ｌYear ended December 31, 2019

FY 2019 Non-consolidated Financial Results

February 7, 2020

(All financial information herein has been prepared in accordance with accounting principles generally accepted in Japan.
This document is an English translation from the original Japanese-language document. This translation is not subject toauditing standards in the U.S.)
Listed company name:
Code number:

Original Engineering
Consultants Co., Ltd.
4642

Stock listing:Tokyo Stock Exchange, Second Section(URL https://www.oec-solution.co.jp)

Representative: Title President & Representative Director Name:
Contact person: Title Director & General Manager of
Name:
Financial Affairs Division
Planned Annual General Meeting of Shareholders: March 26, 2020
Planned filing of a financial report: March 26, 2020
Date of scheduled payment of dividends: March 27, 2020
Earnings supplementary explanatory documents: None
Earnings presentation: None

Nobuhiko Suga
Kaoru Kira

Tel: (03) 6757-8800(Amounts less than ¥1 million are truncated)
1. NON-CONSOLIDATED FINANCIAL RESULTS FOR FY 2019 (January 1, 2019 to December 31, 2019)(1) Non-consolidated Operating Results(Percentages represent year-on-year changes)
Net sales
Operating income
Ordinary income
ProfitMillion yen%
Million yen% Million yen% Million yen%
FY 2019 ended
6,338
1.3
800 -20.2816-12.8
481 -18.9
December 31, 2019
FY 2018 ended
6,257
0.0
1,003
-0.9
936
-8.0
593 -39.0
December 31, 2018
Profitper share-basic
Yen

ProfitOrdinary income Operating margin
per share-diluted Return on equity
to total assets
Yen
%
%
%

FY 2019 ended
81.56
81.34
8.3
December 31, 2019
FY 2018 ended
88.26
87.83
10.2
December 31, 2018
(Reference) Gain (loss) on investment by equity method: FY 2019: ¥- million

11.1

12.6

12.8

16.0

FY 2018: ¥- million(2) Non-consolidated Financial Position
Total assets

Net assets

Shareholders’ equity
ratio%

Net assets per share

Million yen
Million yen
Yen
As of December 31,
7,007
5,506
78.6
950.462019
As of December 31,
7,675
6,098
79.5
900.82
2018(Reference) Shareholders’ equity: As of December 31, 2019: ¥5,506 million As of December 31, 2018: ¥6,098 million(3) Non-consolidated Cash Flows
Cash flows fromoperating activities
FY 2019 ended
December 31, 2019
FY 2018 ended
December 31, 2018

Cash flows frominvesting activities

Cash flows fromfinancing activities

Million yen

Million yen

Million yen

Cash and cash
equivalents at theend of the period
Million yen

426

-17

-1,118

3,027

1,459

-440

-81

3,736

2. DIVIDENDS(Record date)
FY 2018 ended
December 31, 2018
FY 2019 ended
December 31, 2019
FY 2020 ending
December 31, 2020
(Forecast)

Dividends per share
End of first Interim End of third Fiscal
quarterquarter
year-end
Yen
Yen
Yen
Yen

Full
year
Yen

Total dividend Payout
Ratio ofamountdividends
toratio(Full year)
net assets
Million yen
%
%

-

0.00

-

14.00

14.00

95

15.9

1.6

-

0.00

-

30.00

30.00

176

36.8

3.2

-

0.00

-

32.00

32.00

39.5

3. FORECAST OF NON-CONSOLIDATED RESULTS FOR FY 2020 (January 1, 2020 to December 31, 2020)(Percentages represent changes from the same period of the previous fiscal year)
Net sales
Operating income
Ordinary income
ProfitProfit per share
Million yen% Million yen% Million yen% Million yen%
Yen
Full year
6,400 1.0
800 -0.1800-2.0
470 -2.4
81.11*NOTES(1) Changes in accounting policies, changes in accounting estimates and retrospective restatements:(i) Changes in accounting policies in accordance with revision of accounting standards: None(ii) Changes in accounting policies other than (i) above: None(iii) Changes in accounting estimates: None(iv) Retrospective restatements: None
(2) Number of outstanding shares (Common stock)(i) Number of shares outstanding at end of period, including treasury stock
As of December 31, 2019: 7,796,800 shares
As of December 31, 2018: 7,796,800 shares(ii) Number of shares of treasury stock at end of period
As of December 31, 2019: 2,003,465 shares
As of December 31, 2018: 1,026,965 shares(iii) Average number of shares outstanding for each period
As of December 31, 2019: 5,902,478 shares
As of December 31, 2018: 6,721,703 shares* The summary of financial results is not subject to audit by certified public accountants or audit corporations.
Note regarding forecasts and forward-looking statements
The business results forecasts presented are based on information available to the Company at the present time andare subject to potential risks and uncertainty. Accordingly, actual results may differ significantly from any
expressed future performance herein due to various factors.
For matters relating to results forecasts, please refer to “1. SUMMARY OF BUSINESS RESULTS,” “(4) Future
Outlook” on page 5 of the Attachment.

