total current liabilities
Long-term liabilities:
Corporate Bond payable
Long-term debt (Notes 7-(b), 7-(f), 12 and 22)
Lease obligations
Deferred tax liability on land revaluation (Note 7-(c))
Allowance for share-based payment
Liability for retirement benefits (Note 15)
Other long-term liabilities
Total long-term liabilities

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 3)

¥88,732
29,782¥103,870
32,568$801,481
269,009

8,662
605
8,083
1,463
25,601
749
995
2,159
21,831
188,665

11,511
408
7,962
3,565
21,181
920
330
2,159
15,497
199,977

78,2405,464
73,01013,214
231,243
6,765
8,987
19,501
197,190
1,704,136

5,000
49,5181,249
575
36
18,562
2,910
77,852－28,330634
285
16
17,5404,181
50,98945,163447,276
11,281
5,193
325
167,663
26,284703,206

12,003

12,003

108,418

96,001

91,084

867,139(3,504)
104,499(3,118)99,969(31,650)
943,898

407
(147)
71
(1,622)(803)(2,094)
7,902
110,308¥376,826(2,274)(156)
73(1,130)(775)(4,264)
6,738
102,443¥353,410

3,676(1,327)641(14,650)(7,253)(18,914)
71,375996,368$3,403,721

Contingent liabilities (Notes 7-(d) and 19)
Net assets:
Shareholders’ equity:
Capital stock:
Common stock:
Authorized:
533,892,994 shares in 2021 and 2020
Issued and outstanding:
162,673,321 shares in 2021 and 2020
Retained earnings
Treasury stock, at cost:
5,511,604 shares in 2021 and 4,648,600 shares in 2020
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain on securities
Deferred (loss) on hedging instruments, net of taxes (Note 14)
Land revaluation (Note 7-(c))
Translation adjustments
Retirement benefits liability adjustment (Note 15)
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

The accompanying notes are an integral part of these statements.

73

Sumitomo Mitsui Construction Co., Ltd.
Consolidated Statements of Income
Sumitomo Mitsui Construction Co., Ltd.
March 31, 2021
and Consolidated Subsidiaries

Consolidated Statements of Income

Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 3)

Net sales (Note 8-(a))
Cost of sales (Notes 8-(b) and 8-(d))
Gross profit
Selling, general and administrative expenses(Notes 8-(c), 8-(d) and 15)
Operating income
Other income (expenses):
Interest and dividend income
Payments received from insurance claims
Interest expense
Exchange loss, net
Financing related expenses
Commission for loan commitment agreement
Gain on sales of property and equipment (Note 8-(e))
Gain on sales of investment in securities (Note 13-(c))
Gain on bargain purchase
Gain on sales of shares of subsidiaries and affiliates
Loss on sales and disposal of property and equipment(Note 8-(f))
Loss on termination of golf club membership
Other, net
Profit before income taxes
Income taxes (Note 16):
Current
DeferredProfitProfit attributable to:Non-controlling interests
Owners of parent¥421,619
382,684
38,935¥472,402
424,733
47,669$3,808,319
3,456,634
351,684

23,351

22,903210,920

15,584

24,765

140,764791
117(1,082)
(894)
（608）
(628)
15
8
547
330

1,057
99
(754)
(535)
(245)
(49)
4
0
－
－

7,144
1,056
(9,773)(8,075)(5,491)(5,672)
135
72
4,940
2,980

(145)
(276)

(66)
－

(1,309)(2,492)(259)(2,083)
13,500(537)(1,026)23,738(2,339)(18,814)
121,940

3,757
219
3,977

7,255
269
7,524

33,935
1,978
35,922

9,522

16,21386,008779¥8,743662¥15,550

7,036$78,972(Yen)
Profit per share (Note 20)¥ 55.33(U.S. dollars)(Note 3)
¥ 97.89$

0.499

The accompanying notes are an integral part of these statements.

48

Sumitomo Mitsui Construction Co., Ltd.

Sumitomo Mitsui Construction Co., Ltd.
and Consolidated
Subsidiaries
Consolidated Statements of Comprehensive
IncomeMarch 31, 2021

Consolidated Statements of Comprehensive Income
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 3)

Profit¥9,522¥16,213$86,008

Other comprehensive income:Unrealized holding gain on securities
Deferred gain (loss) on hedging instruments, net of taxes
Translation adjustments
Retirement benefits liability adjustments

2,681
8
(528)
12

(4,201)
14
(22)
(141)

24,21672(4,769)108

Total other comprehensive income (Note 9)Comprehensive income

2,174¥11,697(4,351)¥11,862

19,636$105,654

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests¥10,915781¥11,204
657$98,590
7,054

The accompanying notes are an integral part of these statements.

59

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Changes Inand
Net Consolidated
Assets
Subsidiaries
March 31, 2021

Consolidated Statements of Changes in Net Assets

Capitalstock
Balance at the beginning of theperiodChanges in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Profit attributable to owners of
the parent
Change of scope of
consolidation
Purchases of treasury stock
Disposition of treasury stockReversal of Land Revaluation
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period¥12,003

Year ended March 31, 2021
Shareholders’ equity
Additional
Treasurypaid-instock,
Retained
capitalat costearnings(Millions of yen)―

¥91,084

35(36)(3,792)(0)(3,792)

8,743

8,743

(35)

¥(3,118)

―
―

4,916
¥96,001¥99,969

(503)
117

(503)
81
1

(386)
¥(3,504)

4,530¥104,499

1―¥12,003

Total
shareholders’equityYear ended March 31, 2021
Accumulated other comprehensive income
DeferredTotalloss onRetirement accumulated
Unrealized
hedgingotherbenefits
Nonholding
instruments,
liability comprehensive controlling
Land
Translation
gain onincomeinterests
securities net of taxes revaluation adjustments adjustments(Millions of yen)
Balance at the beginning of theperiodChanges in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Profit attributable to owners of
the parent
Change of scope of
consolidation
Purchases of treasury stock
Disposition of treasury stockReversal of Land Revaluation
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period¥(2,274)¥(156)¥73¥(1,130)¥(775)¥(4,264)¥6,738Total
net assets¥102,443(0)(3,792)
8,743
(503)
81
1
2,682

8

(1)

(491)

(27)

2,170

1,164

3,334

2,682
¥407

8
¥(147)

(1)
¥71

(491)
¥(1,622)(27)¥(803)

2,170¥(2,094)

1,164¥7,902

7,865¥110,3086

10

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Changes Inand
Net Consolidated
Assets
Subsidiaries
March 31, 2021

Consolidated Statements of Changes in Net Assets (continued)

Capitalstock
Balance at the beginning of theperiodChanges in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Profit attributable to owners of
the parent
Change of scope of
consolidation
Purchases of treasury stock
Disposition of treasury stockReversal of Land Revaluation
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period$108,418$822,726

316$(28,163)$(20,540)―$902,980(0)(34,251)

78,972

78,972(4,543)
1,056(4,543)731
9(3,486)$(31,650)

40,917$943,898

9―$108,418

Total
shareholders’equity(325)(34,251)(316)

Unrealized
holding
gain onsecurities
Balance at the beginning of theperiodChanges in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Profit attributable to owners of
the parent
Change of scope of
consolidation
Purchases of treasury stock
Disposition of treasury stockReversal of Land Revaluation
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period

Year ended March 31, 2021
Shareholders’ equity
Additional
Treasurypaid-instock,
Retained
capitalat costearnings(Thousands of U.S. dollars) (Note 3)

44,404$867,139

Year ended March 31, 2021
Accumulated other comprehensive income
DeferredTotalloss onRetirement accumulated
hedgingotherbenefits
Noninstruments,
liability comprehensive controlling
Land
Translation
net of taxes revaluation adjustments adjustments
incomeinterests(Thousands of U.S. dollars) (Note 3)$(1,409)$659$(10,206)$(7,000)$(38,515)$60,861

Total
net assets$925,327(0)(34,251)
78,972(4,543)731
924,22572(9)(4,435)(243)

19,60010,51330,11424,225$3,67672$(1,327)(9)$641(4,435)$(14,650)(243)$(7,253)

19,600$18,914

10,513$71,375

71,041$996,368

7

11

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Changes Inand
Net Consolidated
Assets
Subsidiaries
March 31, 2021

Consolidated Statements of Changes in Net Assets (continued)

Capitalstock
Balance at the beginning of theperiodChanges in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Profit attributable to owners of
the parent
Change of scope of
consolidation
Purchases of treasury stock
Disposition of treasury stock
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period¥12,003¥79,694

(513)

(247)
(3,853)(760)(3,853)

15,55015,550(15)―¥12,003¥1,926(528)―

11,390¥91,084¥(1,716)

Total
shareholders’Equity¥528(59)

Unrealized
holding
gain onsecurities
Balance at the beginning of theperiodChanges in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Profit attributable to owners of
the parent
Change of scope of
consolidation
Purchases of treasury stock
Disposition of treasury stock
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period

Year ended March 31, 2020
Shareholders’ equity
Additional
Treasurypaid-instock,
Retained
capitalat costearnings(Millions of yen)

¥90,509(1,501)98(59)(1,501)83(1,402)¥(3,118)

9,459¥99,969

Year ended March 31, 2020
Accumulated other comprehensive income
DeferredTotal(loss) gain
Retirement accumulatedon hedging
otherbenefits
Noninstruments,
liability comprehensive controlling
Land
Translation
net of taxes revaluation adjustments adjustments
incomeinterests(Millions of yen)¥(170)¥73¥(1,086)¥(655)¥(0,086¥7,357Total
net assets¥097,953(760)(3,853)
15,550(59)(1,501)
83(4,201)

14

―

(44)

(119)

(4,351)(618)(4,970)(4,201)¥(2,274)14¥(156)―¥73(44)¥(1,130)(119)¥(775)(4,351)¥(4,264)(618)¥6,7384,489¥102,443

The accompanying notes are an integral part of these statements.

812

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Cash Flowsand Consolidated Subsidiaries
March 31, 2021
Consolidated Statements of Cash Flows
2021

Years ended March 31,

2020(Millions of yen)

Operating activities
Profit before income taxes
Depreciation and amortization
Decrease in allowance for doubtful receivables
Decrease in reserve for defects on completed construction projects
Increase in allowance for losses on construction contracts
Increase in allowance for share-based payment(Decrease) increase in liability for retirement benefits
Loss on sales and disposal of property and equipment
Interest and dividend income
Interest expense
Exchange (gain) loss, net
Reversal of allowance for PCB disposal expenses
Gain on bargain purchase
Gain on sales of shares of subsidiaries and affiliates
Decrease (increase) in trade notes receivable, accounts receivable oncompleted construction contracts and other
Decrease (increase) in inventories(Increase) decrease in other assets
Increase (decrease) increase in retirement benefits liability adjustments
included in accumulated other comprehensive income(Decrease) increase in trade notes payable, accounts payable on
construction contracts and other
Increase (decrease) in advances received on construction contracts inprogress
Increase (decrease) in other liabilities
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Investing activities
Decrease in fixed deposits
Purchases of property and equipment
Proceeds from sales of property and equipment
Purchases of intangible fixed assets
Purchases of investments in securities
Proceeds from sales of investments in securities
Disbursements for loans receivable
Proceeds from collection of loans receivable
Purchases of shares of subsidiaries resulting in change in scope of
consolidation
Payments for sales of shares of subsidiaries resulting in change in scopeof consolidation
Other
Net cash (used in) investing activities

2021(Thousands of
U.S. dollars)(Note 3)

¥13,500
2,701
(57)
(209)
380
21
(156)
130
(791)
1,082
(109)
－
(547)
(330)

¥23,738
2,143
(20)
(86)
73
16
65
61
(1,057)
754
203
(4)
－
－

$121,940
24,397(514)(1,887)3,432
189(1,409)
1,174(7,144)
9,773
(984)
－
(4,940)(2,980)24,546288(2,447)(33,947)(4,361)
2,004

221,7142,601(22,102)

58

(172)

523

(24,772)

5,809(223,755)

3,756
5,304
416
(22,764)831（1,059）（5,813）
16,723(3,787)(1,839)146(10,259)
1,104
(756)
(8,093)(18,005)

33,92647,908
3,757
205,618
7,506(9,565)(52,506)
151,052

1,117(2,703)
58
(957)
(1)
37
(16)
179

10
(2,228)
51
(555)
(501)
27
(341)
158

10,089(24,415)523(8,644)
(9)
334
(144)
1,616

(195)

－

(1,761)(299)
98(2,681)－(36)(3,416)(2,700)885(24,216)913

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Cash Flowsand Consolidated Subsidiaries
March 31, 2021

Consolidated Statements of Cash Flows (continued)
2021

Years ended March 31,

2020(Millions of yen)

Financing activities
Decrease in short-term bank loans
Proceeds from long-term debt
Payments of long-term debt
Increase in long-term loans of employees
Proceeds from issuance of corporate bonds
Increase in treasury stock
Cash dividends paid
Cash dividends paid for non-controlling shareholders
Payments from changes in ownership interests in subsidiaries that do
not result in change in scope of consolidation
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Increase in cash and cash equivalents from newly consolidated
subsidiaries
Cash and cash equivalents at end of the year (Note 11)¥(7,520)29,000(12,111)
408
5,000
(503)
(3,785)
(122)

¥

(265)
10,000(1,511)433－(1,500)(3,844)
(215)

2021

(Thousands of
U.S. dollars)(Note 3)$(67,925)
261,945(109,393)
3,685
45,163(4,543)(34,188)(1,101)

(0)
(651)
9,713

(1,809)
(447)
837

(0)
(5,880)87,733(6)
23,74845,842(102)(20,686)
66,430(54)
214,506
414,072－¥69,59198¥45,842－$628,588

The accompanying notes are an integral part of these statements.

1014and Consolidated Subsidiaries
Notes
Sumitomo Mitsui Construction Co.,
Ltd. to Consolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
March 31, 2021
1.

Basis of Preparation

The accompanying consolidated financial statements of Sumitomo Mitsui Construction Co.,
Ltd. (the “Company”) and consolidated subsidiaries (collectively the “Group”) are preparedon the basis of accounting principles generally accepted in Japan, which are different incertain respects as to the application and disclosure requirements of International Financial
Reporting Standards, and have been compiled from the consolidated financial statements
prepared by the Company as required by the Financial Instruments and Exchange Law ofJapan.
Certain reclassifications have been made to present the accompanying consolidated financial
statements in a format which is familiar to readers outside Japan. In addition, certain amounts
in the prior year’s financial statements have been reclassified to conform to the current year’s
presentation.
As permitted, amounts of less than one million yen have been omitted. As a result, the totals
shown in the accompanying consolidated financial statements do not necessarily agree withthe sums of the individual amounts.
2.

Summary of Significant Accounting Policies(a) Basis of Consolidation and Accounting for Investments in Unconsolidated Subsidiaries
and Affiliates
The accompanying consolidated financial statements include the accounts of the Company
and the significant companies which it controls directly or indirectly. Companies overwhich the Company exercises significant influence in terms of their operating andfinancial policies have been included in the consolidated financial statements on an
equity basis. In the elimination of investments in subsidiaries, the assets and liabilitiesof the subsidiaries, including the portion attributable to non-controlling shareholders,
are recorded based on the fair value at the time the Company acquired control of therespective subsidiaries. All significant intercompany balances and transactions havebeen eliminated in consolidation.
The excess of the cost over the underlying net assets at fair value at the respective datesof acquisition of the consolidated subsidiaries (goodwill) or the excess of fair value ofthe net assets acquired over cost (negative goodwill) is charged or credited to income inthe year of acquisition.
Investments in affiliates not accounted for by the equity method are principally stated at
cost.
The Company had 18 consolidated subsidiaries and 1 affiliates accounted for by theequity method as of March 31, 2021.
11

15

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

2.

