ANNUAL REPORT
2022

CONTENTS
PROFILE

1

THE MESSAGE FROM THE PRESIDENT

2

CONSOLIDATED BALANCE SHEETS

8

CONSOLIDATED STATEMENTS OF INCOME

10CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

11

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

12

CONSOLIDATED STATEMENTS OF CASH FLOWS

15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

17

INDEPENDENT AUDITOR'S REPORT78

NON-CONSOLIDATED BALANCE SHEETS

88

NON-CONSOLIDATED STATEMENTS OF INCOME

90

NON-CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

91

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS

94

INDEPENDENT AUDITOR'S REPORT120

CORPORATE OUTLINE124

CORPORATE DATA

125

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

5

6

Consolidated Financial Statements
Sumitomo Mitsui Construction Co., Ltd.
and Consolidated Subsidiaries
Year ended March 31, 2022with Independent Auditor’s Report7Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Balance Sheets
and Consolidated Subsidiaries
March 31, 2022
Consolidated Balance Sheets

AssetsCurrent assets:
Cash and deposits (Notes 6-(c), 10 and 11)
Trade notes receivable, accounts receivable on completed
construction contracts and other (Notes 6-(a), 11 and 17)
Inventories (Notes 6-(b) and 6-(f))
Other current assets
Allowance for doubtful receivables
Total current assets

Non-current assets:
Property and equipment, at cost:
Land (Notes 6-(c) and 6-(d))
Buildings and structures (Note 6-(c))
Machinery, equipment and vehicles (Note 6-(c))
Construction in progress
Accumulated depreciation
Property and equipment, net
Intangible fixed assets
Investments and other assets:
Investments in securities (Notes 6-(c), 11 and 12)
Deferred tax assets (Note 15)
Investments in unconsolidated subsidiaries and affiliates
Asset for retirement benefits (Note 14)
Other (Note 6-(c))
Allowance for doubtful receivables
Total investments and other assets
Total non-current assets

Total assets

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)(Note 3)¥70,974¥ 75,532$ 579,900

197,169
27,882
19,615(1)
315,640

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

1,610,989
227,812160,266(8)
2,578,968

16,316
17,066
39,216370(38,930)
34,04016,156
15,96926,556
1,009(30,920)
28,772

133,311
139,439
320,418
3,023(318,081)
278,127

6,808

3,140

55,625

20,954
10,601
817
127
5,976
(891)
37,58478,43318,891
3,968
1,053
160
6,028
(916)
29,18561,099171,206
86,616
6,675
1,037
48,827(7,280)307,083
640,844¥394,073¥376,826$3,219,813

2

8

Sumitomo Mitsui Construction Co., Ltd.
Consolidated Balance Sheets
March 31, 2022

Liabilities and net assets
Current liabilities:
Trade notes payable, accounts payable on construction contracts
and other (Note 11)
Electronically recorded payable (Note 11)
Short-term bank loans and current portion of long-term debt
(Notes 6-(c), 6-(h), 11 and 23)
Lease obligations
Accrued expenses
Income tax payable
Advances received on construction contracts in progress (Notes
6-(g) and 17)
Reserve for defects on completed construction projects
Allowance for losses on construction contracts (Note 6-(f))
Allowance for contingency loss
Other current liabilities
Total current liabilities
Long-term liabilities:
Corporate Bond payable
Long-term debt (Notes 6-(c), 6-(h), 11 and 23)
Lease obligations
Deferred tax liability on land revaluation (Note 6-(d))
Allowance for share-based payment
Liability for retirement benefits (Note 14)
Other long-term liabilities
Total long-term liabilities
Contingent liabilities (Notes 6-(e) and 19)
Net assets:
Shareholders’ equity:
Capital stock:
Common stock:
Authorized:
533,892,994 shares in 2022 and 2021
Issued and outstanding:
162,673,321 shares in 2022 and 2021
Retained earnings
Treasury stock, at cost:
6,382,798 shares in 2022 and 5,511,604 shares in 2021
Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain on securities
Deferred (loss) on hedging instruments, net of taxes (Note 13)
Land revaluation (Note 6-(d))
Translation adjustments
Retirement benefits liability adjustment (Note 14)
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)(Note 3)

¥ 89,634
29,347¥ 88,732
29,782$ 732,363
239,782

1,988
781
7,435
3,110

8,662
605
8,083
1,463

16,243
6,381
60,74825,41028,635489
19,611
2,159
24,215
207,40925,601
749
995
2,159
21,831
188,665

233,965
3,995
160,233
17,640197,851
1,694,656

5,000
57,806
1,889
574
57
18,3893,245
86,9635,000
49,5181,249
575
36
18,562
2,910
77,85240,853472,30915,434
4,689
465
150,249
26,513
710,540

12,003

12,00398,071

85,71496,001

700,334(3,907)
93,811(3,504)
104,499(31,922)
766,492

(555)
(92)
70
(1,001)(843)(2,422)
8,313
99,701¥394,073

407
(147)
71
(1,622)(803)(2,094)
7,902
110,308¥376,826(4,534)(751)
571(8,178)(6,887)(19,789)
67,922814,617$3,219,813

The accompanying notes are an integral part of these statements.

93

Sumitomo Mitsui Construction Co., Ltd.
Consolidated Statements of Income
Sumitomo Mitsui Construction Co., Ltd.
March 31, 2022
and Consolidated Subsidiaries

Consolidated Statements of Income

Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)(Note 3)

Net sales (Notes 7-(a), 17 and 18)
Cost of sales (Notes 7-(b) and 7-(d))
Gross profit
Selling, general and administrative expenses(Notes 7-(c), 7-(d) and 14)
Operating income (loss)
Other income (expenses):
Interest and dividend income
Payments received from insurance claims
Interest expense
Exchange gain (loss), net
Financing related expenses
Commission for loan commitment agreement
Gain on sales of property and equipment (Note 7-(e))
Gain on sales of investment in securities (Note 12-(c))
Gain on bargain purchase
Gain on sales of shares of subsidiaries and affiliates
Gain on liquidation of subsidiaries and affiliates
Loss on sales and disposal of property and equipment(Note 7-(f))
Other, net
Profit (loss) before income taxes
Income taxes (Note 15):
Current
DeferredProfit (loss)
Profit (loss) attributable to:Non-controlling interests
Owners of parent¥403,275
385,096
18,178¥421,619
382,684
38,935$3,294,999
3,146,466
148,525

25,63823,351

209,477(7,459)15,584(60,944)

814
93
(987)
429
(410)
(512)
17
19

791
117
(1,082)
(894)
(608)
(628)
15
8
547
330

6,650
759
(8,064)
3,505(3,349)(4,183)
138
155

－
－
6

－

49

(191)
(314)
(1,036)(8,495)

(145)
(535)
(2,083)
13,500(1,560)(2,565)(8,464)(69,409)

4,083(6,026)(1,942)

3,757
219
3,977

33,360(49,236)(15,867)(6,552)

9,522(53,533)469¥ (7,022)779¥ 8,743

3,832$ (57,373)(Yen)
Profit (loss) per share (Note 20)－－¥ (44.93)(U.S. dollars)(Note 3)
¥ 55.33$(0.367)

The accompanying notes are an integral part of these statements.

410

Sumitomo Mitsui Construction Co., Ltd.

Sumitomo Mitsui Construction Co., Ltd.
and Consolidated
Subsidiaries
Consolidated Statements of Comprehensive
IncomeMarch 31, 2022

Consolidated Statements of Comprehensive Income
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)(Note 3)

Profit (loss)¥(6,552)¥ 9,522$(53,533)

(962)
54
620
(29)

2,681
8
(528)
12

(7,860)
441
5,065
(236)

Total other comprehensive income (Note 8)
Comprehensive income(316)¥(6,869)

2,174¥11,697(2,581)$(56,123)

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests¥(7,349)480¥10,915781$(60,045)
3,921

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

The accompanying notes are an integral part of these statements.

511

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Changes Inand
Net Consolidated
Assets
Subsidiaries
March 31, 2022

Consolidated Statements of Changes in Net Assets

Capitalstock
Balance at the beginning of theperiodCumulative effects of changes inaccounting policies
Restated balance
Changes in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Loss attributable to owners of
the parent
Purchases of treasury stock
Disposition of treasury stockReversal of land revaluation
Transfer from retained earnings
to additional paid-in capital
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period

Year ended March 31, 2022
Shareholders’ equity
Additional
Treasurypaid-instock,
Retained
capitalat costearnings(Millions of yen)

¥12,003¥―¥96,001

12,003―

95,586¥(3,504)¥104,499(3,504)

104,085

(414)

(1)

(20)

―
¥12,003(414)(1)(2,828)(2,828)(7,022)
1

21

(21)

―
¥―

(9,872)¥85,714

Total
shareholders’equity(502)
100(7,022)
(502)
79
1
―

(402)
¥(3,907)(10,274)¥ 93,811

Year ended March 31, 2022
Accumulated other comprehensive income
Deferred
Total
Unrealized
loss onRetirement accumulated
holding
hedgingotherbenefits
Nongain on
instruments,
liability comprehensive controlling
Land
Translation
securities net of taxes revaluation adjustments adjustments
incomeinterests(Millions of yen)
Balance at the beginning of theperiodCumulative effects of changes inaccounting policies
Restated balance
Changes in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Loss attributable to owners of
the parent
Purchases of treasury stock
Disposition of treasury stockReversal of land revaluation
Transfer from retained earnings
to additional paid-in capital
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period

Total
net assets¥407¥(147)¥71¥(1,622)¥(803)¥(2,094)¥7,902¥110,308

407

(147)

71

(1,622)(803)(2,094)

7,902

109,894(414)(1)(2,828)(7,022)
(502)
79
1
―
(962)

54

(1)

621

(40)

(328)

410

81

(962)
¥(555)

54¥ (92)

(1)
¥70

621
¥(1,001)(40)¥(843)(328)¥(2,422)410¥8,313(10,192)¥ 99,701

6

12

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Changes Inand
Net Consolidated
Assets
Subsidiaries
March 31, 2022

Consolidated Statements of Changes in Net Assets (continued)

CapitalstockYear ended March 31, 2022
Shareholders’ equity
Additional
Treasurypaid-instock,
Retained
capitalat costearnings(Thousands of U.S. dollars) (Note 3)

Balance at the beginning of theperiod$98,071$―$784,385

Cumulative effects of changes inaccounting policies
Restated balance

98,071―

780,995

Changes in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Loss attributable to owners of
the parent
Purchases of treasury stock
Disposition of treasury stockReversal of land revaluation
Transfer from retained earnings
to additional paid-in capital
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period$(28,629)$853,819(28,629)

850,437(3,382)

(8)

(163)

―
$98,071

Unrealized
holding
gain onsecurities(3,382)(8)(23,106)(23,106)(57,373)
8

171

(171)

―
$―

(80,660)$700,334

Total
shareholders’equity(4,101)
817(57,373)(4,101)645
8―(3,284)$(31,922)(83,944)$766,492

Year ended March 31, 2022
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)

Total
net assets

Balance at the beginning of theperiod$3,325$(1,201)$580$(13,252)$(6,560)$(17,109)$64,564$901,282

Cumulative effects of changes inaccounting policies
Restated balance

3,325(1,201)

580(13,252)(6,560)(17,109)64,564

897,900

Changes in items during the period:
Change in a parent’s ownershipinterest due to transaction with
non-controlling interests
Dividends from surplus
Loss attributable to owners of
the parent
Purchases of treasury stock
Disposition of treasury stockReversal of land revaluation
Transfer from retained earnings
to additional paid-in capital
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period(3,382)(8)(23,106)(57,373)(4,101)645
8―(7,860)

441

(8)

5,073

(326)

(2,679)

3,349

661

(7,860)$(4,534)441$ (751)

(8)
$571

5,073
$ (8,178)(326)$(6,887)(2,679)$19,789

3,349$67,922(83,274)$814,6177

13

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Changes Inand
Net Consolidated
Assets
Subsidiaries
March 31, 2022

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
Purchases of treasury stock
Disposition of treasury stockReversal of land revaluation
Transfer from retained earnings
to additional paid-in capital
Net changes in items other thanshareholders’ equity
Total changes in items during theperiodBalance at the end of the period¥12,003―¥91,084

35(36)(3,792)
8,743

(35)

1

¥(3,118)

Total
shareholders’Equity¥99,969(0)(3,792)
(503)
117

8,743
(503)
81
1
―

―
¥12,003

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
Purchases of treasury stock
Disposition of treasury stockReversal of land revaluation
Transfer from retained earnings
to additional paid-in capital
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(Millions of yen)¥(2,274)

―
―

4,916
¥96,001(386)¥(3,504)

4,530¥104,499

Year ended March 31, 2021
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)¥(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¥110,308

The accompanying notes are an integral part of these statements.