Index of the Attachment
1.

SUMMARY OF BUSINESS RESULTS ................................................................................................................2(1) Summary of Business Results for Current Period ..............................................................................................2(2) Summary of Financial Position for Current Period ............................................................................................3(3) Summary of Cash Flows for Current Period ......................................................................................................4(4) Future Outlook ...................................................................................................................................................52.

BASIC POLICY FOR THE SELECTION OF ACCOUNTING STANDARDS ................................................5

3.

FINANCIAL STATEMENTS AND PRIMARY NOTES(1) Non-consolidated Balance Sheets ......................................................................................................................6(2) Non-consolidated Statements of Operations ......................................................................................................8(3) Non-consolidated Statements of Changes in Net Assets ....................................................................................9(4) Non-consolidated Statements of Cash Flows .....................................................................................................11(5) Notes regarding the Non-consolidated Financial Statements .............................................................................13(Matters Affecting the Assumption of a Going Concern) ...................................................................................13(Changes in Presentation) ...................................................................................................................................13(Notes regarding the Statements of Changes in Net Assets) ..............................................................................13(Segment Information) .......................................................................................................................................13(Profit and Loss under Equity Method) ..............................................................................................................13(Per Share Information) ......................................................................................................................................13(Significant Subsequent Events).........................................................................................................................14

1

1. SUMMARY OF BUSINESS RESULTS(1) Summary of Business Results for Current Period
According to the Bank of Japan’s Tankan survey in December 2019, the diffusion index (DI) for major
manufacturing firms dropped five percentage points from the September 2019 survey to zero percentage points, andthat for major non-manufacturing firms, it dropped one percentage points from the previous survey to 20 percentage
points. The DI for small and medium-sized manufacturers dropped five percentage points from the previous survey
to minus nine percentage points, and that of non-manufacturers dropped three percentage point to seven percentage
points. The forecast DI for the next three months is unchanged for major manufacturers and is down two percentage
points for major non-manufacturers, which indicates that many companies are concerned about uncertainties inoverseas economies and are cautious about the business outlook.
Under the above-mentioned economic conditions, the overall budget for public works projects of the Ministryof Land, Infrastructure, Transport and Tourism (MLIT), with which the Company has a close business relationship,
for fiscal 2020 was approved by the Cabinet meeting. The totals earmarked for “disaster prevention and safetysubsidies” and “general social infrastructure development subsidies” are almost at the same level as in fiscal 2019,or at 96% of the previous year’s level. Separately from this, a total of ¥29,659 million, an increase of 90% from theprevious fiscal year, is earmarked for the budget for expenses related to sewerage works, including individual
subsidies for flood control measures. In addition, a total of ¥340 billion is appropriated for the sewerage works as
emergency response measures based on the “Three-year emergency response plan for disaster prevention, disastermitigation, and building national resilience” for critical infrastructure over the three-year period from the second
supplementary budget for fiscal 2018 to fiscal 2020.
According to a provisional calculation of the Cabinet Office, Japan’s water and sewerage infrastructure assets
amount to approximately ¥130 trillion, which indicates that the water and sewerage infrastructure stock is thesecond largest infrastructure stock in the country by sector after the road infrastructure stock. Among these, most of
the population has access to water supplies, with the total length of water pipes reaching around 660,000 kilometersacross Japan. However, the national average annual rate of renewing water pipes is as low as 0.75%, which meansthat it will take almost 130 years to renew all of these pipes. The statutory useful life of water pipes is 40 years, butthey are expected to deteriorate further due to the slow progress in renewing the water pipes infrastructure, much ofwhich was built during the high-growth period. Therefore, renewing aged water pipes has become an important
issue for stable supplies of safe water.
Meanwhile, 91.4% of the population of Japan has access to sewage treatment facilities (as of the end of
FY2018), but only 79.3% has access to sewers, which means nearly 11 million people still live without access to
sewage treatment facilities; promoting sewage services needs to be accelerated. While the need to construct new
facilities is on the decrease, a great number of water and sewage facilities that were rapidly built during the highgrowth period are reaching the end of their useful lives every year. Maintenance and renewal of these infrastructure
assets, which are indispensable for ensuring a safe, secure, and culturally strong living environment, are thus indemand. In addition, needs are growing for flood control measures to protect human lives and assets from localized
torrential rainfall and large typhoons, which have occurred frequently in recent years, anti-seismic measures such as
quake-resistant toilet facilities, and measures for reinforcing water and sewerage systems to make them tsunami
resistant.
The Company, in this operating environment, worked aggressively to win orders mainly in the water supply
field, particularly for services related to asset management in line with the Water Supply Division of the Ministry of
Health, Labour and Welfare’s new water supply vision that focuses on the key words of “safety, strength,
sustainability, collaboration and challenge.” In the sewerage field, the Company pursues orders in line with theseven major themes set by the Sewerage and Wastewater Management Department of MLIT: Strengthening
earthquake recovery and reconstruction support and implementing national measures for safety and peace of mind;
early reduction of areas lacking sewerage infrastructure; promoting water environmental management; improving
facilities management and operations; strengthening sewerage management; promoting measures to achieve a lowcarbon, recycling-oriented society; and, promoting international water businesses through globalization and privatepublic initiatives. We also make efforts to obtain orders for services related to support by the Ministry of Internal
Affairs and Communications for introducing local public enterprise-based accounting into small-scale water supply
2

