Annual Report 2015
For the year ended March 31, 2015

Supportingthefuturetoday
Supporting the future today

Profile

Kandenko Co., Ltd., aims for the mutual prosperity of its
shareholders, customers, and the communities where it
works, and finds its purpose in this pursuit. We conductbusiness in a wide range of fields and have grown into oneof the largest general infrastructure companies in Japan.
Owing to the support of its stakeholders, Kandenko
celebrated its 70th anniversary in September 2014.
In fields such as building infrastructure,telecommunications infrastructure, and electric power
infrastructure, Kandenko uses its independently developed
technologies, expertise, and work methods to provide endto-end engineering services ranging from design andexecution to maintenance and renovation of electrical,
telecommunications, and other kinds of work. We are also
active in the renewable energy field, where the execution
expertise we have accumulated in the fields of solar andwind power serves us well.
Kandenko will continue to innovate on the technology
front, nurture its human resources, and build a sounderfinancial structure while making a long-lasting contribution
to society as a partner in social infrastructure.

Your Partner in
Social Infrastructure

Here we would like to introduce the TV commercial titled “Diorama
Town,” which Kandenko started broadcasting in August 2014.
The commercial shows everyday life returning to a diorama
town through the work of Kandenko employees, who restore thepower after a thunderstorm causes a blackout. This expresses

CONTENTS

Kandenko’s role in the construction and maintenance of02

The Kandenko Group03

Consolidated Financial Highlights

04

Message from the Management

06

New Management Vision /New Medium-Term Management Plan

08

Business Review by Divisioninfrastructure throughout Japan, and the Company’s sense of
responsibility about undertaking recovery work after
natural disasters.

Electrical Engineering, Environmental Facilities
and Systems, and Renovation Work 08
Information & Communication Work 09
Power Distribution Lines Engineering Work 10
Electric Power & Civil Engineering Work 11
Power Generation 12

13

Topics19

Research & Development

20

Corporate Governance

22

Environmental Initiatives

23

Financial Section
Consolidated 10-Year Financial Summary 24
Financial Position 25
Business and Other Risks 26
Consolidated Balance Sheet 27
Consolidated Statement of Income 29
Consolidated Statement ofComprehensive Income 30
Consolidated Statement of
Changes in Equity 31
Consolidated Statement of Cash Flows 34
Notes to Consolidated Financial Statements 35
Independent Auditors’ Report 62

63

Company Profile
History 63
Stock Information 64
Board of Directors and Audit &Supervisory Board Members / Network 65

Annual Report 2015

1

The Kandenko GroupThe Kandenko Group comprises Kandenko Co., Ltd. and 21 consolidated subsidiaries. We engage in five businesses: facility
installation, electrical equipment sales, real estate, leasing, and power generation. The positions of these businesses within theGroup and the business segment to which they belong are explained below.

Facility Installation Business

Other Businesses

Kandenko operates a facility installation business and subcontracts

Kandenko is engaged in the real estate and power generationsome of this work to Kawasaki Setsubi Kogyo Co., Ltd.; Kankobusinesses; KANKO SYOJI Co., Ltd., in the electrical equipment sales

Facilities Co., Ltd.; Kanko Power Techno Co., Ltd.; Kanagawa

business; Kanko Fudousan Kanri Co., Ltd., in the real estate business;

K-Techno Co., Ltd.; Chiba K-Techno Co., Ltd.; Saitama K-Techno Co.,K Lease Co., Ltd., in the leasing business; and Choshi Wind

Ltd.; Ibaraki K-Techno Co., Ltd.; Tochigi K-Techno Co., Ltd.; Gunma

Development Co., Ltd., and Kama Solar Power Co., Ltd. in the power

K-Techno Co., Ltd.; Yamanashi K-Techno Co., Ltd.; Shizuoka

generation business. Kandenko purchases some of the materials it

K-Techno Co., Ltd.; NETSAVE Co., Ltd.; and HANDENKO

requires for installation work from KANKO SYOJI, rents land and

CORPORATION. Worksite security is outsourced to Tokyo Kouji Keibibuildings from Kanko Fudousan Kanri, and leases vehicles and otherCo., Ltd., and design and estimation work are given to Bay Techno

items from K Lease. Both Kandenko and Choshi Wind Development

Co., Ltd. Kandenko and Transmission Line Construction Co., Ltd.,sell electricity to TEPCO.

receive orders from Tokyo Electric Power Company, Incorporated

The businesses mentioned above are arranged in a schematic(TEPCO) and its affiliates, for the installation of electrical facilities.

diagram below showing the Kandenko Group’s structure.

Kandenko Group Structure(As of March 31, 2015)

Clients
Tokyo Electric Power Company, Incorporated (and its affiliates)

Sales of
Installation electrical
work equipment

Other clientsRealestaterentalLeasing

Electricity
sales

Kandenko Group
Installation work
Worksite safety & security
Design estimation

Facility installation business and other businesses

Facility installation business・Kawasaki Setsubi Kogyo Co., Ltd. ・Kanko Facilities Co., Ltd.
・Kanko Power Techno Co., Ltd. ・Kanagawa K-Techno Co., Ltd.
・Chiba K-Techno Co., Ltd.
・Saitama K-Techno Co., Ltd.
・Ibaraki K-Techno Co., Ltd.
・Tochigi K-Techno Co., Ltd.
・Gunma K-Techno Co., Ltd.
・Yamanashi K-Techno Co., Ltd.
・Shizuoka K-Techno Co., Ltd.
・NETSAVE Co., Ltd.
・HANDENKO CORPORATION
・Tokyo Kouji Keibi Co., Ltd.
・Bay Techno Co., Ltd.
・Transmission Line Construction Co., Ltd.

2

Leasing

Kandenko

Sales of electricalequipment
Real estate rental
Leasing

Real estate rental
Sales of electricalequipment

Other businesses
Sales of electrical equipment Real estate
・KANKO SYOJI CO., LTD. ・Kanko Fudousan
Kanri Co., Ltd.
Power generation
Leasing
・Choshi Wind・K Lease Co., Ltd.
Development Co., Ltd.
・Kama Solar Power
Co., Ltd.

Consolidated Financial Highlights

Kandenko Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2014 and 2015
Millions of yen

2014

2015

Reference:
2015(Kandenko, nonconsolidated)¥ 437,930¥ 436,682¥ 389,193

Operating income

8,284

9,388

6,824

Ordinary income

9,089

10,336

7,781

Net income

4,226

4,615

3,806

Comprehensive income

7,327

11,984–

Total assets

359,933

366,177

322,992

Total net assets

189,692

193,345

172,653

Equity ratio (%)

51.45

51.44

53.45%Net assets per share (yen)906.29922.05845.12

Net income per share (yen)

20.69

22.59

18.63

Cash dividends per share (yen)

12.00

14.00

–

Number of employees (persons)

8,821

8,839

6,604

Operating income(Millions of yen)

(Millions of yen)

2011

2012

2013

2014

2015

0

2011

2012

2013

2014

2015

0

1,876

3,000

4,615

6,000
3,952

9,388

5,000

8,284

200,000

7,364

10,0008,034

400,000

0(Millions of yen)
9,000

10,735436,682

437,930

447,741

441,786

15,000462,482

600,000

Net income

5,866

Net sales

4,226

Net sales

2011

2012

2013

2014

2015

Annual Report 20153

Message from the Management

Manabu Yamaguchi
Chairman and Director

Fiscal 2014 Business Environment

decreased from the previous fiscal year. Nevertheless, the entire
company’s drive to improve productivity and reduce work costs andIn fiscal 2014, ended March 31, 2015, the Japanese economy wasadministrative and indirect expenses led to strong profit growth

characterized by sluggish consumer spending due to the consumption

compared to fiscal 2013.

tax rate hike at the beginning of the term. However, stock prices roseon favorable corporate earnings while the employment environment
improved, showing that a modest economic recovery was underway.

OutlookWith the approach of the Tokyo Olympic and Paralympic Games in

For these reasons, investment in private construction was firm,

2020, we expect to see a surge in construction demand, especially that

unlike that in electric power facilities. As part of its rationalization plan,

related to infrastructure and large-scale redevelopment projects in theTokyo Electric Power Company (TEPCO) cut back greatly on capitalgreater Tokyo area. On the other hand, amid TEPCO’s restrictions on

investment for electric power facilities, and thus Kandenko continued tocapital investment, the government plans power system reforms such as

face a severe business environment.

electric power liberalization and separation of the power generation andIn these circumstances, Kandenko promoted further efficiency ofits business operations. To expand the geographic reach and flexibility

4

Hiroshi Mizue
President and Directortransmission businesses. The industry is thus on the brink of a major
turning point.

of its marketing and construction systems and simplify our businessWe have drafted a management vision called “Kandenko, a 100-

processes, we undertook a sweeping management reorganization,

Year Company Supporting Society,” which aims to guide the Kandenko

eliminated the system of branch offices in each prefecture, introduced aGroup to new achievements and set out our direction. At the same

headquarters for each region, put the Electricity Transmission Business

time, we decided on a medium-term management plan for the next

Office directly under the Head Office’s jurisdiction, and consolidated

three years, which calls on Kandenko to implement the following

offices within the business.

management policies.

Due to the decline in TEPCO-related work and a two-monthFirst, we will accelerate the structural reforms launched in 2014.

shutdown in operations, both net sales and new orders received

These call for reorganization of related companies and improvement of

We will accelerate structural reform andpush ahead with earnings expansion.
productivity. We will keep close track of earnings and expenditures by

Fiscal 2014 business results

each branch office as we advance into a more profitable future.

Consolidated results (Billions of yen)

Next, Kandenko will construct a new business model based on theexpertise it has accumulated over many years as a general infrastructurecompany. For example, we plan to develop our power generation
business using in-house technology and offer high-value-added
services that match the needs of a stock-based society.
Since the Great East Japan Earthquake, a cumulative total of

Net sales

436.6 (Down 0.3% YoY)

Operating income

9.3 (Up 13.3% YoY)

Ordinary income

10.3 (Up 13.7% YoY)

Net income

4.6 (Up 9.2% YoY)

more than 410,000 employees of the Kandenko Group have taken
part in recovery and reconstruction work in Fukushima Prefecture. To

Non-consolidated results

give this work even greater momentum, we established a Fukushima

New orders received

408.9 (Down 5.5% YoY)

Net sales

389.1 (Down 0.5% YoY)

Headquarters in July 2015 and help all of the onsite work divisions in
the Group, including the Nuclear Power Division, to demonstrate theiroverall strength. In this way, Kandenko will continue making a long-term
contribution to Fukushima’s recovery.
As we move forward, each Kandenko Group employee will engage
in sincere, safe, and quality conduct, the basis of fair and appropriate

Operating income

6.8 (Up 26.2% YoY)

Ordinary income

7.7 (Up 22.6% YoY)

Net income

3.8 (Up 30.7% YoY)

business operation. Concurrently, we will establish the type of resilient
corporate structure on which sustained growth depends, and by raising
Kandenko’s profitability, we will boost its corporate value.

Basic Policy on Sharing Profits: Dividends
for Fiscal 2014 and 2015
Our basic policy is to continuously pay stable dividends twice
annually, an interim and a fiscal year-end dividend. We also strive toreturn profits to shareholders through other offerings, includingcommemorative dividends.
Dividends for fiscal 2014 consisted of an interim dividend of ¥8
per share, which included a commemorative 70th anniversary dividend

Fiscal 2015 business results (forecast)
Consolidated results (Billions of yen)

Net sales

466.0 (Up 6.7% YoY)

Operating income

10.1 (Up 7.6% YoY)

Ordinary income

10.6 (Up 2.5% YoY)）

Net income

6.1 (Up 32.2% YoY)

Non-consolidated resultsof ¥2, and a fiscal year-end dividend of ¥6 per share, for an annual

New orders received

440.0 (Up 7.6% YoY)

dividend of ¥14 per share.

Net sales

416.0 (Up 6.9% YoY)

To implement our positive stand on returning profits to shareholders
in fiscal 2015, we will add a special dividend based on earnings andother factors. We plan an interim dividend of ¥6 per share and a fiscal
year-end dividend of ¥8 per share, which will include a special dividendof ¥2, for an annual dividend of ¥14 per share.

Operating income

8.0 (Up 17.2% YoY)

Ordinary income

8.6 (Up 10.5% YoY)

Net income

5.3 (Up 39.2% YoY)

Annual Report 2015

5

New Management Vision / New Medium-Term Management Plan

A 100-Year Company Supporting Society

Ⅰ

Trust based onwell-establishedcompliance, safety, andquality

A Company Trusted bySociety and Its
Customers

Contributing toFukushima’s recovery bystrengthening our systems
for stabilizing anddecommissioning the
Fukushima Daiichi Nuclear
Power Plant

We aim to be trusted by society and ourcustomers for three things that arepreconditions for good management:compliance, safety, and quality.

Ⅱ
A Total Solution
Provider for Facilities

A deeply felt social
mission to ensure thesmooth operation ofelectric power
infrastructure and ourcustomers’ facilities

Establishment of the Fukushima
Headquarters (July 2015)

Energy savings
BCP (multiplexing, response to
momentary power losses and blackouts)
Electric power cost
Higher functionality

Globalization
Lifespan extension

Respond to the diverse
needs of customers

Emergency response

Our core fields thus far
Engineering

Comprehension and analysis
of customer needs

MaintenanceConstruction
Procurement

Drafting and proposal of
facility plans

MaintenanceOperation

In response to the diverse needs ofTotal solutions throughout the life cycle

society and our customers, we aim to
be a total solution provider,

Building facilities

comprehensively offering all types ofCommunications

services for facilities.

Electric power

Roads

Gas
Water

Start of the New Medium-Term
Management Plan
Along with our Management Vision, we haveembarked on a new Medium-Term Management
Plan (fiscal 2015–2017), which comprises thepractical details of how to attain our Vision. As
we remain mindful of our keywords (“vigor, trust,and a new leap forward—Kandenko 2017”), we
will put a high priority on implementing thefollowing policies over the next three years.

6

Toward total network services

Railways

Important Policies in Our Medium-Term Management Plan (Fiscal 2015–2017)●Thoroughgoing compliance, improvement of safety

and quality● Structural reform, profit expansion> Reinforcement of marketing/construction system andhigher efficiency in Group management> Productivity improvements, deeper cost-cutting initiatives● Construction of a new business model, expansionof business fields> Response to a stock-based society> New business fields arising from electric power system

reforms> Using in-house technology in the social infrastructure field> Renewable energy power generation business, energy

management service● Fostering employees and technology that willsustain the Company in the future● Infusing the Company with vigor and livelinessIn September 2014, Kandenko marked the 70th anniversary of its foundation. We are committed to maintaining a stableelectricity supply for decades into the future, and to maintaining and improving our customers’ facilities. To express thiscommitment, we drafted a new Management Vision titled “Kandenko, a 100-Year Company Supporting Society.”

Ⅲ

Power line

● Construction, maintenance and operation

Communication cable
Underground line
Power-related peripheral businesses

Subcontracting business

Into Power-Related
Subcontracting Work,
Mindful of Retail Power
Liberalization and
Globalization

Solar power generation
Electricity storage facilities

Construction and safeguarding of
power plants and power substations

EMS-based information
integration andenergy management● Construction and operation of power plants● Securing power source for retail use

Power plants(thermal and nuclear)

Undergroundingof power lines

Cogeneration
systems

Smart community

Power substations

We are moving into power-related

Renewable energy power plants(solar, wind, low-head hydro, biomass)

peripheral businesses, such as high-● Electric power sales outside designated area
● High-voltage power receiving services

voltage power receiving services and the

Office buildings,
apartment complexes

construction and operation of smart

Medical, educational,
and cultural facilities

communities.