814

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Cash Flowsand Consolidated Subsidiaries
March 31, 2022
Consolidated Statements of Cash Flows
2022

Years ended March 31,

2021(Millions of yen)

Operating activities
Profit (loss) 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 in liability for retirement benefits
Loss on sales and disposal of property and equipment
Interest and dividend income
Interest expense
Exchange (gain) loss, net
Gain on bargain purchase
Gain on sales of shares of subsidiaries and affiliates
Gain on liquidation of subsidiaries and affiliates(Increase) decrease in trade notes receivable, accounts receivable oncompleted construction contracts and other(Increase) decrease in inventories
Decrease (increase) in other assets(Decrease) increase in retirement benefits liability adjustments includedin accumulated other comprehensive income
Decrease in trade notes payable, accounts payable on construction
contracts and other
Increase in advances received on construction contracts in progress
Increase in other liabilities
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by 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 (Note 10)
Payments for sales of shares of subsidiaries resulting in change in scopeof consolidation (Note 10)
Other
Net cash used in investing activities

2022(Thousands of
U.S. dollars)(Note 3)¥(8,495)
3,296
(24)
(265)
18,685
23
(201)
173
(814)
987
(565)
－
－
(6)

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

$(69,409)
26,930(196)(2,165)
152,667
187(1,642)
1,413(6,650)8,064(4,616)－－(49)(2,467)(1,965)574

24,546288(2,447)(20,156)(16,055)
4,689

(17)

58

(138)

(407)
4,123
287
(16)
12,904792(988)(2,711)
9,996(24,772)
3,756
5,304
416
22,764831(1,059)(5,813)
16,723(3,325)33,6872,344(130)
105,433
6,471(8,072)(22,150)
81,673875(3,722)51(497)(3,865)
302
(23)
84

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

7,149
(30,410)416(4,060)(31,579)
2,467
(187)
686

(6,211)(195)(50,747)－
26(12,980)(299)
98(2,681)－
212(106,054)915

Mitsui Construction Co., Ltd.
Sumitomo Mitsui Construction Co.,Sumitomo
Ltd.
Consolidated Statements of Cash Flowsand Consolidated Subsidiaries
March 31, 2022

Consolidated Statements of Cash Flows (continued)2022

Years ended March 31,

2021(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 (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year (Note 10)2022(Thousands of
U.S. dollars)(Note 3)

¥ (1,173)
10,000(7,212)332－(502)(2,822)(126)¥(7,520)
29,000(12,111)
408
5,000
(503)
(3,785)(122)$ (9,584)
81,706(58,926)
2,712－(4,101)(23,057)(1,029)－(643)(2,148)

(0)
(651)
9,713

－
(5,253)(17,550)

648(4,483)69,591¥65,108(6)
23,74845,842¥69,591

5,294(36,628)
568,600$531,971

The accompanying notes are an integral part of these statements.

1016and Consolidated Subsidiaries
Notes
Sumitomo Mitsui Construction Co.,
Ltd. to Consolidated Financial Statements
Notes to Consolidated Financial Statements
March 31, 2022 and 2021
March 31, 2022
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 22 consolidated subsidiaries and 1 affiliate accounted for by theequity method as of March 31, 2022.
11

17

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(b) Fiscal Year of Consolidated Subsidiaries
All foreign consolidated subsidiaries (11 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. For
other securities, securities other than shares, etc. with no market value are carried at fairvalue with any changes in unrealized holding gain or loss, net of the applicable income
taxes, included directly in net assets. Shares, etc. with no market value are carried at cost.
Cost of securities sold is determined 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.

18

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(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 March 31, 2022 in order to cover payments of share to directors
based on a share-based payment regulation.

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(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, 2022.
(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
The Group is primarily engaged in civil construction and building construction,
providing construction design and construction work services as well as other related
services to its domestic and overseas customers.
In civil and building construction, the Group primarily enters into long-term construction
contracts. For such contracts, the completion and delivery of construction work is
identified as a performance obligation. Performance obligations are deemed to besatisfied over time, and revenue is recognized based on progress toward complete
satisfaction of a performance obligation. The progress toward complete satisfaction of aperformance obligation is measured based on the proportion of construction costs
incurred by the end of the reporting period to the total expected construction costs. Whenthe progress toward complete satisfaction of a performance obligation cannot bereasonably measured, but the costs to be incurred are expected to be recovered, revenue
is recognized only to the extent of the costs incurred, except for those contracts that arein the initial stages of construction. For construction contracts whose period between thedate of commencement of the transaction and the point in time when the performanceobligation is expected to be fully satisfied is very short, an alternative treatment is applied,
whereby revenue is not recognized over time, but is recognized when the performanceobligation is fully satisfied.
(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).
20

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(n) 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.
(o) Method and Period of Amortization of Goodwill
In principle, goodwill is amortized on a straight-line basis over the period for which
goodwill is expected to have an effect, which shall not exceed 20 years.
(p) 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.
(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.

21

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(q) Income Taxes (continued)
Effective from the next fiscal year, the Company and some of its domestic consolidated
subsidiaries will transition to the group tax sharing system from the consolidated
taxation system. However, with respect to the transition to the group tax sharing systemestablished by the “Act for Partial Amendment to the Income Tax Act, etc.” (Act No. 8
of 2020) and items for which the non-consolidated tax payment system was revised inconjunction with the transition to the group tax sharing system, the amounts of deferred
tax assets and deferred tax liabilities will be based on the provisions of the tax act before
the revision, instead of applying the provisions of Paragraph 44 of the “Implementation
Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28 issued on February 16,2018) in accordance with the treatment provided in Paragraph 3 of the “Practical
Solution on the Treatment of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39
issued on March 31, 2020).
Effective from the beginning of the next fiscal year, the Company plans to apply the“Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing
System” (ASBJ PITF No. 42 issued on August 12, 2021), which provides informationon the treatment of accounting and disclosure of corporate and local income taxes andtax effect accounting in the case of applying the group tax sharing 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¥122.39 = U.S.$1.00, the approximate rate of exchange in effect on March 31, 2022. 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.
4.

Significant Accounting Estimates

For the year ended March 31, 2022
(a) Provision for Contingent Loss
(1) Amounts recognized on the consolidated financial statements for this fiscal year

Allowance for contingency loss

As of March 31, 2022
(Millions of yen)(Thousands of U.S. dollars)¥2,159$17,640

22

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

(a) Provision for Contingent Loss (continued)(2) Information on significant accounting estimates for the 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, and decreased fromapproximately 51.0 billion yen to approximately 50.6 billion yen on September 30,2022) as alleged rebuilding cost for the whole structure of the apartment. The
Company considers that MFR’s claim lacks legal foundation and reason, and willcontinue to make appropriate arguments in that court proceeding.
(b) Recognition of Revenues from Construction Contracts(1) Amounts recognized on the consolidated financial statements for this fiscal year
As of March 31, 2022
(Millions of yen) (Thousands of U.S. dollars)
Net sales of construction contracts,
etc. related to performanceobligations to be satisfied over time

¥346,875$2,834,177(2) Information on significant accounting estimates for the item above
For construction contracts, etc. whose performance obligations are satisfied overtime, the progress toward complete satisfaction of a performance obligation ismeasured and net sales of completed construction contracts are recognized overtime based on such progress toward satisfaction of the performance obligation.
It is necessary to estimate total revenues and costs of a project reasonably uponrecognition. The Group’s results may fluctuate due to changes in net sales and costsof completed construction contracts as a result of negotiations with clients,
unanticipated incurrence of costs, or other reasons.

23

17

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

4.

Significant Accounting Estimates (continued)

For the year ended March 31, 2021
(a) Provision for Contingent Loss
(1) Amounts recognized on the consolidated financial statements for this fiscal year

Allowance for contingency loss

As of March 31, 2021
(Millions of yen)
¥2,159(2) Information of significant accounting estimates for the 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 the consolidated financial statements for this fiscal year
As of March 31, 2021
(Millions of yen)
Net sales recognized based on
percentage-of-completion method¥339,470(2) Information of significant accounting estimates for the item above
Net sales of completed construction contracts of which the percentage ofcompletion can be reliably estimated are recognized by the percentage-ofcompletion method. The percentage of completion is calculated at the cost incurred
as a percentage of the estimated total cost. It is necessary to estimate total revenue
and cost of a project reasonably upon the recognition.
The Group’s results may fluctuate due to changes in net sales 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.
24

18

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

5.

Changes in Accounting Policies(a) Accounting Standard for Revenue Recognition
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29 issued on March 31, 2020; hereinafter “Revenue Recognition
Standard”) and other standards from the beginning of the current fiscal year. The
Company recognizes revenue when control of a promised good or service is transferred
to a customer in an amount that reflects the consideration to which the Company expects
to be entitled in exchange for those goods and services.
The main changes resulting from the application of the Revenue Recognition Standard,
etc. are as follows.
Recognition of revenues from construction contracts:
The Company previously applied the percentage-of-completion method for construction
contracts whose percentage of completion can be reliably estimated, and the completedcontract method for other construction contracts. However, when control over goods orservices is transferred to a customer over time, the Company has changed the method ofrecognizing revenue to one where revenue is recognized over time as it satisfies its
performance obligation to transfer the goods or services to customers. The progress
toward complete satisfaction of a performance obligation is measured based on the
proportion of construction costs incurred by the end of the reporting period to the total
expected construction costs. When the progress toward complete satisfaction of aperformance obligation cannot be reasonably measured, but the costs to be incurred are
expected to be recovered, revenue is recognized only to the extent of the costs incurred,
except for those contracts that are in the initial stages of construction. For construction
contracts whose period between the date of commencement of the transaction and thepoint in time when the performance obligation is expected to be fully satisfied is very
short, an alternative treatment is applied, whereby revenue is not recognized over time,
but is recognized when the performance obligation is fully satisfied.
The Company applies the Revenue Recognition Standard, etc. in accordance with thetransitional treatment provided for in the proviso to Paragraph 84 of the Revenue
Recognition Standard. The cumulative impact of retrospectively applying the new
accounting policies to prior periods is adjusted to retained earnings at the beginning of
the current fiscal year, with the new accounting policies applied from the beginningbalance. In addition, applying the method stipulated in proviso (1) to Paragraph 86 of
the Revenue Recognition Standard, contract modifications that occurred prior to thebeginning of the current fiscal year were accounted for based on the terms of the contract
after reflecting all contract modifications, with the cumulative impact adjusted toretained earnings at the beginning of the current fiscal year.
As a result of this change, compared with the figures before the application of the
Revenue Recognition Standard, etc., in the consolidated statements of income for thecurrent fiscal year, net sales decreased by ¥2,488 million ($20,328 thousand), cost of
sales decreased by ¥2,896 million ($23,662 thousand), operating loss decreased by ¥408
million ($3,333 thousand), and loss before income taxes decreased by ¥630 million($5,147 thousand).
25

19

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(a) Accounting Standard for Revenue Recognition (continued)
The cumulative impact of this change has been reflected on net assets at the beginningof the current fiscal year. As a result, the beginning balance of retained earnings
decreased by ¥414 million ($3,382 thousand) in the consolidated statements of changes
in net assets.
The impact of this change on per share information is described in the relevant section.
In accordance with the transitional treatment set forth in Paragraph 89-3 of the Revenue
Recognition Standard, notes on revenue recognition for the previous fiscal year are notpresented.
(b) Accounting Standard for Fair Value Measurement
The Company has applied the “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30 issued on July 4, 2019; hereinafter “Fair Value Measurement
Standard”) and other standards from the beginning of the current fiscal year, and willprospectively apply the new accounting policies stipulated by the Fair Value
Measurement Standard, etc. in accordance with the transitional treatment provided in
Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 issued on
July 4, 2019). This application will have no impact on the consolidated financial
statements.
In addition, the Company will include notes on fair value information by level within thefair value hierarchy in the notes on financial instruments. However, in accordance withthe transitional treatment provided in Paragraph 7-4 of the “Implementation Guidanceon Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19
issued on July 4, 2019), notes pertaining to the previous fiscal year are not presented.

26

20

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

6.