and sewerage operations, in accordance with the Local Public Enterprise Act, as well as operations including
sewerage operations management strategy formulation operations. In overseas markets, the Company has beenworking to win orders by tapping into projects in emerging nations through public-private partnerships.
With regard to its internal work environment, the Company has worked to distribute profits to employees andincrease revenue by boosting productivity and reducing costs through the following measures: providing 90 percent
of its employees with smartphones and notebook PCs and creating an office environment in which a free address
system and a wireless LAN system are available to introduce a telework environment, allowing employees to work
anywhere not only in the office but also outside the office; facilitating prompt information-sharing between
different levels, on which the Company has worked to raise awareness internally; speedily responding todepartmental issues by checking management benchmarks by department when necessary; conducting appropriate
budget management, process control, progress management, and outsourcing management for orders received for
projects; upgrading in-house engineers’ skills; securing and fostering young employees who will lead the next
generation; reducing overtime to comply with the revised Labor Standards Act; promoting health management;utilizing internal systems, such as a staggered working hours system and promoting the use of paid leave, that allow
each employee to work flexibly according to his/her own circumstances.
As a result, the non-consolidated orders received during the fiscal year under review amounted to ¥6,144
million, an increase of 14.2% compared with the previous fiscal year. The main causes for the increase in orders
received are considered to be the increase in the number of orders received as a result of placement of orders forwhich we have been working on project formation since the previous fiscal year, receipt of order for a large-scale
turnkey design and construction project, and improvement of production systems due to hiring of work-readyengineers. On the other hand, net sales amounted to ¥6,338 million, a 1.3% increase from the previous fiscal year.
Operating income amounted to ¥800 million, a decrease of 20.2% compared with the previous fiscal year, andordinary income decreased 12.8% to ¥816 million. Profit amounted to ¥481 million, a decrease of 18.9% comparedwith the previous fiscal year. Extraordinary loss was recorded due mainly to the occurrence of the cost of correction
as a result of lack of confirmation on the part of both ordering party and party receiving order.
Results by operating division were as follows.
[Engineering Consultant Department]
The Engineering Consultant Department received orders totaling ¥5,693 million during the fiscal year underreview, an increase of 12.6% compared with the previous fiscal year. Sales by the department decreased 0.4%, to¥5,846 million.
[Information Processing Department]
In the Information Processing Department, orders received increased 38.6% compared with the previous fiscal
year, to ¥451 million. Sales by the department increased 27.4%, to ¥491 million.