Ⅳ

Traffic systems

Small-scalewind power

Construction and operationof telecommunication
systems

Construction and operationof power distribution
networks

Civil engineering work

Electrical engineering work,
environmental and plantfacility work

Factories

Society, our customers

Fostering People andTechnology to Raise Our
Worksite Strength

Worksite strength (marketing, construction)

Kandenko trains its employees to ensure
their readiness for the future, just as it
develops new technologies andPersonnel development

improves skills, the cornerstones of ourTechnology development

growth. This is a step on the way to
becoming a 100-year company.
Fostering people who answer the needs of society and our customers,
and strengthening our technology

Financial targets for fiscal 2017 (consolidated)

Capital investment plan (by type)Net sales¥500 billion or moreThree-year capital investment¥30 billion

Production facilities¥10 billion

Operating income¥15 billion or morePower generation business¥14 billion

Real estate business¥6 billion

Net income¥10 billion or more

Annual Report 20157

Business results by type of work
New orders received(Millions of yen)

176,606
191,774

181,820
187,387

191,227

217,182
195,170

226,677
174,319
175,707

Business Review by Division

Net sales

300,000

2011

2012

2013

2014

2015

250,000

200,000

Electrical Engineering,
Environmental Facilities
and Systems, andRenovation Work
DescriptionofBusiness

150,000

100,000

50,0000Electrical Engineering Work: Work on electrical facilities and equipment inside all types of buildings
and structures, building interiors, and control equipment
Environmental Facilities and Systems, and Renovation Work: Work on air conditioning andsanitation systems, heat supplying systems, disaster prevention systems
Toranomon Hills (Minato Ward, Tokyo)

In electrical engineering, environmental facilities and systems, and renovation
work, Kandenko faced challenges in securing work execution capabilities to keep
pace with increasing investment in construction, especially in the Tokyo area. We
made workplace and system changes to raise productivity by, for example,
analyzing market information to better plan our receipt of orders. Concurrently,
we assigned our pool of workers more flexibly and strengthened our on-site
support systems. As a result, new orders received totaled ¥217,182 million(down 4.2% year on year), remaining above ¥200,000 million for the second
straight year. Completed work (net sales) rose 2.1% from fiscal 2013 to¥195,170 million.

University of Tokyo Yasuda Auditorium (Bunkyo Ward, Tokyo)

8

Business results by type of work
New orders received

Net sales(Millions of yen)

30,08032,65035,56933,23840,00031,21031,50735,32032,36741,02140,92150,00030,000Information &Communication Work

20,00010,0000

DescriptionofBusiness

2011

2012

2013

2014

2015

Develop proposals for and carry out installation and maintenance of information andtelecommunications systems, lay optical fiber cables for telecommunications providers, install opticaltransmission equipment, carry out building and maintenance of transmission base stations for mobile
communications, carry out building and maintenance of networks for CATV and municipalities, andcarry out maintenance of telecommunications facilities for electric power providers

In information & communication work, telecom providers did not install
smartphone base stations or lay optic fiber cables at the rate they once
did. In addition, cable TV operators restricted or postponed their capital
investment, making the business environment even more severe. As aresult, both new orders received and net sales fell below the amountachieved the previous fiscal year, as shown below.
New orders received: ¥30,080 million (down 15.4% year on year)
Net sales: ¥32,650 million (down 1.8% year on year)

Connecting fiber optic cables

Installing more mobile phone antennas

Annual Report 20159

Business results by type of work

Power Distribution
Lines Engineering Work130,700
128,742

156,945
156,900

100,000

50,0000

DescriptionofBusiness(Millions of yen)

135,650
133,910150,000

Net sales

144,413
143,699

Business Review by Division

163,750
162,556

New orders received
200,000

2011

2012

2013

2014

2015

Construction and maintenance of TEPCO’s electric power facilities

In the field of overhead and underground power distribution lines
engineering work, reduced investment in electricity distribution facilities
and the introduction of a full-fledged competitive bidding system(leading to price cuts for work) made the operating environment harsher
than ever before.
For this reason, we launched a productivity drive entailing an
immediate response to changes in work volume through flexible
deployment of work execution capability over a wide area. We also took
the initiative in fixed cost-cutting by making branch offices directly
responsible for work in their area and combining and eliminating somebranch offices. Nevertheless, both new orders received and net sales
declined from fiscal 2013, as shown below.
New orders received: ¥130,700 million (down 3.6% year on year)
Net sales: ¥128,742 million (down 3.9% year on year)

Connecting underground power distribution cables

Using an elevating work platform to install a new transformer on a power pole10

Business results by type of work

31,00432,62935,07832,681(Millions of yen)

36,44638,34829,51632,35440,00042,36250,000Net sales

30,591

New orders received

30,000Electric Power & Civil
Engineering Work

20,00010,0000

DescriptionofBusiness

2011

2012

2013

2014

2015

Power Generation and Transformation Work: Work on power stations and substations, and wind
power generation
Transmission Lines Work: Work on overhead transmission lines
Civil Engineering Work and Underground Lines Work: Work on underground transmission lines,
and civil engineering work utilizing C.C. Box
Nuclear Power Work: Conduct regular inspections and maintenance of nuclear power plant facilities
and equipment

In the field of power generation and transformation, overhead andunderground power lines, civil engineering, and nuclear and wind power
generation, Kandenko responded to the decline in TEPCO-related workby using its accumulated technology and expertise to bid on jobs suchas the construction of special high-voltage transformer facilities and thelaying of underground gas pipelines for a broader clientele. Nevertheless,our efforts were insufficient to turn the tide, as shown below.
New orders received: ¥31,004 million (down 11.6% year on year)
Net sales: ¥32,629 million (down 0.2% year on year)

Mounting a blade on a wind turbine

Removing a gas circuit breaker from a transformer at a substation

Annual Report 201511

Business Review by Division

Power Generation

Sosa Solar Power Plant (Sosa City, Chiba Prefecture)

In power generation, we completed solar power plants in Sosa City,

two wind farms with an aggregate generating capacity of 29MW. When

Chiba Prefecture, and Sakai Town, Ibaraki Prefecture, and we are now

a solar power plant now under construction in Kama City and Iizuka

selling electricity from those sources. With these two facilities, ourCity, Fukuoka Prefecture, is completed in fiscal 2015, Kandenko’s

renewable energy power plants now total four solar power plants andaggregate generating capacity will rise to 49MW.

Kama Solar Power Plant (Kama City and Iizuka City, Fukuoka Prefecture)

Outline of Power Generation Facilities
1
Name of facility
Location

2
Kaminokawa Solar Power Plant
Kaminokawa Town,
Tochigi Prefecture

Generating
1.75MWcapacity of facility
Start of operation October 2013

4
Name of facility
Location

Name of facility
Location

3
Shinkoga Solar Power Plant
Sakai Town, Ibaraki
Prefecture

Generating
1.5MW
capacity of facility
Start of operation March 2015

5
Shiraoka Solar Power Plant
Shiraoka City, Saitama
Prefecture

Generating
1.5MW
capacity of facility
Start of operation May 2013

Company nameLocation
Generating
capacity of facility
Start of operation

Choshi Wind Development Co., Ltd.
Choshi City, Chiba Prefecture
22.5MW(1.5MW x 15 turbines)
November 2004 (nine turbines)
July 2006 (six turbines)

6

Name of facility

Sosa Solar Power Plant

Name of facility

Location

Sosa City, Chiba Prefecture

Location

Generating
1.5MW
capacity of facility
Start of operation July 2014

Ushikuma Solar Power Plant
Kama City, Fukuoka
Prefecture

Generating
1.5MW
capacity of facility
Start of operation June 2015

7
Company nameKama Solar Power Co., Ltd.
Kama Solar Power Plant I

Kama Solar Power Plant II

Location

Kama City and Iizuka City, Fukuoka Prefecture

Kama City, Fukuoka Prefecture

13.75MW

5.00MW

Start of operation

1
2
5

Name of facility

Generating capacity of facility

124

Total: 18.75MW
June 2015

November 2015

6 7

3

Topics

Nikko Toshogu Museum
The shrines and temples of Nikko constitute one of Japan’s representative World Heritage sites. The most famous shrine is Nikko
Toshogu, where Ieyasu Tokugawa, the first shogun of the Tokugawa Shogunate, is buried. The year 2015, the 400th anniversary of
Ieyasu’s death, will be marked by ceremonies and a festival held in his honor. One of these events is the opening of the remodeled
Nikko Toshogu Museum. The museum was rebuilt for the first time in 50 years, with display rooms to show Japanese “southernbarbarian” armor (an Important Cultural Property) and many valuable historical materials, as well as a theater where the Yomei-mon
Gate (a National Treasure) and other artifacts are introduced.
In rebuilding the museum, Kandenko was responsible for electricity-related equipment, such as high-voltage receiving
equipment, lighting, and a snow-melting system to keep snow from accumulating on the roof. Lighting was a particular challenge
because of the museum’s role as a showplace. We conducted detailed simulations and made adjustments to produce the kindof light that would most faithfully show the beauty of the displayed objects. We ended up using LED lights, which also reduced
power consumption.
Untreated cryptomeria (Japanese cedar) wood grown in Nikko is used in the museum, so we had to take pains to avoid
damaging this valuable material when we installed lights and sensors. Furthermore, we did our work amid a World Heritage site and inrich natural surroundings, so we faced a number of restrictions aimed at protecting historical artifacts and the ecosystem when we
excavated or installed exterior lighting. By tapping into our accumulated technology and skills, we completed the job without a mishap.
Kandenko’s technology helps the Nikko Toshogu Museum to show its valuable historical materials to a multitude of people.

Nikko Toshogu Museum

A display room showing valuable objects on the theme of “Ieyasu Tokugawa and Nikko
Toshogu.” A section of the ceiling made of material cut from a single cryptomeria tree can beseen in this photo.

To mark the museum’s completion, swords designated as a National Treasure were put on
display for the first time in 47 years (a special display until May 2015).

Annual Report 201513

Topics: Introduction of Projects by Kandenko

7 Meiji Co., Ltd. New Plant (Kaizuka City, Osaka Prefecture)

1 Head Office building of Bourbon Corporation

2 Azumino New City Hall (Azumino City, Nagano Prefecture)(Kashiwazaki City, Niigata Prefecture)

8 Sanda New City Hall (Sanda City, Hyogo Prefecture)

4 NISSAY MARUNOUCHI GARDENTOWER(Chiyoda Ward, Tokyo)

1
3 Shinjuku Toho Building (Shinjuku Ward, Tokyo)
9

LED lighting at YAHUOKU! DOME Arena (Fukuoka City,
Fukuoka Prefecture)

2

4

3
5

8

6

7

9

5

14

Shinagawa Season Terrace (Minato Ward,
Tokyo)

6 Chiba Medical Center (Chiba City, Chiba Prefecture)

Annual Report 201515

Topics

Establishment of
the Fukushima Headquarters
In July 2015, Kandenko established its Fukushima Headquarters to better assist Fukushima Prefecture’s post-earthquake recovery andreconstruction, and to continue working on the stabilization and decommissioning of the Fukushima Daiichi Nuclear Power Plant.
A cumulative total of more than 410,000 employees of the Kandenko Group have engaged in recovery and reconstruction work.
As a general infrastructure company, we have deployed the strength of all the onsite work divisions in this effort, and we will keep
contributing to reconstruction as we put down roots in Fukushima.

Laying electric power cables in a frozen soil impermeable wall

Laying optical fiber cable in a freezing plant structure

Construction of a new power source network

Inspection of an emergency-use generator

16

Contribution to the Full Opening of
the Joban Expressway
Kandenko worked on electrical and communications facilities for the Joban Expressway, a major transportation route linking Tokyo
with Sendai, which opened fully in March 2015.
Part of the Joban Expressway section for which Kandenko was responsible passed through a radiation-controlled area. In thisspecial environment, work-related technology and skills took on added importance, as did knowledge on limiting employee exposure
to radiation.
We made use of the expertise and experience gained from past work on expressways and our recovery and reconstruction workon the Fukushima Daiichi Nuclear Power Plant to complete this job without incident.
We will continue to contribute in any way we can to the earliest possible recovery of Fukushima Prefecture and the rest of the
Tohoku region.

Installing a variable-message sign on a roadway

Installing light fixtures in a roadway tunnel

Installing an ETC card-reader gate
at the Namie Interchange

Annual Report 201517

Topics

Work Clothes Redesigned
On celebrating its 70th year, Kandenko introduced new work clothes for its employees in March 2015.
The work clothes we used for the previous 35 years were basically blue. In fact, Kandenko came to be recognized by the color of
its employees’ clothing.
The basic image of the clothing is carried on, but we have tried to express youthfulness, sincerity, and dynamism in the new
design. We also made the clothing more functional by taking the opinions of front-line workers into consideration to improve safety
and practicality.
Although our attire might look slightly different, Kandenko will continue to make a broad contribution to society and aims to betrusted by all.

Employees attend a training session in their redesigned work clothes.

18

Research & Development

Aiming to deal with unmet needs and longstanding issues in the workplace, Kandenko gives a high priority to developing technologythat will help to expand new orders, technology that will contribute to new businesses, and technology that will boost our onsite power
and resilience. In fiscal 2014, we concentrated on developing technologies in areas where our customers’ needs were strongest:
namely, technologies to ensure facility security, conserve energy, maintain and operate large-scale solar power plants in a way that
contributes to efficiency. We also developed work methods that facilitate safety and labor saving and smooth the introduction of robots.
R&D expenses amounted to ¥1,024 million (consolidated) in fiscal 2014, and the main results are detailed below. (R&D
expenses are not broken down by segment.)

Facility Installation Businessbroaden its applications, so that we can win more civil engineeringorders.

Development of Large-Capacity LED Ceiling Light Fixtures for
Warehouses and Factories
When ceiling lights are installed in new warehouses and factories orwhen lighting systems are replaced, LED lights are often the first choice
nowadays, because of their energy-saving and labor-saving qualities.
This type of work is expected to increase. Seeing a need, we filled it bydeveloping high-capacity LED ceiling light fixtures with an improved
substrate for high efficiency andDevelopment of a Bucket Net to Stop Falling Objects

durability, as well as lighter weight. We

When people work on cherry pickers or other elevated buckets, theaim to expand orders for this device,problem of falling objects has typically been countered by cloaking theand have begun proposing it

bucket in a net. However, attaching the net takes time, and its fixed shapeto customers.

limits the bucket’s maneuverability. We sought to solve this problem bydeveloping a net that fulfills the same

Development of a Power Pole-Mounted Box for CATV-Use
Optical Fiber Terminal Devices

purpose but can freely take any shape.

CATV transmission lines have generally been composed of coaxial cables

even in proximity to crowded power

and optical fiber cables up to now, but with increasing transmission speeds

lines. We plan to use this new net toin recent years, it has become necessary to extend optical fibers to theimprove the safety and efficiency of elevated work.

This enables a smooth workflow

home (FTTH). Sometimes, however, physical constraints or the difficulty ofrecovering the cost of cable installation make FTTH work impractical. We
addressed this problem by developing

Other Businesses

FTTH terminals and can be used with

Upgrade of the Mega-Solar Power Plant Measurement andMonitoring System

existing retractable coaxial cables. We

Kandenko added a function to its measurement and monitoring system forwill propose this device to customers

mega-solar power plants that estimates the soundness of electricity output

as we work to expand sales.

and the power plant based on monitoring data. We use the new function toan FTTH instrument box that contains

ensure the stable operation and improve the reliability of our mega-solar

Development of the Small-Bore, Sharply Curved TunnelForming Method

power plant. We plan to market this system to our customers so it that
contributes directly to sales.