Notes to Consolidated Balance Sheets(a) Receivables and Contract Assets from Contracts with Customers
Receivables and contract assets from contracts with customers included in trade notes
receivable, accounts receivable on completed construction contracts and other as ofMarch 31, 2022 were as follows:
As of March 31,
2022
2022
(Millions of (Thousands ofyen) U.S. dollars)
Trade notes receivable
Accounts receivable on completed
construction contracts and other
Contract assets¥ 3,988$

32,58477,431
115,750¥197,169

632,657
945,747$1,610,989(b) Inventories
The components of inventories as of March 31, 2022 and 2021 were as follows:
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Merchandise and finished goods
Materials and supplies
Costs on uncompleted construction
contracts
Real estate for sale

¥

49
5,736

¥ 1,547
4,694

$

400
46,86622,096–¥27,882

24,252
2¥30,496

180,537–$227,812

27

21

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

(c) Pledged Assets
The following assets were pledged at March 31, 2022 and 2021 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
2022
2022
(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
Securities
Others (Investments and other assets)

¥

–
6,070

¥

0
6,070

$
–
49,595

550

596

4,493

159
4
139
10
¥6,933164
4–
10¥6,846

1,299
32
1,135
81
$56,646

Of the above property and equipment, mortgaged assets for factory foundations at
March 31, 2022 and 2021 were summarized as follows:
As of March 31,
2022
2021
2022
(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$10,278

293

291

2,393

159
¥1,711164¥1,715

1,299$13,979

The secured liabilities as of March 31, 2022 and 2021 were summarized as follows:
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Short-term bank loans[Including current portion of
long-term debt]
Long-term debt

¥ 12

¥ 12

$ 98

[12]
56

[12]
68

[98]
457

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(d) Land Revaluation
Land for operations was revalued by two consolidated subsidiaries under the Law forLand Revaluation during the year ended March 31, 2001. Land for operations wasrevalued by consolidated subsidiaries under the Law for Land Revaluation during theyear ended March 31, 2002. The revaluation amounts are shown as a separate
component of net assets.
The market value of the land was less than the revalued book amount by ¥720 million($5,882 thousand) and ¥1,058 million at March 31, 2022 and 2021, respectively.
(e) Contingent Liabilities
At March 31, 2022 and 2021, the Company and its consolidated subsidiaries were
contingently liable for the following:
As of March 31,
2022
2021
2022
(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
(f)

¥2

¥3

$16

637
482

787
–

5,204
3,938

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¥207 million ($1,691 thousand) and ¥103 million as of March 31, 2022 and 2021,
respectively.

(g) Contract Liabilities
Advances received on construction contracts in progress included contract liabilities in
the amount of ¥28,635 million ($233,965 thousand) as of March 31, 2022.

29

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants
For the year ended March 31, 2022
(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.
In addition, the balance of bank borrowings under the loan commitment agreement
is immaterial as of March 31, 2022.
Unused amount on loan commitment agreement as of March 31, 2022 and 2021
were as follows.

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

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)¥20,000¥20,000$163,412–––¥20,000¥20,000$163,412(2) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (including five different banks from (1) above) 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¥2,250 million ($18,383 thousand) in long-term debt (including the current
portion) as of March 31, 2022.

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)(3) 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 ($81,706 thousand) in long-term debt as of March 31,2022.
Unused amount on the committed syndicated loan contract as of March 31, 2022
and 2021 were as follows.

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

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)¥10,000¥10,000$81,706
10,00081,706
10,000¥–¥–$–(4) The Company has entered into a committed syndicated loan contract dated on
December 26, 2019 with its ten banks (including six different banks from (3)above) 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 ($81,706 thousand) in long-term debt as of March 31,
2022.

31

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)
Unused amount on the committed syndicated loan contract as of March 31, 2022
and 2021 were as follows.
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the contract¥10,000¥10,000$81,706
10,00081,706
10,000Loan balance outstanding
¥
–
¥
–
$
–
Difference (unused portion)(5) 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:
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 addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥15,000 million ($122,559 thousand) in long-term debt as of March 31,2022.
Unused amount on the committed syndicated loan contract as of March 31, 2022
and 2021 were as follows.

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

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)¥15,000¥15,000$122,559
15,000122,559
15,000¥–¥–$–(6) The Company has entered into a syndicated loan contract dated on September 29,
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 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.
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26

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)
In addition, the balance of bank borrowings under this syndicated loan contract is¥2,200 million ($17,975 thousand) in long-term debt (including the current
portion) as of March 31, 2022.
(7) 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:
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 ($81,706 thousand) in long-term debt as of March 31, 2022.
(8) The Company has entered into a loan commitment agreement dated on May 25,
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:
Total consolidated net assets at the end of the second quarter of the fiscal year
beginning March 31, 2021 shall be equal to or exceed 75% of total consolidated
net assets as of March 31, 2021.
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 loan commitment agreement
is immaterial as of March 31, 2022.
Unused amount on loan commitment agreement as of March 31, 2022 and 2021
were as follows.

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

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)¥30,000¥–$245,118–––¥30,000¥–$245,118

33

27

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)(9) The Company has entered into a loan commitment agreement dated on June 25,
2021 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 the second quarter of the fiscal year
beginning March 31, 2021 shall be equal to or exceed 75% of total consolidated
net assets as of March 31, 2021.
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 loan commitment agreement
is immaterial as of March 31, 2022.
Unused amount on loan commitment agreement as of March 31, 2022 and 2021
were as follows.
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement¥20,000¥–$163,412–––
Loan balance outstanding¥20,000¥–$163,412
Difference (unused portion)(10) The Company has entered into a syndicated loan contract dated on March 28, 2022with 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,
2022 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2021 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 ($81,706 thousand) in long-term debt as of March 31, 2022.
(11) The Company has entered into a committed syndicated loan contract dated on
March 28, 2022 with Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui
Trust Bank, Limited. The following financial covenant is included in the contract:34

28

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)
Total consolidated net assets at the end of each fiscal year beginning March 31,
2022 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2021 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 immaterial as of March 31, 2022.
Unused amount on the committed syndicated loan contract as of March 31, 2022
and 2021 were as follows.
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥7,000–¥7,000¥––¥–$57,194–$57,194

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.

35

29

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)
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
(Millions of yen)
¥20,000¥20,000––¥20,000¥20,000(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 in long-term debt (including the current portion) as of March 31,
2021.
(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 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:3630

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)
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 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
(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, 2021.

37

31

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)
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
(Millions of yen)
¥10,000¥10,000
10,00010,000¥–¥–(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 the second quarter of the fiscal year
beginning March 31, 2020 shall be equal to or exceed 75% of total consolidated
net assets as of 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
(Millions of yen)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥30,000–¥30,000¥––¥–(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 the second quarter of the fiscal year
beginning March 31, 2020 shall be equal to or exceed 75% of total consolidated
net assets as of March 31, 2020.

38

32

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)
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
(Millions of yen)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥50,000–¥50,000¥––¥–(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:
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 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
(Millions of yen)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥15,000
15,000
¥
–

¥–
–
¥–

39

33

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(h) Financial Covenants (continued)(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 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:
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 in long-term debt as of March 31, 2021.

40

34

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

7.

Notes to Consolidated Statements of Income(a) Revenue from Contracts with Customers
Net sales are not presented separately for revenues from contracts with customers andother revenues. The amounts of revenues from contracts with customers are presented
in “Notes to the Consolidated Financial Statements (Segment Information, etc.).”(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 ¥19,219 million ($157,030 thousand) and ¥725 million for the years ended
March 31, 2022 and 2021, respectively.
(c) Selling, General and Administrative Expenses
The significant components of selling, general and administrative expenses at March 31,
2022 and 2021 were as follows:
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Salaries and wages
Retirement benefit expenses
Provision of allowance for doubtfulreceivables
Other
Total

¥11,918658¥11,369659$ 97,377
5,376

0
13,061¥25,638

7
11,314¥23,351

0
106,716$209,477(d) Research and Development Expenses
Research and development costs included in selling, general and administrative
expenses and manufacturing costs amounted to ¥2,484 million ($20,295 thousand) and¥2,748 million for the years ended March 31, 2022 and 2021, 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, 2022 and 2021 were as follows:
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Buildings and structures
Machinery, equipment and vehicles
Land
Total

¥ 0
17
–
¥17

¥ 0
5
9
¥15

$ 0
138
–
$138

41

35

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(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, 2022 and 2021 were as follows:
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Loss on disposal
Loss on sales
Total

¥191
0
¥191

¥139
6
¥145

$1,5600$1,5604236Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

8. Notes 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, 2022 and 2021 were as follows:
2022

Years ended March 31,

2021(Millions of yen)
Unrealized holding gain (loss) on securities:
Changes in items during the period
Amount of recycling
Before income tax effect adjustment
Income tax effect adjustment
Unrealized holding gain (loss) on securities

2022(Thousands of
U.S. dollars)¥(1,370)(16)(1,387)424(962)¥3,859–3,859(1,177)
2,681$(11,193)(130)(11,332)
3,464(7,860)

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

78
–
78
(23)
54

12
–
12
(3)
8

637
–
637
(187)
441

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

620
–
620
–
620

(528)
–
(528)
–
(528)

5,065
–
5,065
–
5,065

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 (loss)

(34)
16
(17)
(11)
(29)
¥ (316)

(17)
75
58
(46)
12
¥2,174

(277)
130
(138)
(89)
(236)
$ (2,581)

43

37

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

9.

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, 2022
Balance atApril 1,
2021
Shares issued:
Common stock

162,673,321
Balance atApril 1,
2021

Treasury stock:
Common stock

5,511,604

Increase
Decrease(Number of shares)––

Increase
Decrease(Number of shares)
1,035,490

164,296

Balance at
March 31,2022

162,673,321
Balance at
March 31,2022

6,382,798

Note 1:

Increase of common stock is due to the purchase of fractional 5,990 shares and the acquisitionof treasury stock of 1,029,500 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 277 shares in response to shareholder
requests and the disposition of treasury stock of 164,019 shares as the compensation of
restricted stocks based on the resolution of the board of directors held on July 20, 2021.

For the year ended March 31, 2021
Balance atApril 1,
2020
Shares issued:
Common stock

162,673,321
Balance atApril 1,
2020

Treasury stock:
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

44

38

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(b)

Dividends(1) Dividends paid
For the year ended March 31, 2022

Resolution

Type of shares

Annual general
meeting of theshareholders on
June 29, 2021

Common stock

Total
dividends Dividends(Millions of per share
(Yen)
yen)
¥2,828

Total
dividends(Thousandsof U.S.
dollars)

Dividends
per share(U.S.
dollars)$23,106$0.147¥18.00Cut-off
date

Effective
date

March 31,2021

June 30,2021

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¥24.00Cut-off
date

Effective
date

March 31,2020

June 29,2020(2) Dividends with the cut-off date in the year ended March 31, 2022 and the effective
date in the year ending March 31, 2023 were as follows:

Resolution
Annual general
meeting of theshareholders on
June 29, 2022

Type ofshares

Source ofdividends

Commonstock

Retainedearnings

Total
dividends(Millionsof yen)¥3,125

Dividends
per share
(Yen)

Total
dividends(Thousandsof U.S.
dollars)

Dividends
per share(U.S.
dollars)Cut-off
date

Effective
date¥20.00$25,533$0.163March
31, 2022

June 30,
2022

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

45

39

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

10. Notes to Consolidated Statements of Cash Flows
Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2022 and 2021 were as follows:
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Cash and deposits
Time deposits with maturities of overthree months
Cash and cash equivalents¥70,974¥75,532$579,900(5,865)¥65,108(5,940)¥69,591(47,920)$531,971

Assets and liabilities of a company that became a consolidated subsidiary due toacquisition of stock
For the year ended March 31, 2022
Antara Koh Private Limited and its subsidiaries Antara Koh (Myanmar) Ltd, AKM Sdn.
Bhd and Antara Koh (Malaysia) Sdn. Bhd were consolidated as the company’s
subsidiaries by acquisition 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, 2022 were as follows:
Years ended March 31,

Current assets
Non-current assets
Goodwill
Current liabilities
Non-current liabilities
Acquisition price of stocks
Accounts payable included in acquisition price ofstocksCash and cash equivalents
Balance: payments for acquisition

2022

2022

(Millions of yen)(Thousands of
U.S. dollars)¥2,515
4,668
2,919(1,589)
(859)
7,654
(638)

$20,549
38,14023,849(12,983)(7,018)62,537(5,212)(804)¥6,211(6,569)$50,747

46

40

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

10. Notes to Consolidated Statements of Cash Flows (continued)
For the year ended March 31, 2021
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:
Years ended
March 31,2021

(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)
¥ 195

Assets and liabilities of a company that was excluded from scope of consolidation due
to sale of stock
For the year ended March 31, 2022
Not applicable.
For the year ended March 31, 2021
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:
Years ended
March 31,2021

(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)
47

41

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

11.