(2) Summary of Financial Position for Current Period(Current assets)
Current assets at the end of the fiscal year under review amounted to ¥5,568 million (down 10.1% from the endof the previous fiscal year). The main factors contributing to this change included a decrease in cash and deposits
due to purchase of treasury stock and an increase in accounts receivable-completed operation.
(Noncurrent assets)
Noncurrent assets at the end of the fiscal year under review stood at ¥1,438 million (down 2.8% from the end of
the previous fiscal year). The main factors contributing to this change included a decrease in investments and otherassets as a result of redemption of investment securities.
(Current liabilities)
Current liabilities at the end of the fiscal year under review stood at ¥1,311 million (down 0.8% from the end of
the previous fiscal year). The main factors contributing to this change included a decrease in advances received on
uncompleted services due to decline of payments received for operations and increases in income taxes payable andaccrued consumption taxes.
(Noncurrent liabilities)
Noncurrent liabilities at the end of the fiscal year under review stood at ¥189 million (down 25.7% from the3

end of the previous fiscal year). The main factors contributing to this change included a decrease in provision for
retirement benefits.
(Net assets)
Net assets at the end of the fiscal year under review amounted to ¥5,506 million (down 9.7% from the end of
the previous fiscal year). The main factors contributing to this change included an increase in treasury stock due topurchase through a tender offer, despite an increase in retained earnings due to the recording of profit.
(3) Summary of Cash Flows for Current Period
Cash and cash equivalents stood at ¥3,027 million (down 19.0% from the end of the previous fiscal year) at theend of the fiscal year under review. Significant factors contributing to this change included the posting of profit
before income taxes, and purchase of treasury stock.
The main factors contributing to changes in cash flows during the fiscal year under review were as follows:(Cash flows from operating activities)
Net cash provided in operating activities amounted to ¥426 million (decreased 70.8% compared with theprevious fiscal year).
The main factor contributing to this change was the posting of profit before income taxes and a decrease inadvances received on uncompleted services.
(Cash flows from investing activities)
Net cash used in investing activities totaled ¥17 million (decreased 96.0% compared with the previous fiscal
year).
This was mainly due to the purchase and redemption of investment securities, and the purchase of noncurrent
assets.
(Cash flows from financing activities)
Net cash used in financing activities amounted to ¥1,118 million (increased 1,279.0% compared with theprevious fiscal year).
Significant factors contributing to this change included the purchase of treasury stock.
FY 2017

FY 2018

FY 2019

Shareholders’ equity ratio (%)

79.7

79.5

78.6

Shareholders’ equity ratio on a market value basis (%)

66.1

80.2

81.2

Interest-bearing debt to cash flow ratio (years)

0.16

0.04

0.11

224.54758.75128.56

Interest coverage ratio (times)

Ratio formula:
Shareholders’ equity ratio: Shareholders’ equity / total assets
Shareholders’ equity ratio on a market value basis: Market capitalization / total assets
Interest-bearing debts to cash flow ratio (years): Interest-bearing liabilities / cash flows from operating activities
Interest coverage ratio: Cash flows from operating activities / interest payments
Notes:
1. Market capitalization is calculated by multiplying the share price at end of period by the number of shares
outstanding at end of period (excluding treasury stock).
2. Cash flows in these indicators refer to net cash from operating activities as stated in the Non-consolidated
Statements of Cash Flows. Interest-bearing liabilities are all liabilities presented on the Non-consolidated
Balance Sheets that are subject to interest expenses. Interest payments are those stated in the Non-consolidated
Statements of Cash Flows.