Summary of Significant Accounting Policies (continued)(b) Fiscal Year of Consolidated Subsidiaries
All foreign consolidated subsidiaries (7 companies) have a fiscal year that ends on
December 31. The accompanying consolidated financial statements were preparedbased on the financial statements as of the same date. Necessary adjustments forconsolidation were made on significant transactions that took place during the period
between the fiscal year-end of the subsidiaries and the fiscal year-end of the Company.
(c) Securities
The accounting standard for financial instruments requires that securities be classified
into three categories: trading, held-to-maturity or other securities. Trading securities arecarried at fair value and held-to-maturity securities are carried at amortized cost.
Marketable securities classified as other securities for which market prices are
determinable are carried at fair value with any changes in unrealized holding gain or
loss, net of the applicable income taxes, included directly in net assets. Non-marketablesecurities classified as other securities are carried at cost. Cost of securities sold isdetermined by the moving average method.
(d) Inventories
Inventories other than materials and supplies are stated at cost determined by the specificidentification method. Materials and supplies are valued at cost determined by theaverage method. Cost of real estate for sale and materials and supplies is written downwhen their carrying amounts become unrecoverable.
(e) Depreciation and Amortization(1) Property and equipment (except leased assets) and investments in real estate
Depreciation of property and equipment (except leased assets) and investments inreal estate is determined primarily by the declining-balance method based on theestimated useful lives and the residual value of the respective assets as prescribedin the Corporation Tax Law of Japan except that the straight-line method is applied
to office buildings (except facilities attached to buildings) acquired on or after April
1, 1998 and facilities attached to buildings and structures acquired on or after April
1, 2016.
Depreciation at all overseas subsidiaries is determined by the straight-line method
or by the declining-balance method based on the estimated useful lives of therespective assets.
(2) Intangible fixed assets (except leased assets)
Amortization of intangible fixed assets (except leased assets) is calculated by thestraight-line method based on the estimated useful lives of the respective assets asprescribed in the Corporation Tax Law of Japan. Amortization of computer software
for internal use is calculated by the straight-line method over the estimated useful
lives of 5 years.

1612

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

2.

Summary of Significant Accounting Policies (continued)(e) Depreciation and Amortization (continued)(3) Leased assets
Depreciation of leased assets under finance leases other than those that transfer theownership of the leased assets to the lessees is calculated by the straight-line
method over the lease term with a residual value of zero.
(f)Advances Received on Construction Contracts in Progress
As is customary in Japan, the Company and its domestic consolidated subsidiaries
receive payments from customers on an installment basis in accordance with the termsof the respective construction contracts.

(g) Allowance for Doubtful Receivables
An allowance for doubtful receivables has been provided for future losses on general
receivables at an amount calculated by applying the percentage of actual losses oncollection experienced in the past, and an uncollectible amount for doubtful receivables
estimated based on an individual assessment of each receivable and probability ofcollection.
(h) Reserve for Defects on Completed Construction Projects
A reserve has been provided at an estimated amount for the fiscal year’s sales proceeds inorder to cover the liability for future costs of defects of the completed construction
projects.
(i)

Allowance for Losses on Construction Contracts
An allowance has been provided based on the estimated amount for the future losses on
construction projects in progress at the fiscal year end which are anticipated to be
substantial losses in the future.

(j)

Allowance for Contingency Loss
An allowance for contingency loss related to the defective piling work at a condominium
in Yokohama has been provided based on the reasonably estimated amount necessary
for payments to be borne as the contractor in accordance with defect liability applicableto the construction contract.

(k) Allowance for Share-based Payment
An allowance has been provided based on the estimated amount for share-based
payment liability as of 31 March, 2021 in order to cover payments of share to directors
based on a share-based payment regulation.

17

13

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

2.

Summary of Significant Accounting Policies (continued)(l)Accounting for Retirement Benefits(1) Method of attributing expected retirement benefits to periods
In calculating the retirement benefit obligation, the benefit formula method isapplied to attribute the expected retirement benefits to the periods up to year ended
March 31, 2021.
(2) Amortization of actuarial gain or loss and prior service cost
Actuarial gain or loss is amortized in the year following the year in which the gainor loss is recognized by the straight-line method over periods (mainly 11 years),
which are shorter than the average remaining years of service of the employees.
Prior service cost is being amortized as incurred by the straight-line method overperiods (mainly 11 years), which are shorter than the average remaining years ofservice of the employees.

(m) Recognition of Revenues and Costs on Construction Contracts
Revenues and costs of construction contracts that commenced on or after April 1, 2009,of which the percentage of completion can be reliably estimated, are recognized by thepercentage-of-completion method. The percentage of completion is calculated at thecost incurred as a percentage of the estimated total cost. The completed-contract method
is applied for contracts for which the percentage of completion cannot be reliably
estimated.
(n) Derivatives and Hedge Accounting(1) Method of hedge accounting
Derivative financial instruments are mainly stated at fair value except thoseaccounted for under deferred hedge accounting.
Interest rate swaps qualifying for hedge accounting and meeting specific matching
criteria are not re-measured at market value, but the differential paid or received
under the swap agreements is charged or credited to income (short-cut method).
(2) Hedging instruments and hedged items
Hedging instruments:

Interest rate swaps
Forward foreign exchange contracts

Hedged items:

Interest on debt
Future foreign currency transactions(3) Hedging policy
The Company utilizes interest rate swaps only for the purpose of hedging futurerisks of fluctuation of interest rates.
18

14

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

2.

Summary of Significant Accounting Policies (continued)(n) Derivatives and Hedge Accounting (continued)(4) Assessment of hedge effectivenessAn evaluation of hedge effectiveness for interest rate swaps by principle method is
performed on a quarterly basis to confirm that there is a strong correlation between
hedged items and hedging instruments by comparing accumulated amount of thechange of cash flows of hedged items and accumulated amount of the change ofcash flows of hedging instruments to assess whether the forward contract qualifies
for hedge accounting. However, the evaluation of hedge effectiveness is omitted incase of interest rate swaps meeting specific matching criteria.
An evaluation of hedge effectiveness for a forward foreign exchange contract isperformed on a quarterly basis to confirm that amount of the forward foreignexchange contract is within amount of the underlying hedged item to assess
whether the forward foreign exchange contract qualifies for hedge accounting.
(o) Cash Equivalents
All highly liquid investments with a maturity of three months or less when purchased,
which can easily be converted to cash and are subject to little risk of change in value,
are considered cash equivalents.
(p) Consumption Taxes
Consumption taxes are accounted for by the tax exclusion method.
(q) Income Taxes
Deferred tax assets and liabilities are determined based on the differences between theamounts calculated for financial reporting purposes and the tax bases of the assets andliabilities and are measured using the enacted tax rates and laws which will be in effectwhen the differences are expected to reverse.
The Company has adopted the consolidated taxation system.
(r)

Accounting Method of Joint Ventures for Construction Project
Assets, liabilities, costs and profits for a joint venture project are mainly recognized on
pro-rata basis of investment ratio of each members.

3.

U.S. Dollar Amounts

The translation of yen amounts into U.S. dollar amounts is included solely for the convenienceof readers outside Japan and has been made, as a matter of arithmetic computation only, at¥110.71 = U.S.$1.00, the approximate rate of exchange in effect on March 31, 2021. Thistranslation should not be construed as a representation that yen have been, could have been,or could in the future be, converted into U.S. dollars at that or any other rate.
19

15

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

4.

Significant Accounting Estimates(a) Provision for Contingent Loss
(1) Amounts recognized on Financial Statement of this fiscal year

Allowance for contingency loss

As of March 31, 2021
(Millions of yen)(Thousands of U.S. dollars)
2,159
19,501(2) Information of significant accounting estimates for an item above
An allowance for contingency loss related to the defective piling work at acondominium in Yokohama has been provided based on the reasonably estimatedamount necessary for payments to be borne as the contractor in accordance withdefect liability applicable to the construction contract.
Mitsui Fudosan Residential Co., Ltd. (hereinafter as “MFR”), which is one of thedevelopers of the apartment, initiated a lawsuit against the Company and two pilingcompanies on November 28, 2017, claiming about 45.9 billion yen (which amountincreased to approximately 51.0 billion yen on July 11, 2018) as alleged rebuilding
cost for the whole structure of the apartment. The Company considers that MFR’s
claim lacks legal foundation and reason, and will continue to make appropriate
arguments in that court proceeding.
(b) Recognition of Net Sales based on Percentage-of-Completion Method(1) Amounts recognized on Financial Statement of this fiscal year
As of March 31, 2021
(Millions of yen) (Thousands of U.S. dollars)
Net Sales recognized based on
Percentage-of-Completion Method

339,470

3,066,299(2) Information of significant accounting estimates for an item above
Net sales of construction contracts of which the percentage of completion can bereliably estimated are recognized by the percentage-of-completion method. The
percentage of completion is calculated at the cost incurred as a percentage of theestimated total cost. It is necessary to estimate total revenue and cost of a project
reasonably upon the recognition.
The Company’s result might be fluctuated due to change of revenues and costs ofcompleted construction contracts affected by design changes or additional
contracts generated from negotiations with clients, unpredictable changes of global
politics, economics and social conditions, natural disasters, unforeseeable facts
found after commencement of construction works, and/or modification of
construction works caused by changes of project site situation.

20

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

5.

Unapplied Accounting Standard and Implementation Guidance(a) “Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29 issued on March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition”(ASBJ Guidance No. 30 issued on March 26, 2021)(1) Outline
This is a comprehensive accounting standard for revenue recognition. Revenue isrecognized using the following five steps:(i)

Identify the contract(s) with a customer(ii) Identify the performance obligations in the contract(s)(iii) Determine the transaction price(iv) Allocate the transaction price to the performance obligations(v) Recognize revenue when (or as) the entity satisfied each performanceobligation(2) Scheduled Date of Application
The Company will apply the accounting standard and the implementation guidancefrom the beginning of the fiscal year ending March 31, 2022.
(3) Impact of the Application of the Unapplied Accounting Standard and the
Implementation Guidance
The Company is currently assessing the effects of application of the accounting
standards and the implementation guidance on its consolidated financial statements.
(b) “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30 issued on July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement”(ASBJ Guidance No. 31 issued on July 4, 2019)“Accounting Standard for Measurement of Inventories”(ASBJ Statement No. 9 issued on July 4, 2019)“Accounting Standard for Financial Instruments”(ASBJ Statement No. 10 issued on July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19 issued on March 31, 2020)(1) Outline
The ASBJ has developed an “Accounting Standard for Fair Value Measurement”
and “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (hereinafter collectively, the “Fair Value Measurement Standard”),
which provide guidance for fair value measurement in order to improvecomparability with internationally recognized accounting standards. The Fair
Value Measurement Standard is applied with respect to the fair value of thefollowing items;
21

17

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

5.

Unapplied Accounting Standard and Implementation Guidance (continued)(1) Outline (continued)(i)Financial instruments defined in “Accounting Standard for Financial
Instruments”(ii) Inventories held for trading purposes defined in “Accounting Standard for
Measurement of Inventories”“Implementation Guidance on Disclosures about Fair Value of Financial
Instruments” has been revised requiring disclosure of financial instruments broken
down by level in the fair value hierarchy.
(2) Scheduled Date of Application
The Company will apply the accounting standards and the implementation
guidance from the beginning of the year ending March 31, 2022.
(3) Impact of the Application of the Unapplied Accounting Standard and the
Implementation Guidance
The Company is currently assessing the effects of application of the accounting
standards and the implementation guidance on its consolidated financial statements.
6.

Additional Information

The estimation of accounting consequences of COVID-19
The timing of the end and the impacts upon domestic and global economy of COVID-19
pandemic are unpredictable and the outlook of market conditions of the future global economy
and the Group is laborious to foresee.
Whereas consequences such as suspension of a project are moderate in domestic projects,
limitation of activities continues in overseas projects. The Group predicts effects on progress ofthe projects and calculates accounting estimates such as profit and loss and recovery possibilityof deferred tax assets.
Disclosure of Accounting Method of Joint Ventures for Construction Project“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error
Corrections” (ASBJ Statement No. 24 issued on March 31, 2020) is applied to the Financial
Statements as of the end of the current fiscal year, and “principles and procedures ofaccounting treatment adopted when the provisions of related accounting standards, etc. are
not clear” are disclosed.

22

18

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets(a) Inventories
The components of inventories as of March 31, 2021 and 2020 were as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Merchandise and finished goods
Materials and supplies¥ 1,547
4,694¥ 1,991
3,111$ 13,973
42,399Real estate for sale

24,252
2¥30,496

25,0742¥30,180

219,05818$275,458

Costs on uncompleted construction
contracts(b) Pledged Assets
The following assets were pledged at March 31, 2021 and 2020 principally as collateralfor short-term bank loans, long-term debt, and guarantees (such as guarantees for thecompletion of construction contracts):
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Cash and deposits
Land
Buildings and structures, net ofaccumulated depreciation
Machinery, equipment and vehicles,
net of accumulated depreciation
Investments in securities
Others (Investments and other assets)

¥

0
6,070

¥

0
6,070

$

0
54,827

596

540

5,383

164
4
10
¥6,846152
4
10¥6,7781,481
36
90$61,837

Of the above property and equipment, mortgaged assets for factory foundations at
March 31, 2021 and 2020 were summarized as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Land
Buildings and structures, net ofaccumulated depreciation
Machinery, equipment and vehicles,
net of accumulated depreciation¥1,258¥1,258$11,363

291

235

2,628

164
¥1,715152¥1,646

1,481$15,49023

19

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets (continued)(b) Pledged Assets (continued)
The secured liabilities as of March 31, 2021 and 2020 were summarized as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Short-term bank loans[Including current portion of
long-term debt]
Long-term debt

¥[12

¥[11

$ 108

[12]
68

[11]
80

[108]
614

(c) Land Revaluation
Land for operations was revalued by two consolidated subsidiaries under the Law forLand Revaluation during the year ended March 31, 2001. The revaluation amount isshown as a separate component of net assets.
The market value of the land was less than the revalued book amount by ¥1,058 million($9,556 thousand) and ¥658 million at March 31, 2021 and 2020, respectively.
(d) Contingent Liabilities
At March 31, 2021 and 2020, the Company and consolidated subsidiaries were
contingently liable for the following:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
As guarantors of bank loans toemployees (house building fund)As guarantors of bank loans to Amenity
Life Co., Ltd.
Advance deposits¥003¥0,003$0,027

787
–

–
1,226

7,108
–

(e) Estimated Loss on Uncompleted Construction Contracts
An estimated loss on uncompleted construction contracts was recognized and included
as part of inventories but was not offset against the amount on the balance sheet. It has
been recorded as an allowance for losses on construction contracts in the amounts of¥103 million ($930 thousand) and ¥24 million as of March 31, 2021 and 2020,
respectively.

24

20

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets (continued)(f)Financial covenants
For the year ended March 31, 2021
(1) The Company has entered into a loan commitment agreement dated on March 31,
2016 with its seven banks with Sumitomo Mitsui Banking Corporation as arranger.
The following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2016 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2014 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
Unused amount on loan commitment agreement as of March 31, 2021 and 2020
were as follows.

Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)¥20,000¥20,000$180,652–––¥20,000¥20,000$180,652(2) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (same bank as we had contracted for the year ended
March 31, 2016) with Sumitomo Mitsui Banking Corporation as arranger. The
following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2017 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2014 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥5,500 million ($49,679 thousand) in long-term debt (including the current
portion) as of March 31, 2021.

25

21

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets (continued)(f)Financial covenants (continued)(3) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (including different 5 banks from above (2)) with
Sumitomo Mitsui Banking Corporation as arranger. The following financial covenant
is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2017 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2016 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In addition, the balance of bank borrowings under this syndicated loan contract is¥2,750 million ($24,839 thousand) in long-term debt (including the current
portion) as of March 31, 2021.
(4) The Company has entered into a committed syndicated loan contract dated on
March 30, 2018 with its seven banks (same bank as we had contracted for theyear ended March 31, 2016) with Sumitomo Mitsui Banking Corporation asarranger. The following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2018 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2017 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥10,000 million ($90,326 thousand) in long-term debt as of March 31,
2021.
Unused amount on the committed syndicated loan contract as of March 31, 2021
and 2020 were as follows.