In the small-bore tunnel-forming method, if an underground pipe
needed to turn sharply at an intersection with right-angle corners,
a pile had to be driven into the center of the intersection to guidethe pipe. This often caused traffic jams. Faced with this problem,
we developed a method of following the line of a road when boringtunnels around sharp corners. We intend to refine this method andAnnual Report 201519

Corporate GovernanceCorporate Governance
As Kandenko’s operating environment drastically changes, we are working to make management more efficient and transparent
while ensuring the fairness of business execution. We realize that Kandenko’s continued existence as a company with high value toits stakeholders depends on a robust corporate governance system. We are therefore unstinting in our efforts to strengthen
corporate governance.
An Internal Audit Division consisting of 10 people conducts internal

Outline of the Current Corporate Governance System

audits and guidance sessions according to a plan, and reports the results

Kandenko’s Board of Directors is composed of 15 members, including

to the Internal Control Committee and Management Committee.

two outside directors. They hold a scheduled meeting once monthly,

Independent accounting auditors and the Internal Audit Division reportand meet on other occasions when necessary. The Board discusses

their findings to the Audit & Supervisory Board meeting and regularly

and decides on important business matters and oversees the businessdiscuss these matters with the Audit & Supervisory Board members,

conduct of Company directors. The two outside directors are provided

including outside members. Opinions are exchanged whenever necessary

with a designated supporting department that gives briefings on proposals

so that cooperation is ensured. While the Audit & Supervisory Board

before those proposals are tabled at meetings, if necessary. Importantmembers (including outside members), independent accounting auditors,

managerial issues, including those that will be brought up at a Board ofand the Internal Audit Division carry out their audits, they receive regular

Directors meeting, are discussed by a Management Committee that meets

reports on the maintenance and state of internal control from each division

weekly or when necessary. In these ways, we strive for rational corporate

responsible for business execution.

administration. Moreover, we have introduced an executive officer system,

Currently, the Company has two outside directors and three outsidewhich separates managerial oversight from business execution, to

Audit & Supervisory Board members. We appoint outside directors

accelerate the decision-making process and reinforce business execution

and outside Audit & Supervisory Board members to fulfill audit andwhile enhancing the efficiency of the directors’ business execution system.

oversight functions and to enhance transparency, so in accordance with

To foster swift responses to changes in the operating environment andthe Companies Act and other regulations, we look for candidates whose

invigorate management, directors’ terms are limited to one year from theexperience and expertise outside the Company will be useful to Kandenko,

time of appointment.

and who can oversee and audit the directors’ execution of duties from

Kandenko has employed an Audit & Supervisory Board member

an independent and neutral standpoint. Regarding outside Audit &system for some time. Five Audit & Supervisory Board members, includingSupervisory Board members, the Audit & Supervisory Board meeting first

three from outside the Company, conduct audits appropriately based onagrees to the candidates, the Board of Directors approves them, and thenlegal stipulations and Kandenko’s audit policy. The outside members

they are presented to a shareholders’ meeting for a vote.

heighten our system’s independence and neutrality. They attend our Boardof Directors meetings and other important meetings, where they express
their independent and objective opinions. Audit & Supervisory Board
members, including outside members, meet with the Company’s directors

To clarify important points in the Kandenko Group’s business activities

on a regular and irregular basis to ask about the state of the latter’s work.

and encourage deeper entrenchment of compliance, we have enacted the

We provide the Audit & Supervisory Board members with an Auditing

Kandenko Group Charter of Corporate Behavior, and we are promoting its

Office to enable the complete and effective fulfillment of their duties.

establishment and raising the consciousness of all Group employees about

Kandenko has appointed Inoue Audit Corporation as its independent

the Charter. We have set up a compliance consultation point for employees

accounting auditor. The three CPAs who audited Kandenko’s accounts are

and an internal system where legal violations can be reported. We are

Hideo Kayashima, Teruo Hayashi, and Hiroyuki Yoshimatsu, none of whomworking to establish and maintain a corporate culture of fairness

has audited our accounts for over seven consecutive years. Seven otherand soundness.

CPAs and two additional people assist with the account audit.

20

Compliance System

Corporate Governance System

General Meeting of Shareholders
Appointment, dismissal

ReportReportReportDecision-making, oversight

Board of Directors (Directors)
Audit
Oversight

ReportAppointment,
dismissal

Audit & Supervisory
Board member

Audit & Supervisory
Board members
Audit & Supervisory
Board

(

Management Committee)
Appointment,
dismissal

ReportAudit,
reportDecision-making, oversight,
business execution

Internal Control
Committee

President /Director responsible
for business

Safety, Environment &Quality Committee
ReportAudit

Business execution(

Auditing OfficeDirectors,
executive officers

Division managers,
department managers,
branch heads)

Accountant audit

Independentaccounting auditor

Internal
Control Division( Complianceconsultations )Employees

Related companies

Annual Report 201521

Environmental Initiatives

The human race has enjoyed many benefits of industrial and economic development, but these benefits have come at the cost of global
warming, pollution, and ecological destruction. A great burden has thus been placed on the global environment.
Coexistence with the natural environment, the foundation of our existence, is essential for any healthy society. This is also atheme that we must continually keep in mind in our business activities.
At Kandenko, we take the long-term view that it is corporate management’s vital social responsibility to have an environmental
vision leading to the creation of a sustainable society. We will do our part to leave a safe, sound environment for future generations byimplementing initiatives that reduce the burden on the environment.

Basic Policy on the Environment

Structure for Promoting Environmental Preservation

Our Philosophy

With the aim of carefully reviewing its policies and actions for

As a member of a recycling-based society, Kandenko will help to constructenvironmental preservation activities, Kandenko established the Safety,

a rich human environment, and through unceasing innovations, will help toEnvironment & Quality Committee, which is chaired by the president of theconserve the global environment.

Company. At the same time, Groups for Promoting a Safe Environment wereformed at the Construction Headquarters and the Regional Headquarters to

Activity Planpromote environmental activities. A broad range of environmental issues

1. We consider environmental conservation to be an important management

are carefully reviewed by the Committee for Environmental Measures, withissue. We are committed to making continual, incremental improvements

decisions made on what concrete actions should be taken and thento our environmental management system.

carried out.

2. While engaged in activities to save resources, conserve energy, promote
recycling, and prevent pollution, we will reduce the volume of waste
produced by our businesses.

Environmental Education

3. We will follow legal regulations and agreements and enact our own

We believe that in promoting environmental activities such as energy

environmental standards to promote environmental conservation.

conservation, the reduction of CO2 emissions, and proper disposal of

4. We will educate our employees about the environment and raise theirindustrial waste, each employee’s correct understanding and concern forenvironmental awareness.
5. We will build bridges of cooperation to regional society and seek
harmony with society as a whole.

environmental issues is critical, so we carry out environmental education
for people of all ranks.
Kandenko encourages employees to take the Certification Test forEnvironmental Specialists (Eco Test), which is organized by the Tokyo

Environmental Management System

Chamber of Commerce and Industry. People who pass the test have a broad

In accordance with its basic environmental policy, Kandenko has built anconservation initiatives among their colleagues and in their communities,

environmental management system (EMS) that covers the entire Company,

making this qualification valuable to both the individual and the Company.

and has been engaged in making continuous improvements to the systemand carrying forward proactive environmental conservation activities.
To promote environmental conservation activities, Kandenko’s head
office, regional headquarters, branches, and representative offices havecooperated as one in constructing an EMS that complies with ISO 140001
standards. Seeking a fair and just assessment from a third party, we
acquired ISO 140001 certification for our branches in Tokyo, Saitama,
Chiba, and Kanagawa.

22

knowledge of the environment and can voluntarily lead environmental

Financial Section
24

Consolidated 10-Year Financial Summary

30

Consolidated Statement of Comprehensive Income

25

Financial Position

31

Consolidated Statement of Changes in Equity

26

Business and Other Risks

34

Consolidated Statement of Cash Flows

27

Consolidated Balance Sheet

35

Notes to Consolidated Financial Statements

29

Consolidated Statement of Income

62

Independent Auditors’ Report

Annual Report 201523

Consolidated 10-Year Financial Summary(Millions of yen)

For the fiscal years ended March 31
Net sales

2007

2008

2009

2010

2011

2012

2013

2014

2015

¥ 436,979 ¥ 452,645 ¥ 468,608 ¥ 473,804 ¥ 453,623 ¥ 462,482 ¥ 441,786 ¥ 447,741 ¥ 437,930 ¥ 436,682

Operating income

10,741

4,350

6,457

8,858

9,477

10,735

8,034

7,364

8,284

9,388

Ordinary income

11,415

5,109

7,276

9,854

10,484

11,634

9,070

8,301

9,089

10,336

Net income

8,408

4,284

4,865

5,586

5,428

5,866

1,876

3,952

4,226

4,615

–

–

–

–

–

1,772

4,381

8,238

7,327

11,984

Total assets

356,277

371,970

373,674

379,093378,150

353,342359,726

364,008359,933

366,177

Net assets

176,495

181,090

173,171

172,487

177,536

176,808

178,757

184,269

189,692

193,345

Equity ratio (%)

49.54

48.23

45.84

44.57

45.96

48.93

48.54

49.49

51.45

51.44

Net assets per share (%)

861.20876.44837.07826.08850.04845.67854.31

881.41906.29922.05

Net income per share (%)

40.32

20.93

23.78

27.30

26.54

28.69

9.18

19.34

20.69

22.59

Cash dividends per share (%)

12.00

12.00

12.00

12.00

14.00

12.00

12.00

12.00

12.00

14.00

Net cash provided by (used in)operating activities

15,924(13,008)

23,153

16,947

12,236

10,257

13,035

15,401(2,218)2,921

Net cash provided by (used in)investing activities(17,025)(9,579)2,439(9,825)(9,763)(3,799)1,583(12,748)(5,839)2,253

Net cash used inoperating activities(2,976)(1,529)(1,887)(3,519)(4,400)(4,037)(5,423)(2,900)(4,540)(3,743)

Cash and cash equivalents at endof the year

37,952

13,83437,50341,06039,142

41,53950,72550,55038,69740,157

Number of employees (persons)

7,546

7,676

7,893

8,513

8,665

8,769

8,746

8,732

8,821

8,839

Comprehensive income

24

2006

Financial Position
Analysis of Consolidated Financial Position

Cash Flows

Total assets at the end of the fiscal year under review increased ¥6,244

In the fiscal year under review, both operating activities and investing

million over the previous fiscal year to ¥366,177 million.

activities contributed to an increase in consolidated cash and cash
equivalents (henceforth “funds”). Despite the negative contribution madeAssetsby financing activities, consolidated funds increased ¥1,460 million from

Although notes receivable, accounts receivable from completed

the previous fiscal year to ¥40,157 million.

construction contracts and other increased ¥15,210 million, a decrease of¥5,999 million in securities and ¥10,025 million in costs on uncompleted

Cash flows from operating activities

construction contracts resulted in a decrease in current assets of ¥3,575

In the fiscal year under review, cash flows from operating activities added

million compared with the end of the previous fiscal year.

¥2,921 million to funds (up ¥5,140 million from the previous fiscal

Although non-current deferred tax assets decreased ¥1,915 million,year). Positive factors included income before income taxes and minority

such factors as an increase of ¥4,846 million in property, plant andinterests, which added ¥11,141 million to funds, and a decrease in costs

equipment and ¥8,470 million in investment securities resulted in an

on uncompleted construction contracts, which added ¥10,025 million.

increase in total non-current assets of ¥9,820 million compared with the

These positive factors outweighed the negative ones, such as an increase

end of the previous fiscal year.

in trade notes and accounts receivable of ¥14,371 million and a decreasein advances received on uncompleted construction contracts of ¥5,147

Liabilities

million. As a result, funds increased.

Within current liabilities, advances received on uncompleted construction
contracts decreased ¥5,147 million, but there was an increase of ¥5,498

Cash flows from investing activities

million in notes payable, accounts payable for construction contracts andIn the fiscal year under review, funds increased ¥2,253 million due toother and, within long-term liabilities, there was an increase of ¥4,356

investing activities (up ¥8,093 million from the previous fiscal year). The

million in liabilities related to the net defined benefit liability, resulting in an

Company expended ¥7,390 million on purchase of property, plant andincrease in total liabilities of ¥2,591 million compared with the end of theequipment, but it also received ¥5,970 million from a net decrease in timeprevious fiscal year.

deposits and ¥3,000 million in proceeds from sales and redemptionof securities.

Net assets
Retained earnings declined ¥3,308 million, but due to an increase of

Cash flows from financing activities¥5,638 million in the valuation difference on available-for-sale securities,

In the fiscal year under review, financing activities reduced funds by ¥3,743

as well as other factors, consolidated net assets increased ¥3,653 million

million (up ¥796 million from the previous fiscal year). The main factor wasfrom the year-earlier figure.

an expenditure of ¥2,860 million on cash dividends paid.

Annual Report 201525

Business and Other Risks
Described below are factors that could possibly have a significant impact on decisions made by investors. In recognizing that there is
the potential for such risks to occur, the Kandenko Group is undertaking efforts to avoid their occurrence as well as formulating
countermeasures in the event such risks occur.
Moreover, the statements described below regarding the future reflect judgments made by the Kandenko Group based on what
was known up to the end of the fiscal year ended March 31, 2015.

Changes in the Business Environment

Asset Holding Risk

In the event that significant changes occur in the business environment,

As it is necessary to have such assets as real estate and securities forsuch as decreases in construction-related investments or capital investment

business activities, should something happen, such as a significant decline

in electric power facilities and equipment exceeding projected changes,

in the value of the held assets, or a dramatic drop in the profitability of the

it is possible that the actual financial performance or other results of thereal estate for business purposes, it is possible that the actual financial

Company could be affected. Sales to TEPCO account for about 40% of theperformance or other results of the Company could be affected.

Kandenko Group’s sales.

Fluctuations in Materials Costs or Labor Costs

Liability for Employees’ Retirement Benefits
Should the value of pension assets decline, or should there be changes inShould materials costs or labor costs increase significantly, and thethe assumptions, such as the return on investments or discount rate, used

increase cannot be reflected in the contracted fees, it is possible that theto calculate the liability for employees’ retirement benefits, it is possible

actual financial performance or other results of the Company could

that the actual financial performance or other results of the Company could

be affected.

be affected.

Work and Related Risks

Legal Regulations

If work done by Kandenko turns out to be seriously defective or an

The Company is subject to legal regulations, including the construction

accident occurs in the course of work, it is possible that the actual financial

business law, the antimonopoly law, and the industrial safety and healthperformance or other results of the Company could be affected.

law. Should there be any changes, such as revision or repeal of legal
regulations, or enactment of new legal regulations, or if changes are madeCredit Risk of Client Company
In the construction industry, the contract fee for one transaction is verylarge, and in many cases, a condition of concluding the contract is thatpayment of the large sum of the construction fee is to be made when
the handover of the construction project is completed. Should the clientcompany suffer from a credit shortage before the Company can receive
payment of the construction fee, it is possible that the actual financial
performance or other results of the Company could be affected.

26

to criteria for their application or administrative sanctions are handed
down based on the legal regulations, it is possible that the actual financial
performance or other results of the Company could be affected.

Consolidated Balance Sheet
KANDENKO CO., LTD. AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2014 AND 2015
(Millions of Yen)

(Thousands of U.S. Dollars)
2015

2014

2015

AssetsCurrent assets
Cash and deposits*3

Notes receivable, accounts receivable from completed
construction contracts and other*3¥

Securities
Costs on uncompleted construction contracts

44,558*3

114,115*3¥

31,285*3

129,326*3

5,999

11,999*5

44,12821,260*5$

367,733
1,077,716
49,991*5

177,166

Raw materials and supplies

4,272

2,656

22,133

Deferred tax assets

7,547

5,543

46,191

Other

4,162

5,476

45,633

Allowance for doubtful accounts

(398)

(423)

(3,525)217,542

213,967

1,783,058

Total current assets

Non-current assets
Property, plant and equipment
Buildings and structures*3

80,394*3

84,429*3

703,575

Machinery, vehicles, tools, furniture and fixtures*3

46,953*3

45,350*3

377,916*2, *360,098*2, *359,917*2, *3499,308

Land
Leased assets

3,122

2,567

21,391

Construction in progress

2,859

4,909

40,908

Accumulated depreciation(104,556)(103,455)(862,125)

Total property, plant and equipment

88,872

93,718780,983

3,138

2,905

24,208Intangible assets

Investments and other assets
Investment securities

36,854*1, *3

Deferred tax assets
Other

45,324*1, *3

5,861

7,777
7,912

*3

*1, *36,326*3377,700
48,841*3

52,716

Allowance for doubtful accounts(2,164)(1,925)(16,041)

Total investments and other assets

50,37955,586463,216

142,390

152,210

1,268,416

366,177$ 3,051,475

Total non-current assets
Total assets¥

359,933¥

The accompanying notes are an integral part of financial statements.

Annual Report 201527

(Millions of Yen)

(Thousands of U.S. Dollars)
2015

2014

2015

Liabilities
Current liabilities
Notes payable, accounts payable for construction
contracts and other
Short-term loans payable

¥

7,631

*3

¥

80,73386,231
8,728

*3

$
*3

718,591
72,733

Lease obligations

623

516

4,300

Income taxes payable

675

972

8,100

Advances received on uncompleted construction
contracts

17,012

11,864

98,866

Provision for warranties for completed construction

975

965

8,041

Provision for loss on construction contracts

4,472

*5

3,124

*5

*5

26,033

Other

15,337

15,210126,750

Total current liabilities

127,462

127,6141,063,450

Non-current liabilities
Long-term loans payable

2,844

*3

Lease obligations
Deferred tax liabilities for land revaluation

1,755

*3

809

1,046
8,130

*2

*3

7,304

*2

14,6256,741*260,866

Net defined benefit liability

28,79233,149276,241

Other

1,964

2,198

18,316

Total non-current liabilities

42,77845,217

376,808

170,240

172,832

1,440,266

Capital stock

10,264

10,26485,533

Capital surplus

6,425

6,268

52,233Retained earnings

165,656

162,347

1,352,891

(538)

(553)

(4,608)

181,807178,327

1,486,058

Valuation difference on available-for-sale securities

9,763

15,402

128,350

Deferred gains or losses on hedges

(108)

(332)

(2,766)

Total liabilities
Net assets
Shareholders’ equity

Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income

Revaluation reserve for land

(6,414)*2*2(53,450)

Remeasurements of defined benefit plans

660

1,385

11,541

Total accumulated other comprehensive income

3,363

10,04083,666

Minority interests

4,521

4,976

41,466

Total net assets

189,692

193,345

1,611,208

366,177$ 3,051,475

Total liabilities and net assets
The accompanying notes are an integral part of financial statements.