4(4) Future Outlook
The national budget for disaster prevention and safety subsidies allocated to operating expenses of local
governments and social infrastructure improvement subsidies is expected to remain at the same level. In light ofsuch external environmental business factors affecting orders, the Company’s target project budget is likely to beguaranteed. However, the majority of orders for local governments’ public procurement are placed through pricecompetitive auction. Accordingly, the Company expects to continue to face various issues to address to achieve its
management goals, such as competition among firms, fluctuations of bidding prices, and an increase in sales cost
due to an increase in rebuilding and renewal operations that require complex and advanced experiences andexpertise, and an increase in personnel expenses to respond to recruiting activities that are becoming increasingly
difficult year by year and to prevent turnover, secure, and foster talented human resources.
The Company, meanwhile, has achieved a year-on-year increase in productivity and corporate image. It hasdone this through company-wide awareness reforms aimed at achieving the objectives of having every employee
work with a sense of management and establishing an organization with an open culture, which have been
consistently pursued under the present management structure, and aimed at providing industry-leading pleasantworking conditions and a good in-house system. The Company is facing issues such as passing on techniques ofaged engineers with extensive experience and securing and fostering young employees who will lead the next
generation. And our activities for hiring new graduates and mid-career workers are delivering results at eachbusiness location through measures, such as continuous improvement of earnings, increase in operating margin andshare price, building a solid financial base, firmly establishing a corporate image of pleasant working environment,
and promoting corporate coverage in the general media.
The greatest management resource of the Company is human capital, and we will further strive to secure, fosterand retain talented human resources and work to solve management issues. With a growing number of local
governments expected to experience a decrease in staffing levels, it will be difficult to continue to manage waterand sewerage operations only by local government staff. Accordingly, the Company will aim to obtain sustainable
orders and increase revenue by supporting the sustainable provision of water and sewerage services, which are vitalfor the lives of people, by offering the consultation services it has cultivated to date according to the individual
circumstances of local governments.
Water supply and sewerage budgets in Japan are expected to continue placing emphasis on, for example,
building water supply and sewerage facilities in areas without them; measures related to earthquakes, floods, anddisaster prevention; programs to address an aging infrastructure; support services to reinforce operating
foundations; and enhancing the vitality of local communities. Hence, the Company will aggressively carry out sales
programs to meet such needs and strengthen its production system. At the same time, the Company will, in
consideration of profitability, continuously engage in the overseas water-related business, mainly in emerging Asian
countries, where economic development is remarkable and demand for water supply and sewerage infrastructure is
expected to grow.
In the fiscal year ending December 31, 2020, the Company forecasts orders to increase 0.9%, to ¥6,200 million,
and net sales to increase 1.0%, to ¥6,400 million. Operating income is forecast to decrease 0.1%, to ¥800 million,
and ordinary income to decrease 2.0%, to ¥800 million. Profit is forecast to decrease 2.4%, to ¥470 million.

2. BASIC POLICY FOR THE SELECTION OF ACCOUNTING STANDARDSThe Company’s stakeholders are mostly domestic shareholders, creditors and business partners, and hence theCompany does not have much necessity to procure funds from overseas. Considering these, the Company applies
the Japanese accounting standards.

5

3. FINANCIAL STATEMENTS AND PRIMARY NOTES(1) Non-consolidated Balance Sheets
FY 2018(as of December 31, 2018)
Amount(thousand yen)

FY 2019(as of December 31, 2019)
Amount(thousand yen)

4,452,537
1,685,356
1,320
32,616
216
55,586-31,663
6,195,970

3,743,180
1,750,203
4,723
36,021
216
60,417-26,240
5,568,523

194,788
027,681150,015
51,138423,624

209,838034,015150,015
40,634
434,503

3,321
116,788
4,685
3,711
128,506

3,321
115,479
3,243
3,711
125,755

531,807
50,00010,94864,529147,133
2,132
94,37328,769-2,200927,495

473,282
50,0009,612
66,039159,928
3,061
89,83728,769-2,200878,330

Total noncurrent assets

1,479,626

1,438,589

Total assets

7,675,596

7,007,113

Category
AssetsCurrent assets
Cash and deposits
Accounts receivable—completed operation
Costs on uncompleted services
Prepaid expenses
Advances receivable from group affiliates
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings, net
Structures, net
Tools, furniture and fixtures, net
Land
Lease assets, net
Total property, plant and equipment
Intangible assets
Leasehold right
SoftwareLease assets
Telephone subscription right
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable from employees
Insurance funds
Guarantee deposits
Long-term prepaid expenses
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets

6Category

FY 2018(as of December 31, 2018)
Amount(thousand yen)

FY 2019(as of December 31, 2019)
Amount(thousand yen)

192,854
22,95488,352
151,718
131,450
39,799535,610
102,940
38,912
12,593
5,107
1,322,294

170,388
22,20556,562
194,098
230,950
122,498
344,578
107,948
40,302
9,044
12,707
1,311,285