Maximum limit under the contract
Loan balance outstanding
Difference (unused portion)

26

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)¥10,000¥10,000$90,326
10,00010,00090,326
¥
–
¥
–
$
–

22

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets (continued)(f)Financial covenants (continued)(5) The Company has entered into a committed syndicated loan contract dated on
December 26, 2019 with its ten banks (including different 6 banks from above (4))
with Sumitomo Mitsui Banking Corporation as arranger. The following financial
covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2020 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2019 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥10,000 million ($90,326 thousand) in long-term debt as of March 31,
2021.
Unused amount on the committed syndicated loan contract as of March 31, 2021
and 2020 were as follows.

Maximum limit under the contract
Loan balance outstanding
Difference (unused portion)

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)¥10,000¥10,000$90,326
10,00010,00090,326–¥–$–¥(6) The Company has entered into a loan commitment agreement dated on June 25,
2020 with its seven banks (same bank as we had contracted for the year ended
March 31, 2016) with Sumitomo Mitsui Banking Corporation as arranger. The
following financial covenant is included in the contract:
Total consolidated net assets at the end of second quarter of fiscal year beginning
March 31, 2020 shall be equal to or exceed 75% of total consolidated net assets asof March 31, 2020.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.

27

23

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets (continued)(f)Financial covenants (continued)
In addition, the balance of bank borrowings under the committed syndicated loan
contract is immaterial as of March 31, 2021.
Unused amount on loan commitment agreement as of March 31, 2021 and 2020
were as follows.
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥30,000–¥30,000¥––¥–$270,978–$270,978(7) The Company has entered into a loan commitment agreement dated on June 25,
2020 with Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui Trust
Bank, Limited. The following financial covenant is included in the contract:
Total consolidated net assets at the end of second quarter of fiscal year beginning
March 31, 2020 shall be equal to or exceed 75% of total consolidated net assets asof March 31, 2020.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is immaterial as of March 31, 2021.
Unused amount on loan commitment agreement as of March 31, 2021 and 2020
were as follows.
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥50,000–¥50,000¥––¥–$451,630–$451,630(8) The Company has entered into a general syndicated committed loan contract datedon June 25, 2020 with its twenty-five banks with Sumitomo Mitsui Banking
Corporation as arranger. The following financial covenant is included in thecontract:

28

24

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets (continued)(f)Financial covenants (continued)
Total consolidated net assets at the end of each fiscal year beginning March 31,
2021 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2020 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥15,000 million ($135,489 thousand) in long-term debt as of March 31,
2021.
Unused amount on the committed syndicated loan contract as of March 31, 2021
and 2020 were as follows.
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥15,000
15,000
¥
,–

¥–
–
¥–

$135,489
135,489$–(9) The Company has entered into a syndicated loan contract dated on September 29,
2020 with Sumitomo Mitsui Banking Corporation as arranger and Sumitomo Mitsui
Trust Bank, Limited as co-arranger. The following financial covenant is included in
the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2021 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2020 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥3,400 million ($30,710 thousand) in long-term debt (including the current
portion) as of March 31, 2021.
(10) The Company has entered into a syndicated loan contract dated on March 29, 2021
with its seven banks (same bank as we had contracted for the year ended March 31,2016) with Sumitomo Mitsui Banking Corporation as arranger. The following
financial covenant is included in the contract:25
29

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets (continued)(f)Financial covenants (continued)
Total consolidated net assets at the end of each fiscal year beginning March 31,
2021 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2020 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥10,000 million ($90,326 thousand) in long-term debt as of March 31, 2021.
For the year ended March 31, 2020
(1)

The Company has entered into a syndicated loan contract dated on March 29, 2016
and loan commitment agreement dated on March 31, 2016 with its seven bankswith Sumitomo Mitsui Banking Corporation as arranger. The following financial
covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2016 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2014 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥10,000 million in long-term debt (including the current portion) as of March 31,
2020.
Unused amount on loan commitment agreement as of March 31, 2020 and 2019were as follows.

Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)

30

As of March 31,
2020
2019
(Millions of yen)
¥20,000¥20,000––¥20,000¥20,000

26

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets (continued)(f)Financial covenants (continued)(2) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (same bank as we had contracted for the year ended
March 31, 2016) with Sumitomo Mitsui Banking Corporation as arranger. The
following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2017 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2014 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥6,500 million in long-term debt (including the current portion) as of March 31,
2020.
(3) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (including different 5 bank from above (2)) with
Sumitomo Mitsui Banking Corporation as arranger. The following financial covenant
is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2017 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2016 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In addition, the balance of bank borrowings under this syndicated loan contract is¥3,250 million in long-term debt (including the current portion) as of March 31,
2020.
(4) The Company has entered into a committed syndicated loan contract dated on
March 30, 2018 with its seven banks (same bank as we had contracted for the year
ended March 31, 2016) with Sumitomo Mitsui Banking Corporation as arranger. The
following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2018 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2017 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.

31

27

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

7.

Notes to Consolidated Balance Sheets (continued)(f)Financial covenants (continued)
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥10,000 million in long-term debt as of March 31, 2020.
Unused amount on the committed syndicated loan contract as of March 31, 2020
and 2019 were as follows.

Maximum limit under the contract
Loan balance outstanding
Difference (unused portion)

As of March 31,
2020
2019
(Millions of yen)
¥10,000¥10,000
10,00010,000¥－¥－(5) The Company has entered into a committed syndicated loan contract dated on
December 26, 2019 with its ten banks (including different 6 banks from above (4))
with Sumitomo Mitsui Banking Corporation as arranger. The following financial
covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2020 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2019 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥10,000 million in long-term debt as of March 31, 2020.
Unused amount on the committed syndicated loan contract as of March 31, 2020
and 2019 were as follows.
As of March 31,
2020
2019
(Millions of yen)
Maximum limit under the contract
Loan balance outstanding
Difference (unused portion)

32¥10,000
10,000
¥
,–

¥–
–
¥–

28

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

8.

Notes to Consolidated Statements of Income(a) Net Sales Based on Percentage-of-completion Method
Net sales on construction contracts accounted for under the percentage-of-completion
method amounted to ¥339,470 million ($3,066,299 thousand) and ¥381,887 million forthe years ended March 31, 2021 and 2020, respectively.
(b) Allowance for Losses on Construction Contracts Included in Cost of Sales
The allowance for losses on construction contracts was included in cost of sales in theamounts of ¥725 million ($6,548 thousand) and ¥184 million for the years ended March
31, 2021 and 2020, respectively.
(c) Selling, General and Administrative Expenses
The significant components of selling, general and administrative expenses at March 31,
2021 and 2020 were as follows:
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Salaries and wages
Retirement benefit expenses
Depreciation expenses
Provision of allowance for doubtfulreceivables
Other
Total

¥11,369659
819¥10,526595
713$102,691
5,952
7,397

7
10,495¥23,351–
11,067¥22,903

63
94,799$210,920(d) Research and Development Expenses
Research and development costs included in selling, general and administrative
expenses and manufacturing costs amounted to ¥2,748 million ($24,821 thousand) and¥2,750 million for the years ended March 31, 2021 and 2020, respectively.
(e) Gain on Sales of Property and Equipment
The significant components of gain on sales of property and equipment for the years
ended March 31, 2021 and 2020 were as follows:
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Buildings and structures
Machinery, equipment and vehicles
Land
Total

¥00
5
9
¥15

¥–
4
–
¥4

$00
45
81
$135

33

29

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

8.

Notes to Consolidated Statements of Income (continued)(f)Loss on Sales and Disposal of Property and Equipment
The significant components of loss on sales and disposal of property and equipment for
the years ended March 31, 2021 and 2020 were as follows:
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Loss on disposal
Loss on sales
Total

9.

¥139
6
¥145

¥59
6
¥66

$1,25554$1,309Notes to Consolidated Statements of Comprehensive Income

Amount of recycling and amount of income tax effects associated with other comprehensive
income for the years ended March 31, 2021 and 2020 were as follows:
2021

Years ended March 31,

2020(Millions of yen)
Unrealized holding gain on securities:
Changes in items during the period
Amount of recycling
Before income tax effect adjustment
Income tax effect adjustment
Unrealized holding gain on securities

2021(Thousands of
U.S. dollars)¥3,859–3,859(1,177)2,681¥(6,056)
2(6,053)
1,852(4,201)$34,856–
34,856(10,631)
24,216

12
–
12
(3)
8

21
–
21
(6)
14

108
–
108
(27)
72

Translation adjustments:
Changes in items during the period
Amount of recycling
Before income tax effect adjustment
Income tax effect adjustment
Translation adjustments

(528)
–
(528)
–
(528)

(22)
–
(22)
–
(22)

(4,769)–(4,769)–(4,769)Retirement benefits liability adjustments:
Changes in items during the period
Amount of recycling
Before income tax effect adjustment
Income tax effect adjustment
Retirement benefits liability adjustments
Total other comprehensive income

(17)
75
58
(46)
12
¥2,174

(210)
38
(172)
30
(141)
¥(4,351)

(153)
677
523
(415)
108
$19,636

Deferred gain on hedging instruments, net of taxes:
Changes in items during the period
Amount of recycling
Before income tax effect adjustment
Income tax effect adjustment
Deferred gain on hedging instruments, net of taxes

34

30

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

10. Notes to Consolidated Statements of Changes in Net Assets(a) Type and number of shares issued and treasury stock
For the year ended March 31, 2021
Balance atApril 1,
2020
Shares issued:
Common stock

162,673,321
Balance atApril 1,
2020

Treasury shares:
Common stock

4,648,600

Increase
Decrease(Number of shares)––

Increase
Decrease(Number of shares)
1,038,152

175,148

Balance at
March 31,2021

162,673,321
Balance at
March 31,2021

5,511,604

Note 1:

Increase of common stock is due to the purchase of fractional 7,884 shares and the acquisitionof treasury stock of 1,029,300 shares based on the resolution of the board of directors held on
February 10, 2021.

Note 2:

Decrease of common stock is due to the sale of fractional 798 shares in response to shareholder
requests and the disposition of treasury stock of 174,350 shares as the compensation of
restricted stocks based on the resolution of the board of directors held on July 21, 2020.

Note 3:

Increase of common stock of 968 shares is due to the acquisition without compensation caused
by a decrease of one of the members of the board of directors

For the year ended March 31, 2020
Balance atApril 1,
2019
Shares issued:
Common stockNote:162,673,321

Increase
Decrease(Number of shares)––

Balance at
March 31,2020

162,673,321

The Company executed the consolidation of shares at the ratio of 5 shares into 1 share effectivefrom October 1, 2017. Decrease of common stock is due to the consolidation of shares.
Balance atApril 1,
2019

Treasury shares:
Common stock

2,094,304

Increase
Decrease(Number of shares)
2,695,089

140,793

Balance at
March 31,2020

4,648,600

Note 1:

Increase of common stock is due to the purchase of fractional 6,689 shares and the acquisitionof treasury stock of 800,000 shares and 1,888,400 shares based on the resolution of the boardof directors held on May 10, 2019 and on August 7, 2019, respectively.

Note 2:

Decrease of common stock is due to the sale of fractional 562 shares in response to shareholder
requests and the disposition of treasury stock of 140,231 shares as the compensation of
restricted stocks based on the resolution of the board of directors held on August 8, 2019.

35

31

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

10.

Notes to Consolidated Statements of Changes in Net Assets (continued)(b)Dividends:(1) Dividends paid
For the year ended March 31, 2021

Resolution
Annual general
meeting of theshareholders on
June 26, 2020

Type of shares
Common stock

Total
dividends(Millions ofyen)

Dividends
per share(Yen)¥3,792¥24.00Total
dividends(Millions ofyen)

Dividends
per share(Yen)¥3,853¥24.00Cut-off
date

Effective
date

March 31,2020

June 29,2020

Cut-off
date

Effective
date

March 31,2019

June 28,2019

For the year ended March 31, 2020

Resolution
Annual general
meeting of theshareholders on
June 27, 2019

Type of shares
Common stock(2) Dividends with the cut-off date in the year ended March 31, 2021 and the effective
date in the year ending March 31, 2022 were as follows:

Resolution

Type of shares

Annual general
meeting of theshareholders on
June 29, 2021

Common stock

Source ofdividends

Total dividends(Millions of yen)

Dividends
per share(Yen)

Retainedearnings¥2,828¥18.00Cut-off
date

Effective
date

March 31,2021

June 30,
2021

Dividends with the cut-off date in the year ended March 31, 2020 and the effective
date in the year ending March 31, 2021 were as follows:

Resolution

Type of shares

Annual general
meeting of theshareholders on
June 26, 2020

Common stock

Source ofdividends

Total dividends(Millions of yen)

Dividends
per share(Yen)

Retainedearnings¥3,792¥24.0036

Cut-off date

Effectiv
e dateMarch 31,2020

June 29,2020

32

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

11. Notes to Consolidated Statements of Cash Flows
Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2021 and 2020 were as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Cash and deposits
Time deposits with maturities of overthree months
Cash and cash equivalents¥75,532¥53,495$682,250(5,940)¥69,591(7,652)¥45,842(53,653)$628,588

Assets and liabilities of a company that became a consolidated subsidiary due toacquisition of stock
Sumitomo Mitsui Construction Steel Structures Engineering Co. Ltd. and its subsidiary
DPS Bridge Works Co., Ltd. were consolidated as the company’s subsidiaries byacquisition of stocks. Detail of assets and liabilities of the subsidiaries at the time of
consolidation, acquisition price of stocks and net payments for acquisition at March 31,
2021 were as follows:

2021

Years ended March 31,

2020(Millions of yen)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Non-controlling interests
Gain on bargain purchase
Acquisition price of stocks
Cash and cash equivalents
Balance: payments for acquisition¥16,727
5,606(18,033)(2,089)
(663)
(547)
1,000
(804)
¥00,195

¥–
–
–
–
–
–
–
–
¥–

2021

(Thousands of
U.S. dollars)$151,088
50,636(162,885)(18,869)(5,988)(4,940)9,032(7,262)$001,761

Assets and liabilities of a company that was excluded from scope of consolidation due
to sale of stock
Amenity Life Co., Ltd. was excluded from scope of consolidation due to sales of stocks.
Detail of assets and liabilities of Amenity Life Co., Ltd. at the time of sales, selling priceof stocks and net payments for sales at March 31, 2021 were as follows:37

33

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

11. Notes to Consolidated Statements of Cash Flows (continued)

2021

Years ended March 31,

2020(Millions of yen)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Gain on sales of stocks
Selling price of stocks
Cash and cash equivalents
Balance: payments for sales

¥305
780
(114)
(1,301)330
0(259)¥(259)

2021(Thousands of
U.S. dollars)

¥–
–
–
–
–
–
–
¥–

$2,754
7,045(1,029)(11,751)2,980
0(2,339)$(2,339)

12. Financial Instruments(a) Overview(1) Policy for financial instruments
The Group limits investments of surplus funds to short-term bank deposits andraises necessary funds through bank loans.
In addition, the Group only uses derivatives for hedging risk of fluctuation offoreign currency exchange rates or interest rates, not for speculative transactions.
(2) Types of financial instruments and related risk and risk management system
Trade notes receivable, accounts receivable on completed construction contracts
and other are exposed to credit risk in relation to customers and trading partners.
Also, the Group’s main investments in securities are shares of companies, and they
are exposed to market price fluctuation risk.
Management of credit risks (Risks of default by customers and trading partners)
The Company manages due dates and balances of trade notes receivable, accounts
receivable on completed construction contracts and other for individual customers
and trading partners through its internal systems and monitors their credit status.
These systems enable the Group to identify any concerns for doubtful receivables at
an early stage and reduce risks of uncollectible amounts. Consolidated subsidiaries
also manage credit risks in the same manner as the Company. The Company
minimizes credit risks by mainly holding held-to-maturity securities with highcredit ratings.
Management of market risks (Risks of fluctuations in currency exchange andinterest rates)
The Company and certain consolidated subsidiaries hold trade receivables inforeign currencies. However, the risk of fluctuations in the currency exchange rate
is not significant because a similar amount of trade payables are also held, and theCompany utilizes foreign exchange forward contracts to hedge the risk of changes
in the foreign currency exchange rate.
34
38

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

12. Financial Instruments (continued)(a) Overview (continued)
Loan payables are used for operating funds. The Group manages loan payables byflexibly preparing or revising its fund management plans.
Derivatives are foreign currency exchange forward contracts held for the purposeof hedging future risk of fluctuation of foreign currency exchange rate of themonetary liabilities denominated in foreign currencies, and interest rate swaps held
for the purpose of hedging future risk of fluctuation of interest rates on loan payables.
Derivative transactions are carried out in accordance with the Companies’ internal
rules on transactions, and with highly rated financial institutions used as counterparties to reduce the risk of default.
Information regarding the method of hedge accounting, hedging instruments andhedged items, hedging policy, and assessment of hedge effectiveness is found in
Note 2-(n).
(3) Supplementary explanation of the fair value of financial instruments
The fair values of financial instruments are based on market prices, or, if no market
prices are available, they include estimated amounts. Because estimations of thefair value incorporate various factors, applying different assumptions can, in somecases, result in different fair values.
In addition, the amounts of derivatives in Note 14 “Derivatives and Hedge
Accounting” are not necessarily indicative of the actual market risk involved in thederivative transactions.