28(6,953)*2¥359,933¥

Consolidated Statement of Income
KANDENKO CO., LTD. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED MARCH 31, 2014 AND 2015
(Millions of Yen)
2015

2014
Net sales of completed construction contracts
Cost of sales of completed construction contracts¥

Gross profit (loss) on completed construction contracts
Selling, general and administrative expenses¥

437,930
405,390*1(Thousands of U.S. Dollars)

24,255436,682405,245*1$ 3,639,016
3,377,041*1

31,43632,540*2

2015

22,047*2

261,966
183,725

*2

8,284

9,388

78,233

Interest income

105

83

691

Dividend income

568

611

5,091

Foreign exchange gains

108

132

1,100

Other

379

347

2,891

Total non-operating income

1,162

1,175

9,791

Interest expenses

192

125

1,041

Commission for syndicate loan

90

–

–

Other

75

101

841

Total non-operating expenses

358

227

1,891

9,089

10,336

86,133–

1,263

10,525

18

–

–

18

1,263

10,525

Operating income (loss)
Non-operating income

Non-operating expenses

Ordinary income (loss)
Extraordinary income
Gain on sales of investment securities
Gain on sales of non-current assets*4

Total extraordinary income
Extraordinary losses
Impairment loss

106

*5

292

*5

2,433

*5

Loss on retirement of non-current assets

416

119

991

Other

47

47

391

Total extraordinary losses

570

458

3,816

Income (loss) before income taxes and minority interests

8,538

11,141

92,841

Income taxes-current

1,239

1,553

12,941

Income taxes-deferred

2,625

4,459

37,158

Total income taxes

3,865

6,013

50,108

Income (loss) before minority interests

4,673

5,128

42,733

Minority interests in income (loss)

446

513

4,275

Net income (loss)

¥

4,226

¥

4,615

$

38,458The accompanying notes are an integral part of financial statements.

Annual Report 201529

Consolidated Statement of Comprehensive Income
KANDENKO CO., LTD. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED MARCH 31, 2014 AND 2015
(Millions of Yen)
2015

2014
Income (loss) before minority interests¥(Thousands of U.S. Dollars)

¥

4,673

2015
5,128

$

42,733

Other comprehensive income			
Valuation difference on available-for-sale securities

2,762

5,674

47,283

Deferred gains or losses on hedges

(108)

(224)

(1,866)

Revaluation reserve for land

–

723

6,025

Remeasurements of defined benefit plans, net of tax

–

681

5,675

Total other comprehensive income
Comprehensive income

2,654

*1

¥

7,327

6,856

*1

¥

11,984

57,133*1$

99,866Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to minority interests
The accompanying notes are an integral part of financial statements.

30

11,477

6,877
¥

449

¥

507

95,641$

4,225

Consolidated Statement of Changes in Equity
KANDENKO CO., LTD. AND CONSOLIDATED SUBSIDIARIESYEAR ENDED MARCH 31, 2014
(Millions of Yen)
Capitalstock
Balance at beginning ofcurrent period¥

Shareholders’ equity
Retained
Treasury
earnings
sharesCapitalsurplus10,264

¥

6,425

¥

Cumulative effects of changes
in accounting policies

163,815¥

Total shareholders’equity

(512)

¥

–

Restated balance

10,264

6,425

179,992–

163,815(512)

179,992

Changes of items during period
Purchase of shares of
consolidated subsidiaries––

Dividends of surplus(2,452)(2,452)

Net income (loss)

4,226

4,226

Reversal of revaluation
reserve for land85

85

Change of scope of
consolidation

(19)

(19)

Purchase of treasury shares
Disposal of treasury shares

(0)

(26)

(26)

0

0

Net changes of items otherthan shareholders’ equity
Total changes of items during period
Balance at end of current period–¥

10,264

Valuation difference
on available-forsale securities
Balance at beginning ofcurrent period

¥

7,005

(0)
¥

6,425

1,840
¥

165,656

(25)
¥

(538)

1,814
¥

181,807

Accumulated other comprehensive income
Deferred gains
Remeasurements Total accumulated
Revaluation
or losses onof defined benefit other comprehensive
reserve for land
hedgesincome
plans
¥

–

¥

(6,867)

¥

–

¥

138

Minority
interests¥

4,138

Total net assets¥

Cumulative effects of changes
in accounting policies

184,269–

Restated balance

7,005

–

(6,867)

–

138

4,138

184,269

Changes of items during period
Purchase of shares of
consolidated subsidiaries–

Dividends of surplus(2,452)

Net income (loss)

4,226

Reversal of revaluation
reserve for land85

Change of scope of
consolidation(19)

Purchase of treasury
shares(26)

Disposal of treasury
shares0

Net changes of items otherthan shareholders' equity

2,758

(108)

(85)

660

3,225

382

3,608

Total changes of items during period

2,758

(108)

(85)

660

3,225

382

5,422

Balance at end of current period

¥

9,763

¥

(108)

¥

(6,953)

¥

660

¥

3,363

¥

4,521

¥

189,692

The accompanying notes are an integral part of financial statements.

Annual Report 201531

YEAR ENDED MARCH 31, 2015
(Millions of Yen)
Capitalstock
Balance at beginning ofcurrent period¥

Shareholders’ equity
Retained
Treasury
earnings
sharesCapitalsurplus10,264¥

6,425¥ 165,656

Cumulative effects of changes
in accounting policies¥

Total shareholders’equity(538)¥ 181,807(5,247)
10,264

Restated balance

6,425(5,247)

160,408(538)

176,559

Changes of items during period
Purchase of shares of
consolidated subsidiaries

(156)

(156)

Dividends of surplus(2,860)(2,860)Net income (loss)

4,615

4,615

Reversal of revaluation
reserve for land

184

184

Change of scope of
consolidation––

Purchase of treasury shares
0

Disposal of treasury shares

(14)

(14)

0

0

Net changes of items otherthan shareholders’ equity–

Total changes of items during period
Balance at end of current period¥

10,264

Valuation difference
on available-forsale securities
Balance at beginning ofcurrent period

¥

9,763

¥

(156)

1,939

6,268

¥ 162,347

¥

(14)

1,768

(553)

¥ 178,327

Accumulated other comprehensive income
Deferred gains
Remeasurements Total accumulated
Revaluation
or losses onof defined benefit other comprehensive
reserve for land
hedgesincome
plans
¥

(108)

¥

(6,953)

¥

660

¥

3,363

Minority
interests¥

4,521

Cumulative effects of changes
in accounting policies

Total net assets¥ 189,692(5,247)

9,763

Restated balance(108)(6,953)

660

3,363

4,521

184,444

Changes of items during period
Purchase of shares of
consolidated subsidiaries(156)

Dividends of surplus(2,860)Net income (loss)

4,615

Reversal of revaluation
reserve for land

184

Change of scope of
consolidation–

Purchase of treasury
shares(14)

Disposal of treasury
shares0

Net changes of items otherthan shareholders’ equity

5,638

(224)

538

724

6,677

455

7,132

Total changes of items during period

5,638

(224)

538

724

6,677

455

8,901

4,976

¥ 193,345

Balance at end of current period¥

15,402

The accompanying notes are an integral part of financial statements.

32

¥

(332)

¥

(6,414)

¥

1,385

¥

10,040¥YEAR ENDED MARCH 31, 2015
(Thousands of U.S. Dollars)
Capitalstock
Balance at beginning ofcurrent period$

Capitalsurplus85,533$53,541

Shareholders’ equity
Retained
Treasury
earnings
sharesTotal shareholders’equity$ 1,380,466$ 1,515,058

Cumulative effects of changes
in accounting policies$(4,483)(43,725)
85,533

Restated balance

53,541(43,725)

1,336,733(4,483)

1,471,325

Changes of items during period
Purchase of shares of
consolidated subsidiaries(1,300)(1,300)

Dividends of surplus(23,833)(23,833)

Net income (loss)

38,45838,458

Reversal of revaluation
reserve for land

1,533

1,533

–

–

Change of scope of
consolidation
Purchase of treasury shares
0

Disposal of treasury shares

(116)

(116)

0

0

Net changes of items otherthan shareholders’ equity–

Total changes of items during period
Balance at end of current period

Balance at beginning ofcurrent period$

85,533$(1,300)16,15852,233$ 1,352,891

$

(116)

14,733(4,608)$ 1,486,058

Valuation difference
on available-forsale securities

Accumulated other comprehensive income
Deferred gains
Remeasurements Total accumulated
Revaluation
or losses onof defined benefit other comprehensive
reserve for land
hedgesincomeplans$$

81,358(900)$(57,941)

$

5,500

$

28,025

Minority
interests$

37,675

Cumulative effects of changes
in accounting policies

Total net assets$ 1,580,766(43,725)

81,358

Restated balance(900)(57,941)

5,500

28,02537,675

1,537,033

Changes of items during period
Purchase of shares of
consolidated subsidiaries(1,300)

Dividends of surplus(23,833)

Net income (loss)

38,458

Reversal of revaluation
reserve for land

1,533

Change of scope of
consolidation–

Purchase of treasury
shares(116)

Disposal of treasury
shares0

Net changes of items otherthan shareholders’ equity

46,983(1,866)

4,483

6,033

55,641

3,791

59,433

Total changes of items during period

46,983(1,866)

4,483

6,033

55,641

3,791

74,17541,466$ 1,611,208

Balance at end of current period$

128,350$(2,766)$(53,450)$

11,541$

83,666$

The accompanying notes are an integral part of financial statements.

Annual Report 201533

Consolidated Statement of Cash Flows
KANDENKO CO., LTD. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED MARCH 31, 2014 AND 2015
(Millions of Yen)
2015

2014
Cash flows from operating activities
Income (loss) before income taxes and minority interests
Depreciation
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for loss on
construction contracts
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Loss (gain) on valuation of investment securities
Loss (gain) on sales of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in costs on uncompleted
construction contracts
Decrease (increase) in other inventories
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in advances received on uncompleted
construction contracts
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Net cash provided by (used in) operating activities
Cash flows from investing activities
Net decrease (increase) in time deposits
Purchase of securities
Proceeds from sales and redemption of securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales and redemption of investment securities
Payments of loans receivableCollection of loans receivable
Other, net¥

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments of lease obligations
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting
from change of scope of consolidation
Cash and cash equivalents at end of period
The accompanying notes are an integral part of financial statements.

34

*1

¥

(Thousands of U.S. Dollars)

¥

8,538
4,607
106
(2,291)

2015
11,141
3,939
292
(213)

$

92,841
32,8252,433(1,775)(848)(1,347)(11,225)(1,076)
(674)
192
14
–
(12,297)(2,524)
(695)
125
11
(1,263)(14,371)(21,033)(5,791)
1,041
91(10,525)(119,758)

6,664

10,02583,541

483
2,107

1,615
3,230

13,45826,916(5,179)(5,147)(42,891)

(237)
111
675
(192)
(2,812)(2,218)(2,114)
2,702
696
(125)
(352)
2,921

(17,616)
22,5165,800(1,041)(2,933)24,341

3,420(3,000)2,000(6,963)214(1,934)
1,000
(1)
32
(607)

5,970
(2,000)3,000(7,390)17(1,978)
2,369
–
1,371
894

49,750(16,666)
25,000(61,583)
141(16,483)
19,741–
11,4257,450(5,839)2,253

18,775

(180)
200
(474)
(1,568)(2,452)(64)(4,540)58(12,539)
50,550

290
–
(281)
(668)
(2,860)(222)(3,743)28
1,460
38,6972,416–(2,341)(5,566)(23,833)(1,850)(31,191)
233
12,166
322,475

686––

38,697*1¥

40,157*1$334,641

Notes to Consolidated Financial Statements
KANDENKO CO., LTD. AND CONSOLIDATED SUBSIDIARIESYEARS ENDED MARCH 31, 2014 AND 2015

BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
Kandenko Co., Ltd. (the “Company”) and its consolidated subsidiaries (thetranslated from yen amounts into U.S. dollar amounts at the rate of ¥120

“Companies”) maintain their accounting records and prepare their financial=U.S.$1.00, the exchange rate prevailing on March 31, 2015.

statements in accordance with accounting principles generally accepted

As permitted by the Financial Instruments and Exchange Act ofin Japan, which are different in certain respects as to the application andJapan, amounts of less than one million yen have been omitted. As a result,disclosure requirements of International Financial Reporting Standards.

the totals shown in the accompanying consolidated financial statements

The accompanying financial statements have been compiled from the(both in yen and in dollars) do not necessarily agree with the sum of theconsolidated financial statements prepared by the Company as required byindividual amounts.

the Financial Instruments and Exchange Act of Japan.
For the convenience of readers, the accompanying consolidated
financial statements as of and for the year ended March 31, 2015 have been

Please note that the way of presentation has been changed to thetranslation of the consolidated financial statements in the Securities Reportfrom the year ended March 31, 2015.

SIGNIFICANT MATTERS PROVIDING THE BASIS FOR THE PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
1. The scope of consolidation(1) Number of consolidated subsidiaries: 21

statements in terms of net income (amount corresponding to equity
interest) and retained earnings (amount corresponding to equity interest),
and are not material, taken as a whole.

Names of the consolidated subsidiaries: Kanko Fudousan Kanri Co., Ltd.,
Kanko Power Techno Co., Ltd., KANKO SYOJI CO., LTD., Kanko Facilities
Co., Ltd., Bay Techno Co., Ltd., Tokyo Kouji Keibi Co., Ltd.,

3. Accounting period of consolidated subsidiaries

K Lease Co., Ltd., Kanagawa K - Techno Co., Ltd., Chiba K - Techno Co.,

The year-end date for consolidated subsidiaries is the same as theLtd., Saitama K - Techno Co., Ltd., Ibaraki K - Techno Co., Ltd., Tochigi

consolidated year-end date.

K - Techno Co., Ltd., Gunma K - Techno Co., Ltd., Yamanashi K - TechnoCo., Ltd., Shizuoka K - Techno Co., Ltd., NETSAVE Co., Ltd., HANDENKOCORPORATION,Kawasaki Setsubi Kogyo Co., Ltd., Transmission Line

4. Significant accounting policies

Construction Co., Ltd., Choshi Wind Development Co., Ltd.,(1) Evaluation methods for significant assets

Kama Solar Power Co., Ltd.

(a) Securities
i. Held-to-maturity securities(2) Name of major non-consolidated subsidiary:
KANDENKO ENGINEERING (MALAYSIA) SDN. BHD.

Amortized cost method (straight-line method)
ii. Available-for-sale securities(Reason for excluding from the scope of consolidation)

Securities with market quotations:

All of the non-consolidated subsidiaries are small in scale and have no

Stated at market value at the end of the year (Unrealized gains ormaterial impact on the consolidated financial statements in terms of total

losses, net of applicable taxes, are comprehensively reported as a

assets, net sales, net income (amount corresponding to equity interest) andcomponent of net assets and the cost of securities sold is computed

retained earnings (amount corresponding to equity interest).

using the moving average method.).
Securities without market quotations:

2. Application of equity method(1) Number of non-consolidated subsidiaries and affiliatesthat are accounted for by the equity method: None

Stated at cost determined by the moving-average method.
(b) Derivatives
Fair value method(c) Inventories
i. Costs on uncompleted construction contracts(2) Name of the major non-consolidated subsidiaries andaffiliates that are not accounted for by the equity method:

Stated at cost determined by the specific cost method.
ii. Raw materials and supplies

KANDENKO ENGINEERING (MALAYSIA) SDN. BHD.

Stated at cost determined by the moving-average method (Balance(Reason for excluding from the scope of the equity method)

sheet amounts are determined by writing down the carrying amountNon-consolidated subsidiaries and affiliates that are not accounted for bybased on declining profitability.)

the equity method have immaterial impact on the consolidated financial

Annual Report 201535

(2) Depreciation methods of significant depreciable assets(5) Accounting policies for significant revenues and expenses(a) Property, plant and equipment (excluding leased assets)(a) Recognition of revenues and costs of completed construction contracts

Depreciated mainly by the declining-balance method

i. Construction contracts that the outcome of the construction activity is

Useful life and residual value are determined on the same basis as that

deemed certain during the course of the activity at the end of the yearof the method provided in the Corporate Tax Act.