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 is also held, and theCompany utilizes foreign exchange forward contracts to hedge the risk of changes
in the foreign currency exchange rate.
Loan payables are mainly used for operating funds. The Group manages loan
payables by flexibly 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).
4842Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(a) Overview (continued)(3) Supplementary explanation of the fair value of financial instruments
Since variable factors are incorporated in the calculation of the fair value offinancial instruments, applying different assumptions may result in different fairvalues.
In addition, the amounts of derivatives in Note 13 “Derivatives and Hedge
Accounting” are not necessarily indicative of the actual market risk involved in thederivative transactions.
(b) Fair Value of Financial Instruments
Amounts recognized in the consolidated balance sheets, fair value, and the difference at
March 31, 2022 and 2021, were as shown below.
Carrying
value
Trade notes receivable,accounts receivable oncompleted construction
contracts and other
Securities and investments
in securities (*2)
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
Corporate bonds
Long-term debt
Total liabilities
Derivative transactions (*3)

As of March 31, 2022
Fair
Carrying
Fair
Difference
Difference
value
value
value
(Millions of yen)(Thousands of U.S. dollars)¥197,169¥197,102¥ (67)$1,610,989$1,610,442$ (547)

17,554

17,5562

143,426

143,443

16

209
17,345

211
17,3452–

1,707
141,719

1,723
141,719

16–¥214,724¥214,658¥ (65)$1,754,424$1,753,885$ (531)¥ 89,634¥ 89,634¥–$ 732,363$732,363

29,347

29,347–

239,782239,782

–

1,988
5,000
57,806

1,986
4,974
57,393

(1)
(25)
(412)

16,24340,853472,309

16,22640,640468,935(8)(204)(3,366)¥183,776¥ (133)¥183,336¥ (133)¥(440)¥ –$1,501,560$ (1,086)$1,497,965$ (1,086)$(3,595)$–$–(*1): Since “cash and deposits” are cash and deposits are settled in a short period of time, their fair value
approximates their book value. Therefore, information on “cash and deposits” is omitted.
(*2): Shares, etc. with no market value are not included in “Securities and investments in securities.” The
consolidated balance sheet amount of such financial instruments (unlisted stocks) was ¥4,095 million ($33,458
thousand).
(*3): Assets and liabilities arising from derivative transactions are shown at net value. If total is liabilities, amounts
is shown as “( ).”49

43

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(b) Fair Value of Financial Instruments (continued)

Trade notes receivable,accounts receivable oncompleted construction
contracts and other
Securities and investments
in securities (*2)
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
Corporate bonds
Long-term debt
Total liabilities
Derivative transactions (*3)

As of March 31, 2021
Carrying
Fair
value
Difference
value(Millions of yen)

¥190,177¥190,155¥ (22)

15,404

15,405

1

117
15,287¥205,581

118
15,287¥205,5601–¥ (20)¥ 88,732¥ 88,732¥

29,782

29,782

–

8,662
5,000
49,518¥181,695
¥
211

8,572
4,979
48,832¥180,899
¥
211

(89)
(20)
(685)
¥(796)¥ ––(*1): Cash and deposits are omitted because they are cash and their fair value approximates their book value asdeposits are settled in a short period of time.
(*2): Unlisted stocks of ¥4,278 million are not included in “Securities and investments in securities” because they
have no market value and their fair value cannot be reliably measured.
(*3): Assets and liabilities arising from derivative transactions are shown at net value. If total is liabilities, amounts
is shown as “( ).”50

44

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(b) Fair Value of Financial Instruments (continued)
Note 1:

The redemption schedule for monetary claims and held-to-maturity debt
securities with maturity dates subsequent to March 31, 2022 and 2021
As of March 31, 2022
Within1 yearDeposits¥ 70,947
Trade notes receivable,accounts receivable oncompleted construction
contracts and other
179,144
Securities and investments
in securities
Held-to-maturity
147
securities (bonds)¥250,238

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

Note 2: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)

–

¥–

¥–

$ 579,679 $

18,025

–

–

62

–

–

¥18,087¥–¥–

As of March 31, 2021
Over
Over
1 year
5 years
and within and within
5 years
10 years(Millions of yen)
¥

–

$–

$–

1,463,714

147,275

–

–

1,201

506

–

–

$2,044,595 $147,781

$–

$–

Over
10 years

–

¥–

¥–

9,472

–

–

69
¥9,541–¥––¥–

The redemption schedule for corporate bonds, long-term debt and otherinterest bearing debt with maturity dates subsequent to March 31, 2022 and2021. See Note 22 and 23.

(c) Fair Value Information by Level within the Fair Value Hierarchy
The fair value of financial instruments is classified into the following three levels
according to the observability and materiality of inputs used to measure fair value.
Level 1 fair value:
Level 2 fair value:
Level 3 fair value:

Fair value measured using observable inputs, i.e. quoted
prices in active markets for assets or liabilities that are thesubject of the measurement.
Fair value measured using observable inputs other than Level
1 inputs.
Fair value measured using unobservable inputs.

If multiple inputs are used that are significant to the fair value measurement, the fair value
measurement is categorized in its entirety in the level of the lowest level input that issignificant to the entire measurement.
51

45

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(c) Fair Value Information by Level within the Fair Value Hierarchy (continued)(1) Financial assets and liabilities measured at fair value

Level 1
Securities andinvestments in securities
Other securities
Stock
Total assets
Derivative transactions
Hedge accounting isappliedTotal liabilities

Level 2
Level 3
(Millions of yen)

As of March 31, 2022
Fair Value
Total
Level 1
Level 2
Level 3
Total
(Thousands of U.S. dollars)¥17,345¥17,345

¥ –
¥ –

¥–
¥–

¥17,345¥17,345$141,719$141,719

$
$

–
–

$–
$–

$141,719$141,719

¥
¥

¥133
¥133

¥–
¥–

¥
¥

$
$

$1,086$1,086

$–
$–

$
$

–
–

133
133

–
–

1,086
1,086

(2) Financial instruments other than those measured at fair value

Level 1
Trade notes receivable,accounts receivable oncompleted construction
contracts and other
Securities and investments
in securities
Held-to-maturity
securities
Bonds
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
Corporate bonds
Long-term debt
Total liabilities

Note 1:

Level 2
Level 3
(Millions of yen)

As of March 31, 2022
Fair Value
Total
Level 1
Level 2
Level 3(Thousands of U.S. dollars)

Total

¥ –

¥197,102¥–¥197,102$–$1,610,442$–$1,610,442

211
¥211

–
¥197,102–¥–

211¥197,313

1,723$1,723–$1,610,442

–
$–

1,723
$1,612,166¥ –¥ 89,634¥–¥ 89,634$–$ 732,363$–$ 732,363–

29,347–

29,347–

239,782–239,782

–
–
–
¥ –

1,986
4,974
57,393¥183,336

–
–
–
¥–

1,986
4,974
57,393¥183,336–––$–

16,22640,640468,935$1,497,965

–
–
–
$–

16,22640,640468,935$1,497,965

Description of the valuation techniques and inputs used in the fair value
measurements

Securities and investments in securities
Listed stocks and bonds are valued using quoted market prices. Since listed stocks andbonds are traded in active markets, their fair value is classified as Level 1 fair value.
Trade notes receivable, accounts receivable on completed construction contracts and
other
52

46

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(c) Fair Value Information by Level within the Fair Value Hierarchy (continued)
The fair value of these receivables is calculated for each receivable classified by acertain period using the discounted present value method based on the amount of thereceivables, the period to maturity, and an interest rate that takes into account credit risk,
and is classified as Level 2 fair value.
Trade notes payable, accounts payable on construction contracts and other, andelectronically recorded payable
The fair value of these payables is based on their book value as most of them are settled
within one year, and is classified as Level 2 fair value.
Short-term bank loans and current portion of long-term debt
For the current portion of long-term debt, the fair value is calculated in the same manner
as for long-term debt. Since other short-term bank loans are settled in a short period oftime, their fair value is almost equal to their book value, and is therefore classified as
Level 2 fair value.
Corporate bonds
The fair value of bonds issued by the Company is calculated by discounting the total
amount of principal and interest at an interest rate that takes into account the remaining
term of the bonds and credit risk. The fair value of bonds is classified as Level 2 fairvalue because they have a quoted market price but are not traded in an active market.
Long-term debt
The fair value of long-term debt is calculated based on the present value of the total
principal and interest discounted at the interest rate that would be applicable to a newsimilar borrowing, and is classified as Level 2 fair value. The fair value of long-term
debt with floating interest rates that is subject to the short-cut method is calculated bydiscounting the total amount of principal and interest treated together with the interest
rate swaps by the reasonably estimated interest rate that would be applicable to a newsimilar borrowing.
Derivative transactions
The fair value of interest rate swaps is based on the price quoted by the counterparty
financial institutions and is classified as Level 2 fair value. The fair value of interest rate
swaps accounted for using the short-cut method is included in the fair value of therelevant long-term debt because they are accounted for as an integral part of the longterm debt that is hedged.

53

47

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

12. Securities
Securities at March 31, 2022 and 2021 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, 2022
Fair
Unrealized Carrying
Fair
Unrealized
Carrying
value
gain
value
value
gain
value
(Millions of yen)(Thousands of U.S. dollars)

¥209

¥211

¥2

$1,707$1,723$16

As of March 31, 2021
Fair
Unrealized
Carrying
gain
value
value
(Millions of yen)

¥117

¥118

¥1

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

Unrealized gain:
Stock
Unrealized loss:
Stock
Total

As of March 31, 2022
Balancesheet
Unrealized
Unrealized
amountgain (loss)
gain (loss)
Cost
Cost
(Millions of yen)(Thousands of U.S. dollars)¥ 4,118¥ 2,339¥1,778$ 33,646$ 19,111$14,527

13,226¥17,345

15,789¥18,129(2,562)¥ (784)

108,064$141,719

129,005$148,124(20,933)$ (6,405)

As of March 31, 2021
Balancesheet
Unrealized
amountgain (loss)
Cost(Millions of yen)
¥ 4,550¥ 2,620¥1,92910,736¥15,287

12,063¥14,684(1,326)¥ 602(c) Sales of Other Securities
Year ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Sales proceeds
Total gain on sales of security
Total loss on sales of security

¥302
19

¥37
8

$2,467
155

–

–

–

54

48

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

13. Derivatives and Hedge Accounting
Derivative transactions for the years ended March 31, 2022 and 2021 were summarized asfollows:(a) Derivative Transactions to which the Hedge Accounting is Applied(1) Currency-related transactions
There were no currency-related transactions to which the hedge accounting isapplied for the year ended March 31, 2022.
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
Note:

Hedgeditem

Accounts
payableFutureforeigncurrency

ContractOver
Fairamount1 yearvalue(Millions of yen)

¥ -

¥-

(Note)

198
¥198

¥-

¥3
¥3

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.

(2) Interest-related transactions
Method ofhedge
accounting
Fair value

Total

Method ofhedge
accounting
Short-cut
method

Total
Note:

As of March 31, 2022
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¥ (56)$61,279$61,279$ (457)2,500¥10,000

2,500¥10,000(77)¥(133)

20,426$81,706

20,426$81,706(629)$(1,086)

As of March 31, 2022
Transaction
type

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)$49,023$49,023(Note)

4,000¥10,000

4,000¥10,000(Note)

32,682$81,706

32,682$81,706(Note)

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.

55

49

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

(a) Derivative Transactions to which the Hedge Accounting is Applied (continued)
Method ofhedge
accounting
Fair value

Total

Method ofhedge
accounting
Short-cut
method

Total
Note:

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)

¥ 7,500¥ 7,500¥(106)

2,500¥10,000

2,500¥10,000(108)¥(215)

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)

¥ 6,000¥ 6,000(Note)

4,000¥10,000

4,000¥10,000(Note)

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.

56

50

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

14.

Retirement Benefit Plans

For the year ended March 31, 2022, 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, 2022 and2021 were as follows (excluding plans for which the simplified method is applied):Year ended March 31,
2022
2021
2022
(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
Other
Balance at the end of year

¥17,022878
81
32(1,197)––30(3)¥16,845¥16,120889
79
26(1,240)
(1)
1,165
(16)
–

¥17,022$139,079
7,173
661
261
(9,780)
–
–

245
(24)
$137,633

The changes in plan assets during the year ended March 31, 2022 and 2021 were as follows(excluding plans for which the simplified method is applied):Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Balance at the beginning of year
Expected return on plan assets
Actuarial gain (loss)
Contribution of the employer
Increase due to a new consolidation
Retirement benefit paid
Foreign currency translation
Balance at the end of year

¥517
0
(2)
18
–

(24)
1
¥511

¥ 45
7
11
9
446
(3)
0
¥517

$4,224
0
(16)
147
–

(196)
8
$4,17557

51

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

14. Retirement Benefit Plans (continued)
The changes in liability for retirement benefits based on the simplified method during theyear ended March 31, 2022 and 2021 were as follows:
Years ended March 31,
2022
2021
2022
(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
Other
Balance at the end of year

¥1,896
253
(201)
(19)
–
–

¥1,928¥1,466
175
(160)
(17)
451
(18)
¥1,896$15,491
2,067(1,642)(155)––$15,752

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,
2022 and 2021 is as follows:
As of March 31,
2022
2021
2022
(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¥ 1,633(1,526)106
18,155¥ 1,590(1,523)67
18,333$ 13,342(12,468)866
148,337

18,262

18,401

149,211

18,389(127)

18,562(160)

150,249(1,037)¥18,262¥18,401$149,211

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

58

52

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

14. Retirement Benefit Plans (continued)
The components of retirement benefit expense during the year ended March 31, 2022 and2021 were as follows:Year ended March 31,
2022
2021
2022
(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

¥ 878
81
(0)
379
(362)

¥ 889
79
(7)
430
(359)

$ 7,173
661
(0)
3,096
(2,957)253¥1,230175¥1,207

2,067$10,049

The components of retirement benefit liability adjustments included in other comprehensive
income (before tax effect) during the year ended March 31, 2022 and 2021 were as follows:
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Actuarial loss
Prior service cost
Total

¥344
(362)
¥ (17)