39

35

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

12. Financial Instruments (continued)(b) Fair value of financial instruments
Amounts recognized in the consolidated balance sheets, market value, and the difference
at March 31, 2021 and 2020, were as shown below. Moreover, items for which it isextremely difficult to determine fair values are not included in the following table (seeNote 2).
Carryingvalue

As of March 31, 2021
Fair
Carrying
Fair
Difference
Difference
value
value
value
(Millions of yen)(Thousands of U.S. dollars)

Cash and deposits
Trade notes receivable,accounts receivable oncompleted construction
contracts and other
Securities and investments
in securities
Held-to-maturity
securities
Other securities¥075,532¥075,532¥( –$0,682,250$ 682,250

190,177

190,155(22)

1,717,794

1,717,595(198)

15,404

15,4051

139,138

139,147

9

117
15,287

118
15,2871–

1,056
138,081

1,065
138,0819–

Total assets¥281,114¥281,093¥0(20)$2,539,192$2,539,022$(180)¥088,732¥088,732¥(00–$ 801,481$ 801,481

29,782

29,782–

269,009

269,009

–

8,662
5,000
49,518

8,572
4,979
48,832

(89)
(20)
(685)

78,24045,163447,276

77,42744,973441,080

(803)
(180)
(6,187)¥181,695¥, 211¥180,899¥, 211¥(796)¥( –$1,641,179 $1,633,989$(1,905) $0 (1,905)$(7,189)$0, 00 –Trade notes payable,accounts payable on
construction contracts
and other
Electronically recorded
payableShort-term bank loans
and current portion of
long-term debt
Corporate bondLong-term debt
Total liabilities
Derivative transactions (*)
(*):

$

$

–

–

Assets and liabilities arising from derivative transactions are shown at net value. If total is liabilities, amounts
is shown as “( ).”4036

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

12. Financial Instruments (continued)(b) Fair value of financial instruments (continued)
As of March 31, 2020
Carrying
Fair
value
Difference
value(Millions of yen)
Cash and deposits
Trade notes receivable,accounts receivable oncompleted construction
contracts and other
Securities and investments
in securities
Held-to-maturity
securities
Other securities
Total assets
Trade notes payable,accounts payable on
construction contracts
and other
Electronically recorded
payableShort-term bank loans
and current portion of
long-term debt
Long-term debt
Total liabilities
Derivative transactions (*)
(*):

¥,

¥053,495¥053,495

200,794

200,764(29)

11,581

11,5842

162
11,419¥265,872

164
11,419¥265,8442–¥, (27)¥103,870¥103,870¥(

32,56832,568–

11,511
28,330¥176,281¥(224)

11,37828,185¥176,002
¥
(224)

(133)
(145)
¥(278)¥( –––Assets and liabilities arising from derivative transactions are shown at net value. If total is liabilities, amounts
is shown as “( ).”Note 1:

Calculation of the fair value of financial instruments and other matters related
to investment securities and derivative transactions

Assets(1) Cash and deposits
The book values are used, because settlement periods of deposits are short and theirmarket values are almost the same as their book values.
(2) Trade notes receivable, accounts receivable on completed construction contracts
and other
The fair values are determined using the present value of discounted collectible
principal and interest amounts estimated reflecting their collectability based on an
appropriate rate in which a credit spread is added to a risk-free benchmark rate
(such as a government bond yield) corresponding to the remaining term.
(3) Securities and investments in securities
Concerning the market value of investment securities, the market value for stocks
is the price quoted on the stock exchange, and the market value for bonds is theprice provided by financial institutions.
In addition, for matters concerning to securities, see “Notes on securities.”
41

37

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

12. Financial Instruments (continued)(b) Fair value of financial instruments (continued)
Liabilities(1) Trade notes payable, accounts payable on construction contracts, Electronicallyrecorded payable
The book values are used, because these are operation payable and settlement
periods are within a year and their market values are almost the same as their bookvalues.
(2) Short-term bank loans
The carrying amount of the current portion of long-term debt approximates fairvalue since the carrying amount is equivalent to the present value of future cash
flows discounted using the current borrowing rate for similar debt with a compatible
maturity. For borrowings other than the current portion of long-term debt, thecarrying amount approximates fair value due to the short maturities of these
instruments.
(3) Corporate Bond
Fair value of corporate bonds issued by the Company is based on the present valueof the total principal and interest discounted by the interest rate reflects theremaining term and the credit risk.
(4) Long-term debt
Fair value of long-term debt is based on the price provided by financial institutionsor the present value of future cash flows discounted using the current borrowing
rate for similar debt with a comparable maturity. The fair value of loans subject tospecial hedge accounting treatment of interest rate swaps is based on the present
value of the total principal and interest of the borrowings hedged by interest rate
swaps, discounted by the interest rate to be applied if similar new loans wereentered into.
The information of the fair value for derivatives is included in Note 14.
Note 2:Financial instruments for which it is extremely difficult to measure the fairvalue
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)

Unlisted stocks (*)¥4,278¥4,288$38,641(*): Unlisted stocks are not included in “Securities and investments in securities” because
these have no market value and it is extremely difficult to measure the fair value.

42

38

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

12. Financial Instruments (continued)(b) Fair value of financial instruments (continued)
Note 3:

The redemption schedule for monetary claims and held-to-maturity debt
securities with maturity dates subsequent to March 31, 2021 and 2020
As of March 31, 2021
Within1 yearDeposits¥ 75,528
Trade notes receivable,accounts receivable oncompleted construction
contracts and other180,705
Securities and investments
in securities
Held-to-maturity
47
securities (Bonds)¥256,280

Within1 yearDeposits¥ 53,490
Trade notes receivable,accounts receivable oncompleted construction
contracts and other
192,156
Securities and Investments
in securities
Held-to-maturity
45
securities (Bonds)¥245,693

Note 4:OverOver
1 year
5 years
and within and within
5 years
10 years(Millions of yen)¥Over
10 yearsOverOver
1 year
5 years
Within and within and withinOver
5 years
10 years 10 years
1 year(Thousands of U.S. dollars)

–

¥–

¥–

$ 682,214

$,

–

$–

$–

9,472

–

–

1,632,237

85,556––69¥9,541

–
¥–

–
¥–

424
$2,314,876

623$86,180

–
$–

–
$–

As of March 31, 2020
Over
Over
1 year
5 years
and within and within
5 years
10 years(Millions of yen)¥Over
10 years

–

¥–

¥–

8,637

–

–

116
¥8,753–¥––¥–

The redemption schedule for corporate bonds, long-term debt and otherinterest bearing debt with maturity dates subsequent to March 31, 2021 and2020. See Note 22.

43

39

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

13. Securities
Securities at March 31, 2021 and 2020 were summarized as follows:(a) Held-to-maturity securities

Securities whose fairvalue exceeds theircarrying value:
Bonds

Securities whose fairvalue exceeds theircarrying value:
Bonds

As of March 31, 2021
Fair
Unrealized Carrying
Fair
Unrealized
Carrying
value
gain
value
value
gain
value
(Millions of yen)(Thousands of U.S. dollars)

¥117

¥118

¥1

$1,056$1,065$9

As of March 31, 2020
Fair
Unrealized
Carrying
gain
value
value
(Millions of yen)

¥162

¥164

¥2

(b) Other securities
Balancesheet
amountUnrealized gain:
Stock
Unrealized loss:
Stock
Total

Unrealized gain:
Stock
Unrealized loss:
Stock
Total

As of March 31, 2021
Balancesheet
Unrealized
Unrealized
amountgain (loss)
gain (loss)
Cost
Cost
(Millions of yen)(Thousands of U.S. dollars)¥04,550¥02,620¥1,929$041,098$023,665$17,423

10,736¥15,287

12,063¥14,684(1,326)¥0,602

96,974$138,081

108,960$132,634(11,977)$05,437

As of March 31, 2020
Balancesheet
Unrealized
amountgain (loss)
Cost(Millions of yen)
¥3,021¥1,674¥1,346

8,397¥11,419

13,007¥14,682(4,609)¥3,262(c) Sales of other securities
Year ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Sales proceeds
Total gain on sales of security
Total loss on sales of security

¥37
8
–

¥27
0
3

$334
72
–

44

40

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

14. Derivatives and Hedge Accounting
Derivative transactions for the years ended March 31, 2021 and 2020 were summarized asfollows:(a) Derivative transactions to which the hedge accounting is applied(1) Currency-related transactions
Method ofhedge
accounting
Allocationaccounting
method forforwardforeignexchange
contracts

As of March 31, 2021
Transaction
type
Forwardforeignexchange
contracts
Long
U.S.dollars
Long
U.S.dollars

Total

Hedgeditem

Accounts
payableFutureforeigncurrency

ContractOver
Fairamount1 yearvalue(Millions of yen)Contract
Over
Fair value
amount1 year(Thousands of U.S. dollars)

¥,00-

¥ -

(Note 2)$0,00-$-(Note 2)

198
¥198

¥ -

¥3
¥3

1,788
$1,788

$$-

$27
$27

Note 1:

Estimated fair value was provided by the counterparty financial institution.

Note 2:Since forward foreign exchange contracts accounted for are included in that of the account payable as thehedged item, the fair values of the contracts are included in the fair values of the account payable.

There were no currency-related transactions to which the hedge accounting isapplied for the year ended March 31, 2020.
(2)

Interest-related transactions

Method ofhedge
accounting
Fair value

Total
Note 1:

As of March 31, 2021
Transaction
type

Hedgeditem

Interest-rate
swaps:
Pay fixed/
Receivefloating
Pay fixed/
Receivefloating

Long-termdebtLong-term
debt

ContractOver
Fairamount1 yearvalue(Millions of yen)Contract
Over
Fair value
amount1 year(Thousands of U.S. dollars)¥ 7,500¥ 7,500¥(106)$67,744$67,744$0,(957)

2,500¥10,000

2,500¥10,000(108)¥(215)

22,581$90,326

22,581$90,326,,0,(975)$(1,942)

Estimated fair value was provided by the counterparty financial institution.

45

41

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

14. Derivatives and Hedge Accounting (continued)(2)

Interest-related transactions (continued)

Method ofhedge
accounting
Short-cut
methodTotal
Note 1:

Fair value

Total

Short-cut
methodNote 1:Hedgeditem

Interest-rate
swaps:
Pay fixed/
Receivefloating
Pay fixed/
Receivefloating

Long-termdebtLong-term
debt

ContractOver
Fairamount1 yearvalue(Millions of yen)ContractOveramount1 yearFair value(Thousands of U.S. dollars)¥ 6,000¥ 6,000(Note 1)

$54,195$54,195(Note 1)

4,000
¥10,000

4,000¥10,000(Note 1)

36,130$90,326

36,130$90,326(Note 1)

As of March 31, 2020
Transaction
type

Hedgeditem

Interest-rate
swaps:
Pay fixed/
Receivefloating
Pay fixed/
Receivefloating

Long-termdebtLong-term
debt

ContractOver
Fairamount1 yearvalue(Millions of yen)

¥ 7,500¥ 7,500¥(109)

2,500¥10,000

2,500¥10,000(114)¥(224)

Estimated fair value was provided by the counterparty financial institution.

Method ofhedge
accounting

Total

Transaction
type

Since these interest rate swaps accounted for by short-cut method are included in that of the long-term debt
as the hedged item, the fair values of the contracts are included in the long-term debt.

Method ofhedge
accounting

Note 1:

As of March 31, 2021

As of March 31, 2020
Transaction
type

Hedgeditem

Interest-rate
swaps:
Pay fixed/
Receivefloating
Pay fixed/
Receivefloating

Long-termdebtLong-term
debt

ContractOver
Fairamount1 yearvalue(Millions of yen)

¥ 6,000¥ 6,000(Note 1)

4,000
¥10,000

4,000¥10,000(Note 1)Since these interest rate swaps accounted for by short-cut method are included in that of the long-term debt
as the hedged item, the fair values of the contracts are included in the long-term debt.

46

42

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

15. Retirement Benefit Plans
For the year ended March 31, 2021, the Group has either funded or unfunded defined benefit
and defined contribution plans.
The Group has a defined benefits pension plan, i.e. defined benefit company pension plan
and lump-sum retirement benefit plans. Certain consolidated domestic subsidiaries participate
in the Small and Medium Enterprise Retirement Allowance Mutual Aid Scheme. Certain
foreign consolidated subsidiaries have an employee pension trust. The Company and certain
consolidated subsidiaries have a defined contribution pension plan.
In addition, for certain defined benefit company pension plan and lump-sum retirement benefit
plans and the defined contribution pension plan of the Company and certain consolidated
subsidiaries, the simplified method is applied to calculate their liability for retirement benefits
and retirement benefits expenses.
The changes in the retirement benefit obligation during the year ended March 31, 2021 and2020 were as follows (excluding plans for which the simplified method is applied):Year ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Balance at the beginning of year
Service cost
Interest cost
Actuarial loss
Retirement benefit paid
Prior service cost
Increase due to a new consolidation
Foreign currency translation
Balance at the end of year

¥16,120889
79
26(1,240)
(1)
1,165
(16)
¥17,022¥16,116866
67
214(1,145)––0¥16,120$145,605
8,029
713
234
(11,200)(9)
10,522(144)$153,753

The changes in plan assets during the year ended March 31, 2021 and 2020 were as follows(excluding plans for which the simplified method is applied):Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Balance at the beginning of year
Expected return on plan assets
Actuarial gainContribution of the employer
Increase due to a new consolidation
Retirement benefit paid
Foreign currency translation
Balance at the end of year

¥45
7
11
9
446
(3)
0
¥517

¥44
4
3
–
–

(8)
0
¥45

$406
63
99
81
4,028
(27)
0
$4,66947

43

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

15. Retirement Benefit Plans (continued)

The changes in liability for retirement benefits based on the simplified method during theyear ended March 31, 2021 and 2020 were as follows:
Years ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Balance at the beginning of year
Retirement benefit expense
Retirement benefit paid
Contribution to defined contribution plan
Increase due to a new consolidation
OthersBalance at the end of year

¥1,466
175
(160)
(17)
451
(18)
¥1,896¥1,404
122
(45)
(15)
–
–

¥1,466$13,241
1,580(1,445)
(153)
4,073
(162)
$17,125

A reconciliation of the funded retirement benefit obligation and plan assets and the net
liability for retirement benefits recognized in the consolidated balance sheet at March 31,
2021 and 2020 is as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits in the
consolidated balance sheet
Liability for retirement benefits
Assets for retirement benefits
Net liability for retirement benefits in the
consolidated balance sheet¥ 1,590(1,523)67
18,333

¥

415
(194)
221
17,319$ 14,361(13,756)
605
165,594

18,401

17,540166,20918,562(160)

17,540–167,663(1,445)¥18,401¥17,540$166,209

Note: Including plans for which the simplified method is applied.