34,204
24,695
138,302
8,400
48,836
254,439
1,576,733

22,92815,226
94,782
6,720
49,467
189,125
1,500,410

1,093,000

1,093,000

2,171,308
703,995
2,875,303

2,171,308
704,775
2,876,083

2,000,000
726,952
2,726,952-623,560
6,071,695

2,500,000
612,909
3,112,909-1,610,179
5,471,813

26,73334,51026,733433

34,510378

6,098,862

5,506,702

7,675,596

7,007,113

Liabilities
Current liabilities
Accounts payable—operating
Lease obligations
Accounts payable—otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received on uncompleted services
Deposits received
Provision for bonuses
Provision for loss on order received
Provision for share benefit
Asset retirement obligations
Total current liabilities
Noncurrent liabilities
Lease obligations
Provision for share benefit
Provision for retirement benefits
Long-term accounts payable—other
Asset retirement obligations
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surpluses
Retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Total retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Subscription rights to shares
Total net assets
Total liabilities and net assets

7

(2) Non-consolidated Statements of Operations
FY 2018(from January 1, 2018 to
December 31, 2018)
Amount(thousand yen)

FY 2019(from January 1, 2019 to
December 31, 2019)
Amount(thousand yen)Contracts completed

6,257,188

6,338,536

Cost of completed work

3,953,174

4,194,843

Gross profit

2,304,013

2,143,693

Selling, general and administrative expenses

1,300,381

1,343,204

Operating income

1,003,632

800,489278

326Interest on securities

4,119

5,500

Dividend income

7,190

7,958

Insurance income

1,000

-

Commission fee

2,430

2,430

Gain on valuation of investment securities-

17,236

Gain on redemption of investment securities-

13,096

Foreign exchange gains

-

645

Other

3,681

5,842

Total non-operating income

18,69953,036

Interest expenses

1,923

3,316

Expenses for securities transactions

24,33733,010Loss on sales of investment securities

20,886-

Loss on valuation of investment securities

35,735-

Foreign exchange losses

2,692

-

524

783

86,10037,109936,231

816,416

1,038

4,626

-

31,8001,038

36,426

Profit before income taxes

935,192

779,989

Income taxes―current

189,722

297,393

Income taxes-deferred

152,188

1,171

Total income taxes

341,910

298,565

Profit593,281

481,424

Category

Non-operating income
Interest income

Non-operating expenses

Other
Total non-operating expenses
Ordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Loss on construction compensation
Total extraordinary loss8

(3) Non-consolidated Statements of Changes in Net Assets
FY 2018 (from January 1, 2018 to December 31, 2018)(Thousand yen)
Shareholders’ equity
Capital surplus

Balance at the beginningof current period
Changes of items during
the period
Provision of generalreserve
Dividends of surplus
ProfitPurchase of treasury
stock
Disposal of treasurystock
Net changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end ofcurrent period

Capital
stock

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurpluses

1,093,000

2,171,308

715,3072,886,615-11,312-11,312Retained earnings
Other retained earnings
Retained Total retained
Generalearnings
earnings
reservebrought
forward1,100,000

1,114,757

2,214,757

900,000-900,000--81,085-81,085593,281593,281---11,312-11,312900,000-387,804

512,195

1,093,000

2,171,308

703,995

2,875,303

2,000,000

726,952

2,726,952

Valuation and translation
adjustments
Subscription
Valuation
Total
Total valuation rights to sharesdifference onshareholders’and translation
available-forequity
adjustments
sale securities

Shareholders’ equity
Treasurystock
Balance at the beginningof current period
Changes of items during
the period
Provision of generalreserve
Dividends of surplus
ProfitPurchase of treasury
stock
Disposal of treasurystock
Net changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end ofcurrent period-669,783

5,524,589

58,50958,5091,287

Total net
assets5,584,386---81,085-81,085593,281593,281

-29

-29

-29

46,252

34,940-853-31,776-31,776

34,086-31,776

46,222547,105-31,776-31,776-853

514,475-623,560

6,071,695

26,733

26,733433

6,098,862

9

FY 2019 (from January 1, 2019 to December 31, 2019)(Thousand yen)
Shareholders’ equity
Capital surplus