¥415
(357)
¥ 58

$2,810(2,957)$ (138)The components of retirement benefit liability adjustments included in accumulated othercomprehensive income (before tax effect) as of March 31, 2022 and 2021 were follows:
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Unrecognized actuarial loss
Unrecognized prior service cost
Total

¥1,068(143)¥ 925¥1,413(505)¥ 907$8,726(1,168)$7,55759

53

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

14. Retirement Benefit Plans (continued)
The fair value of plan assets, by major category, as a percentage of total plan assets as ofMarch 31, 2022 and 2021 were follows:
2022
Bonds
StocksOther
Total

As of March 31,

89%
5%
6%
100%

2021
74%
18%
8%
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,
2022
2021
Discount rate
Expected rate of return on plan assets
Expected rate of increase in salaries

Principally 0.3%
Principally 0.7%
Principally 4.8%

Principally 0.3%
Principally 2.0%
Principally 4.7%

The contribution to defined contribution plans in the company and consolidated subsidiaries
were as follows:
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Contribution to defined contribution plans

¥768

¥778

$6,27560

54

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

15. Income Taxes
The significant components of deferred tax assets and liabilities at March 31, 2022 and 2021
were as follows:
As of March 31,
2022
2021
2022
(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
Allowance for losses on construction
contracts
Provision for contingent loss
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets¥ 5,631
3,201
65
249

¥5,6993,465
66
8$46,008
26,154
531
2,034

6,608
661
1,626
18,043(6,336)
11,706

298
661
1,447
11,648(6,302)
5,345

53,991
5,400
13,285
147,422(51,768)
95,645

(970)
(2)
(453)
(58)
(1,485)¥10,221(1,008)
(185)
(97)
(85)
(1,377)¥3,968(7,925)(16)(3,701)(473)(12,133)$83,511

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

The significant differences between the statutory tax rate and the effective tax rates for theyear ended March 31, 2021 has been omitted as its difference was less than 5% of thestatutory tax rate.
The same information has been omitted for the year ended March 31, 2022 due to the postingof loss before income taxes.

61

55

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

16. Business Combination and Divestiture
For the year ended March 31, 2021
Business Combination by Acquisition
The Company entered into a share transfer agreement for the transfer of shares of Antara Koh
Private Limited (hereinafter “AKPL”) as announced in the “Notice Concerning Acquisitionof Shares of Antara Koh Private Limited (Conversion to Subsidiary)” dated December 23,
2021 and acquired AKPL’s shares on February 15, 2022. As a result of this share acquisition,
Antara Koh (Myanmar) Ltd, AKM Sdn. Bhd, and Antara Koh (Malaysia) Sdn. Bhd, which
are subsidiaries of AKPL, became second-tier subsidiaries of the Company.
(a) Summary of Business Combination(1) Name of acquired company and its business outline
Name of acquired company
Business outline

Antara Koh Private Limited
Civil engineering, offshore and abovewater piling work, etc.

(2) Major reason for the business combination
In order to proactively transform ourselves with a view to the future and accelerate
reforms to enhance our business competitiveness and create corporate value, wehave been promoting various measures, positioning the following as our basic
medium-term management policies: (1) Transform the construction process, (2)Strengthen overseas business, and (3) Expand businesses domains.
Founded in 1974, AKPL is a construction company with a presence in Singapore,
Malaysia, and other Southeast Asian countries, focusing on mechanical civilengineering. AKPL is a specialist in offshore and above-water piling works, and has
built up a stable track record with a mission to provide safety and high quality. We
have built a long-term relationship of trust with AKPL as an important partner
mainly in charge of foundation work in large-scale bridge construction, which is asource of our strengths in our overseas business.
We consider that we can expect investment effects from this share acquisition,
contributing to the realization of the basic medium-term management policies, suchas through the utilization of AKPL’s vessels and pile foundation technologies andthe enhancement of competitiveness through collaboration in the construction
management system for the further expansion of business in the field of large
bridges as part of our policy to strengthen our overseas operations. We acquired
AKPL’s shares because we expect that this share acquisition will further enhance
the corporate value of AKPL by utilizing the Group’s resources, and will also bringsignificant benefits to the overseas business strategy of the Group.

62

56

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(a) Summary of Business Combination (continued)(3) Date of business combination
February 15, 2022 (deemed acquisition date: December 31, 2021)(4) Legal form of business combination
Acquisition of stock(5) Name of the company after business combination
No change(6) Percentage of voting rights acquired
100%(7) Basis for determining the acquirer
The Company’s acquisition of shares in consideration for cash.
(b) Period for Which the Operations of the Acquired Company Are Included in theConsolidated Financial Statements
Since only the balance sheet is consolidated in the current fiscal year, the consolidated
statements of income does not include the results of the acquired company.
(c) Acquisition Cost of the Acquired Company and Related Details of Each Class ofConsideration (Approximate Amount)
Consideration for acquisition―CashAcquisition cost

SGD89 million(¥7,654 million) ($62,537 thousand)
SGD89 million(¥7,654 million) ($62,537 thousand)(d) Major Acquisition-related Costs
Advisory fees, etc.

¥329 million($2,688 thousand)

63

57

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(e) Amount of Goodwill Incurred, Reasons for the Goodwill Incurred, and the Method andPeriod of Amortization(1) Amount of goodwill incurred¥2,919 million($23,849 thousand)(2) Reasons for the goodwill incurred
The excess earning power expected mainly from the utilization of AKPL’s vessel
and pile foundation technologies, and the enhancement of competitiveness throughcollaboration in the construction management system.
(3) Method and period of amortization
Goodwill is amortized on a straight-line basis over 8 years.
(f) Assets Acquired and Liabilities Assumed at the Acquisition Date
Current assets
Non-current assets
Total assets¥2,515 million¥4,668 million¥7,183 million($20,549 thousand)($38,140 thousand)($58,689 thousand)Current liabilities
Long-term liabilities
Total liabilities¥1,589 million¥859 million¥2,448 million($12,983 thousand)($7,018 thousand)($20,001 thousand)64

58

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

17.

Revenue Recognition(a) Disaggregation of Revenue from Contracts with Customers
Information on the disaggregation of revenue from contracts with customers is presented in“18. Segment Information, etc.”(b) Useful Information in Understanding Revenue from Contracts with Customers
The Group is primarily engaged in civil construction and building construction, providing
construction design and construction work services as well as other related services to its
domestic and overseas customers.
In civil and building construction, the Group primarily enters into long-term construction
contracts. For such contracts, the completion and delivery of construction work is identified
as a performance obligation. Performance obligations are deemed to be satisfied over time,and revenue is recognized based on progress toward complete satisfaction of a performanceobligation. The progress toward complete satisfaction of a performance obligation ismeasured based on the proportion of construction costs incurred by the end of the reporting
period to the total expected construction costs. When the progress toward complete
satisfaction of a performance obligation cannot be reasonably measured, but the costs to be
incurred are expected to be recovered, revenue is recognized only to the extent of the costs
incurred, except for those contracts that are in the initial stages of construction. For
construction contracts whose period between the date of commencement of the transaction
and the point in time when the performance obligation is expected to be fully satisfied is very
short, an alternative treatment is applied, whereby revenue is not recognized over time, but
is recognized when the performance obligation is fully satisfied.
Some construction contracts include variable consideration as they contain sliding clauses(overall sliding, single item sliding, or inflationary sliding) or clauses related to penalties fordelays in construction. Variable consideration is estimated using the mode method based oncontract terms and past performance.
Consideration for transactions related to construction contracts is generally received withinapproximately one year after the performance obligation is satisfied (in some cases, advancepayments are received based on the contract). However, when the period between thesatisfaction of the performance obligation and the customer’s payment of the consideration
is expected to be long, and the related market interest rate is expected to be considerably highand the impact on the financial component is expected to be significant, then the receivables
are considered to contain a significant financial component. The financial component of thereceivables based on the contract with the customer is adjusted accordingly.

65

59

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(c) Balance of Contract Assets and Liabilities and the Transaction Price Allocated to the
Remaining Performance Obligations(1) Balances of contract assets and contract liabilities
Years ended March 31,

Receivables from contracts with customers(beginning balance) (Note)
Receivables from contracts with customers(ending balance) (Note)
Contract assets (beginning balance)
Contract assets (ending balance)
Contract liabilities (beginning balance)
Contract liabilities (ending balance)

2022

2022

(Millions of yen)(Thousands of
U.S. dollars)¥69,479$567,685

77,431

632,657

117,681
115,750
24,091
28,635

961,524
945,747
196,837
233,965

Note: Receivables from contracts with customers are included in the amount of accounts
receivable on completed construction contracts and other.

Contract assets relate to the rights of the Group to consideration for the completion anddelivery of construction contracts with customers that have been completed but unbilled
as of the end of the fiscal year. Contract assets are reclassified to receivables fromcontracts with customers when the Group’s rights to the consideration become
unconditional. Consideration for such construction is billed and received in accordancewith the payment terms of the construction contracts.
Contract liabilities mainly relate to advances received from customers in accordancewith the payment clauses of construction contracts. The contract liabilities are reversed
upon recognition of revenue.
The portion of revenue recognized in the current fiscal year and included in the
beginning balance of contract liabilities amounted to ¥20,350 million ($166,271
thousand)The amount of revenue recognized in the current fiscal year from performanceobligations that were satisfied (or partially satisfied) in prior years was ¥3,889 million($31,775 thousand).
(2) Transaction price allocated to the remaining performance obligations
The total transaction price allocated to the remaining performance obligations as ofMarch 31, 2022 amounted to ¥836,011 million ($6,830,713 thousand).
The transaction price allocated to the remaining performance obligations represents theaggregate amount of the transaction price of contracts for which the Group has been
awarded as of the end of the current fiscal year, but for which no revenue is recognizedbecause the performance obligations have not been satisfied as of that date. The Group
expects to recognize revenue from such transaction prices within approximately two
years as performance obligations are satisfied.
66

60

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

18. 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 andOther Items 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.
As described in “Changes in Accounting Policies,” the Company has applied the
Revenue Recognition Standard, etc. from the consolidated financial statements for thecurrent fiscal year and changed the accounting method for revenue recognition.
Accordingly, the Company also changed the method for calculating segment income orloss for operating segments.
As a result of this change, compared with the previous method, sales and segment
income in the Civil Construction segment decreased by ¥956 million ($7,811 thousand)and increased by ¥660 million ($5,392 thousand), respectively, and sales and segment
loss in the Building Construction segment decreased by ¥1,531 million ($12,509
thousand) and increased by ¥252 million ($2,058 thousand), respectively, for the current
fiscal year.

67

61

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(c) Segment income, segment assets and other items for reportable segments

Sales
Externalcustomers
Intersegment
transactions ortransfers
Net sales
Segment income(loss)

Sales
Externalcustomers
Intersegment
transactions ortransfers
Net sales
Segment income(loss)

Year ended March 31, 2022
Reportable operating segments
Others
Civil
Building
Total(Note 1)
Total
(Millions of yen)

Adjustments Consolidated(Note 2)
(Note 3)¥191,446¥211,063¥402,510¥765¥403,275¥–¥403,275

680¥192,127－¥211,063

680¥403,190

146
¥912

827
¥404,103(827)¥(827)–¥403,275¥ 24,589¥ (6,470)¥ 18,119¥119¥ 18,239¥ (60)¥ 18,178

Year ended March 31, 2022
Reportable operating segments
OthersBuilding
Total(Note 1)
Total
Civil
(Thousands of U.S. dollars)

Adjustments Consolidated(Note 2)
(Note 3)

$1,564,229$1,724,511$3,288,749$6,250$3,294,999$–$3,294,999

5,556$1,569,793–$1,724,511

5,556$3,294,305

1,192$7,451

6,757$3,301,764(6,757)$(6,757)–$3,294,999$ 200,906$ (52,863) $ 148,043$ 972$ 149,023$ (490)$ 148,525

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

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

Note 3:

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

Sales
Externalcustomers
Intersegment
transactions ortransfers
Net sales
Segment income

Year ended March 31, 2021
Reportable operating segments
Others
Civil
Building
Total(Note 1)
Total
(Millions of yen)

Adjustments Consolidated(Note 2)
(Note 3)¥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¥ 21,687¥ 16,972¥ 38,660¥357¥ 39,017¥ (81)¥ 38,935

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.

68

62

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(d) Information on Disaggregation of Revenue by Reportable Segment

Japan
Asia
Others
Revenue from contracts
with customers
Other revenue
Sales to externalcustomers

Japan
Asia
Others
Revenue from contracts
with customers
Other revenue
Sales to externalcustomers
Note:Year ended March 31, 2022
Reportable operating segments
OthersBuilding
Total(Note)
Civil(Millions of yen)
¥150,737¥182,532¥333,269¥551
39,63925,11064,750
213
3,204
4,117
－
912
191,289
210,847
402,137
765

Total¥333,821
64,963
4,117
402,902

156

215

372

－

372

¥191,446¥211,063¥402,510¥765¥403,275

Year ended March 31, 2022
Reportable operating segments
Others
Civil
Building
Total(Note)(Thousands of U.S. dollars)$1,231,612 $1,491,396 $2,723,008$4,502323,874
205,163
529,046
1,740
7,451
26,17833,638－1,562,946
1,722,746
3,285,701
6,250

Total
$2,727,518
530,786
33,6383,291,951

1,274

1,756

3,039

－

3,039

$1,564,229$1,724,511$3,288,749$6,250$3,294,999“Others” which includes the Company’s business of solar power and insurance agent, does not qualify asa reportable operating segment.