Percentage-of-completion method (cost proportion method shall

Useful lives of certain buildings are deemed as 30 years although their

be applied to estimate the percentage-of-completion of such

useful lives based on the Corporate Tax Act are longer than 30 years.
(b) Intangible assets (excluding leased assets)
Straight-line method

construction contract)ii. Other construction contracts
Completed-contract method

Software for internal use is amortized by the straight-line method overan estimated useful life (5 years).
(c) Leased assets(6) Significant hedge accounting method(a) Hedge accounting method

Leased assets related to finance lease transactions that do not transfer

The Companies use the deferral hedge accounting method. However,ownership are depreciated using the straight-line method based on thethe exceptional accounting is used for interest rate swaps that meetassumption that the useful life equals the lease term, and the residual
value equals zero.

specified matching criteria.
(b) Hedging instruments and hedged items
Hedging instruments: Interest rate swaps(3) Accounting policies for significant allowance and provisions(a) Allowance for doubtful accounts

Hedged items: Loans payable(c) Hedging policy

The allowance for doubtful accounts is provided for to the amountIn accordance with internal approval procedures for derivative

sufficient to cover possible losses on collection. It consists of thetransactions, interest rate fluctuation risks related to the hedged items

estimated uncollectible amount with respect to identified doubtful

are hedged to a certain degree.

receivables and an amount calculated by applying the percentage of(d) Method for evaluating the effectiveness of hedges

actual losses on collection experienced in the past to

The Companies evaluate the effectiveness of their hedging activities

remaining receivables.

by comparing cumulative changes in cash flows on the hedging(b) Provision for warranties for completed construction

instruments with cumulative changes in cash flows on the related

To provide for possible future expenses under warranties for completed

hedged items. However, the evaluation of hedging effectiveness isconstruction contracts, provision for construction contracts completed

omitted for interest rate swaps to which the exceptional accounting

during the year is provided based on future estimated amount.

is applied.

(c) Provision for loss on construction contracts
To provide for future losses on construction orders, provision for(7) Method and period of amortization of goodwill

estimated losses are provided for uncompleted construction contracts

Goodwill is amortized by the straight-line method over the estimated period

at the end of the year that are likely to incur losses and the amount canthat the benefits are expected to be received, not exceeding 20 years.

be reasonably estimated.

(4) Accounting method relating to retirement benefits(8) Cash and cash equivalents in the consolidated
statements of cash flows(a) Method of attributing expected retirement benefit to periods

Cash and cash equivalents include cash in hand, readily available deposits

Method of attributing expected retirement benefit to periods is allocatedand short-term investments with maturities of three months or less from theby the straight-line basis (the expected benefit divided by the totalpurchase date whose value is not subject to significant fluctuation risk.

service years would be deemed as arising in each period).
Past service costs are being amortized as incurred by the straight-line(9) Other significant accounting policies for the preparationof consolidated financial statements

method over a certain period (5 years) within the average remaining

Accounting method for consumption taxes:

years of service of the eligible employees.

Consumption and local consumption taxes are accounted for by the tax-(b) Amortization of actuarial gains and losses and past service cost

Actuarial gains and losses are amortized by the straight-line
method over a certain period (5 years) within the average remaining
years of service of the eligible employees commencing with thefollowing periods.

36

exclusion method.

CHANGES IN ACCOUNTING POLICIESApplication of the accounting standard, etc.
for retirement benefits

Application of the accounting standard, etc.
for business combinations

The Company has applied the main clause of the Paragraph 35 of the

The “Accounting Standard for Business Combinations” (ASBJ Statement“Accounting Standard for Retirement Benefits” (Accounting Standards

No. 21, September 13, 2013 (hereinafter, the “Statement No. 21”)), theBoard of Japan (“ASBJ”) Statement No. 26, May 17, 2012 (hereinafter, the“Accounting Standard for Consolidated Financial Statements” (ASBJ“Statement No. 26”)) and the main clause of the Paragraph 67 of theStatement No. 22, September 13, 2013 (hereinafter, the “Statement No.

“Guidance on Accounting Standard for Retirement Benefits” (ASBJ22”)) and the “Accounting Standard for Business Divestitures” (ASBJ

Guidance No. 25, March 26, 2015 (hereinafter, the “Guidance No. 25”))

Statement No. 7, September 13, 2013 (hereinafter, the “Statement No. 7”)),

effective from the year ended March 31, 2015. Accordingly, the calculation

etc. shall be effective from April 1, 2014. Accordingly, effective from themethod of defined benefit obligations and service cost has been revised,year ended March 31, 2015, the Company has applied these standards, etc.

and the method for determining the discount rate has been changed from(except the Paragraph 39 of the Statement No. 22) and the difference fromthe method based on years proximate to the average remaining service

changes in interest of the Company in a subsidiary in which the Company

period of the employees to the method using single weighted average

keeps continued control is recorded as capital surplus and acquisition

discount rate determined by reflecting the estimated period of retirement

related costs are charged to income in the year when such costs are

benefit payment and the amount by each estimated period of retirement

incurred. With regards to business combinations undertaken on or after

benefit payment.

April 1, 2014, revision of allocating acquisition costs due to settlement ofWith regards to the application of the Statement No. 26, etc., in
accordance with the transitional treatment stipulated in Paragraph 37 of theStatement No. 26, the amount of impact of the change in calculationtransitional treatment is reflected in the consolidated financial statement for
the year when the date of the business combination belongs to.
With regards to the application of the Statement No. 21, etc., inmethods of defined benefit obligations and service cost has been added toaccordance with the transitional treatment stipulated in Paragraph 58-2 (4)or deducted from retained earnings as of April 1, 2014.

of the Statement No. 21, Paragraph 44-5 (4) of the Statement No. 22 andAs a result, net defined benefit liability increased by ¥8,136 million($67,800 thousand) and retained earnings decreased by ¥5,247 million($43,725 thousand) as of April 1, 2014. Also, operating income, ordinary

Paragraph 57-4 (4) of the Statement No. 7, the Company has applied thesestandards as of April 1, 2014 and thereafter.
As a result, capital surplus as of March 31, 2015 decreased by ¥156

income and income before income taxes increased by ¥306 million ($2,550

million ($1,300 thousand). The impact on profit or loss for the year ended

thousand) for the year ended March 31, 2015, respectively.

March 31, 2015 was immaterial.

Net assets per share as of March 31, 2015 decreased by ¥24.72

Purchase of investments in subsidiaries which does not result in($0.20) and net income per share for the year ended March 31, 2015change in scope of consolidation is recorded under financing activities inincreased by ¥0.97 ($0.008).

the consolidated statement of cash flows for the year ended March

The impact on segment information is described in “SEGMENT
INFORMATION.”

31, 2015.
Capital surplus in the consolidated statement of changes in equity asof March 31, 2015 decreased by ¥156 million ($1,300 thousand).
The impacts on per share information and segment information
were immaterial.

Annual Report 201537

NOTES TO CONSOLIDATED BALANCE SHEET*1. Amounts of non-consolidated subsidiaries and affiliates’ stocks included in investment securities
Millions of Yen

Thousands of U.S. Dollars
2015

2014
Investment securities (Stocks)

¥

¥

653

Investment securities (Investments in capital)

2015
653

$

5,441

–

0

–

*2. The Company revalued its land held for business use in accordance with the “Act on Revaluation of Land” (the Act No. 34, March 31, 1998) and recorded
revaluation reserve for land in the net assets section.
(a) Method of revaluation:
Revaluation was made by reasonably adjusting the market value of standard sites as stipulated by the Article 2 Clause 1 of the “Ordinance for
Enforcement of the Act on Revaluation of Land” (Ordinance No. 119, March 31, 1998) and value determined by the method for calculating taxable land
price of land holding tax in accordance with the Article 16 of the Land-holding Tax Act as defined and published by the Commissioner of National Tax
Agency as stipulated by the Article 2 Clause 4 of the “Ordinance for Enforcement of the Act on Revaluation of Land.”(b) Date of revaluation:
March 31, 2002
Millions of Yen

Thousands of U.S. Dollars
2015

2014
Difference between the fair value of the revalued land at end ofyear and its book value after revaluation¥¥(7,972)

2015(6,680)$(55,666)*3. Assets pledged as collateral and secured obligations(1) Assets pledged as collateral which the Company’s subsidiaries provide and secured obligations
Millions of Yen

Thousands of U.S. Dollars
2015

2014
Cash and deposits

¥

1,196

Notes receivable, accounts receivable from completed
construction contracts and other

¥

[–]

87

¥

958

[–]

92

¥

2015
[–]

$ 7,983

[–]

766

$

[–]
[–]

Buildings and structures

1,140

[140]

1,248

[133]

10,400[1,108]

Machinery, vehicles, tools, furniture and fixtures

2,101[2,100]1,910[1,909]15,916[15,908]

Land
Total

¥

Short-term loans payable¥

Long-term loans payable
Total

¥

1,668

[–]

1,668

[–]

13,900[–]6,194¥ [2,241]¥ 5,878¥ [2,042]$ 48,983$[17,016]

281

¥

¥

$ [2,400][281]¥ 1,288[288]$ 10,733

2,544[1,844]

1,555[1,555]

12,958[12,958]

2,825¥ [2,125]¥ 2,844¥ [1,844]$ 23,700$[15,366]

Note: The figures in the brackets show mortgages of the factory foundation mortgaged assets and related obligations.

(2) Assets pledged as collateral for the loans of the investing company of the Company
Millions of Yen

Thousands of U.S. Dollars
2015

2014
Investment securities¥

Investments and other assets – Other (long-term loans receivable)
Total

38

45

¥

1,376

44

$

131

1,331
¥

2015

¥

175

366
1,091

$

1,458

4. Contingent liabilities
The Company provides guarantees of the employees’ loans from financial institutions.
Millions of Yen

Thousands of U.S. Dollars
2015

2014
Employees (housing loans)

¥

1,984

¥

2015
1,800

$

15,000*5. Both costs on uncompleted construction contracts relating to construction contracts that are likely to incur losses and provision for loss on construction
contracts are presented without offsetting.
Amount of costs on uncompleted construction contracts corresponding to provision for loss on construction contracts
Millions of Yen

Thousands of U.S. Dollars
2015

2014
¥

262

¥

2015
264

$

2,200

NOTES TO CONSOLIDATED STATEMENT OF INCOME*1. Provision for loss on construction contracts included in cost of sales of completed construction contracts
Millions of Yen

Thousands of U.S. Dollars
2015

2014
¥

2,827

¥

2015
2,522

$

21,016*2. Principal accounts and amounts in selling, general and administrative expenses
Millions of Yen

Thousands of U.S. Dollars
2015

2014
Employees’ salaries and allowances¥

11,603Retirement benefit expenses¥

2015
11,095$92,458

798

1,081

6,650

3. Total amount of research and development expenses included in general and administrative expenses and manufacturing costs
Millions of Yen

Thousands of U.S. Dollars
2015

2014
¥

1,086

¥

2015
1,024

$

8,533

*4. Breakdown of gain on sales of non-current asset
Millions of Yen
2014
Land

¥

18

Annual Report 201539

*5. Impairment loss
The Companies recorded impairment losses for the following asset groups.
For the year ended March 31, 2014
Purpose of Use
Type

Location
Tochigi prefecture and others

Number of assets

Land, buildings and structures andothersIdle assets and others

13

Idle assets and others that impairment losses were recognized were grouped by individual properties.
The book value of the above asset group was reduced to the respective recoverable amount, due to decline in land prices of the idle assets, etc. The
decline was recorded as impairment losses of ¥106 million in extraordinary losses.
The amount consisted of ¥56 million for land, ¥49 million for buildings and structures and others.
The recoverable amount of the asset group was measured at the net sales price, primarily based on the market value of standard sites and the assessedvalue of inheritance tax by roadside land prices.

Location

For the year ended March 31, 2015
Purpose of Use
Type

Ibaraki prefecture and others

Idle assets

Number of assets

Land

12

Idle assets and others that impairment losses were recognized were grouped by individual properties.
The book value of the above asset group was reduced to the respective recoverable amount, due to decline in land prices of the idle assets, etc. The
decline was recorded as impairment losses of ¥292 million ($2,433 thousand) in extraordinary losses.
The recoverable amount of the asset group was measured at the net sales price, primarily based on the market value of standard sites and the assessedvalue of inheritance tax by roadside land prices.

NOTES TO CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME*1. Reclassification adjustments and tax effects relating to other comprehensive income
Millions of Yen

Thousands of U.S. Dollars
2015

2014

2015

Valuation difference on available-for-sale securities:
Gains arising during the year¥

Reclassification adjustments

4,268

¥

7,604

$

(8)

–

63,366(66)

Amount before income tax effect

4,268

7,595

63,291

Income tax effect(1,506)(1,921)(16,008)

Valuation difference on available-for-sale securities

2,762

5,674

47,283

(108)

(224)

(1,866)

–

723

6,025

Gains arising during the year

–

1,255

10,458

Reclassification adjustments

–

(258)

(2,150)

Amount before income tax effect

–

996

8,300

Income tax effect

–

(315)

(2,625)Remeasurements of defined benefit plans, net of tax

–

681

5,675

Deferred gains or losses on hedges
Losses arising during the year
Revaluation reserve for land
Income tax effectRemeasurements of defined benefit plans:

Total other comprehensive income

40

¥

2,654

¥

6,856

$

57,133NOTES TO CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended March 31, 2014
1. Matters related to class and number of issued shares and class and number of treasury shares(Shares)
As of April 1, 2013

Increase

Decrease

As of March 31, 2014

Shares issued:
Common shares
Total

205,288,338––

205,288,338

205,288,338––

205,288,338

920,620

51,497

1,275

970,842920,620

51,497

1,275

970,842

Treasury shares:
Common shares
Total

Notes:
1. Increase in number of common shares in treasury shares is due to repurchase of shares less than one unit.
2. Decrease in number of common shares in treasury shares is due to the sales of shares less than one unit in response to repurchase requests.

2. Matter related to dividends(1) Dividends paid
Resolution

Class of shares

Total dividends

Dividends per share

Record date

Effective dateOrdinary general
meeting ofshareholders on
June 26, 2013

Common shares¥1,226 million¥6.0

March 31, 2013

June 27, 2013

Board of directors’
meeting on
October 31, 2013

Common shares¥1,226 million¥6.0

September 30, 2013

December 5, 2013

(2) Dividends whose record date fell in the year ended March 31, 2014, but whose effective date comes after March 31, 2014
Resolution

Class of shares

Total dividends

Ordinary general
meeting ofshareholders on
June 26, 2014

Common shares¥1,225 million

Source of dividend funds Dividends per share

Retained earnings¥6.0

Record date

Effective date

March 31, 2014

June 27, 2014

Annual Report 201541

For the year ended March 31, 2015
1. Matters related to class and number of issued shares and class and number of treasury shares(Shares)
As of April 1, 2014

Increase

Decrease

As of March 31, 2015

Shares issued:
Common shares
Total

205,288,338––

205,288,338

205,288,338––

205,288,338

970,842

23,736805

993,773

970,842

23,736805

993,773

Treasury shares:
Common shares
Total

Notes:
1. Increase in number of common shares in treasury shares is due to repurchase of shares less than one unit.
2. Decrease in number of common shares in treasury shares is due to the sales of shares less than one unit in response to repurchase requests.

2. Matter related to dividends(1) Dividends paid
Resolution

Class of shares

Total dividends

Dividends per share

Record date

Effective dateOrdinary general
meeting ofshareholders on
June 26, 2014

Common shares¥1,225 million$10,208 thousand

¥6.0
$0.05

March 31, 2014

June 27, 2014

Board of directors’
meeting on
October 29, 2014

Common shares¥1,634 million$13,616 thousand

¥8.0
$0.06

September 30, 2014 December 5, 2014

(2) Dividends whose record date fell in the year ended March 31, 2015, but whose effective date comes after March 31, 2015
Resolution

Class of shares

Total dividends

Ordinary general
meeting ofshareholders on
June 26, 2015

Common shares¥1,225 million$10,208 thousand

Source of dividend funds Dividends per share

Retained earnings

¥6.0
$0.05

Record date

Effective date

March 31, 2015

June 29, 2015

NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS*1. Relationship between the balance of cash and cash equivalents at the end of the year and the amount on the consolidated balance sheet
Millions of Yen

Thousands of U.S. Dollars
2015

2014
Cash and deposits¥

Time deposits with maturities of more than three months
Short-term investments with maturities of three months or lessfrom the purchase dateCash and cash equivalents

42¥

44,558¥

2015
44,128$367,733(13,861)(6,971)(58,091)

7,999

2,999

24,991

38,697¥40,157$

334,641

FINANCIAL INSTRUMENTS
1. Status of financial instruments(1) Policies on financial instruments
The Companies manage surplus funds by investing in high security
financial instruments, primarily short-term deposits and debt securities andraise funds through borrowings from banks and other financial institutions.
Certain consolidated subsidiaries enter into derivative transactions
to hedge interest rate fluctuation risks arising from borrowings and thecapture the collectability issues caused by deterioration in thefinancial conditions.
Held-to-maturity securities are invested in debt securities withhigh credit rating, therefore, exposed to minimum credit risk.
The Companies enter into derivative transactions with financial
institutions with high credit rating in order to mitigate credit risk.