Balance at the beginningof current period
Changes of items during
the period
Provision of generalreserve
Dividends of surplus
ProfitPurchase of treasury
stock
Disposal of treasurystock
Net changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end ofcurrent period

Capital
stock

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurpluses

1,093,000

2,171,308

703,995

2,875,303

780

780

Retained earnings
Other retained earnings
Retained Total retained
Generalearnings
earnings
reservebrought
forward2,000,000

726,952

2,726,952

500,000-500,000--95,467-95,467

481,424

481,424

-

-

780

780

500,000-114,043

385,956

1,093,000

2,171,308

704,775

2,876,083

2,500,000

612,909

3,112,909

Valuation and translation
adjustments
Subscription
Valuation
Total
Total valuation rights to sharesdifference onshareholders’and translation
available-forequity
adjustments
sale securities

Shareholders’ equity
Treasurystock
Balance at the beginningof current period
Changes of items during
the period
Provision of generalreserve
Dividends of surplus
ProfitPurchase of treasury
stock
Disposal of treasurystock
Net changes of items
other than shareholders’equityTotal changes of items
during the period
Balance at the end ofcurrent period-623,560

6,071,695

26,733

26,733433

Total net
assets

6,098,862---95,467-95,467

481,424

481,424
1,042,800-1,042,800-1,042,800

56,181

56,961

-55
7,776

7,776

56,906
7,776-986,618-599,881

7,776

7,776

-55

-592,160-1,610,179

5,471,813

34,51034,510378

5,506,702

10

(4) Non-consolidated Statements of Cash FlowsFY 2018(from January 1, 2018 to
December 31, 2018)
Amount(thousand yen)

FY 2019(from January 1, 2019 to
December 31, 2019)
Amount(thousand yen)

Profit before income taxes

935,192

779,989

Depreciation and amortization

84,24588,272

Increase /decrease in allowance for doubtful accounts

12,663-5,423

Interest and dividends income-11,588-13,786

Interest expenses

1,923

3,316

Loss on retirement of property, plant and equipment

1,038

4,626

-

31,800Loss (gain) on sales of investment securities

20,886-

Loss (gain) on valuation of investment securities

35,735-17,236--13,096

Increase/decrease in notes and accounts
receivable―trade421,408-64,847

Increase/decrease in costs on uncompleted services-1,320-3,402

Increase/decrease in notes and accounts payable―trade-70,893-22,465

Increase/decrease in advances received on uncompleted
services239,888-191,032

Increase/decrease in provision for bonuses

2,792

1,390

Increase/decrease in provision for loss on order received-4,721-3,549

-556

3,238

Increase/decrease in provision for retirement benefits-58,749-43,520

Other

27,69381,757

Subtotal

1,635,638

616,031

Interest and dividends income received

11,58913,788Interest expenses paid

-1,923-3,316

Proceeds from insurance income

1,000

-

Income taxes paid

-186,952-200,155

Net cash provided by (used in) operating activities

1,459,351

426,348

Category
Cash flows from operating activities

Loss on construction compensation

Loss (gain) on redemption of investment securities

Increase /decrease in provision for share benefit11

FY 2018(from January 1, 2018 to
December 31, 2018)
Amount(thousand yen)

FY 2019(from January 1, 2019 to
December 31, 2019)
Amount(thousand yen)

Purchase of property, plant and equipment-47,170-61,809

Purchase of intangible assets-54,057-41,624

Purchase of investment securities-501,040-100,333

Proceeds from sales of investment securities

180,113727-

200,000-13,347-15,508

Proceeds from collection of lease and guarantee
deposits

1,078

1,076

Other

-5,730-79-440,154-17,551-26,011-24,420-29-1,042,800

Proceeds from disposal of treasury stock-

42,800

Proceeds from exercise of share options

26,0401,680

Cash dividends paid

-81,085-95,467

Net cash used in financing activities-81,087-1,118,208

Effect of exchange rate change on cash and cash
equivalents

-380

-6

Net increase/decrease in cash and cash equivalents

937,729-709,417

Balance of cash and cash equivalents at beginning of theyear

2,798,825

3,736,554

Balance of cash and cash equivalents at end of the year

3,736,554

3,027,137

Category
Cash flows from investing activities

Proceeds from redemption of investment securities
Payments for lease and guarantee deposits