69

63

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

Related Information
For the year ended March 31, 2022
(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)

¥334,194
Note:¥64,963

Year ended March 31, 2022
Total
Japan
Asia
Others
Total(Thousands of U.S. dollars)¥4,117¥403,275$2,730,566 $530,786$33,638$3,294,999

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

(2) Property and equipment
Japan

Asia
Others(Millions of yen)

¥29,245¥4,645

Year ended March 31, 2022
Total
Japan
Asia
Others
Total(Thousands of U.S. dollars)¥149¥34,040$238,949$37,952$1,217$278,127

Note 1: Countries and regions are classified according to geographical proximity.
Note 2: Asia includes Singapore, amounting to ¥3,848 million ($31,440 thousand).

(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, 2022.
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) SalesYear ended March 31, 2021
Japan

Asia

Others

Total(Millions of yen)
¥358,467¥60,189¥2,962¥421,619

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

7064Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022(b) Geographical Segment Information (continued)(2) Property and equipment
Geographical segment information on property and equipment has been omitted as
the amount of property and equipment in Japan constituted over 90% of total as ofMarch 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.
Losses on impairment by reportable segment
For the years ended March 31, 2022 and 2021, there were no losses on impairment byreportable segment.
Amortization of goodwill and unamortized balance by reportable segment

Amortization for the year
Balance at the end of the year

Year ended March 31, 2022
Reportable operating segments
OthersBuilding
Total(Note)
Civil(Millions of yen)
¥－
¥－
¥－
¥－
2,919
－
2,919
－

Amortization for the year
Balance at the end of the year

Year ended March 31, 2022
Reportable operating segments
OthersBuilding
Total(Note)
Civil(Thousands of U.S. dollars)
$－
$－
$－
$－
23,849－23,849
－

Total
¥－
2,919

Total
$－
23,849For the year ended March 31, 2021, there were no amortization and unamortized balance of
goodwill by reportable segment.
Gain on negative goodwill by reportable segment
For the year ended March 31, 2022, there were no gain on negative goodwill by reportablesegment.
For the year ended March 31, 2021, ¥547 million 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.

71

65

Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

19. Related Party Transactions
Related party transaction
Transactions with affiliates for the year ended March 31, 2022 were summarized as follows:

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

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

Note 1:
Note 2:

Capitalinvestment

Number of
voting shares
held as apercentage ofvoting sharesissued¥1030.0%Capitalinvestment

Number of
voting shares
held as apercentage ofvoting sharesissued$81

30.0%Year ended March 31, 2022

Nature ofTotal amounttransactionof transaction(Millions of yen)
Long-term
non-operating
accounts
receivable
Long-term
accounts
payable¥–¥–Balance sheet
account

Long-term
non-operating
accounts
receivable
Long-term
accounts
payableBalance at
March 31,2022

¥2,918¥2,339Year ended March 31, 2022

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 31,2022

$23,841$19,111

Total amount of transaction represents the amount of a claim for damage from Yoshiikikaku Co., Ltd. and theamount of guarantee for financial institutions.
Allowance for the above long-term non-operating accounts receivable was recognized in the amount of ¥2,889
million ($23,604 thousand).

72

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

19. Related Party Transactions (continued)
Transactions with affiliates for the year ended March 31, 2021 were summarized as follows:

Capitalinvestment

Number of
voting shares
held as apercentage ofvoting sharesissued¥1030.0%

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

Note 1:
Note 2:

Year ended March 31, 2021

Nature ofTotal amounttransactionof transaction(Millions of yen)
Long-term
non-operating
accounts
receivable
Long-term
accounts
payableBalance sheet
account

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

¥2,918¥2,339Total amount of transaction represents the amount of a claim for damage from Yoshiikikaku Co., Ltd. and theamount of guarantee for financial institutions.
Allowance for the above long-term non-operating accounts receivable was recognized in the amount of ¥2,889
million.

20. Per Share Information
Net assets and basic profit (loss) per share as of and for the years ended March 31, 2022 and2021 were as follows:
2021

2022
(Yen)

Net assets per share
Profit (loss) per share¥584.73(44.93)¥651.59
55.33

2022(U.S. dollars)$4.778(0.367)Note 1: For the year ended March 31, 2022, Profit per share – diluted was omitted as loss
per share was recorded and there were no diluted shares.
For the year ended March 31, 2021, Profit per share – diluted was omitted as there
were no diluted shares.
Note 2: As described in “Changes in Accounting Policies,” the Company has applied the
Revenue Recognition Standard, etc. from the consolidated financial statements forthe current fiscal year. As a result, for the current fiscal year, net assets per share
increased by ¥0.14 ($0.001) and loss per share decreased by ¥2.79 ($0.023).

73

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

20. Per Share Information (continued)
The basis of calculation for net assets per share at March 31, 2022 and 2021 were as follows:
As of March 31,
2022
2021
2022
(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¥99,701
8,313[8,313]¥91,388¥110,308
7,902[7,902]¥102,405$814,617
67,922[67,922]$746,694(Thousands of shares)

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

156,290

157,161

The basis for calculating basic profit (loss) per share for the years ended March 31, 2022 and2021 were as follows:
Years ended March 31,
2021
2022
2022
(Millions of yen)(Thousands of
U.S. dollars)Profit (loss) per share – basic:
Profit (loss) attributable to owners of parent
Amount not available to common shareholders
Profit (loss) attributable to owners of parent
per share – basic
Average number of shares of common stock
outstanding¥(7,022)–¥8,743–$(57,373)–¥(7,022)¥8,743$(57,373)(Thousands of shares)
156,284

158,045

74

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

21. Subsequent Event
Issuance of Bonds
In accordance with the limit and outline for the issuance of unsecured straight bonds approvedat the Board of Directors’ meeting held on September 30, 2020, the Company issued its 2ndseries of unsecured straight bonds (with inter-bond pari passu clause) (Sustainability Bonds)
after finalizing the terms and conditions of the issuance on June 8, 2022. Payment wascompleted on June 14, 2022.
The outline of the bond is as follows:(a) Name of bond2nd series unsecured straight bonds of Sumitomo Mitsui Construction Co., Ltd.
(with inter-bond pari passu clause) (Sustainability Bonds)(b) Total amount of issue

5.0 billion yen ($40,853 thousand)(c) Amount of each bond

100 million yen ($817 thousand)(d) Interest rate

0.520% per annum(e) Collateral
These bonds are not secured or guaranteed, and no assets are specifically reserved forthese bonds.
(f)Maturity dateJune 14, 2027(g) Use of funds to be raised(1) Appropriated for refinancing of construction of land and water solar power
generation facilities(2) Appropriated for funds for construction of employee dormitories that fall under the
ZEH-M (Net Zero Energy House-Mansion) category(3) Appropriated for funds and refinancing for the expansion of equipment and facilities
related to the promotion of automation of plant prefabrication (precast concrete)

75

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

22. Corporate Bond
Corporate bonds at March 31, 2022 was summarized as follows:Year ended March 31, 2022
Balance at Balance atApril 1,March 31, Interest
Issued Date
Rate
Collateral
2021
2022
(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

–

October 22,
2020

–

5,000

5,000

5,000

5,000

0.30%

October 22,
2025

Nil

–

–

Redemption
Deadline–Year ended March 31, 2022
Balance at Balance atApril 1,March 31, Interest
Issued Date
Rate
Collateral
2021
2022
(Thousands of U.S.
dollars)

Redemption
Deadline

October 22,
2020

October 22,
2025–

40,85340,85340,85340,853

0.30%

Nil

–

–

–

Scheduled redemption of corporate bonds are summarized as follows:Year ending March 31, 2022
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(Millions of yen)(Thousands of U.S.
dollars)

¥–
–
–
5,000
–

$–
–
–
40,853–23. Short-Term Debt and Long-Term Debt
Short-term debt at March 31, 2022 and 2021 were summarized as follows:

Short-term bank loans (at weighted-averageinterest rates of 3.3% at 2022)
Deposits from employees (at interest rates of
1.0% at 2022 and 2021)

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)¥ 276¥1,450$ 2,255¥4,157¥3,824$33,965

76

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Sumitomo Mitsui Construction Co., Ltd.
Notes to Consolidated Financial Statements
March 31, 2022

23. Short-Term Debt and Long-Term Debt (continued)
Long-term debt at March 31, 2022 and 2021 were summarized as follows:
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Debt with collateral (at weighted-average interest
rates of 2.5% at 2022 and 2021)
Debt without collateral (at weighted-averageinterest rates of 1.2% at 2022 and 2021)
Lease obligations
Current portion (excluding lease obligations)
Current portion of lease obligations

¥68

¥80

$555

59,4502,670(1,712)(781)

56,6501,854(7,212)(605)

485,742
21,815(13,988)(6,381)

The aggregate annual maturities of long-term debt subsequent to March 31, 2022 weresummarized as follows:Year ending March 31,
2023
2024
2025
2026
2027
2028 and thereafter(Millions ofyen)(Thousands of
U.S. dollars)¥ 1,712
9,962
20,212
6,113
10,013
11,503¥59,518$ 13,988
81,395
165,144
49,946
81,812
93,986$486,297

The aggregate annual maturities of lease obligations subsequent to March 31, 2022 weresummarized as follows:Year ending March 31,
2023
2024
2025
2026
2027
2028 and thereafter(Millions ofyen)(Thousands of
U.S. dollars)

¥ 781
591
442
245
196
413
¥2,670$ 6,381
4,828
3,611
2,001
1,601
3,374
$21,815

77

71

78

79

80

81

82

83

84

85

86

Non-Consolidated Financial Statements
Sumitomo Mitsui Construction Co., Ltd.
Year ended March 31, 2022with Independent Auditor’s Report87Sumitomo Mitsui Construction Co., Ltd.
Sumitomo MitsuiCo., Ltd.
Non-Consolidated
Balance Construction
SheetsMarch 31, 2022

Non-Consolidated Balance Sheets
As of March 31,
2022
2021
2022
(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¥ 39,422
634
159,136
147
20,48725,001(214)244,615¥ 42,638
1,308
153,182
47
21,66524,032－242,875$ 322,101
5,180
1,300,236
1,201
167,391
204,273(1,748)
1,998,651

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
5,187
844
5,191
288
4,657
253
(11,168)
10,584

5,328
4,857
799
4,488
275
4,403
544
(10,477)
10,21943,53242,3806,895
42,413
2,353
38,0502,067(91,249)
86,477

2,222

2,205

18,155

20,697
26,856
72
360
181
9,634
3,979
(3,262)58,51871,325

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

169,106
219,429
588
2,941
1,478
78,71532,510(26,652)
478,127
582,768¥315,941¥299,090$2,581,428

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

1
88Sumitomo Mitsui Construction Co., Ltd.
Non-Consolidated Balance Sheets
March 31, 2022

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
(Note 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 contingency loss
Other current liabilities
Total current liabilities
Long-term liabilities:
Bond payable
Long-term debt (Note 5-(d))
Lease obligations
Accrued retirement benefits
Other long-term liabilities
Total long-term liabilities

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)¥

4,922
19,592
67,269¥6,559
19,43264,680$40,215160,078
549,628

1,700
207
2,424
16,083
19,845399
19,2382,159
13,021
166,864

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

13,8901,691
19,805
131,407
162,145
3,260
157,186
17,640106,389
1,363,379

5,000
57,750214
12,8892,596
78,4495,000
49,450355
13,101
2,667
70,57440,853471,852
1,748
105,310
21,210640,975

12,003

12,00398,071

326
326

347
347

2,663
2,663

1,931
60,90862,8391,648
73,00474,652

15,777497,655
513,432(3,907)
71,262(3,504)
83,498(31,922)582,253

(542)
(92)
(635)
70,627¥315,941

418
(147)
271
83,770¥299,090(4,428)(751)(5,188)577,065$2,581,428

Contingent liabilities (Note 5-(c))
Net assets:
Shareholders’ equity:
Capital stock:
Common stock:
Authorized:
533,892,994 shares in 2022 and 2021
Issued and outstanding:
162,673,321 shares in 2022 and 2021
Capital surplus:
Other capital surplus
Total capital surpluses
Retained earnings:
Legal retained earnings
Earned surplus carried forward
Total retained earnings
Treasury stock, at cost:
6,382,798 shares in 2022 and 5,511,604 shares in 2021
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.
89Sumitomo Mitsui Construction Co., Ltd.
Non-Consolidated Statements of Income
March 31, 2022

Sumitomo Mitsui Construction Co., Ltd.