(b) Market risk management (fluctuation risks in market prices
and interest rates)

Companies do not use derivative transactions for speculative purposes.

Interest rate swaps are used to mitigate interest rate fluctuation(2) Description of financial instruments and related risks
Notes receivable, accounts receivable from completed construction
contracts and other, trade receivables, are exposed to customer credit risk.
Securities and investment securities, primarily consist of held-to-maturity
debt securities and shares of companies with business relationship, areexposed to market price fluctuation risks.
Notes payable, accounts payable for construction contracts andother, trade payables, are due within one year. Proceeds from shortterm loans payable are mainly used for operational funds requirement
and proceeds from long-term loans payable are mainly used for capital
expenditures. Floating rate borrowings are exposed to interest rate
fluctuation risks, but are hedged by using derivative transactions (interestrate swaps).
Derivative transactions are interest rate swaps used as hedging
instruments, in order to hedge interest rate fluctuation risks for borrowings.
Details of hedge accounting including hedging instruments and hedged
items, hedging policy and method for evaluating the effectiveness ofhedges are described in “SIGNIFICANT MATTERS PROVIDING THE BASISFOR THE PRESENTATION, 4. Significant accounting policies (6) Significant

risks for borrowings. As for securities and investment securities

hedge accounting method.”(3) Risk management system for financial instruments(a) Credit risk management (risks that counterparties may default)
For trade receivables, the sales administration division regularly
monitors major counterparties’ credit status, and performs due date
controls and balance controls for each customer to mitigate and quickly

except for held-to-maturity debt securities, the accounting
department regularly monitors fair values and issuers’(counterparties’) financial condition and relationship with thecounterparties, and continuously considers whether theCompany holds.
Derivative transactions are executed and managed inaccordance with the nature and limits approved by the boardof directors of the subsidiaries. The executed transactions are
periodically reported to the board of directors.

(c) Liquidity risk management associated with financing activities(payment default risks)
The accounting department prepares and updates a monthly
management plan of funds as necessary to manage theliquidity risk.

(4) Supplementary explanation on fair value of financial instruments
Fair value of financial instruments is measured based on the quoted
market price, if available, or reasonably assessed value if a quoted
market price is not available. Fair value of financial instruments forwhich a quoted market price is not available is calculated basedon certain assumptions, and the fair value might differ if different
assumptions are used. In addition, the contract amount of the derivativetransactions described in “DERIVATIVE TRANSACTIONS” does not
represent the market risk of the derivative transactions.

Annual Report 201543

2. Fair value of financial instruments
Carrying amount and fair value of financial instruments, and differences between these values are as follows. The financial instruments whose fair values are
deemed extremely difficult to determine are excluded from the table below. (See Note 2 below)
Millions of Yen

For the year ended March 31, 2014
Carrying amount(1) Cash and deposits¥(2) Notes receivable, accounts receivable from completed construction contracts and other

44,558Fair value¥

44,558Difference¥–

114,115

Allowance for doubtful accounts (*1)

(335)
113,780

113,778(1)1) Held-to-maturity securities

11,99912,006

62) Available-for-sale securities

32,28832,288–(4) Notes payable, accounts payable for construction contracts and other (*2)(80,733)(80,733)–(5) Short-term loans payable (*2)

(7,631)(7,631)–(6) Long-term loans payable (*2)(2,844)(2,831)(13)(3) Securities and investment securities(7) Derivative transactions (*3)

¥

(108)

¥

(108)

¥

–

(*1) The amount of allowance for doubtful accounts related to notes receivable, accounts receivable from completed construction contracts and other is deducted.
(*2) The value of liabilities is shown in parenthesis.
(*3) The value of assets and liabilities arising from derivative transactions is shown at net value and with the amount in parenthesis indicating the net liability position.

Millions of Yen

For the year ended March 31, 2015
Carrying amount(1) Cash and deposits¥

44,128Fair value¥

44,128Difference¥–

129,326(2) Notes receivable, accounts receivable from completed construction contracts and other(380)

Allowance for doubtful accounts (*1)

128,946

128,946–

1) Held-to-maturity securities

5,999

6,000

0

2) Available-for-sale securities

41,132

41,132–(4) Notes payable, accounts payable for construction contracts and other (*2)

(86,231)(86,231)–(5) Short-term loans payable (*2)

(8,728)(8,728)–(6) Long-term loans payable (*2)

(1,755)(1,757)

1(3) Securities and investment securities(7) Derivative transactions (*3)

44

¥

(332)

¥

(332)

¥

–

Thousands of U.S. Dollars

For the year ended March 31, 2015
Carrying amount(1) Cash and deposits$

367,733

Fair value$

367,733

Difference$–

1,077,716(2) Notes receivable, accounts receivable from completed construction contracts and other(3,166)

Allowance for doubtful accounts (*1)

1,074,550

1,074,550–

1) Held-to-maturity securities

49,99150,00002) Available-for-sale securities

342,766

342,766–(4) Notes payable, accounts payable for construction contracts and other (*2)(718,591)(718,591)–(5) Short-term loans payable (*2)

(72,733)(72,733)–(6) Long-term loans payable (*2)

(14,625)(14,641)8(3) Securities and investment securities(7) Derivative transactions (*3)$

(2,766)$(2,766)$–(*1) The amount of allowance for doubtful accounts related to notes receivable, accounts receivable from completed construction contracts and other is deducted.
(*2) The value of liabilities is shown in parenthesis.
(*3) The value of assets and liabilities arising from derivative transactions is shown at net value and with the amount in parenthesis indicating the net liability position.

Notes:
1. The calculation methods for the fair value of financial instruments, marketable securities and derivative transactions(1) Cash and deposits
Deposits are stated at their carrying amount as the fair value approximates the carrying amount because of the short maturity.
(2) Notes receivable, accounts receivable from completed construction contracts and other
The fair value of these instruments is stated at the net present value by maturity group which is discounted considering the credit risk. The fair value withshort maturity approximates the carrying amount.
(3) Securities and investment securities
The fair value of stocks is calculated by quoted market price and the fair value of debt securities is calculated by quoted market price or quotes fromcounterparty financial institutions. Negotiable certificates of deposit and jointly operated money trusts are stated at their carrying amount as the fairvalue approximates the carrying amount because of the short maturity. Information by holding purpose is described in “SECURITIES.”(4) Notes payable, accounts payable for construction contracts and other, and (5) Short-term loans payable
These are stated at their carrying amount as the fair value approximates the carrying amount because of the short maturity.
(6) Long-term loans payable
Fair value of long-term loans payable is based on the present value of sum of principal and interest discounted using the borrowing rate for similar new
borrowings. The fair value of long-term loans payable with variable interest rates subject to the exceptional accounting of interest rate swaps iscalculated by discounting the sum of principal and interest that were recognized together with the interest rate swaps, with the reasonably estimated rate
which would be applied if a similar new borrowing were entered into.
(7) Derivative transactions
Please refer to “DERIVATIVE TRANSACTIONS.”

Annual Report 201545

2. The carrying amount of financial instruments whose fair values are deemed extremely difficult to determine
Millions of Yen

Thousands of U.S. Dollars
2015

2014
Unlisted stocks, etc.

¥

2015

¥

4,565

4,191

$

34,925Since no quoted market price is available, it is extremely difficult to estimate future cash flows and it is deemed extremely difficult to determine their fair value,
these financial instruments are not included in “(3) Securities and investment securities.”
3. Expected redemption amount of monetary receivables and securities with maturity dates after the consolidated year-end dateMillions of Yen

For the year ended March 31, 2014

Cash and deposits

Due within one year

Due after one year
through five years

Due after five years
through ten years

Due after ten years

¥

¥

¥

¥

Notes receivable, accounts receivable from completed construction
contracts and other

44,558–113,118

996

–
–

–
–

Securities and investment securities
Held-to-maturity securities (corporate bonds)

6,000

1,000

–

–

Held-to-maturity securities (other)

5,000

–

–

–

Available-for-sale securities with maturities (other)

1,000

–

–

–

Total

¥

169,676

¥

1,996

¥

–

¥

–

Millions of Yen

For the year ended March 31, 2015

Cash and deposits

Due within one year

Due after one year
through five years

Due after five years
through ten years

Due after ten years

¥

¥

¥

¥

Notes receivable, accounts receivable from completed construction
contracts and other44,128129,326

–
–

–
–

–
–

Securities and investment securities
Held-to-maturity securities (corporate bonds)
Held-to-maturity securities (other)

–

–

–

–

–

–

–

–

Available-for-sale securities with maturities (other)
Total

6,000

¥

179,454

–
¥

–

–
¥

–

–
¥

–

Thousands of U.S. Dollars

For the year ended March 31, 2015

Cash and deposits

Due within one year

Due after one year
through five years

Due after five years
through ten years

Due after ten years

$

$

$

$

Notes receivable, accounts receivable from completed construction
contracts and other367,733
1,077,716

–
–

–
–

–
–

Securities and investment securities
50,000–––

Held-to-maturity securities (other)

–

–

–

–

Available-for-sale securities with maturities (other)

–

–

–

–

Held-to-maturity securities (corporate bonds)

Total

46

$

1,495,450

$

–

$

–

$

–

4. Scheduled amount of repayment of short-term loans payable and long-term loans payable
Millions of Yen

For the year ended March 31, 2014

Short-term loans payable

Due within one year

Due after one year
through two years

Due after two years Due after three years Due after four years
Due after five years
through three years through four years through five years

¥

¥

¥

Long-term loans payable
Total

7,631
–

¥

7,631

–
1,088

¥

1,088

–

¥

495
¥

495

–

¥

303
¥

303

–

¥

311
¥

311

–
645

¥

645

Millions of Yen

For the year ended March 31, 2015

Short-term loans payable

Due within one year

Due after one year
through two years

Due after two years Due after three years Due after four years
Due after five years
through three years through four years through five years

¥

¥

¥

Total

8,728
–

Long-term loans payable
¥

8,728

–
495

¥

495

–

¥

303
¥

303

–

¥

311
¥

311

–

¥

318
¥

318

–
326

¥

326

Thousands of U.S. Dollars

For the year ended March 31, 2015

Short-term loans payable

Due within one year

Due after one year
through two years

Due after two years Due after three years Due after four years
Due after five years
through three years through four years through five years

$

$

$

Total

72,733–Long-term loans payable$

72,733

–
4,125

$

4,125

–

$

2,525
$

2,525

–

$

2,591
$

2,591

–

$

2,650
$

2,650

–
2,716

$

2,716

Annual Report 201547

SECURITIES
1. Held-to-maturity securities
Millions of Yen

For the year ended March 31, 2014
Carrying amountMarket value

Difference

Securities whose market value exceeds their carrying amount:
Government/municipal bonds

¥

–

¥

–

¥

–

Corporate bonds

2,000

2,000

0

Other

1,000

1,006

6

Subtotal

¥

3,000

¥

3,007

¥

7

¥

–

¥

–

¥

–

Securities whose market value does not exceed their carrying
amount:Government/municipal bonds
Corporate bonds

4,999

4,999

Other

4,000

4,000

Subtotal
Total

(0)
–

¥

8,999

¥

8,999

¥

(0)

¥

11,999¥12,006¥

6

Millions of Yen

For the year ended March 31, 2015
Carrying amountMarket value

Difference

Securities whose market value exceeds their carrying amount:
Government/municipal bonds¥

Corporate bonds
Other
Subtotal

¥

–

¥

–

2,000

2,001

–

–

2,000

¥

–

¥

¥

–
1
–

2,001

¥

–

¥

1

Securities whose market value does not exceed their carrying
amount:Government/municipal bonds¥

Corporate bonds
Other
Subtotal
Total

–

3,999

3,999

(0)

–

–

–

¥

3,999

¥

3,999

¥

(0)

¥

5,999

¥

6,000

¥

0
Thousands of U.S. Dollars

For the year ended March 31, 2015
Carrying amountMarket value

Difference

Securities whose market value exceeds their carrying amount:
Government/municipal bonds

$

$

–

$

16,675–

Other
Subtotal–
16,666

Corporate bonds

–
8

–

–

$

16,666$

16,675

$

8

$

–

$

–

$

–

Securities whose market value does not exceed their carrying
amount:Government/municipal bonds
Corporate bonds
Other
Subtotal
Total

48

33,32533,325

–

–

(0)
–

$

33,325$33,325$(0)$49,991$50,000$0

2. Available-for-sale securities
Millions of Yen

For the year ended March 31, 2014
Carrying amount

Acquisition cost

Difference

Securities whose carrying amount exceeds their acquisition cost:
Stocks¥27,755¥

11,762

Bonds

–

–

Other

–

–

Subtotal¥

15,992––¥

27,755¥

11,762¥

15,992

¥

3,533

¥

4,297

¥

(763)

Securities whose carrying amount does not exceed their acquisition
cost:
Stocks
Bonds

–

Other
Subtotal
Total

–

1,000

–

1,000

–

¥

4,533

¥

5,297

¥

(763)

¥

32,288¥17,060¥15,228Millions of Yen

For the year ended March 31, 2015
Carrying amount

Acquisition cost

Difference

Securities whose carrying amount exceeds their acquisition cost:
Stocks¥38,837¥15,757

Bonds

–

–

Other

–

–

Subtotal¥

23,080––¥38,837¥15,757¥23,080

¥

2,294

¥

2,550

¥

(255)

Securities whose carrying amount does not exceed their acquisition
cost:
Stocks

–

Bonds

–

Other
Subtotal
Total

–

–

–

–

¥

2,294

¥

2,550

¥

(255)

¥

41,132¥

18,308¥22,824
Thousands of U.S. Dollars

For the year ended March 31, 2015
Carrying amount

Acquisition cost

Difference

Securities whose carrying amount exceeds their acquisition cost:
Stocks$$131,308

$

–

–

Other
Subtotal

323,641–

Bonds

192,333–––$

323,641$

131,308$

192,333$

19,116$

21,250$(2,125)

Securities whose carrying amount does not exceed their acquisition
cost:
Stocks
Bonds

–

–

Other

–

–

Subtotal
Total

–
–

$

19,116$

21,250$(2,125)$

342,766$

152,566$

190,200

Annual Report 201549

3. Available-for-sale securities sold during the year
For the year ended March 31, 2014
Not applicable.
Millions of Yen

For the year ended March 31, 2015
Sales amount
Stocks¥Total gain on sales

1,342

¥

1,264

Total loss on sales
¥

2

Bonds

–

–

–

Other

–

–

–

Total

¥

1,342

¥

1,264

¥

2
Thousands of U.S. Dollars

For the year ended March 31, 2015
Sales amount
Stocks$$

10,533–

Bonds$

11,183

10,533For the year ended March 31, 2014

For the year ended March 31, 2015

Disclosure is omitted due to immateriality.

Disclosure is omitted due to immateriality.

16
–

–
$

4. Impairment loss on securities

50

Total loss on sales
$

–

–

Other
Total

Total gain on sales

11,183–$16

DERIVATIVE TRANSACTIONS
Derivative transactions to which hedge accounting is applied
Interest rate-related
For the year ended March 31, 2014
Hedge accounting method

Type of transactions

Primary hedged items

Contract amountContract amount due after
one year

Fair value

Deferral hedge

Interest rate swaps:
fixed payment, floatingreceipt

Long-term loans
payable (forecasted
transaction)¥ 4,880 million¥ 4,880 million¥ (108) million

Note: Calculation method for fair value:
Fair value is based on the prices presented by the counterparty financial institutions.

Hedge accounting method

Type of transactions

Primary hedged items

Contract amountContract amount due after
one year

Fair value

Exceptional accounting of
the interest rate swaps

Interest rate swaps:
fixed payment, floatingreceipt

Long-term loans
payable¥ 708 million¥ 614 million(Note)

Note: The fair value of interest rate swaps subject to the application of the exceptional accounting is recognized together with long-term loans payable, which is designated as the hedged item, therefore their fair value isincluded in the fair value of the relevant long-term loans payable.