44
48

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

15. Retirement Benefit Plans (continued)
The components of retirement benefit expense during the year ended March 31, 2021 and2020 were as follows:Year ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service cost
Retirement benefit expense calculated by thesimplified method
Total retirement benefit expense

¥ 889
79
(7)
430
(359)

¥ 866
67
(4)
398
(360)

$08,029
713
(63)
3,884
(3,242)

175¥1,207122¥1,0901,580$10,902

The components of retirement benefit liability adjustments included in other comprehensive
income (before tax effect) during the year ended March 31, 2021 and 2020 were as follows:
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Actuarial loss
Prior service cost
Total

¥(415
(357)
¥(058

¥(187
(360)
¥(172)$(3,748(3,224)$ 523

The components of retirement benefit liability adjustments included in accumulated othercomprehensive income (before tax effect) as of March 31, 2021 and 2020 were follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Unrecognized actuarial loss
Unrecognized prior service cost
Total

¥1,413(505)¥ 907¥1,752(864)¥ 888$12,763(4,561)$08,192

45
49

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

15. Retirement Benefit Plans (continued)

The fair value of plan assets, by major category, as a percentage of total plan assets as ofMarch 31, 2021 and 2020 were follows:
2021
Bonds
StocksOther
Total

As of March 31,

74%
18%
8%
100%

2020
98%
–

2%
100%

The expected return on plan assets has been estimated based on the anticipated allocation toeach asset class and the expected long-term returns on assets held in each category.
The principal assumptions used for above plans were as follows:
Years ended March 31,
2021
2020
Discount rate
Expected rate of return on plan assets
Expected rate of increase in salaries

Principally 0.3%
Principally 2.0%
Principally 4.7%

Principally 0.3%
7.6%
Principally 4.7%

The contribution to defined contribution plans in the company and consolidated subsidiaries
were as follows:
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Contribution to defined contribution plans

¥778

¥779

$7,02746
50

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

16. Income Taxes
The significant components of deferred tax assets and liabilities at March 31, 2021 and 2020
were as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Deferred tax assets:
Liability for retirement benefits
Accounts payable and accrued expenses
Impairment loss
Loss on valuation of investment securities
Provision for contingent loss
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets¥ 5,699
3,465
66
8
661
1,746
11,648(6,302)
5,345¥ 5,379
3,445
1,016
998
661
1,564
13,066(7,314)
5,751$051,476
31,297596
72
5,970
15,770105,211(56,923)
48,279(1,008)(185)(183)(1,377)¥ 3,968

(428)
(0)
(34)
(463)
¥ 5,288(9,104)(1,671)(1,652)(12,437)$035,841

Deferred tax liabilities:
Retained earnings of foreign consolidated
subsidiaries
Unrealized holding gain on securities
Other
Total deferred tax liabilities
Net deferred tax assets

The significant differences between the statutory tax rate and the effective tax rates for theyears ended March 31, 2020 has been omitted as its difference was less than 5% of thestatutory tax rate.
17.

Business Combination and Divestiture(a) Business Combination by Acquisition
The Company entered into a stock purchase agreement for purchasing stock of Mitsui
E&S Steel Structures Engineering Co., Ltd. (hereinafter as “MSE”) with Mitsui E&S
Holdings Co.,Ltd. (hereinafter as “MES”) as announced on August 6, 2020 and acquired
stock on October 1, 2020.
As a result of the acquisition, DPS Bridge Works Co., Ltd. (hereinafter as “DPS”) which
is a subsidiary of MSE became a second-tier subsidiary of the Company.
(1) Summary of business combinationi.

Name of the acquired company and the company’s business
Name of the acquired company
The company’s business

Mitsui E&S Steel Structures Engineering
Co., Ltd.
Construction of bridge, maintenance ofbridge, construction in coastal area
51

47

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

17.

Business Combination and Divestiture (continued)(a) Business Combination by Acquisition (continued)ii.

Purpose of business combination
The SMCC Group has established “Mid-term Management Plan 2019-2021” and its
theme as “Accelerate Changes”, which aims to accelerate changes to enhance ourbusiness competitiveness and create corporate value based on policies: (1) Change
the construction process (2) Strengthen overseas business (3) Expand businesses
domain.
The Group considers this acquisition of stock will leads to expand to steel structurebusiness, and will enables to make comprehensive design/build approach forprestressed concrete and steel structure bridges.
Massive renewal of infrastructure and expanding business in overseas are expectedin this business area, and it is also expected that utilization of technology from MSE
and DPS and improvement of efficiency of business/production bases andconstruction management system will lead to improve productivity of the Group.
Therefore, the Group determine the business combination is sufficiently costeffective and matches the basic policies of the Group’s mid-term management plan,
and also the Group’s business resources are beneficial for increasing MSE’s
corporate value.
The Group expects great contribution to the Group’s civil construction businessstrategy and entered into the basic agreement for the acquisition.

iii.

Date of business combination
October 1, 2020

iv.

Legal form of business combination
Acquisition of stockv.

Name of the company after business combination
Sumitomo Mitsui Construction Steel Structures Engineering Co., Ltd.

vi.

Acquiring ratio of voting rights
70%

vii.

Measure of acquisition
The Company obtains the stock in exchange for cash(2) Term of business result of the acquired company which included in the consolidated
Statements of Income for the current consolidated fiscal year
From October 1, 2020 to March 31, 2021

52

48

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

17.

Business Combination and Divestiture (continued)(a) Business Combination by Acquisition (continued)(3) Acquisition cost of the acquired company and the breakdown of the costCompensation of acquisition
Cost of acquisitionCash¥1,000 million¥1,000 million($9,032 thousand)($9,032 thousand)(4) Composition and amount of major acquiring expenses
Advisory fee etc.

¥122 million($1,101 thousand)(5) Amount of emerged negative goodwill and source of the negative goodwilli.

Amount of emerged negative goodwill¥547 millionii.

($4,940 thousand)Source of the negative goodwill
As the net asset at fair market value at the time of the acquisition exceeded theacquisition cost, the difference is recognized as negative goodwill.

(6) Price and major components of assets and liabilities transferred on the combination dateCurrent assets
Non-current assets
Total assets¥16,727 million¥ 5,606 million¥22,334 million($151,088 thousand)($ 50,636 thousand)($201,734 thousand)Current liabilities
Long-term liabilities
Total liabilities¥18,033 million¥ 2,089 million¥20,122 million($162,885 thousand)($ 18,869 thousand)($181,754 thousand)(b) Business Divestiture
The Company entered into a stock purchase agreement for selling stocks of Amenity
Life Co., Ltd. (hereinafter as “AL”) with Unimat Retirement Community Co., Ltd.
(hereinafter as “URC”) on November 11, 2020 and sold the stocks on February 1, 2021.
As a result of the transfer, AL was excluded from the scope of the consolidation.
(1) Summary of business divestiturei.

Name of the purchasing company
Unimat Retirement Community Co., Ltd.

ii.

Divested businessNursing home operation business

53

49

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

17.

Business Combination and Divestiture (continued)(b) Business Divestiture (continued)iii.

Purpose of business Divestiture
AL was incorporated as a subsidiary of the Company in November 1989. It has
operated a nursing home “Amenity Life Hachioji” with capacity of 200 residents(150 rooms) located in Hachioji city, Tokyo since its incorporation, and has provided
nursing services for residents cooperating with nearby medical institutions.
Since an increase of number of competitive service providers resulting in an
intensification of business environment, it become more efficient to outsource theoperation of Amenity Life Hachioji to a company which has strong experience innursing care business compared with operating one facility by itself, and theCompany was seeking an opportunity to transfer the business.
URC, which operates nursing care business nationwide and has over 190 caring
service offices in Kanto region, establishes a business structure enabling cooperation
with neighborhood. URC has a complex of day-care services, group home andnursing home in Hachioji city as well and is expected to be the best transferee tocooperate efficiently with Amenity Life Hachioji, therefore the Company decided
the transfer of the business.

iv.

Date of business divestiture
February 1, 2021v.

Legal form of business divestiture
Acquisition of stock, which compensation is limited to cash or cash equivalent(2) Accounting treatmenti.

Profit and loss emerged from business divestiture
Gain on sale of shares of subsidiaries and affiliates: ¥330 million ($2,980 thousand)

ii.

iii.

Carrying amount of assets and liabilities related to the transferred company
Current assets
Non-current assets
Total assets¥, 305 million¥, 780 million¥1,085 million($ 2,754 thousand)($ 7,045 thousand)($ 9,800 thousand)Current liabilities
Long-term liabilities
Total liabilities¥, 114 million¥1,301 million¥1,415 million($ 1,029 thousand)($11,751 thousand)($12,781 thousand)Accounting treatment
The difference between sales value of the transferred stock and its consolidated
carrying amount was recorded “Gain on sales of shares of subsidiaries and affiliates”.

5450

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

17.

Business Combination and Divestiture (continued)(b) Business Divestiture (continued)(3) Name of segment to which the divested business belonged
Others(4) Profit and loss related to divested business in the consolidated Statements of Income forthe current consolidated fiscal year
Net sales
Operating expenses

18.

¥423 million¥ 3 million($3,820 thousand)($, 27 thousand)Segment Information, etc.

Segment Information(a) Outline of Segments
The Company’s reportable operating segments are components for which separate
financial information is available and that are evaluated regularly by the board of directors
in determining the allocation of management resources and in assessing performance.
The Company currently divides its operations into Civil Construction and Building
Construction, managed by the Civil Engineering Division and the Building Administration
Division, respectively. Business strategies are formulated by each segment.
Accordingly, the Company divides its operations into two reportable operating segmentson the same basis as it uses internally; Civil Construction and Building Construction.
Civil Construction consists mainly of governmental public works like bridge construction.
Building Construction is awarded by private sector companies for things like high riseapartment buildings.
(b) Accounting methods used to calculate segment income (loss), segment assets and otheritems for reportable segments
Accounts for reportable segments are for the most part calculated in line with thegenerally accepted standards used for the preparation of the consolidated financial
statements.
Segment income (loss) for reportable segments is based on gross profit.
Amounts for intersegment transactions or transfers are based on the market prices
determined by third party transactions.
The Company does not allocate any assets to reportable operating segments.

55

51

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

18. Segment Information, etc. (continued)
Segment Information (continued)(c) Segment income, segment assets and other items for reportable segments
Year ended March 31, 2021
Reportable operating segments
Civil
Building
Total
Others
Total(Millions of yen)

Sales
External
Customers
Intersegment
transactionstransfers
Net salesorSegment income

Sales
External
Customers
Intersegment
transactions ortransfers
Net sales
Segment income

Adjustments Consolidated¥186,079¥234,748¥420,827¥791¥421,619¥–¥421,619

753¥186,832－¥234,748

753¥421,581

114
¥906

867
¥422,487(867)¥(867)–¥421,619¥021,687¥016,972¥038,660¥357¥039,017¥, (81)¥038,935

Year ended March 31, 2021
Reportable operating segments
Building
Total
Others
Total
Civil(Thousands of U.S. dollars)

Adjustments Consolidated$1,680,778$2,120,386$3,801,165$7,144$3,808,319$–$3,808,319

6,801$1,687,580–$2,120,386

6,801$3,807,975

1,029$8,1837,831$3,816,159(7,831)$(7,831)–$3,808,319$0,195,890$0,153,301$0,349,200$3,224$0,352,425$0,(731)$0,351,684

Note 1:“Others” which includes the Company’s business of solar power, elder care facilities and insurance agent,
does not qualify as a reportable operating segment.

Note 2:Adjustment for segment income is the reduction of income recognized between reportable operating
segments.

Note 3:

Segment income corresponds to gross profit in the consolidated statement of income.

(c) Segment income, segment assets and other items for reportable segments (continued)
Year ended March 31, 2020
Reportable operating segments
Building
Total
Others
Total
Civil(Millions of yen)

Sales
External
Customers
Intersegment
transactions
or transfers
Net sales
Segment income

Adjustments Consolidated¥176,594¥294,776¥471,371¥1,031¥472,402¥–¥472,402

617¥177,212－¥294,776

617¥471,988

82¥1,114700¥473,102(700)¥(700)–¥472,402¥ 22,265¥ 25,074¥ 47,340¥0,386¥ 47,726¥ (57)¥ 47,669

Note 1:“Others” which includes the Company’s business of solar power, elder care facilities and insurance agent,
does not qualify as a reportable operating segment.

Note 2:Adjustment for segment income is the reduction of income recognized between reportable operating
segments.

Note 3:

Segment income corresponds to gross profit in the consolidated statement of income.

56

52

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

18. Segment Information, etc. (continued)
Related Information
For the year ended March 31, 2021
(a) Product and service information
See “Segment income, segment assets and other items for reportable segments.”(b) Geographical segment information(1) Sales
Japan

Asia
Others(Millions of yen)

¥358,467¥60,189¥2,962

Year ended March 31, 2021
Total
Japan
Asia
Others
Total(Thousands of U.S. dollars)¥421,619$3,237,891$543,663$26,754$3,808,319

Notes: Geographical segments are determined based on the country/region of domicile ofcustomers.

(2) Tangible fixed assets
Geographical segment information on tangible fixed assets has been omitted as theamount of tangible fixed assets in Japan constituted over 90% of total as of March
31, 2021.
(c) Major customer information
Information on major customers has been omitted as there were no sales to a single
customer constituting over 10% of net sales for the year ended March 31, 2021.
For the year ended March 31, 2020(a) Product and service information
See “Segment income, segment assets and other items for reportable segments.”(b) Geographical segment information(1) SalesYear ended March 31, 2020
Japan

Asia

Others

Total(Millions of yen)
¥401,065¥67,075¥4,260¥472,402

Notes: Geographical segments are determined based on the country/region of domicile ofcustomers.

57

53

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

18. Segment Information, etc. (continued)
Related Information (continued)(2) Tangible fixed assets
Geographical segment information on tangible fixed assets has been omitted as theamount of tangible fixed assets in Japan constituted over 90% of total as of March
31, 2020.

(c) Major customer information
Information on major customers has been omitted as there were no sales to a single
customer constituting over 10% of net sales for the year ended March 31, 2020.
Losses on impairment by reportable segment
For the years ended March 31, 2021 and 2020, there were no losses on impairment byreportable segment.
Amortization of goodwill and unamortized balance by reportable segment
For the years ended March 31, 2021 and 2020, there were no amortization and unamortizedbalance of goodwill by reportable segment.
Gain on negative goodwill by reportable segment
For the year ended March 31, 2021, ¥547 million ($4,940 thousand) gain on negative
goodwill was recorded due to the business combination of Sumitomo Mitsui Construction
Steel Structure Engineering Co., Ltd.
Gain on negative goodwill was allocated to the civil construction operation segment.
For the year ended March 31, 2020, there were no gain on negative goodwill by reportablesegment.

58

54

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

19.

Related Party Transactions

Related party transaction
Transactions with affiliates for the year ended March 31, 2021 were summarized asfollows:

Affiliated company:
Yoshiikikaku Co., Ltd.
(Real estate business)

Capitalinvestment

Number of
voting shares
held as apercentage ofvoting sharesissued¥1030.0%Year ended March 31, 2021

Long-term
non operating
accounts
receivable
Long-term
accounts
payableAffiliated company:
Yoshiikikaku Co., Ltd.
(Real estate business)

Note 1:
Note 2:
Note 3:

Capitalinvestment

Number of
voting shares
held as apercentage ofvoting sharesissued$90

30.0%

Balance sheet
account

Balance at
March 31,2021¥–

Long-term
non operating
accounts
receivable¥2,918¥–Long-term
accounts
payable¥2,339Nature ofTotal amounttransactionof transaction(Millions of yen)

Year ended March 31, 2021

Nature ofTotal amounttransactionof transaction(Thousands of U.S. dollars)

Balance sheet
account

Long-term
non operating
accounts
receivable
Long-term
accounts
payableLong-term
non operating
accounts
receivable
Long-term
accounts
payable$–$–Balance at
March 31,2021

$26,357$21,127

Total amount of transaction represents the amount of a claim for damages from Yoshiikikaku Co., Ltd. and theamount of guarantee for financial institution.
Allowance for above long-term non operating accounts receivable was recognized in the amount of ¥2,889
million ($26,095 thousand).
Consumption tax was excluded from the total amount of the transaction, however it was included in the balance
at March 31, 2021.