Non-Consolidated Statements of Income

Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)

Net sales (Note 10):Completed construction
Others¥303,964
422
304,387¥322,002
214
322,217$2,483,568
3,447
2,487,025

298,087323
298,411295,478117
295,596

2,435,550
2,639
2,438,197

5,876
99

26,523
97

48,010808

5,975

26,62048,81917,622(11,647)

16,387
10,233

143,982(95,163)

2,178
85

2,090
109

17,795694－(1,086)
348
(410)
(512)

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

－
(8,873)
2,843(3,349)(4,183)

0
18
6

－
－
－

0
147
49

(130)
(529)
(431)
(461)
(12,109)

(39)
(31)
(415)
(1,153)
9,079(1,062)(4,322)(3,521)(3,766)(98,937)

Current
Deferred

2,668(6,220)(3,551)

1,464
(26)
1,438

21,799(50,821)(29,013)

Profit (loss)¥ (8,557)¥ 7,640$ (69,915)

Cost of sales:
Completed construction
OthersGross profit
Completed construction
OthersSelling, general and administrative expenses (Note 6-(d))
Operating income (loss)
Other income (expenses):
Interest and dividend income (Note 6-(a))
Payments received from insurance claims
Reversal of provision for loss on business of subsidiaries andaffiliates
Interest expense
Exchange gain (loss), net
Financing related expenses
Commission for loan commitment agreement
Gain on sales of property and equipment(Note 6-(b))
Gain on sales of investments in securities
Gain on liquidation of subsidiaries and affiliates
Loss on sales and disposal of property and equipment(Note 6-(c))
Loss on valuation of shares of subsidiaries and affiliates
Other, net (Note 6-(a))
Profit (loss) before income taxes
Income taxes (Note 8):(U.S. dollars)(Note 2)

(Yen)
Profit (loss) per share – basic¥(54.76)¥48.34$(0.447)

See accompanying notes to non-consolidated financial statements.

903

Sumitomo Mitsui Construction Co., Ltd.
Non-Consolidated Statements of Sumitomo
Changes In Net
AssetsConstruction Co., Ltd.
MitsuiMarch 31, 2022

Non-Consolidated Statements of Changes in Net Assets
Year ended March 31, 2022
Shareholders’ equity
Additional
paid-in capital

Balance at the beginning of
the period
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
Profit (loss)
Purchases 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 theperiodTreasurystock, at cost

Total
shareholders’equity¥(3,504)¥83,498(3,504)

83,072

Capitalstock

Other capitalsurplus

Earnedreserve¥12,003¥347¥1,648¥73,004
(426)

(426)

12,003347

1,648

72,57774,226(2,828)(2,828)(2,828)(282)(8,557)–(8,557)

(502)
100

–
(8,557)
(502)
79

282

¥74,652

(20)

(426)

–

(20)

282

(11,669)(11,386)(402)(11,809)¥12,003¥326¥1,931¥60,908¥62,839¥(3,907)¥71,262

Year ended March 31, 2022
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
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
Profit (loss)
Purchases 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)

¥418¥(147)¥271

Total
net assets¥83,770
(426)

418

(147)

271

83,343(2,828)–(8,557)
(502)
79

(961)

54

(907)

(907)

(961)

54

(907)

(12,716)¥(542)¥(92)¥(635)¥70,627

491

Sumitomo Mitsui Construction Co., Ltd.
Sumitomo
Mitsui
Non-Consolidated Statements of Changes
In NetAssets Construction Co., Ltd.
March 31, 2022

Non-Consolidated Statements of Changes in Net Assets (continued)
Year ended March 31, 2022
Shareholders’ equity
Additional
paid-in capital

Balance at the beginning of
the period
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
Profit (loss)
Purchases 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
carriedEarnedTotal retained
forwardreserveearnings(Thousands of U.S. dollars) (Note 2)

Treasurystock, at cost

Total
shareholders’equity$(28,629)$682,228(28,629)

678,748

Capitalstock

Other capitalsurplus$98,071$2,835$13,465$596,486(3,480)(3,480)98,071

2,835

13,465592,997

606,471(23,106)(23,106)(23,106)(2,304)(69,915)–(69,915)(4,101)
817–(69,915)(4,101)645

2,304$609,951(163)(3,480)

–

(163)

2,304

(95,342)(93,030)(3,284)(96,486)$98,071$2,663$15,777$497,655$513,432$(31,922)$582,253

Year ended March 31, 2022
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
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes in items during
the period
Dividends from surplus
Provision of legal retained
earnings
Profit (loss)
Purchases 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$3,415$(1,201)$2,214$684,451(3,480)3,415(1,201)

2,214

680,962(23,106)–(69,915)(4,101)645(7,851)441(7,410)(7,410)(7,851)441(7,410)(103,897)$(4,428)$(751)$(5,188)$577,065

5
92

Sumitomo Mitsui Construction Co., Ltd.
Non-Consolidated Statements of Changes
In NetAssetsConstruction Co., Ltd.
Sumitomo
MitsuiMarch 31, 2022

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

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

See accompanying notes to non-consolidated financial statements.

6
93

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

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022 and 2021
March 31, 2022
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. For other securities, securities other than shares, etc. with no market value
are carried at fair value with any changes in unrealized holding gain or loss, net of theapplicable income taxes, included directly in net assets. Shares, etc. with no market value
are carried at cost. Cost of securities sold is determined by the moving average method.
Investments in subsidiaries and affiliates are stated 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).

7

94

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(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.
95

8

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(i)

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.

(j)

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, 2022.
(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.

(k) Recognition of Revenues and Costs
The Company is primarily engaged in civil construction and building construction,
providing construction design and construction work services as well as other related
services to its domestic and overseas customers.
In civil and building construction, the Company primarily enters into long-term
construction contracts. For such contracts, the completion and delivery of construction
work is identified as a performance obligation. Performance obligations are deemed tobe satisfied over time, and revenue is recognized based on progress toward complete
satisfaction of a performance obligation. The progress toward complete satisfaction ofa performance obligation is measured based on the proportion of construction costs
incurred by the end of the reporting period to the total expected construction costs. Whenthe progress toward complete satisfaction of a performance obligation cannot bereasonably measured, but the costs to be incurred are expected to be recovered, revenue
is recognized only to the extent of the costs incurred, except for those contracts that arein the initial stages of construction. For construction contracts whose period between
the date of commencement of the transaction and the point in time when the performanceobligation is expected to be fully satisfied is very short, an alternative treatment isapplied, whereby revenue is not recognized over time, but is recognized when theperformance obligation is fully satisfied.

96

9

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(l)

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.
(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.
(m) 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.
(n) 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.
9710Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(n) Income Taxes (continued)
The Company has adopted the consolidated taxation system.
Effective from the next fiscal year, the Company will transition to the group tax sharing
system from the consolidated taxation system. However, with respect to the transition
to the group tax sharing system established by the “Act for Partial Amendment to the
Income Tax Act, etc.” (Act No. 8 of 2020) and items for which the non-consolidated tax
payment system was revised in conjunction with the transition to the group tax sharing
system, the amounts of deferred tax assets and deferred tax liabilities will be based on
the provisions of the tax act before the revision, instead of applying the provisions ofParagraph 44 of the “Implementation Guidance on Tax Effect Accounting” (ASBJ
Guidance No. 28 issued on February 16, 2018) in accordance with the treatment
provided in Paragraph 3 of the “Practical Solution on the Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System to the Group Tax
Sharing System” (ASBJ PITF No. 39 issued on March 31, 2020).
Effective from the beginning of the next fiscal year, the Company plans to apply the“Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing
System” (ASBJ PITF No. 42 issued on August 12, 2021), which provides informationon the treatment of accounting and disclosure of corporate and local income taxes andtax effect accounting in the case of applying the group tax sharing system.
(o) 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 ¥122.39 = U.S.$1.00, the approximate rate ofexchange prevailing on March 31, 2022. 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

For the year ended March 31, 2022
(a) Provision for Contingent Loss
(1) Amounts recognized on the financial statements for this fiscal year

Allowance for contingency loss

As of March 31, 2022
(Millions of yen)(Thousands of U.S. dollars)¥2,159$17,64098

11

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022
(a) Provision for Contingent Loss (continued)(2) Information of significant accounting estimates for the 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, and decreased fromapproximately 51.0 billion yen to approximately 50.6 billion yen on September 30,2022) as alleged rebuilding cost for the whole structure of the apartment. The
Company considers that MFR’s claim lacks legal foundation and reason, and willcontinue to make appropriate arguments in that court proceeding.
(b) Recognition of Revenues from Construction Contracts(1) Amounts recognized on the financial statements for this fiscal year
As of March 31, 2022
(Millions of yen) (Thousands of U.S. dollars)
Net sales of construction contracts,
etc. related to performanceobligations to be satisfied over time

¥274,053$2,239,178(2) Information of significant accounting estimates for the item above
For construction contracts, etc. whose performance obligations are satisfied overtime, the progress toward complete satisfaction of a performance obligation ismeasured and net sales of completed construction contracts are recognized overtime based on such progress toward satisfaction of the performance obligation.
It is necessary to estimate total revenues and costs of a project reasonably uponrecognition. The Company’s results may fluctuate due to changes in net sales andcosts of completed construction contracts as a result of negotiations with clients,
unanticipated incurrence of costs, or other reasons.

99

12Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022
3. Significant Accounting Estimates (continued)
For the year ended March 31, 2021
(a) Provision for Contingent Loss
(1) Amounts recognized on the financial statements for this fiscal year

Allowance for contingency loss

As of March 31, 2021
(Millions of yen)
¥2,159(2) Information of significant accounting estimates for the 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 statements for this fiscal year
As of March 31, 2021
(Millions of yen)
Net sales recognized based on
percentage-of-completion method¥287,806(2) Information of significant accounting estimates for the item above
Net sales of completed construction contracts of which the percentage ofcompletion can be reliably estimated are recognized by the percentage-ofcompletion method. The percentage of completion is calculated at the cost incurred
as a percentage of the estimated total cost. It is necessary to estimate total revenue
and cost of a project reasonably upon the recognition.
The Company’s results may fluctuate due to changes in net sales 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.
100

13Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022
4.

Changes in Accounting Policies(a) Accounting Standard for Revenue Recognition
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29 issued on March 31, 2020; hereinafter “Revenue Recognition
Standard”) and other standards from the beginning of the current fiscal year. The
Company recognizes revenue when control of a promised good or service is transferred
to a customer in an amount that reflects the consideration to which the Company expects
to be entitled in exchange for those goods and services.
The main changes resulting from the application of the Revenue Recognition Standard
are as follows.
Recognition of revenues from construction contracts:
The Company previously applied the percentage-of-completion method for construction
contracts whose percentage of completion can be reliably estimated, and the completedcontract method for other construction contracts. However, when control over goods orservices is transferred to a customer over time, the Company has changed the method ofrecognizing revenue to one where revenue is recognized over time as it satisfies its
performance obligation to transfer the goods or services to customers. The progress
toward complete satisfaction of a performance obligation is measured based on the
proportion of construction costs incurred by the end of the reporting period to the total
expected construction costs. When the progress toward complete satisfaction of aperformance obligation cannot be reasonably measured, but the costs to be incurred are
expected to be recovered, revenue is recognized only to the extent of the costs incurred,
except for those contracts that are in the initial stages of construction. For construction
contracts whose period between the date of commencement of the transaction and thepoint in time when the performance obligation is expected to be fully satisfied is very
short, an alternative treatment is applied, whereby revenue is not recognized over time,
but is recognized when the performance obligation is fully satisfied.
The Company applies the Revenue Recognition Standard, etc. in accordance with thetransitional treatment provided for in the proviso to Paragraph 84 of the Revenue
Recognition Standard. The cumulative impact of retrospectively applying the new
accounting policies to prior periods is adjusted to retained earnings at the beginning of
the current fiscal year, with the new accounting policies applied from the beginningbalance. In addition, applying the method stipulated in proviso (1) to Paragraph 86 of
the Revenue Recognition Standard, contract modifications that occurred prior to thebeginning of the current fiscal year were accounted for based on the terms of the contract
after reflecting all contract modifications, with the cumulative impact adjusted to earned
surplus carried forward at the beginning of the current fiscal year.