For the year ended March 31, 2015
Hedge accounting method

Type of transactions

Primary hedged items

Contract amountContract amount due after
one year

Fair value

Deferral hedge

Interest rate swaps:
fixed payment, floatingreceipt

Long-term loans
payable (forecasted
transaction)¥ 4,880 million$ 40,666 thousand¥ 4,880 million$ 40,666 thousand¥ (332) million$ (2,766) thousand

Primary hedged items

Contract amountContract amount due after
one year

Fair value

Long-term loans
payable¥ 614 million$ 5,116 thousand¥ 518 million$ 4,316 thousand(Note)

Note: Calculation method for fair value:
Fair value is based on the prices presented by the counterparty financial institutions.

Hedge accounting method

Type of transactions

Exceptional accounting Interest rate swaps:of the interest rate fixed payment, floatingreceiptswaps

Note: The fair value of interest rate swaps subject to the application of the exceptional accounting is recognized together with long-term loans payable, which is designated as the hedged item, therefore their fair value isincluded in the fair value of the relevant long-term loans payable.

Annual Report 2015

51

RETIREMENT BENEFITS
1. Overview of retirement benefit plans
The Companies have funded and unfunded defined benefit plans and defined contribution plans to prepare for retirement benefits to employees. Defined
benefit pension plans (funded plans) offer retirement lump-sum payments or pensions according to the salary and service period of the eligible employees.
Retirement lump-sum payment plans (unfunded plans) offer retirement lump-sum payments according to the salary and service period of theeligible employees.
Certain consolidated subsidiaries participate in a multi-employer welfare benefit pension fund, which is accounted for in the same manner as defined
contribution plans because it is impracticable to reasonably estimate an amount of plan assets for the contributions made by the subsidiaries.
Certain consolidated subsidiaries use the simplified method in calculating net defined benefit liability and retirement benefit expenses.

2. Defined benefit plans(1) Changes in defined benefit obligations
Millions of Yen
2015

2014
Balance at beginning of year¥

68,786¥

66,526–

8,136

68,786

74,663Current service cost

1,996

2,272

Interest cost

1,335

659

Actuarial gains and losses

156

1,100

(5,811)(6,012)

Cumulative effects of changes in accounting policies
Restated balance

Benefit paid
Past service cost
Balance at end of year

–

63
¥

66,526¥

72,683Thousands of U.S. Dollars
2015$554,383
67,800622,191
18,933
5,491
9,166(50,100)–$
605,691(2) Changes in plan assets
Millions of Yen
2015

2014
Balance at beginning of year¥

36,683¥37,734

Expected return on plan assets

550

565

Actuarial gains and losses

1,656

2,355

Contributions by the employer

3,183

3,205

Benefits paid

(4,338)(4,326)

Balance at end of year¥

37,734¥39,534

Thousands of U.S. Dollars
2015$
314,450
4,708
19,62526,708(36,050)$
329,450(3) Reconciliation between ending balances of defined benefit obligations and plan assets and the net defined benefit liability and net
defined benefit asset reported on the consolidated balance sheet
Millions of Yen
2015

2014
Funded defined benefit obligations¥

Plan assets
Unfunded defined benefit obligations
Net amount of liabilities and assets recognized in consolidated balance sheet

52

48,824¥(39,534)

11,09013,602
19,547

17,702¥53,136(37,734)

28,792¥33,149Net defined benefit liability¥

28,792¥33,149Net amount of liabilities and assets recognized in consolidated balance sheet¥

28,792¥33,149Thousands of U.S. Dollars
2015$
442,800(329,450)
113,350
162,891$
276,241$
276,241$
276,241

(4) Breakdown of retirement benefit expenses
Millions of Yen
Current service costThousands of U.S. Dollars
2015

2014
¥

1,996

¥

2015
2,272

$

18,933

Interest cost

1,335

659

5,491

Expected return on plan assets

(550)

(565)

(4,708)Actuarial gains and losses recognized in the year

785

(270)

(2,250)

12

12

100

Past service cost recognized in the year
Total

¥

3,579

¥

2,108

$

17,566(5) Remeasurements of defined benefit plans
Remeasurements of defined benefit plans (before tax effect) consist of the following:
Millions of Yen
2015

2014
Past service cost¥–

Actuarial gains and losses
Total

Thousands of U.S. Dollars

¥

–

$

(100)

$

(8,300)

(984)

–
¥

2015
(12)

¥

(996)

(8,200)(6) Accumulated remeasurements of defined benefit plans
Accumulated remeasurements of defined benefit plans (before tax effect) consist of the following:
Millions of Yen
Unrecognized past service cost¥50

Unrecognized actuarial gains and losses
Total

Thousands of U.S. Dollars
2015

2014

37

¥

(2,008)(1,011)$

308$(16,733)(2,046)(1,061)¥

2015¥(17,050)(7) Plan assets(a) Breakdown of plan assets
The ratio of each major category to total plan assets is as follows:
2015

2014
General account

42%

46%

Bonds

32%

32%

Equities

21%

25%

Other

1%

1%

Total

100%

100%

(b) Method of determining the long-term expected rates of return on plan assets
Expected return rate on plan assets is determined by considering the current and anticipated future portfolio of plan assets and current and anticipatedfuture long-term performance of individual asset classes that comprise the funds’ asset mix.

(8) Assumptions used in actuarial calculations
Major assumptions used in actuarial calculations
2014

2015

Discount rate

mainly 2.0%

mainly 0.9%

Expected return rate on plan assets

mainly 1.5%

mainly 1.5%

Annual Report 201553

3. Defined contribution plans
The required amount of contribution to the defined contribution plans (including the multi-employer welfare benefit pension fund accounted for in the samemanner) of the Companies was ¥1,477 million and ¥1,659 million ($13,825 thousand) for the years ended March 31, 2014 and 2015, respectively.

Information on the multi-employer welfare benefit pension fund for which the required amount ofcontribution is accounted for as retirement benefit expenses(1) Funded status of multi-employer welfare benefit pension fundMillions of Yen
As of March 31, 2014
14,231¥
16,331

As of March 31, 2013
Plan assets¥

Sum of actuarial obligations calculated for finance status ofpension plan and minimum reserve
Net amount

15,117¥(886)

16,143¥

188(2) Percentage of the amounts paid by the consolidated subsidiaries in the total amount of contribution for the multi-employer welfare
benefit pension fund
From March 1 to March 31, 2013

From March 1 to March 31, 2014
7.78%

8.08%

DEFERRED TAX ACCOUNTING
1. Breakdown of major factors that caused deferred tax assets and liabilities
Millions of Yen

Thousands of U.S. Dollars
2015

2015

2014
Deferred tax assets:
Net defined benefit liability¥

10,228¥

10,776$89,800Depreciation of property

4,279

3,795

31,625

Provision for loss on construction contracts

1,587

1,034

8,616

Allowance for doubtful accounts

840

739

6,158

Loss carry-forward

192

234

1,950

Others

7,490

5,918

49,316

24,61922,497

187,475

Sub-total
Valuation allowance
Total(2,081)(2,218)(17,341)¥

22,400¥20,416$

170,133¥(5,390)¥(7,311)$(60,925)

Deferred tax liabilities:
Valuation difference on available-for-sale securities
Reserve for advanced depreciation of non-current assets(1,248)(1,116)(9,300)Reserve for special depreciation

(314)

(519)

(4,325)

Others

(162)

(93)

Total
Net deferred tax assets

(775)

¥

(7,116)¥(9,041)$(75,341)¥

15,284¥

11,374$

94,783

Note: Except for above, deferred tax liabilities for land revaluation are recorded as follows:

Millions of Yen
2015

2014
Deferred tax liabilities for land revaluation

54

¥

8,130

¥

7,304

Thousands of U.S. Dollars
2015$
60,866

2. Breakdown of items which caused the difference between the statutory tax rate and the effective
tax rate after adopting tax effect accounting
2015

2014
Statutory tax rate
(Adjustments)
Expenses not deductible for tax purposes
Non-taxable dividend income
Per capita levy of inhabitant taxes
Increase (decrease) in valuation allowance
Adjustment of deferred tax assets at end of year resulting
from tax rate changes
Others-net
Effective tax rate after adopting tax effect accounting

37.8%

35.5%

6.2%
(1.4%)
2.4%(8.2%)

2.4%(1.1%)
1.9%(0.3%)

7.6%

15.0%

0.9%
45.3%

0.6%
54.0%

3. Changes in the amount of deferred tax assets and deferred tax liabilities due to changes in the corporate tax rates
The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 9 of 2015) and the “Act for Partial Amendment of Local Tax Act, etc.” (Act No. 2 of 2015)
were promulgated on March 31, 2015 and corporate tax rates will be reduced effective from years beginning on or after April 1, 2015. As a result, the corporate
tax rate used to calculate deferred tax assets and liabilities will be changed from 35.5% to 33.1% for the temporary differences expected to be realized or
settled for the year beginning on April 1, 2015, and to 32.3% for the temporary differences expected to be realized or settled for the year beginning on
April 1, 2016.
As a result, deferred tax assets (after offsetting deferred tax liabilities) decreased by ¥874 million ($7,283 thousand) and income taxes – deferred,valuation difference on available-for-sale securities, and remeasurements of defined benefit plans increased by ¥1,665 million ($13,875 thousand), ¥722
million ($6,016 thousand) and ¥68 million ($566 thousand), respectively, as of and for the year ended March 31, 2015.
In addition, deferred tax liabilities for land revaluation decreased by ¥723 million ($6,025 thousand) and revaluation reserve for land increased by thesame amount as of March 31, 2015.

SEGMENT INFORMATION, ETC.
(Segment information)
1. Outline of reportable segment information
Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of anentity about which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance.
The Companies engage in facility installation work, sales of electrical equipment, rental of real estate, leasing, sales of electrical power and others.
“Engineering” is determined to be the reportable segment.
“Engineering” includes business related to electrical work, plumbing work and various other work on facilities.

2. Method of measurement for the amounts of net sales, income or loss, assets and other items byreportable segment
The accounting treatment regarding the reportable business segments are the same as recorded in “SIGNIFICANT MATTERS PROVIDING THE BASIS FOR THE
PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS”. The income of reportable segments is based on operating income. The intersegment profit
and transfers are based on trading prices in the market.
(Application of the accounting standards, etc. for retirement benefits)
As described in “CHANGES IN ACCOUNTING POLICIES”, effective from April 1, 2014, the calculation method of defined benefit obligations and service
cost has been revised. Accordingly, the calculation method of defined benefit obligations and service cost for business segments have also been revised. As
a result of the change, segment profit of “Engineering” and “Other” increased by ¥305 million ($2,541 thousand) and ¥1 million ($8 thousand) for the year
ended March 31, 2015, respectively, as compared with the previous accounting method.

Annual Report 201555

3. Net sales, income or loss, assets and other items by reportable segments
Millions of Yen

For the year ended March 31, 2014
Other
(Note 1)Engineering

Adjustments(Note 2)

Total

Consolidated total(Note 3)

Net sales:
Customers¥

Inter-segment

431,883

¥

880

Total

¥

Segment profit
Segment assets

6,046

¥

31,951

432,764

¥

¥

7,532

¥

333,590¥

4,202

437,930¥–

32,83237,998

¥

¥

649

¥

44,393¥563¥

437,930(32,832)¥

437,930(32,832)–

470,762

¥

¥

8,182

¥

102

¥

8,284

¥

377,984¥(18,050)¥

359,933

¥

4,765

¥

(157)

¥

4,607

Other items:
Depreciation
Increase in property, plant and equipment andintangible assets

3,988

1,980

5,969

(55)

5,914

Notes:
1. The “Other” segment is a business segment which is not included in the reportable segment and includes electrical equipment sales business, real estate business, lease business and power generation business.
2. Adjustments in segment profit, segment assets and other items are elimination of internal transactions between segments.
3. Segment profit is adjusted with operating income presented in the consolidated statement of income.

Millions of Yen

For the year ended March 31, 2015
Other
(Note 1)Engineering

Adjustments(Note 2)

Total

Consolidated total(Note 3)

Net sales:¥

426,816

Total¥

Segment profit
Segment assets

Customers

¥

9,866

¥

436,682

431,281¥

39,891

¥

¥

8,514

¥

336,474¥803¥

53,979

¥

3,481

¥

588

4,465

Inter-segment¥–471,172

¥

¥

9,317

¥

390,454¥

4,069

30,025¥436,682(34,490)¥436,682

¥

70

¥

9,388

¥

(24,276)¥

366,177

¥

(130)

¥

3,939

34,490(34,490)–

Other items:
Depreciation
Increase in property, plant and equipment andintangible assets

3,816

5,673

9,490

(85)

9,404
Thousands of U.S. Dollars

For the year ended March 31, 2015
Engineering

Other(Note 1)

Total

Adjustments(Note 2)

Consolidated total(Note 3)

Net sales:
Customers$ 3,556,800$

37,208Inter-segment

82,216$ 3,639,016

250,208

287,416(287,416)–

332,425$ 3,926,433$ (287,416)$ 3,639,016

$

$

$

Total

$ 3,594,008$

Segment profit$

70,950$6,691

Segment assets$ 2,803,950$

449,825

$

$

4,900

77,641$–583$ 3,639,016

78,233$ 3,253,783$ (202,300)$ 3,051,475

$

$

$

Other items:
Depreciation
Increase in property, plant and equipment andintangible assets

29,00831,80047,27533,90879,083(1,083)(708)

32,82578,366

Notes:
1. The “Other” segment is a business segment which is not included in the reportable segment and includes electrical equipment sales business, real estate business, lease business and power generation business.
2. Adjustments in segment profit, segment assets and other items are elimination of internal transactions between segments.
3. Segment profit is adjusted with operating income presented in the consolidated statement of income.

56

(Related information)
For the year ended March 31, 2014

For the year ended March 31, 2015

1. Information about products and services

1. Information about products and services

Information is omitted as similar information is described in the segment

Information is omitted as similar information is described in the segment

information.

information.

2. Information about geographical region

2. Information about geographical region(1) Net sales(1) Net sales

Information is omitted as net sales to external customers in Japan

Information is omitted as net sales to external customers in Japanaccounted for more than 90% of net sales reported in the consolidated

accounted for more than 90% of net sales reported in the consolidated

statement of income.

statement of income.

(2) Property, plant and equipment(2) Property, plant and equipment

Details of property, plant and equipment are omitted as amounts of

Details of property, plant and equipment are omitted as amounts ofproperty, plant and equipment located in Japan accounted for more

property, plant and equipment located in Japan accounted for morethan 90% of all property, plant and equipment reported on thethan 90% of all property, plant and equipment reported on the

consolidated balance sheet.

consolidated balance sheet.

3. Information about major customers

3. Information about major customers
Millions of Yen

Millions of Yen

Customer Name

Net sales

Related segment

Customer Name

Net sales

Related segment

Tokyo Electric Power
Company, Incorporated¥ 165,452

Engineering

Tokyo Electric Power
Company, Incorporated¥ 155,986

Engineering
Thousands of U.S. Dollars

Customer Name

Net sales

Related segment

Tokyo Electric Power
Company, Incorporated$ 1,299,883

Engineering

Annual Report 2015

57

(Information about impairment loss noncurrent assets of each reportable segment)
Millions of Yen

For the year ended March 31, 2014
Engineering
Impairment loss¥

91

Other (Note)¥

Corporate/elimination

14

¥

–

Total
¥

106

Note: “Other” is related to real estate business.

Millions of Yen

For the year ended March 31, 2015
Engineering
Impairment loss¥

288

Other (Note)¥

Corporate/elimination
3

¥

–

Total
¥

292

Thousands of U.S. Dollars

For the year ended March 31, 2015
Engineering
Impairment loss

$

2,400

Other (Note)$25

Corporate/elimination
$

–

Total
$

2,433

Note: “Other” is related to real estate business.

(Information about amortization and unamortized balance of goodwill of each reportable segment)
For the year ended March 31, 2014

For the year ended March 31, 2015

Disclosure is omitted due to immateriality

Disclosure is omitted due to immateriality.

(Information about gain on negative goodwill of each reportable segment)

58

For the year ended March 31, 2014

For the year ended March 31, 2015

Not applicable.