59

55

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

19. Related Party Transactions (continued)
Related party transaction (continued)
Transactions with affiliates for the year ended March 31, 2020 were summarized asfollows:

Affiliated company:
Yoshiikikaku Co., Ltd.
(Real estate business)

Capitalinvestment

Number of
voting shares
held as apercentage ofvoting sharesissued¥1030.0%Year ended March 31, 2020

Long-term
non operating
accounts
receivable
Long-term
accounts
payableNote 1:
Note 2:
Note 3:

Balance sheet
account

Balance at
March 31,2019¥–

Long-term
non operating
accounts
receivable¥2,918¥–Long-term
accounts
payable¥2,339Nature ofTotal amounttransactionof transaction(Millions of yen)

Total amount of transaction represents the amount of a claim for damages from Yoshiikikaku Co., Ltd. and theamount of guarantee for financial institution.
Allowance for above long-term non operating accounts receivable was recognized in the amount of ¥2,889
million.
Consumption tax was excluded from the total amount of the transaction, however it was included in the balance
at March 31, 2020.

20. Per Share Information
Net assets and basic profit per share as of and for the years ended March 31, 2021 and 2020
were as follows:
2021

2020
(Yen)

Net assets per share
Profit per shareNote:¥651.5955.33¥605.63
97.89

2021(U.S. dollars)$5.886
0.499

Profit per share – diluted was omitted as there were no diluted share for the year
ended March 31, 2021 and 2020.

60

56

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

20. Per Share Information (continued)

The basis of calculation for net assets per share at March 31, 2021 and 2020 were as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Total net assets
Amounts deducted from total net assets[Including non-controlling interests]
Total net assets attributable to common stock¥110,308
7,902[7,902]¥102,405¥102,443
6,738[6,738]¥95,704$996,368
71,375[71,375]$924,984(Thousands of shares)

Number of shares of common stock used todetermine net assets per share

157,161

158,024

The basis for calculating basic profit per share – based and profit per share – diluted for theyears ended March 31, 2021 and 2020 were as follows:
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)Profit per share – basic:
Profit attributable to owners of parent
Amount not available to common shareholders
Profit attributable to owners of parent
per share – basic
Average number of shares of common stock
outstanding
21.

¥8,743–¥15,550–$78,972–¥8,743¥15,550$78,972(Thousands of shares)
158,045

158,867

Subsequent Event

Stock Repurchase
At the meeting of the Board of Directors held on February 10, 2021, the Company resolved
to repurchase its stock in accordance with Article 156 of the Company Act of Japan, as
applied pursuant to paragraph 3 of Article 165 of the Companies Act of Japan.
(a) Reason for repurchase of treasury stock
To improve capital efficiency and to engage flexible capital policies in response tochanges in management environment.

61

57

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

21.

Subsequent Event (continued)

Stock Repurchase (continued)(b) Details of repurchase(1) Class of share(2) Total number of shares ofcommon stock to be repurchased(3) Total amount(4) Period(5) Repurchase method(c) Result of repurchase(1) Class of share(2) Total number of shares ofcommon stock to be repurchased(3) Total amount(4) Period(5) Repurchase method

Common stock of the Company
Up to 3,000,000 shares(1.90% of the total number of shares ofcommon stock outstanding excluding
treasury stock)
Up to 1,000,000,000 yen
From February 12, 2021 to June 30, 2021
Auction market on Tokyo Stock Exchange
Common stock of the Company
2,058,800 shares
999,917,100 yen
From February 15, 2021 to May 7, 2021
Auction market on Tokyo Stock Exchange

22. Corporate Bond
Corporate Bond at March 31, 2021 was summarized as follows:Year ended March 31, 2021
Balance at Balance atApril 1,March 31, Interest
Issued Date
Collateral
Rate
2020
2021
(Millions of yen)CompanyBond

The Company

1st Unsecured Bond
(with inter-bond paripassu clause)

–

Total

CompanyBond

The Company

1st Unsecured Bond
(with inter-bond paripassu clause)

Total

Note:

–

October 22,
2020

–

0

5,000

0

5,000

0.30%

–

Nil

–

Redemption
Deadline
October 22,
2025–

Year ended March 31, 2021
Balance at Balance atApril 1,March 31, Interest
Issued Date
Collateral
Rate
2020
2021
(Thousands of U.S.
dollars)

Redemption
Deadline

October 22,
2020

October 22,
2025

–

0

45,163045,163

0.30%

–

Nil

–

–

Profit per share – diluted was omitted as there were no diluted share for the year
ended March 31, 2021 and 2020.

62

58

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

22. Corporate Bond (continued)
Scheduled redemption of corporate bonds are summarized as follows:Year ending March 31, 2021

(Thousands of U.S.
dollars)(Millions of yen)

Within 1 year
Over 1 year and within 2 years
Over 2 years and within 3 years
Over 3 years and within 4 years
Over 4 years and within 5 years¥0,00–
–
–
–
5,000

$

–
–
–
–
45,16323. Short-Term Debt and Long-Term Debt
Short-term debt at March 31, 2021 and 2020 were summarized as follows:

Short-term bank loans (at weighted-averageinterest rates of 2.0% at 2021)
Deposits from employees (at interest rates of
1.0% at 2021 and 2020)

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)¥1,450¥0,00–$13,097¥3,824¥3,415$34,540

Long-term debt at March 31, 2021 and 2020 were summarized as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Debt with collateral (at weighted-average interest
rates of 2.5% at 2021 and 2020)
Debt without collateral (at weighted-averageinterest rates of 1.2% at 2021 and 1.3% at 2020)
Lease obligations
Current portion (excluding lease obligations)
Current portion of lease obligations

63¥(00,080 ¥,
56,6501,854(7,212)(605)

92

39,750
1,043(11,511)
(408)

$,

722

511,697
16,746(65,143)(5,464)59

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2021

23. Short-Term Debt and Long-Term Debt (continued)
The aggregate annual maturities of long-term debt subsequent to March 31, 2021 weresummarized as follows:Year ending March 31,
2022
2023
2024
2025
2026
2027 and thereafter(Millions ofyen)(Thousands of
U.S. dollars)¥07,212
1,712
9,962
15,212
6,113
16,517¥56,730$065,143
15,46389,982
137,404
55,216
149,191$512,419

The aggregate annual maturities of lease obligations subsequent to March 31, 2021 weresummarized as follows:Year ending March 31,
2022
2023
2024
2025
2026
2027 and thereafter(Millions ofyen)(Thousands of
U.S. dollars)

¥ 605
500
345
249
68
86
¥1,854$05,464
4,516
3,116
2,249
614
776
$16,746

60
64

65

66

67

68

69

70

71

72

Non-Consolidated Financial Statements
Sumitomo Mitsui Construction Co., Ltd.
Year ended March 31, 2021
with Independent Auditor’s Report73Sumitomo Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co., Ltd.
Non-Consolidated Balance Sheets
March 31, 2021

Non-Consolidated Balance Sheets

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)

AssetsCurrent assets:
Cash and deposits
Trade notes receivable
Accounts receivable on completed construction contracts
Securities
Inventories
Other current assets
Allowance for doubtful receivables
Total current assets¥ 42,638
1,308
153,182
47
21,66524,032－242,875¥ 20,387
288
176,82745
22,913
16,776(20)
237,218$0,385,132
11,814
1,383,632
424
195,691
217,071－
2,193,794

Non-current assets:
Property and equipment, at cost:
Land (Note 5-(b))
Buildings (Note 5-(b))
Structures (Note 5-(b))
Machinery and equipment
VehiclesTools, furniture and fixtures
Construction in progress
Accumulated depreciation
Property and equipment, net

5,328
4,857
799
4,488
275
4,403
544
(10,477)
10,219

5,328
4,823
797
3,751
278
4,236
110
(10,202)9,125

48,12548,871
7,217
40,5382,483
39,770
4,913(94,634)
92,304

2,205

1,902

19,916

18,64520,994
72
379
54
2,825
4,104
(3,286)
43,79056,215

14,841
16,219
73
416
57
3,984
5,028
(4,667)35,953
46,982

168,412
189,630
650
3,423
487
25,51737,069(29,681)395,537
507,768¥299,090¥284,200$2,701,562

Intangible fixed assets
Investments and other assets:
Investments in securities
Investments in subsidiaries and affiliates (Notes 5-(b) and 7)
Long-term loans receivable
Long-term loans to employees
Long-term prepaid expenses
Deferred tax assets (Note 8)
Other
Allowance for doubtful receivables
Total investments and other assets
Total non-current assets

Total assets

274Sumitomo Mitsui Construction Co., Ltd.
Non-Consolidated Balance Sheets
March 31, 2021

Liabilities and net assets
Current liabilities:
Trade notes payable (Note 5-(a))
Electronically recorded payable (Note 5-(a))
Accounts payable on construction contracts (Note 5-(a))
Short-term bank loans and current portion of long-term debt
(Notes 5-(d))
Lease obligations
Income taxes payable
Deposit received
Advances received on construction contracts in progress
Reserve for defects on completed construction projects
Allowance for losses on construction contracts
Allowance for losses on business of subsidiaries and affiliates
Allowance for contingency loss
Other current liabilities
Total current liabilities
Long-term liabilities:
Bond payable
Long-term debt (Notes 5-(d))
Lease obligations
Accrued retirement benefits
Other long-term liabilities
Total long-term liabilities

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)¥

6,559
19,43264,680¥ 9,516
23,81876,789$ 59,244
175,521584,229

7,200
236
94
15,122
15,964
611
670
－
2,159
12,014
144,746

11,500
180
2,813
8,502
13,847
761
278
670
2,159
19,591
161,926

65,034
2,131
849
136,591
144,196
5,518
6,051
－
19,501
108,517
1,307,433

5,000
49,450355
13,101
2,667
70,574－28,250297
13,4092,660
44,61745,163446,6623,206
118,336
24,089637,467

12,003

12,003

108,418

347
347

382
382

3,134
3,134

1,648
73,00474,652

1,268
69,53570,804

14,885
659,416674,301(3,504)
83,498(3,118)80,072(31,650)
754,204

418
(147)
271
83,770¥299,090(2,258)(156)(2,414)77,657¥284,200

3,775(1,327)
2,448
756,661$2,701,562

Contingent liabilities (Note 5-(c))
Net assets:
Shareholders’ equity:
Capital stock:
Common stock:
Authorized:
533,892,994 shares in 2021 and 2020
Issued and outstanding:
162,673,321 shares in 2021 and 2020
Capital surplus:
Other capital surplus
Total capital surpluses
Retained earnings:
Legal retained earnings
Earned surplus carried forward
Total retained earnings
Treasury stock, at cost:
5,511,604 shares in 2021 and 4,648,600 shares in 2020
Total shareholders’ equity
Valuation, translation adjustments and other:
Unrealized holding gain on securities
Deferred (loss) on hedging instruments, net of taxes
Total valuation, translation adjustments and otherTotal net assets
Total liabilities and net assets

See accompanying notes to non-consolidated financial statements.
75

Sumitomo Mitsui Construction Co., Ltd.
Non-Consolidated Statements of Income
March 31, 2021

Sumitomo Mitsui Construction Co., Ltd.

Non-Consolidated Statements of Income

Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)

Net sales:
Completed construction (Note 6-(a))
OthersCost of sales:
Completed construction
OthersGross profit
Completed construction
OthersSelling, general and administrative expenses (Note 6-(e))
Operating income
Other income (expenses):
Interest and dividend income (Note 6-(b))
Payments received from insurance claims
Reversal of provision for loss on business of subsidiaries andaffiliates
Interest expense
Exchange loss, net
Financing related expenses
Commission for loan commitment agreement
Gain on sales of property and equipment(Note 6-(c))
Gain on sales of investments in securities
Loss on sales and disposal of property and equipment(Note 6-(d))
Loss on valuation of shares of subsidiaries and affiliates
Loss on termination of golf club membership
Other, net (Note 6-(b))
Profit before income taxes
Income taxes (Note 8):¥322,002
214
322,217¥369,254
158
369,412$2,908,517
1,932
2,910,459

295,478117
295,596

333,845107
333,9532,668,936
1,056
2,670,002

26,52397

35,40850

239,571876

26,62035,459240,448

16,387
10,233

16,85418,605148,017
92,430

2,090
109

1,497
84

18,878984

335(1,126)
(838)
(608)
(628)

80
(821)
(523)
(245)
(49)

3,025
(10,170)(7,569)(5,491)(5,672)

－
－

0
0

－
－

(39)
(31)
(276)
(139)
(1,153)
9,079

(10)
(81)
－
(41)
(112)
18,492(352)(280)(2,492)(1,255)(10,414)82,007

1,464
(26)
1,438

5,182
155
5,337

13,223(234)
12,988¥007,640¥ 13,155$0,069,009(U.S. dollars)(Note 2)¥82.81$0.436

Current
DeferredProfit(Yen)
Profit per share – basic¥48.34

See accompanying notes to non-consolidated financial statements.

76

4

Sumitomo Mitsui Construction Co., Ltd.
Non-Consolidated Statements of Sumitomo
Changes In Net
AssetsConstruction Co., Ltd.
MitsuiMarch 31, 2021

Non-Consolidated Statements of Changes in Net Assets
Year ended March 31, 2021
Shareholders’ equity
Additional
paid-in capital

Balance at the beginning of
the period
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
ProfitPurchases of treasury stock
Disposition of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes in items during
the period
Balance at the end of theperiodCapitalstock

Other capitalsurplus

Earnedreserve¥12,003¥382¥1,268379

Treasurystock, at cost

Total
shareholders’equity¥(3,118)¥80,072¥69,535¥70,804(3,792)(3,792)(3,792)

(379)
7,640

–
7,640

(503)
117

–
7,640
(503)
81

(35)

–

(35)

379

3,468

3,847

(386)

3,246

¥12,003¥347¥1,648¥73,004¥74,652¥(3,504)¥83,498

Year ended March 31, 2021
Valuation, translation adjustments and other
DeferredTotalloss onvaluation,
Unrealized
hedgingtranslation
holding
instruments,
adjustments
gain onnet of taxes
and othersecurities(Millions of yen)
Balance at the beginning of
the period
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
ProfitPurchases of treasury stock
Disposition of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes in items during
the period
Balance at the end of theperiodRetained earnings
Earned surplus
carriedTotal retained
forwardearnings(Millions of yen)¥(2,258)¥(156)¥(2,414)Total
net assets¥77,657(3,792)
–
7,640
(503)
81

2,677

8

2,686

2,686

2,677

8

2,686

6,112

¥418

¥(147)¥271¥83,770

5
77

Sumitomo Mitsui Construction Co., Ltd.
Sumitomo
Mitsui
Non-Consolidated Statements of Changes
In NetAssets Construction Co., Ltd.
March 31, 2021

Non-Consolidated Statements of Changes in Net Assets (continued)
Year ended March 31, 2021
Shareholders’ equity
Additional
paid-in capital

Balance at the beginning of
the period
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
ProfitPurchases of treasury stock
Disposition of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes in items during
the period
Balance at the end of theperiodCapitalstock

Other capitalsurplus$108,418$3,450Retained earnings
Earned surplus
carriedEarnedTotal retained
forwardreserveearnings(Thousands of U.S. dollars) (Note 2)$11,453