101

14

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(a) Accounting Standard for Revenue Recognition (continued)
As a result of this change, compared with the figures before the application of the
Revenue Recognition Standard, etc., in the non-consolidated statements of income forthe current fiscal year, net sales increased by ¥2,156 million ($17,615 thousand), cost of
sales increased by ¥1,811 million ($14,796 thousand), operating loss decreased by ¥345
million ($2,818 thousand), and loss before income taxes decreased by ¥566 million($4,624 thousand).
The cumulative impact of this change has been reflected on net assets at the beginningof the current fiscal year. As a result, the beginning balance of earned surplus carriedforward decreased by ¥426 million ($3,480 thousand) in the non-consolidated statementsof changes in net assets.
For the current fiscal year, net assets per share and net loss per share decreased by ¥0.21($0.002) and ¥2.52 ($0.021), respectively.
In accordance with the transitional treatment set forth in Paragraph 89-3 of the Revenue
Recognition Standard, notes on revenue recognition for the previous fiscal year are notpresented.
(b) Accounting Standard for Fair Value Measurement
The Company has applied the “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30 issued on July 4, 2019; hereinafter “Fair Value Measurement
Standard”) and other standards from the beginning of the current fiscal year, and willprospectively apply the new accounting policies stipulated by the Fair Value
Measurement Standard, etc. in accordance with the transitional treatment provided in
Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 issued on
July 4, 2019). This application will have no impact on the non-consolidated financial
statements.

102

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Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022
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, 2022 and2021 were as follows:
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Trade notes payable
Electronically recorded payable
Accounts payable on construction
contracts

¥437
4,120

¥387
3,391

$3,57033,662

8,225

8,321

67,203(b) Pledged Assets
The following assets were pledged at March 31, 2022 and 2021 principally as collateralfor guarantees (such as guarantees for the completion of construction contracts):
As of March 31,
2022
2021
2022
(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$14,175

101

100

825

28
363
¥2,22730
363¥2,228228
2,965$18,195

There were no secured liabilities as of March 31, 2022 and 2021.
The following assets were pledged at March 31, 2022 and 2021 as collateral for businesssecurity deposits:
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Securities

¥139

¥–

$1,135103

16

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022
5.

Notes to Non-Consolidated Balance Sheets (continued)(c) Contingent Liabilities
At March 31, 2022 and 2021, the Company was contingently liable for the following:
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
As guarantor of bank loans to
subsidiaries and other
Advance deposits¥7,142482¥2,605–$58,354
3,938(d) Financial Covenants
For the year ended March 31, 2022
(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.
In addition, the balance of bank borrowings under the loan commitment agreement
is immaterial as of March 31, 2022.
Unused amount on loan commitment agreement as of March 31, 2022 and 2021
were as follows.
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)

104¥20,000–¥20,000¥20,000–¥20,000$163,412–$163,412

17

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) Financial Covenants (continued)(2) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (including five different banks from (1) above) 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¥2,250 million ($18,383 thousand) in long-term debt (including the current
portion) as of March 31, 2022.
(3) 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 ($81,706 thousand) in long-term debt as of March 31,2022.
Unused amount on the committed syndicated loan contract as of March 31, 2022
and 2021 were as follows.

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

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)¥10,000¥10,000$81,706
10,00010,00081,706
¥
–
¥
–
$ –

105

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Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) Financial Covenants (continued)(4) The Company has entered into a committed syndicated loan contract dated on
December 26, 2019 with its ten banks (including six different banks from (3)above) 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 ($81,706 thousand) in long-term debt as of March 31,2022.
Unused amount on the committed syndicated loan contract as of March 31, 2022
and 2021 were as follows.

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

As of March 31,
2021
2022
2022
(Millions of yen)(Thousands of
U.S. dollars)¥10,000¥10,000$81,706
10,00010,00081,706¥–¥–$–(5) 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:
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 addition, the balance of bank borrowings under the committed syndicated loan
contract is ¥15,000 million ($122,559 thousand) in long-term debt as of March 31,
2022.

106

19

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) Financial Covenants (continued)
Unused amount on the committed syndicated loan contract as of March 31, 2022
and 2021 were as follows.
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the contract
Loan balance outstanding
Difference (unused portion)¥15,000
15,000–¥¥15,000
15,000¥–$122,559
122,559$–(6) The Company has entered into a syndicated loan contract dated on September 29,
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 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¥2,200 million ($17,975 thousand) in long-term debt (including the current
portion) as of March 31, 2022.
(7) 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:
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 ($81,706 thousand) in long-term debt as of March 31, 2022.

107

20

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) Financial Covenants (continued)(8) The Company has entered into a loan commitment agreement dated on May 25,
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:
Total consolidated net assets at the end of the second quarter of the fiscal year
beginning March 31, 2021 shall be equal to or exceed 75% of total consolidated
net assets as of March 31, 2021.
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 loan commitment agreement
is immaterial as of March 31, 2022.
Unused amount on loan commitment agreement as of March 31, 2022 and 2021
were as follows.

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

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)¥30,000¥–$245,118–––¥30,000¥–$245,118(9) The Company has entered into a loan commitment agreement dated on June 25,
2021 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 the second quarter of the fiscal year
beginning March 31, 2021 shall be equal to or exceed 75% of total consolidated
net assets as of March 31, 2021.
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 loan commitment agreement
is immaterial as of March 31, 2022.

108

21

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) Financial Covenants (continued)
Unused amount on loan commitment agreement as of March 31, 2022 and 2021
were as follows.

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

As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)¥20,000¥–$163,412–––¥–$163,412¥20,000(10) The Company has entered into a syndicated loan contract dated on March 28. 2022with 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,
2022 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2021 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 ($81,706 thousand) in long-term debt as of March 31, 2022.
(11) The Company has entered into a committed syndicated loan contract dated on
March 28, 2022 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 each fiscal year beginning March 31,
2022 shall be equal to or exceed 75% of total consolidated net assets as of March
31, 2021 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 immaterial as of March 31, 2022.

109

22

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) Financial Covenants (continued)
Unused amount on the committed syndicated loan contract as of March 31, 2022
and 2021 were as follows.
As of March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥7,000–¥7,000¥––¥–$57,194–$ 57,194

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
(Millions of yen)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥20,000–¥20,000¥20,000–¥20,000

110

23

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(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¥5,500 million in long-term debt (including the current portion) as of March 31,
2021.
(3) The Company has entered into a syndicated loan contract dated on September 28,
2016 with its seven banks (including five different banks from (2) above) 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 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.

111

24

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) 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, 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
(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 six different banks from (4)above) 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, 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
(Millions of yen)
¥10,000¥10,000
10,00010,000
¥
–
¥
–

112

25

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) Financial Covenants (continued)(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 the second quarter of the fiscal year
beginning March 31, 2020 shall be equal to or exceed 75% of total consolidated
net assets as of 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
(Millions of yen)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥30,000–¥30,000¥––¥–(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 the second quarter of the fiscal year
beginning March 31, 2020 shall be equal to or exceed 75% of total consolidated
net assets as of 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.

113

26

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(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
(Millions of yen)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥50,000–¥50,000¥––¥–(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:
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 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
(Millions of yen)
Maximum limit under the agreement
Loan balance outstanding
Difference (unused portion)¥15,000
15,000
¥
–

¥–
–
¥–

(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.
114

27

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) Financial Covenants (continued)
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 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:
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 in long-term debt as of March 31, 2021.

115

28

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022
6.

Notes to Non-Consolidated Statements of Income(a) Transactions with Subsidiaries and Affiliates
Significant transactions with subsidiaries and affiliates other than those individuallypresented on the accompanying non-consolidated statements of income for the years
ended March 31, 2022 and 2021 were as follows:
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Dividend income
Royalty income
Allowance for doubtful accounts¥1,399252
214¥1,598247–$11,430
2,058
1,748

(b) Gain on Sales of Property and Equipment
The significant components of gain on sales of property and equipment for the years
ended March 31, 2022 and 2021 were as follows:
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
VehiclesTools, furniture and fixtures

¥0
0

¥–
–

$0
0

(c) 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, 2022 and 2021 were as follows:
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Loss on disposal
Loss on sales
Total

¥130
0
¥130

¥39
0
¥39

$1,0620$1,062116

29

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022(d) Selling, General and Administrative Expenses
The significant components of selling, general and administrative expenses for the years
ended March 31, 2022 and 2021 were as follows:
Years ended March 31,
2022
2021
2022
(Millions of yen)(Thousands of
U.S. dollars)
Salaries and wages
Depreciation expenses
Other
Total

¥ 8,365918
8,338¥17,622¥ 8,269568
7,550¥16,387$ 68,347
7,500
68,126$143,982

7. Securities
Stocks of subsidiaries and affiliates at March 31, 2022 and 2021 were as follows:
As of March 31, 2022
Carrying
Fair
Unrealized Carrying
Fair
Unrealized
value
value
gain
value
value
gain
(Millions of yen)(Thousands of U.S. dollars)
Stocks ofa subsidiary¥717¥5,360¥4,642$5,858$43,794$37,927

Note: Stocks of subsidiaries and affiliates with no market value that were excluded fromthe above were as follows:
As of March 31,
2022
2022
Carrying value(Millions of yen) (Thousands of
U.S. dollars)

Stocks of subsidiaries
Stocks of affiliates¥14,94229$122,085
236

As of March 31, 2021
Carrying
Fair
Unrealized
value
value
gain
(Millions of yen)
Stocks of a subsidiary¥717¥5,230¥4,513

Note: Stocks of subsidiaries of ¥7,534 million and stocks of affiliates of ¥29 million forwhich it is extremely difficult to determine market values were excluded from theabove.

117

30

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022
8.

Income Taxes

The significant components of the Company’s deferred tax assets and liabilities at March 31,
2022 and 2021 were as follows:
As of March 31,
2022
2021
2022
(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¥3,946
1,985
1,064
240

¥4,011
1,983
1,006
–

$32,241
16,218
8,693
1,960

896

825

7,320

122

187

996

6,500
1,017
15,774(6,123)
9,651

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

53,108
8,309
128,883(50,028)78,854

–
(17)
–
(17)
¥9,634

(184)
(15)
(0)
(200)
¥2,825

–
(138)
–
(138)
$78,715

The following table summarizes the significant differences between the statutory tax rates
and the effective tax rates for the years ended March 31, 2022 and 2021
Years ended March 31,
2022
2021
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%

Note: For the year ended March 31, 2022, the note is omitted due to the posting of loss
before income taxes.
118

31

Sumitomo Mitsui Construction Co.,Ltd.

Notes to Non-Consolidated Financial Statements
March 31, 2022
9.

Business Combination and Divestiture

The note is omitted since the Consolidated Financial Statement (Notes to Consolidated
Financial Statements, Business Combination and Divestiture) provides the same information.
10. Revenue Recognition
The note on useful information in understanding revenue from contracts with customers isomitted since the Consolidated Financial Statement (Notes to Consolidated Financial
Statements, Revenue Recognition) provides the same information.
11. Subsequent Event
Issuance of Bonds
In accordance with the limit and outline for the issuance of unsecured straight bonds approvedat the Board of Directors’ meeting held on September 30, 2020, the Company issued its 2ndseries of unsecured straight bonds (with inter-bond pari passu clause) (Sustainability Bonds)
after finalizing the terms and conditions of the issuance on June 8, 2022. Payment wascompleted on June 14, 2022.
The outline of the bond is as follows:(a) Name of bond2nd series unsecured straight bonds of Sumitomo Mitsui Construction Co., Ltd.
(with inter-bond pari passu clause) (Sustainability Bonds)(b) Total amount of issue

5.0 billion yen ($40,853 thousand)(c) Amount of each bond

100 million yen ($817 thousand)(d) Interest rate

0.520% per annum(e) Collateral
These bonds are not secured or guaranteed, and no assets are specifically reserved forthese bonds.
(f)Maturity dateJune 14, 2027(g) Use of funds to be raised(1) Appropriated for refinancing of construction of land and water solar power
generation facilities(2) Appropriated for funds for construction of employee dormitories that fall under the
ZEH-M (Net Zero Energy House-Mansion) category(3) Appropriated for funds and refinancing for the expansion of equipment and facilities
related to the promotion of automation of plant prefabrication (precast concrete)
119

32

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123

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-3)No.200, Specified Constructor,
granted by the Minister of Land,
Infrastructure, Transport and Tourism

License:(16)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

124

The Master Trust Bank of Japan, Ltd.
CITY INDEX ELEVENTH CO., 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

10F Frabelle Corporate Plaza,129 Tordesillas
Corner Bautista Salcedo Village Makati City,
Philippines.
TEL:63-2-840-4913
FAX:63-2-840-4912

Yangon (Myanmar)

SMCC Overseas Singapore Pte. Ltd.

#16-06, Crystal office Tower, Kyun Taw Street,
Kamyut 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

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

Phnom Penh (Cambodia)(Phnom Penh Center) South Building, 8 floor,
Room No. 871, Street Sothearos (3), Phom 1,
Sangkat Tonle Bassac, Khan Chamkarmon,
Phnom Penh, 120101, Cambodia
TEL:855-78-777-072

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

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

SUBSIDIARY COMPANIES INOVERSEAS
SMCC(Thailand)Co.,Ltd.
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
Singapore
2 Bukit Merah Central #14-01 & 02, Singapore
159835
TEL:65-6933-8000
FAX:65-6933-8001

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.
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

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

125

SMCC Malaysia Sdn. Bhd.
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

SMCC Taiwan Co., Ltd.
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

Antara Koh Private Limited
27 Pioneer Road, Singapore 628500
TEL: 65-6862-2822
FAX: 65-6861-1335