Not applicable

(Related party transactions)
Transactions between related parties
Transactions between the Company and Related Parties
The parent company and major shareholders (limited to companies) of the Company
For the year ended March 31, 2014
Type

Name

Location

Capital stock

Description ofbusiness

Ratio of voting
rightsRelation to the related
party

Other affiliates

Tokyo Electric Power
Company, Incorporated

Chiyoda-ku, Tokyo¥ 1,400,975 million

Electric powerbusiness

Direct (46.6%)
Indirect ( 1.2%)

Electric work contract
and others

Type

Name

Nature of transaction

Other affiliates

Tokyo Electric Power
Company, Incorporated

Installation ofelectric work

Amount of transaction

Account¥ 156,583 million

Purchase of
raw materials¥ 36,368 million

Balance at end of year

Notes receivable,accounts receivable fromcompleted construction
contracts and other¥ 29,188 million

Advances received on
uncompleted construction
contracts¥

Notes payable, accounts
payable for construction
contracts and other¥ 2,750 million

572 million

For the year ended March 31, 2015
Type
Other affiliates

Type

Other affiliates

Name

Location

Tokyo Electric Power
¥ 1,400,975 million
Chiyoda-ku, Tokyo
Company, Incorporated$ 11,674,791 thousand

Name

Tokyo Electric Power
Company, Incorporated

Nature of transaction

Installation ofelectric work

Purchase of
raw materials

Description ofbusiness

Ratio of voting
rightsRelation to the related
partyElectric powerbusiness

Direct (46.6%)
Indirect ( 1.2%)

Electric work
contract and others

Capital stock

Amount of transaction¥ 146,637 million$ 1,221,975 thousand¥ 38,769 million$ 323,075 thousand

Account

Balance at end of year

Notes receivable,accounts receivable fromcompleted construction
contracts and other¥ 30,788 million$ 256,566 thousand

Advances received on
uncompleted construction
contracts¥$

Notes payable, accounts
payable for construction
contracts and other¥ 2,461 million$ 20,508 thousand

468 million
3,900 thousand

Notes:
1. Above transaction amounts do not include consumption taxes and above balances at the end of the year include consumption taxes.
2. Terms and conditions of the transactions and its policies
Terms and conditions for construction orders and purchase of raw materials are determined based on arm’s length basis through negotiations considering market price, etc.

Annual Report 2015

59

PER SHARE INFORMATION
Yen

U.S. Dollars
2015

2014
Net assets per share¥

906.29Net income per share¥2015
922.05

$

7.68

22.59

20.69

0.18

Notes:
1. Diluted net income per share has not been presented since there is no dilutive security.
2. The basis of calculating net income per share is as follows:

Millions of Yen
Net income

¥

4,226

Amount not attributable to common shareholders
Net income applicable to common shares

Thousands of U.S. Dollars
2015

2014
¥

2015
4,615

$

38,458

–

–

–

4,226

4,615

38,458

Thousands of Shares
2015

2014
Weighted average number of common shares during the year

204,308

204,341

3. The basis of calculating net assets per share is as follows:

Millions of Yen
Total net assets¥

TThousands of U.S. Dollars
2015

2014
189,692¥2015
193,345

1,611,208

Amount deducted from total net assets

4,521

4,976

41,466[Minority interests included in the above][4,521][4,976][41,466]

Total net assets related to common shares

185,171

188,368

1,569,733

Thousands of Shares
2015

2014
Number of common shares outstanding at end of year

SIGNIFICANT SUBSEQUENT EVENTS
Not applicable.

60$

204,317204,294

Consolidated Supplemental Schedules(Schedule of bonds)
Not applicable.

(Schedule of loans)
As of April 1, 2014

As of March 31, 2015

Short-term loans payable¥ 7,350 million$ 61,250 thousand¥ 7,640 million$ 63,666 thousand

0.7–

Current portion of long-term loans payable¥$

281 million
2,341 thousand¥$

1,088 million
9,066 thousand

1.7–

Current portion of lease obligations¥$

623 million
5,191 thousand¥$

516 million
4,300 thousand––

Long-term loans payable (excluding current portion of
long-term loans payable)¥ 2,844 million$ 23,700 thousand¥ 1,755 million$ 14,625 thousand

2.3

2016 to 2021

Lease obligations (excluding current portion of leaseobligations)

¥
$

¥
$

809 million
6,741 thousand–

2016 to 2022

–

–

–

–

¥ 12,146 million$ 101,216 thousand¥ 11,809 million$ 98,408 thousand––

1,046 million
8,716 thousand

Other interest-bearing debt
Total

Average interest rate (%)

Maturity

Notes:
1. Interest rates and balances at the end of the year are used to calculate average interest rate. The average interest rate of lease obligations has not been presented since lease obligations before deducting the amountequivalent to interest expense included in total lease payments are recorded on the consolidated balance sheet.
2. The redemption schedule of long-term loans payable and lease obligations (excluding current portion) for five years subsequent to March 31, 2015 is summarized as follows:

Due after one year
through two years

Due after two years
through three years

Due after three years
through four years

Due after four years
through five years

Long-term loans payable¥$

495 million
4,125 thousand¥$

303 million
2,525 thousand¥$

311 million
2,591 thousand¥$

318 million
2,650 thousand

Lease obligations¥$

349 million
2,908 thousand¥$

234 million
1,950 thousand¥$

135 million
1,125 thousand¥$

63 million
525 thousand(Schedule of Asset Retirement Obligations)
The amounts of asset retirement obligations as of April 1, 2014 and March 31, 2015 are less than 1% of the total liabilities and net
assets as of April 1, 2014 and March 31, 2015. Therefore, the disclosure is omitted.

OthersQuarterly information for the year ended March 31, 2015
Cumulative period

First quarter

Second quarter

Third quarter

Fourth quarter

Net sales¥$

89,844 million
748,700 thousand¥ 201,639 million$ 1,680,325 thousand¥ 290,684 million$ 2,422,366 thousand¥ 436,682 million$ 3,639,016 thousand

Income before income taxes¥$

1,538 million
12,816 thousand¥$

5,205 million
43,375 thousand¥$

6,652 million
55,433 thousand¥$

11,141 million
92,841 thousand

Net income¥$

687 million
5,725 thousand¥$

2,552 million
21,266 thousand¥$

3,351 million
27,925 thousand¥$

4,615 million
38,458 thousand

Net income per share

¥
$

3.37
0.02

¥
$

12.49
0.10

¥
$

16.41
0.13

¥
$

22.59
0.18

3.37
0.02

¥
$

Each quarter
Net income per shareFirst quarter¥$

Second quarter
9.13
0.07

Third quarter¥$

Fourth quarter
3.91
0.03

¥
$

6.18
0.05

Annual Report 201561

Independent Auditors’ Report62Company Profile
History
Time

Notes

Sep. 1944

Kyoritsu Kogyo Co., Ltd., and seven other companies merge to rationalize their electrical engineering work. Kanto Haiden Co., Ltd. joins the new group to form
Kanto Denki Koji Co., Ltd., an electrical engineering company with capital of ¥3 million and a head office at 2 Tameike, Akasaka Ward, Tokyo. Eight regional
branches are established in Kanagawa, Saitama, Chiba, Gunma, Tochigi, Ibaraki, Yamanashi, and Numazu (now Shizuoka), and operations begin.

Mar. 1948

The Tama Branch is established.

Oct. 1949

In accordance with the Construction Business Act, the Company receives ministerial registration No. 250, which it renews every two years.

Jan. 1959

The Osaka (now Kansai) Branch is established.

Sep. 1960

The head office moves to 4-1-18 Yushima, Bunkyo Ward, Tokyo.

July 1961

The Company invests in Oyo Denki Co., Ltd. (now KANKO SYOJI CO., LTD.).

Oct. 1961

The Company’s stock is listed on the Second Section of the Tokyo Stock Exchange (capital: ¥350 million).

May 1962

Kanto Sekizai Kogyo Co., Ltd. (now K Lease Co., Ltd.) is established.

Jan. 1970

The Sendai (now Tohoku) Branch is established.

Feb. 1970

The Shinetsu (now Nagano) Branch is established.
The civil engineering business is launched.
The Company’s stock listing moves to the First Section of the Tokyo Stock Exchange (capital: ¥1,700 million).

May 1970

Air-conditioning duct business (now the environmental facilities and systems and renovation business) is launched.

Aug. 1970

The Sapporo (now Hokkaido) Branch is established.

Apr. 1971

The Company invests in Dai-ichi Kigyo Co., Ltd. (now Kanko Power Techno Co., Ltd.).

June 1973

The Comprehensive Education Center (now the Education & Training Center) is established.

Apr. 1974

Due to revision of the Construction Business Act, the Company receives ministerial permit (Special – 49) No. 3885, which it currently renews every five years.

June 1976

The Company receives ministerial permit (Ordinary – 51) No. 3885, which it currently renews every five years.

July 1979

The nuclear energy-related business is launched.

Oct. 1981

The Singapore Office (now Branch) is established.

Sep. 1984

The Company name is changed to Kandenko Co., Ltd.

Nov. 1984

Kanko Fudousan Kanri Co., Ltd. is established.

Jan. 1985

The Company invests in Tokyo Kouji Keibi Co., Ltd.

May 1985

The Company’s first issue of unsecured convertible bonds (¥10 billion) takes place.

July 1987

Kanko Maintenance Service Co., Ltd. (now Kanko Facilities Co., Ltd.) is established.

Dec. 1988

The head office moves to 4-8-33 Shibaura, Minato Ward, Tokyo (its present location).

Apr. 1990

The Nagoya Branch is established.

July 1991

The Kyushu Branch is established.

July 1993

The Tsukuba Technology Research & Development Institute (now the Technology Research & Development Institute) is established.

July 1994

Bay Techno Co., Ltd. is established.

July 1995

The Niigata Branch is established.

July 1997

The Chuo (now Tokyo) Branch is established.

Oct. 1997

Ibaraki K-Techno Co., Ltd., Tochigi K-Techno Co., Ltd., Gunma K-Techno Co., Ltd., Yamanashi K-Techno Co., Ltd., and Shizuoka K-Techno Co., Ltd.,are established.

July 1998

Kanagawa K-Techno Co., Ltd., Chiba K-Techno Co., Ltd., and Saitama K-Techno Co., Ltd., are established.

Nov. 2000

NETSAVE Co., Ltd. is established.

Aug. 2001

The Taiwan Branch is established.

Dec. 2001

In accordance with the Building Lots and Buildings Transaction Business Act, the Company receives a Building Lots and Building Transactions Business License(1) No. 80352 from the governor of Tokyo, which it renews every five years.

May 2003

The Company invests in Hankyu Denki Koji Co., Ltd. (now HANDENKO CORPORATION).

June 2004

The Company invests in Transmission Line Construction Co., Ltd.

Apr. 2008

The Company invests in Kawasaki Setsubi Kogyo Co., Ltd. (listed on the Second Section of the Nagoya Stock Exchange).

Oct. 2012

The Company invests in Choshi Wind Development Co., Ltd. (and launches the power generation business).

Mar. 2013

Kama Solar Power Co., Ltd. is established.

Oct. 2014

The regional headquarters system is introduced, and power line engineering work is put under the head office’s direct jurisdiction.

Annual Report 2015

63

Stock Information (As of March 31, 2015)
The shares of common stock of theCompany are listed on the First

Principal Shareholders

Section of the Tokyo Stock Exchange.
On March 31, 2015, there were a totalof 9,144 shareholders.
The following table lists the 10
largest shareholders appearing on theregister at that date.

Name

Number ofshares held

Shares held as a percentage
of total outstanding shares

1

Tokyo Electric Power Company, Incorporated

94,753,552

46.15

2

The Master Trust Bank of Japan, Ltd. (Trust Account)

12,256,000

5.97

3

Mizuho Bank, Ltd.

8,121,839

3.95

4Japan Trustee Services Bank, Ltd. (Trust Account)

6,350,000

3.09

5Kandenko Group Employees Shareholding Association

6,305,004

3.07

6

CBNY DFA INTL SMALL CAP VALUE PORTFOLIO

1,977,000

0.96

7Japan Trustee Services Bank, Ltd. (Trust Account 4)

1,594,000

0.77

8MSIP CLIENT SECURITIES

1,561,192

0.76

9

Takasago Thermal Engineering Co., Ltd.

1,318,000

0.64

10

Japan Trustee Services Bank, Ltd. (Trust Account 9)1,255,000

0.61

Total

135,491,587

66.00

Number of Shares Held by Type of Shareholder

Stock-Related Information

Others0.99％
Foreigncompanies,etc.
11.73％

Individuals,
other16.22％

Financial
institutions
21.02％

Japanesecompanies
50.04％

Fiscal year-end

March 31

Ordinary general
meeting of shareholders

June

Record dates for
dividend payments

March 31 for the fiscal year-end dividend.
September 30 for the interim dividend.

Record date

The date on which shares must be owned forshareholders to exercise voting rights at the general
meeting of shareholders is March 31. If other votes
are required, the record date will be set andannounced in advance.

Method of public
notification

Notification will be given electronically. However, if
we cannot issue an electronic notification, we willplace a notice in the Nihon Keizai Shimbun,
published in Tokyo. Kandenko’s URL for public
notices is as follows.
http://www.kandenko.co.jp/index.html

Transfer agent

Sumitomo Mitsui Trust Bank, Limited
1-4-1 Marunouchi, Chiyoda-ku,
Tokyo 100-8233, Japan

Transfer agent contact
point (inquiries about
stock-related matters)

Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Department
2-8-4 Izumi, Suginami-ku, Tokyo 168-0063, Japan
Tel: 0120-782-031 (toll-free)Monthly Stock Price(Unit : Yen)
800

600

400

0

64

Apr. May June July Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.
2014
2015

Board of Directors and Audit & Supervisory Board Members (As of June 26, 2015)
Managing Directors andExecutive Officers

Chairman

Manabu Yamaguchi

President

Hiroshi Mizue

Shinichiro Kitayama

Executive Vice
Presidents

Kiyoshi Goto

Hiroshi Nomura

Yoshimi Morito

Shigenori Takaoka

Takuo Izumi

Kazuo Nagayama

Shoichiro Kashiwabara

Takehiro Yamaguchi

Senior Managing Directors Masahiro Serizawa
and Executive Officers
Kenichi Takahashi

Haruhiko Terauchi

Audit & Supervisory Board Takao ItoMembers (full-time)
Kenichi Nakamura
Audit & Supervisory
Board Members

Sumihito Okawa

Toshio Nakama
Managing Directors

Takashi Uchino
Masataka Ishizuka

Network
Domestic Offices

Overseas Offices

Head Office

4-8-33 Shibaura, Minato-ku, Tokyo, JapanTokyo Branch

4-8-33 Shibaura, Minato-ku, Tokyo, Japan

Kanagawa Branch 1-1-8 Hiranuma, Nishi-ku, Yokohama, Japan
Chiba Branch

2-1-24 Shinjuku, Chuo-ku, Chiba, Japan

Saitama Branch

3-22-15 Negishi, Minami-ku, Saitama, Japan

Ibaraki Branch

2-7-14 Jonan, Mito-shi, Ibaraki, Japan

Tochigi Branch

91-1 Imaizumicho, Utsunomiya-shi, Tochigi, Japan

Gunma Branch

215-6 Furuichimachi, Maebashi-shi, Gunma, Japan

Yamanashi Branch

4-12-25 Chuo, Kofu-shi, Yamanashi, Japan

Shizuoka Branch

8-12 Yoneyamacho, Numazu-shi, Shizuoka

Tama Branch

2-24-6 Myojincho, Hachioji-shi, Tokyo, Japan

Kansai Branch

Nakanoshima Festival Tower 20th Floor,
2-3-18 Nakanoshima, Kita-ku, Osaka, Japan

Nagoya Branch

Nagoya Toho Building 3rd Floor, 1-2-7 Sakae, Naka-ku,
Nagoya, Japan

Kyushu Branch

Yakuin Business Garden 4th Floor, 1-1-1 Yakuin,
Chuo-ku, Fukuoka, Japan

Hokkaido Branch

Takeda Resona Building 3rd Floor,
4-1-2 Kitaichijo Nishi, Chuo-ku, Sapporo, Japan

Tohoku Branch

Sendai Daiichi Seimei Tower Building,
4-6-1 Ichibancho, Aoba-ku, Sendai, Japan

Nagano Branch

1629-32 Midoricho, Nagano, Japan

Singapore
Branch371 Beach Road, #03-15, Keypoint, Singapore 199597

Taiwan Branch

6F-1, No. 45, Section 1, Minchuan Eastern Road,
Taipei, Taiwan

Yangon Branch

BLK-31, Room 21, 2nd Floor, Shwe Ohn Pin Apartment,
Yanshin Road, Yankin Township, Yangon, Myanmar

Hanoi
Representative
OfficeIndonesia
Representative
Office17th Floor VIT Tower, 519 Kim Ma Street,
Ba Dinh District, Hanoi, Vietnam
5th Floor, Summitmas II Building, Jl. Jend. Sudirman
Kav. 61-62, Jakarta 12190 Indonesia

Annual Report 201565

http://www.kandenko.co.jp/en/

This annual report is printed on Forest Stewardship Council™ (FSC)-certified paper made of wood from responsibly managed forests.
It was also printed using vegetable oil inks.

Printed in Japan