3,423

Treasurystock, at cost

Total
shareholders’equity$(28,163)$723,258$628,082$639,544(34,251)(34,251)(34,251)(3,423)69,009–69,009(4,543)
1,056–
69,009(4,543)
731

(316)

–

(316)

3,423

31,32534,748(3,486)29,319$108,418$3,134$14,885$659,416$674,302$(31,650)$754,204

Year ended March 31, 2021
Valuation, translation adjustments and other
DeferredTotalloss onvaluation,
Unrealized
hedgingtranslation
holding
instruments,
adjustments
Totalgain onnet of taxes
and other
net assets
securities(Thousands of U.S. dollars) (Note 2)
Balance at the beginning of
the period
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
ProfitPurchases of treasury stock
Disposition of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes in items during
the period
Balance at the end of theperiod$(20,395)$(1,409)$(21,804)$701,445(34,251)–
69,009(4,543)731

24,18072

24,261

24,261

24,18072

24,261

55,207$3,775$(1,327)$2,447$756,661

6
78

Sumitomo Mitsui Construction Co., Ltd.
Non-Consolidated Statements of Changes
In NetAssets Construction Co., Ltd.
Sumitomo
MitsuiMarch 31, 2021

Non-Consolidated Statements of Changes in Net Assets (continued)
Year ended March 31, 2020
Shareholders’ equity
Additional
paid-in capital

Balance at the beginning of
the period
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
ProfitPurchases of treasury stock
Disposition of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes in items during
the period
Balance at the end of theperiodCapitalstock

Other capitalsurplus

Earnedreserve¥12,003

¥397

¥883

385

Treasurystock, at cost

Total
shareholders’equity¥(1,716)¥72,188¥60,619¥61,503(3,853)(3,853)(3,853)(385)
13,155–
13,155(1,501)
98–
13,155(1,501)
83

(15)

–

(15)

385

8,915

9,301

(1,402)

7,884¥12,003¥382¥1,268¥69,535¥70,804¥(3,118)¥80,072

Year ended March 31, 2020
Valuation, translation adjustments and other
Deferred gain
Total
(loss) on
valuation,
Unrealized
hedgingtranslation
holding
instruments,
adjustments
gain onnet of taxes
and othersecurities(Millions of yen)
Balance at the beginning of
the period
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
ProfitPurchases of treasury stock
Disposition of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes in items during
the period
Balance at the end of theperiodRetained earnings
Earned surplus
carriedTotal retained
forwardearnings(Millions of yen)

¥1,937¥(170)¥1,766Total
net assets¥73,954(3,853)–
13,155(1,501)
83(4,196)14(4,181)(4,181)(4,196)14(4,181)

3,702¥(2,258)¥(156)¥(2,414)¥77,657

See accompanying notes to non-consolidated financial statements.

779

Sumitomo Mitsui Construction Co., Ltd.
Notes to Non-Consolidated Financial Statements

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021 and 2020
March 31, 2021
1.

Summary of Significant Accounting Policies(a) Basis of Presentation
The accompanying non-consolidated financial statements of Sumitomo Mitsui Construction
Co., Ltd. (the “Company”) are prepared on the basis of accounting principles generally
accepted in Japan, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards, and have been
compiled from the non-consolidated financial statements prepared by the Company as
required by the Financial Instruments and Exchange Law of Japan.
Certain reclassifications have been made to present the accompanying financial statements
in a format which is familiar to readers outside Japan. In addition, certain amounts in theprior year’s financial statements have been reclassified to conform to the current year’s
presentation.
As permitted, amounts of less than one million yen have been omitted. As a result, thetotals shown in the accompanying financial statements do not necessarily agree with thesums of the individual amounts.
(b) Securities and Investments in Subsidiaries and Affiliates
The accounting standard for financial instruments requires that securities be classified
into three categories: trading, held-to-maturity or other securities. Under this standard,
trading securities are carried at fair value and held-to-maturity securities are carried atamortized cost. Marketable securities classified as other securities for which market prices
are determinable are carried at fair value with any changes in unrealized holding gain or
loss, net of the applicable income taxes, included directly in net assets. Non-marketablesecurities classified as other securities are carried at cost. Cost of securities sold isdetermined by the moving average method. Investments in subsidiaries and affiliates arestated at cost determined by the moving average method.
(c) Inventories
Inventories other than materials and supplies are stated at cost determined by the specificidentification method. Materials and supplies are valued at cost determined by theaverage method (cost of materials and supplies is written down when their carrying
amounts become unrecoverable).

880

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
1. Summary of Significant Accounting Policies (continued)(d) Depreciation and Amortization(1) Property and equipment (except leased assets)
Depreciation of property and equipment (except leased assets) is determined by the
declining-balance method based on the estimated useful lives and the residual value ofthe respective assets as prescribed in the Corporation Tax Law of Japan except thatthe straight-line method is applied to office buildings (except facilities attached tobuildings) acquired on or after April 1, 1998 and facilities attached to buildings andstructures acquired on or after April 1, 2016.
(2) Intangible fixed assets (except leased assets) and long-term prepaid expenses
Amortization of intangible fixed assets (except leased assets) and long-term
prepaid expenses is calculated by the straight-line method based on the estimateduseful lives of the respective assets as prescribed in the Corporation Tax Law ofJapan. Amortization of computer software for internal use is calculated by thestraight-line method over the estimated useful lives of 5 years.
(3) Leased assets
Depreciation of leased assets under finance leases other than those that transfer theownership of the leased assets to the lessees is calculated by the straight-line
method over the lease term with a residual value of zero.
(e) Advances Received on Construction Contracts in Progress
As is customary in Japan, the Company receives payments from customers on an
installment basis in accordance with the terms of the respective construction contracts.
(f)

Allowance for Doubtful Receivables
An allowance for doubtful receivables has been provided for future losses on general
receivables at an amount calculated by applying the percentage of actual losses oncollection experienced in the past, and an uncollectible amount for doubtful receivables
estimated based on an individual assessment of each receivable and probability ofcollection.

(g) Reserve for Defects on Completed Construction Projects
A reserve has been provided at an estimated amount for the fiscal year’s sales proceeds
in order to cover the liability for future costs of defects of the completed construction
projects.
(h) Allowance for Losses on Construction Contracts
An allowance has been provided based on the estimated amount for the future losses on
construction projects in progress at the fiscal year end which are anticipated to be
substantial losses in the future.
81

9

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
1. Summary of Significant Accounting Policies (continued)(i)

Allowance for Losses on Business of Subsidiaries and Affiliates
An allowance has been provided for the future losses on business of subsidiaries andaffiliates which is estimated beyond the amount of investments and loans to thesubsidiaries and the affiliates. There is no recognition of such allowance in this fiscal
year.

(j)

Allowance for Contingency Loss
An allowance for contingency loss related to the defective piling work at a condominium
in Yokohama has been provided based on the reasonably estimated amount necessary
for payments to be borne as the contractor in accordance with defect liability applicableto the construction contract.

(k) Employees’ Retirement Benefits(1) Method of attributing expected retirement benefits to periods
In calculating the retirement benefit obligation, the benefit formula method isapplied to attribute the expected retirement benefits to the periods up to year ended
March 31, 2021.
(2) Amortization of actuarial gain or loss and prior service cost
Actuarial gain or loss is amortized in the year following the year in which the gainor loss is recognized by the straight-line method over periods (11 years), which areshorter than the average remaining years of service of the employees.
Prior service cost is being amortized as incurred by the straight-line method overperiods (11 years), which are shorter than the average remaining years of serviceof the employees.
(l)Recognition of Revenues and Costs on Construction Contracts
Revenues and costs of construction contracts that commenced on or after April 1, 2009,of which the percentage of completion can be reliably estimated, are recognized by thepercentage-of-completion method. The percentage-of-completion is calculated at thecost incurred as a percentage of the estimated total cost. The completed-contract method
is applied for contracts for which the percentage of completion cannot be reliably
estimated.

(m) Derivatives and Hedge Accounting(1) Method of hedge accounting
Derivative financial instruments are mainly stated at fair value except thoseaccounted for under deferred hedge accounting.
Interest rate swaps qualifying for hedge accounting and meeting specific matching
criteria are not re-measured at market value, but the differential paid or received
under the swap agreements is charged or credited to income (short-cut method).
1082

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
1. Summary of Significant Accounting Policies (continued)(m) Derivatives and Hedge Accounting (continued)(2) Hedging instruments and hedged items
Hedging instruments:

Interest rate swaps
Forward foreign exchange contracts

Hedged items:

Interest on debt
Future foreign currency transactions(3) Hedging policy
The Company utilizes interest rate swaps only for the purpose of hedging futurerisks of fluctuation of interest rates.
(4) Assessment of hedge effectivenessAn evaluation of hedge effectiveness for interest rate swaps by principle method is
performed on a quarterly basis to confirm that there is a strong correlation between
hedged items and hedging instruments by comparing accumulated amount of thechange of cash flows of hedged items and accumulated amount of the change ofcash flows of hedging instruments to assess whether the forward contract qualifies
for hedge accounting. However, the evaluation of hedge effectiveness is omitted incase of interest rate swaps meeting specific matching criteria.
An evaluation of hedge effectiveness for a forward foreign exchange contract isperformed on a quarterly basis to confirm that amount of the forward foreignexchange contract is within amount of the underlying hedged item to assess
whether the forward foreign exchange contract qualifies for hedge accounting.
(n) Accounting for Retirement Benefits
Accounting for unrecognized actuarial loss and unrecognized prior service cost on nonconsolidated financial statements is different from the accounting on consolidated
financial statements.
(o) Consumption Taxes
Consumption taxes are accounted for by the tax exclusion method.
(p) Income Taxes
Deferred tax assets and liabilities are determined based on the differences between theamounts calculated for financial reporting purposes and the tax bases of the assets andliabilities and are measured using the enacted tax rates and laws which will be in effectwhen the differences are expected to reverse.
The Company has adopted the consolidated taxation system.

83

11

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31,
1. 2021
Summary of Significant Accounting Policies (continued)(q) Accounting Method of Joint Ventures for Construction Project
Assets, liabilities, costs and profits for a joint venture project are mainly recognized on
pro-rata basis of investment ratio of each members.
2.

U.S. Dollar Amounts

The translation of yen amounts into U.S. dollar amounts is included solely for the convenienceof readers outside Japan and has been made at ¥110.71 = U.S.$1.00, the approximate rate ofexchange prevailing on March 31, 2021. This translation should not be construed as arepresentation that yen have been, could have been, or could in the future be, converted into
U.S. dollars at that or any other rate.
3.

Significant Accounting Estimates(a) Provision for Contingent Loss
(1) Amounts recognized on Financial Statement of this fiscal year

Allowance for contingency loss

As of March 31, 2021
(Millions of yen)(Thousands of U.S. dollars)
2,159
19,501(2) Information of significant accounting estimates for an item above
An allowance for contingency loss related to the defective piling work at acondominium in Yokohama has been provided based on the reasonably estimatedamount necessary for payments to be borne as the contractor in accordance withdefect liability applicable to the construction contract.
Mitsui Fudosan Residential Co., Ltd. (hereinafter as “MFR”), which is one of thedevelopers of the apartment, initiated a lawsuit against the Company and two pilingcompanies on November 28, 2017, claiming about 45.9 billion yen (which amountincreased to approximately 51.0 billion yen on July 11, 2018) as alleged rebuilding
cost for the whole structure of the apartment. The Company considers that MFR’s
claim lacks legal foundation and reason, and will continue to make appropriate
arguments in that court proceeding.
(b) Recognition of Net Sales based on Percentage-of-Completion Method(1) Amounts recognized on Financial Statement of this fiscal year
As of March 31, 2021
(Millions of yen) (Thousands of U.S. dollars)
Net Sales recognized based on
Percentage-of-Completion Method

287,806

2,599,638

12
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Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
3. Significant Accounting Estimates (continued)(b) Recognition of Net Sales based on Percentage-of-Completion Method (continued)(2) Information of significant accounting estimates for an item above
Net sales of construction contracts of which the percentage of completion can bereliably estimated are recognized by the percentage-of-completion method. The
percentage of completion is calculated at the cost incurred as a percentage of theestimated total cost. It is necessary to estimate total revenue and cost of a project
reasonably upon the recognition.
The Company’s result might be fluctuated due to change of revenues and costs ofcompleted construction contracts affected by design changes or additional
contracts generated from negotiations with clients, unpredictable changes of global
politics, economics and social conditions, natural disasters, unforeseeable facts
found after commencement of construction works, and/or modification of
construction works caused by changes of project site situation.
4.

Additional Information

The estimation of accounting consequences of COVID-19
The timing of the end and the impacts upon domestic and global economy of COVID-19
pandemic are unpredictable and the outlook of market conditions of the future global economy
and the Group is laborious to foresee.
Whereas consequences such as suspension of a project are moderate in domestic projects,
limitation of activities continues in overseas projects. The Group predicts effects on progress ofthe projects and calculates accounting estimates such as profit and loss and recovery possibilityof deferred tax assets.
Disclosure of Accounting Method of Joint Ventures for Construction Project“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error
Corrections” (ASBJ Statement No. 24 issued on March 31, 2020) is applied to the Financial
Statements as of the end of the current fiscal year, and “principles and procedures ofaccounting treatment adopted when the provisions of related accounting standards, etc. are
not clear” are disclosed.

85

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Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
5.

Notes to Non-Consolidated Balance Sheets(a) Outstanding Balances with Subsidiaries and Affiliates
Significant outstanding balances for subsidiaries and affiliates other than individuallypresented on the accompanying non-consolidated balance sheets at March 31, 2021 and2020 were as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Trade notes payable
Electronically recorded payable
Accounts payable on construction
contracts

¥ 387
3,391

¥ 464
4,985

$ 3,495
30,629

8,321

9,449

75,160(b) Pledged Assets
The following assets were pledged at March 31, 2021 and 2020 principally as collateralfor guarantees (such as guarantees for the completion of construction contracts):
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Land
Buildings, net of accumulated
depreciation
Structures, net of accumulated
depreciation
Investments in subsidiaries and affiliates
Total¥1,735¥1,735$15,671

100

109

903

30
363
¥2,22832
363¥2,240270
3,278$20,124

There were no secured liabilities as of March 31, 2021 and 2020.
(c) Contingent Liabilities
At March 31, 2021 and 2020, the Company was contingently liable for the following:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
As guarantor of bank loans to
subsidiaries and other
Advance deposits¥2,605–¥2,558
1,226$23,529–86

14

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
5. Notes to Non-Consolidated Balance Sheets (continued)(d) Financial covenants
For the year ended March 31, 2021
(1) The Company has entered into a loan commitment agreement dated on March 31,
2016 with its seven banks with Sumitomo Mitsui Banking Corporation as arranger.
The following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2016 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2014 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
Unused amount on loan commitment agreement as of March 31, 2021 and 2020
were as follows.
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥20,000–¥20,000¥20,000–¥20,000$180,652–$180,652(2) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (same bank as we had contracted for the year ended
March 31, 2016) with Sumitomo Mitsui Banking Corporation as arranger. The
following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2017 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2014 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥5,500 million ($49,679 thousand) in long-term debt (including the current
portion) as of March 31, 2021.

87

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Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
5. Notes to Non-Consolidated Balance Sheets (continued)(d) Financial covenants (continued)(3) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (including different 5 bank from above (2)) with
Sumitomo Mitsui Banking Corporation as arranger. The following financial covenant
is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2017 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2016 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In addition, the balance of bank borrowings under this syndicated loan contract is¥2,750 million ($24,839 thousand) in long-term debt (including the current
portion) as of March 31, 2021.
(4) The Company has entered into a committed syndicated loan contract dated on
March 30, 2018 with its seven banks (same bank as we had contracted for the year
ended March 31, 2016) with Sumitomo Mitsui Banking Corporation as arranger. The
following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2018 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2017 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥10,000 million ($90,326 thousand) in long-term debt as of March 31,
2021.
Unused amount on the committed syndicated loan contract as of March 31, 2021
and 2020 were as follows.