Net cash provided by (used in) investing activities
Cash flows from financing activities
Repayments of lease obligations
Purchase of treasury stock12(5) Notes regarding the Non-consolidated Financial Statements(Matters Affecting the Assumption of a Going Concern)
No applicable items.
(Changes in Presentation)(Application of Partial Amendments to the Accounting Standard for Tax Effect Accounting)
The Company has applied the “Partial Amendments to the Accounting Standard for Tax Effect Accounting”(ASBJ Statement No. 28, February 16, 2018) from the beginning of the fiscal year under review. Accordingly,
deferred tax assets are presented under investments and other assets and deferred tax liabilities are presented undernoncurrent liabilities.
As a result, ¥31,141,000 of deferred tax assets under current assets are included in ¥94,373,000 of deferred
tax assets under investments and other assets.
(Notes regarding the Statements of Changes in Net Assets)
The Company, based on the resolution of the Board of Directors meeting held on November 5, 2018,
purchased 1,000,000 shares of treasury stock for ¥1,000,000,000. In addition, following the additional contribution
to the Employee Stock Ownership Plan (J-ESOP), the Company, based on the resolution of the Board of Directors
meeting held on August 7, 2019, disposed of 50,000 shares of treasury stock through third-party allotment to theTrust & Custody Services Bank, Ltd. as the allottee as of August 23, 2019. Accordingly, capital surplus andtreasury stock increased by ¥2,286,000, respectively. As a result, capital stock amounted to ¥2,876,083,000 andtreasury stock amounted to ¥1,610,179,000 at the end of the fiscal year under review.
(Segment Information)[Segment Information]
Previous fiscal year (from January 1 to December 31, 2018) and fiscal year under review (from January 1 to
December 31, 2019)
Since the Company’s business operations comprising engineering consulting and related services are
conducted within a single business segment, segment information is omitted.
(Profit and Loss under Equity Method)
All group affiliates owned by the Company are deemed insignificant group companies by earnings andsurplus standards, and therefore their figures are not shown.
(Per Share Information)
FY 2018(from January 1, 2018 to
December 31, 2018)¥900.82¥88.26¥87.83

Net assets per share
Profit per share
Diluted profit per share

FY 2019(from January 1, 2019 to
December 31, 2019)¥950.46¥81.56¥81.34

Note: 1. The basis for calculating profit per share and diluted profit per share is as follows:
FY 2018
FY 2019(from January 1, 2018 to(from January 1, 2019 to
December 31, 2018)
December 31, 2019)
Profit per share
Profit for the period (thousand yen)Amount not attributed to common shareholders(thousand yen)
Profit attributable to owners of parent attributed tocommon stock (thousand yen)
Average number of common stock outstanding for theperiod (shares)

593,281

481,424--593,281

481,424

6,721,703

5,902,478--

32,95016,16032,95016,160

Diluted profit per share
Profit adjustment (thousand yen)
Increase in number of common stock (shares)(of which the amount of subscription rights toshares)(shares)
13

Overview of dilutive shares not included in thecalculation of diluted profit per share because of theiranti-dilutive effect--Note: 2. The basis for calculation of net assets per share is as follows:
FY 2018(from January 1, 2018 to
December 31, 2018)
Net assets for the period (thousand yen)
6,098,862

FY 2019(from January 1, 2019 to
December 31, 2019)
5,506,702

Deduction amount from total net assets (thousand yen)433
378
(of which the amount of subscription rights to
(433)
(378)
shares)(thousand yen)
Net assets attributed to common stock (thousand yen)
6,098,428
5,506,323
Closing number of common stock used in the calculation
6,769,835
5,793,335
of net assets per share (shares)
The Company’s shares held in trust that are recognized as treasury stock within shareholders’ equity areincluded in the treasury stock deducted from the calculation of the average number of shares outstanding during
the period, used for calculating profit per share (67,005 shares as of December 31, 2018; 66,350 shares as ofDecember 31, 2019).
The Company’s shares held in trust that are recognized as treasury stock within shareholders’ equity areincluded in the treasury stock deducted from the number of shares outstanding at end of the period, used for
calculating “net assets per share” (68,100 shares as of December 31, 2018; 79,800 shares as of December 31, 2019).
(Significant Subsequent Events)
No applicable items.

14