Maximum limit under the contract
Loan balance outstanding
Difference (unused portion)88

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)¥10,000¥10,000$90,326
10,00010,00090,326
¥,
–
¥,
–
$,
–

16

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
5. Notes to Non-Consolidated Balance Sheets (continued)(d) Financial covenants (continued)(5) The Company has entered into a committed syndicated loan contract dated on
December 26, 2019 with its ten banks (including different 6 banks from above (4))
with Sumitomo Mitsui Banking Corporation as arranger. The following financial
covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2020 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2019 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥10,000 million ($90,326 thousand) in long-term debt as of March 31,
2021.
Unused amount on the committed syndicated loan contract as of March 31, 2021
and 2020 were as follows.

Maximum limit under the contract
Loan balance outstanding
Difference (unused portion)

As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)¥10,000¥10,000$90,326
10,00010,00090,326¥–¥–$–(6) The Company has entered into a loan commitment agreement dated on June 25,
2020 with its seven banks (same bank as we had contracted for the year ended
March 31, 2016) with Sumitomo Mitsui Banking Corporation as arranger. The
following financial covenant is included in the contract:
Total consolidated net assets at the end of second quarter of fiscal year beginning
March 31, 2020 shall be equal to or exceed 75% of total consolidated net assets asof March 31, 2020.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is immaterial as of March 31, 2021.
89

17

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
5. Notes to Non-Consolidated Balance Sheets (continued)(d) Financial covenants (continued)
Unused amount on loan commitment agreement as of March 31, 2021 and 2020
were as follows.
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥30,000–¥30,000¥––¥–$270,978–$270,978(7) The Company has entered into a loan commitment agreement dated on June 25,
2020 with Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui Trust
Bank, Limited. The following financial covenant is included in the contract:
Total consolidated net assets at the end of second quarter of fiscal year beginning
March 31, 2020 shall be equal to or exceed 75% of total consolidated net assets asof March 31, 2020.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is immaterial as of March 31, 2021.
Unused amount on loan commitment agreement as of March 31, 2021 and 2020
were as follows.
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥50,000–¥50,000¥––¥–$451,630–$451,630(8) The Company has entered into a general syndicated committed loan contract datedon June 25, 2020 with its twenty-five banks with Sumitomo Mitsui Banking
Corporation as arranger. The following financial covenant is included in thecontract:90

18

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
5. Notes to Non-Consolidated Balance Sheets (continued)(d) Financial covenants (continued)
Total consolidated net assets at the end of each fiscal year beginning March 31,
2021 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2020 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥15,000 million ($135,489 thousand) in long-term debt as of March 31,
2021.
Unused amount on the committed syndicated loan contract as of March 31, 2021
and 2020 were as follows.
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥15,000
15,000
¥
,–

¥–
–
¥–

$135,489
135,489$–(9) The Company has entered into a syndicated loan contract dated on September 29,
2020 with Sumitomo Mitsui Banking Corporation as arranger and Sumitomo Mitsui
Trust Bank, Limited as co-arranger. The following financial covenant is included in
the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2021 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2020 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥3,400 million ($30,710 thousand) in long-term debt (including the current
portion) as of March 31, 2021.
(10) The Company has entered into a syndicated loan contract dated on March 29, 2021
with its seven banks (same bank as we had contracted for the year ended March 31,2016) with Sumitomo Mitsui Banking Corporation as arranger. The following
financial covenant is included in the contract:19
91

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
5.
Notes to Non-Consolidated Balance Sheets (continued)(d) Financial covenants (continued)
Total consolidated net assets at the end of each fiscal year beginning March 31,
2021 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2020 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥10,000 million ($90,326 thousand) in long-term debt as of March 31, 2021.
For the year ended March 31, 2020
(1) The Company has entered into a syndicated loan contract dated on March 29, 2016
and loan commitment agreement dated on March 31, 2016 with its seven bankswith Sumitomo Mitsui Banking Corporation as arranger. The following financial
covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2016 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2014 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥10,000 million in long-term debt (including the current portion) as of March 31,
2020.
Unused amount on loan commitment agreement as of March 31, 2020 and 2019were as follows.
As of March 31,
2020
2019
(Millions of yen)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)

92¥20,000–¥20,000¥20,000–¥20,000

20

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
5. Notes to Non-Consolidated Balance Sheets (continued)(d) Financial covenants (continued)(2) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (same bank as we had contracted for the year ended
March 31, 2016) with Sumitomo Mitsui Banking Corporation as arranger. The
following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2017 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2014 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under this syndicated loan contract is¥6,500 million in long-term debt (including the current portion) as of March 31,
2020.
(3) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (including different 5 bank from above (2)) with
Sumitomo Mitsui Banking Corporation as arranger. The following financial covenant
is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2017 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2016 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In addition, the balance of bank borrowings under this syndicated loan contract is¥3,250 million in long-term debt (including the current portion) as of March 31,
2020.
(4) The Company has entered into a committed syndicated loan contract dated on
March 30, 2018 with its seven banks (same bank as we had contracted for the year
ended March 31, 2016) with Sumitomo Mitsui Banking Corporation as arranger. The
following financial covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,2018 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2017 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
9321

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
5. Notes to Non-Consolidated Balance Sheets (continued)(d) Financial covenants (continued)
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥10,000 million as of March 31, 2020.
Unused amount on the committed syndicated loan contract as of March 31, 2020
and 2019 were as follows.
As of March 31,
2020
2019
(Millions of yen)
Maximum limit under the contract¥10,000¥10,000
Loan balance outstanding
10,00010,000Difference (unused portion)
¥
,–
¥
,–
(5) The Company has entered into a committed syndicated loan contract dated on
December 26, 2019 with its ten banks (including different 6 banks from above (4))
with Sumitomo Mitsui Banking Corporation as arranger. The following financial
covenant is included in the contract:
Total consolidated net assets at the end of each fiscal year beginning March 31,
2020 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2019 or of total consolidated net assets at the end of the most recent fiscal year,
whichever is greater.
In calculating consolidated net assets, any allowance or costs related to thecondominium in Yokohama will be excluded from the calculation in accordancewith instructions received from the Ministry of Land, Infrastructure Transportation
and Tourism of Japan on January 13, 2016.
In addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥10,000 million in long-term debt as of March 31, 2020.
Unused amount on the committed syndicated loan contract as of March 31, 2020
and 2019 were as follows.
As of March 31,
2020
2019
(Millions of yen)
Maximum limit under the contract
Loan balance outstanding
Difference (unused portion)

94¥10,000
10,000
¥
,–

¥–
–
¥–

22

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
6.

Notes to Non-Consolidated Statements of Income(a) Net Sales Based on Percentage-of-completion Method
Net sales on construction contracts accounted for under the percentage-of-completion
method amounted to ¥287,806 million ($2,599,638 thousand) and ¥329,234 million forthe years ended March 31, 2021 and 2020, respectively.
(b) Transactions with Subsidiaries and Affiliates
Significant transactions with subsidiaries and affiliates other than individually presented
on the accompanying non-consolidated statements of income for the years ended March
31, 2021 and 2020 were as follows:
Years ended March 31,
2020
2021
2021
(Millions of yen)(Thousands of
U.S. dollars)
Dividend income
Royalty income
Allowance for doubtful accounts¥1,598247–¥1,060387
80$14,4342,231–(c) Gain on Sales of Property and Equipment
The significant components of gain on sales of property and equipment for the years
ended March 31, 2021 and 2020 were as follows:
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Machinery and equipment
Vehicles

¥–

¥0

$–

–

0

–

(d) Loss on Sales and Disposal of Property and Equipment
The significant components of loss on sales and disposal of property and equipment for
the years ended March 31, 2021 and 2020 were as follows:
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Loss on disposal

¥39

¥10

$352

95

23

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
6. Notes to Non-Consolidated Statements of Income (continued)(e) Selling, General and Administrative Expenses
The significant components of selling, general and administrative expenses for the years
ended March 31, 2021 and 2020 were as follows:
Years ended March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Salaries and wages
Depreciation expenses
Other
Total

¥ 8,269568
7,550¥16,387¥ 7,933
565
8,356¥16,854$074,690
5,130
68,196$148,017

7. Securities
Stocks of subsidiaries and affiliates at March 31, 2021 and 2020 were as follows:
As of March 31, 2021
Carrying
Fair
Unrealized Carrying
Fair
Unrealized
value
value
gain
value
value
gain
(Millions of yen)(Thousands of U.S. dollars)
Stocks ofa subsidiary¥717¥5,230¥4,513$6,476$47,240$40,764

As of March 31, 2020
Carrying
Fair
Unrealized
value
value
gain
(Millions of yen)
Stocks ofa subsidiary¥717¥3,785¥3,068

Note: Stocks of subsidiaries and affiliates for which it is extremely difficult to determine
market values were excluded from the above as follows:
As of March 31,
2021
2020
2021
Carrying value(Millions of yen)(Thousands of
U.S. dollars)
Stocks of
subsidiaries
Stocks ofaffiliates¥7,534¥5,721$68,051

29

30

261

96

24

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
8.

Income Taxes

The significant components of the Company’s deferred tax assets and liabilities at March 31,
2021 and 2020 were as follows:
As of March 31,
2021
2020
2021
(Millions of yen)(Thousands of
U.S. dollars)
Deferred tax assets:
Accrued retirement benefits
Allowance for bad debts
Account payable and accrued expenses
Loss on valuation of investment securities
Loss on devaluation of investments in
subsidiaries and affiliates
Reserve for defects on completed
construction projects
Allowance for losses on construction
contracts
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized holding gain on securities
Asset retirement obligations
Deferred (loss) on hedging instruments
Total deferred tax liabilities
Net deferred tax assets¥ 4,011
1,983
1,006
–

¥ 4,105
1,435
1,970
997

$ 36,229
17,911
9,086
–

825

957

7,451

187

233

1,689

205
999
9,218
(6,192)
3,025

85
1,355
11,140(7,143)
3,996

1,851
9,023
83,262(55,929)
27,323

(184)
(15)
(0)
(200)
¥ 2,825

–
(11)
–
(11)
¥ 3,984(1,661)(135)(0)(1,806)$ 25,517

The following table summarizes the significant differences between the statutory tax rates
and the effective tax rates for the years ended March 31, 2021 and 2020
Years ended March 31,
2021
2020
Statutory tax rates
Non-deductible expenses
Non-taxable income
Per capita inhabitants’ taxes
Tax credit
Valuation allowance
Foreign corporation tax
Other
Effective tax rates

30.6%
1.6
(5.2)
1.6
(3.5)
(10.5)
1.3
(0.1)
15.8%

30.6%
0.6
(1.7)
0.7
(2.4)
1.0
0.–
0.1
28.9%

97

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Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2021
9.

Business Combination and Divestiture

Business Divestiture(1) Accounting treatmenti.

Profit and loss emerged from business divestiture
Reversal of provision for loss on business of subsidiaries and affiliates: ¥335 million($3,205 thousand)

The note is omitted since the Consolidated Financial Statement provides the same
information except for the above mentioned.
10.

Subsequent Event

The note is omitted since the Consolidated Financial Statement provides the same
information.

98

26

99

100

101

102

103

CORPORATE OUTLINE
Corporate Name:

Main Scope of Business:

Main Banks

Sumitomo Mitsui Construction Co.,Ltd.

1) To contract, plan, design and/or supervise
civil engineering, architectural, prestressed
concrete, electrical, piping and other works

Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited

Established:
October 14, 1941

Permission:(Special-28)No.200, Specified Constructor,
granted by the Minister of Land,
Infrastructure, Transport and Tourism

License:(15)No.1, Housing, Land and Building Dealer,
granted by the Minister of Land, Infrastructure,
Transport and Tourism

Main Shareholders
2) To plan, design and supervise marine
development, regional development,
urban development, natural resource
development and environment
maintenance3) To manufacture, sell and lease materials
for civil and building works, prestressed
concrete products, seismic isolating
device, seismic damping device, andother machinery and instruments

Corporate History

104

The Master Trust Bank of Japan, Ltd.
Custody Bank of Japan
Mitsui Fudosan Co., Ltd.
Sumitomo Realty & Development Co., Ltd.

CORPORATE DATAHEAD OFFICE

Bangkok (Thailand)

SMCC Philippines, Inc.

2-1-6 Tsukuda, Chuo-ku,
Tokyo, 104-0051, Japan

26/49, 14th Floor, Orakarn Building, Soi Chidlom,
Ploenchit Road, Lumpini, Pathumwan, Bangkok
10330, Thailand
TEL:66-2-250-0560
FAX:66-2-254-7405

The Peninsula Court 6th Floor, 8735 Paseo deRoxas cor. Makati Avenue, Makati City, Metro
Manila, Philippines
TEL:63-2-840-4913
FAX:63-2-840-4912

Yangon (Myanmar)

SMCC Overseas Singapore Pte. Ltd.

Room No. 20-04, 20th Floor, Crystal Office Tower,
Junction Square Compound, Kyun Taw Street,
Kamaryut Township, Yangon, Myanmar
TEL:95-1-933-9256 / 95-9-25156-5442

2 Bukit Merah Central #14-01 & 02, Singapore
159835
TEL:65-6933-8000
FAX:65-6933-8001

Phnom Penh (Cambodia)

SMCC Malaysia Sdn. Bhd.

INTERNATIONAL DIVISION
2-1-6 Tsukuda, Chuo-ku,
Tokyo, 104-0051, Japan
TEL:81-3-4582-3171
FAX:81-3-4582-3247

OVERSEAS OFFICES
Manila (Philippines)
15th Floor, GT Tower International, 6813
Ayala Avenue corner H.V. Dela Costa Street,
Makati City, Metro Manila, Philippines
TEL:63-2-5304-5300/5301/5302

Guam (USA)Suite 105-107, IBC Building, J.L. Baker Street,
Harmon Industrial Park, Harmon, Guam 96913(P.O.Box 9670, Tamuning, Guam 96931)
TEL:1-671-649-7521
FAX:1-671-649-7550(Phnom Penh Center) South Building, 8 floor,
Room No. 871, Street Sothearos (3), Phom 1,
Sangkat Tonle Bassac, Khan Chamkarmon,
Phnom Penh, 12301, Cambodia
TEL:855-78-777-072

Level 13, Suite13. 06, Johor Bahru City Square(Office Tower)
106-108 Jalan Wong Ah Fook, 80000 Johor Bahru,
Malaysia
TEL:60-7-207-1133
FAX:60-7-207-3311

SUBSIDIARY COMPANIES INOVERSEAS

SMCC Taiwan Co., Ltd.

SMCC(Thailand)Co.,Ltd.
Hanoi (Vietnam)#502-504, 5th Floor, V-Tower, 649 Kim Ma str., Ba
Dinh Dist., Hanoi, Vietnam
TEL:84-24-3942-8888
FAX:84-24-3942-8808

Singapore
2 Bukit Merah Central #14-01 & 02, Singapore
159835
TEL:65-6933-8000
FAX:65-6933-8001

Jakarta (Indonesia)
Summitmas 2, 20th Floor JL. Jend. Sudirman Kav.
61-62, Jakarta Selatan 12190, Indonesia
TEL:62-21-520-1757
FAX:62-21-525-0905

26/49, 14th Floor, Orakarn Building, Soi Chidlom,
Ploenchit Road, Lumpini, Pathumwan, Bangkok
10330, Thailand
TEL:66-2-250-0560
FAX:66-2-254-7405

PT. SMCC Utama Indonesia
Summitmas 2, 20th Floor JL. Jend. Sudirman Kav.
61-62, Jakarta Selatan 12190, Indonesia
TEL:62-21-520-1757
FAX:62-21-525-0905

SMCC Construction India Ltd.
201, 2nd Floor, Plot No. -D1, Ras Vilas, Saket
District Centre, Saket, New Delhi - 110017, India
TEL:91-11-41392800
FAX:91-11-41652592

105

3F., No.129, Sec.2, Zhongshan N.Rd.,
Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.)
TEL:886-2-2563-9833
FAX:886-2-2563-3839