Consolidated Financial Statements
MODEC, INC. and Consolidated Subsidiaries
For the years ended December 31,
2020 and 2019

MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS
December 31, 2020 and 2019ASSETS
Millions of Japanese yen
2019
2020
CURRENT ASSETS:
Cash and time deposits (Notes 1(u), 3 and 17)
Accounts receivable-trade (Notes 17 and 20)
Inventories (Note 2)
Short-term loans receivable (Notes 17 and 20)
Other current assets
Less allowance for bad debts
Total current assets¥66,117
124,741
19,066－
19,082(1,061)
227,946¥52,381
163,364
4,630
8,387
19,198(450)
247,512PROPERTY AND EQUIPMENT (Note 19):
Buildings and structures
Machinery and equipment
Other property and equipment
Construction in progress
Less accumulated depreciation
Net property and equipment

140
111
10,068255(5,847)
4,728

140
90
9,120
10
(4,313)
5,048

INTANGIBLE ASSETS (Note 4)

10,275

9,652

67,54338,004
4,832
4,200
114,581¥357,532

72,20237,8863,922
6,965
120,976¥383,189

INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 17)
Long-term loans receivable from affiliates (Notes 17 and 20)
Deferred tax assets (Note 14)
Other investments (Note 3)
Total investments and other assets
Total assets

The accompanying notes are an integral part of these consolidated financial statements.

1

LIABILITIESMillions of Japanese yen
2020
CURRENT LIABILITIES:
Accounts payable-trade (Notes 17 and 20)
Short-term loans payable (Notes 5 and 17)
Current portion of long-term loans payable (Notes 5 and 17)
Lease obligations
Accrued expenses
Income taxes payable (Note 14)
Advances received
Accrued employees’ bonuses
Accrued directors’ bonuses
Provision for loss on construction contracts
Provision for construction warranty
Provision for repairs
Other current liabilities
Total current liabilities
LONG-TERM LIABILITIES:Long-term loans payable (Notes 5 and 17)
Lease obligations
Net defined benefit liabilities (Note 10)
Deferred tax liabilities
Liabilities from application of equity method
Other long-term provision
Other long-term liabilities
Total long-term liabilities

2019¥151,331
3,001
5,748
1,393
15,653
5,189
32,455
158
－
5,579
7,256
3,731
6,296
237,796¥150,847－
13,931
1,544
18,1105,129
13,411
85
25
7,146
6,930
10,573
4,124
231,860

4,746
1,620
885
62
10,807271
6,326
24,72010,827
2,238
366
196
5,451
285
6,596
25,962¥262,517¥257,823

CONTINGENT LIABILITIES AND COMMITMENTS (Note 15)
Total liabilities

2

NET ASSETS

Millions of Japanese yen
2020
NET ASSETS:SHAREHOLDERS’ EQUITY (Note 8):
Common stock
Authorized – 102,868,000 shares in 2020 and in 2019
Issued – 56,408,000 shares in 2020 and in 2019
Capital surplus
Retained earnings
Treasury stock, at cost
54,232 shares in 2020 and 60,409 shares in 2019
Total shareholders’ equity

2019¥30,122
29,301
56,265¥30,122
29,301
71,950(169)
115,519(188)
131,185

ACCUMULATED OTHER COMPREHENSIVE INCOME:
Unrealized gains (losses) on hedging derivatives, net of tax
Foreign currency translation adjustments
Retirement liability adjustments for foreign consolidated
subsidiaries
Total accumulated other comprehensive income(15,274)(7,610)(11,282)
2,983(1,211)(24,097)(1,095)(9,394)

NON-CONTROLLING INTERESTS
Total net assets
Total liabilities and net assets

3,592
95,015¥357,532

3,575
125,366¥383,189

3

MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2020 and 2019
Millions of Japanese yen
2020
2019
¥309,925¥332,644
319,524
325,148(9,598)
7,495

SALES (Notes 19 and 20)
COST OF SALES (Note 11)
Gross profit (loss)
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Note 12)
Operating profit (loss)

12,015(21,614)

12,336(4,841)

Interest income
Dividend received
Equity in earnings of unconsolidated
subsidiaries and affiliates, net
Interest expense
Foreign exchange gain (loss), net
Gain (loss) on revaluation of derivatives
Gain on sale of non-current assets
Reversal of provision for repairs
Gain on liquidation of subsidiaries andaffiliates
Extraordinary repair expenses (Note 13)
Retirement benefit expenses
Others, net
Total other income (expenses)

4,248
14

5,943
－

4,467
(654)
22
(84)
－
1,552

2,382
(964)
(1,375)
(590)
327
－

－
－
(447)
743
9,864

509
(16,690)－(259)(10,717)

PROFIT (LOSS) BEFORE INCOME TAXES(11,749)(15,558)

INCOME TAXES (Note 14):
Current
Deferred

2,645(1,497)

2,781
(660)

PROFIT (LOSS)(12,897)(17,680)

OTHER INCOME (EXPENSES):PROFIT ATTRIBUTABLE TO NONCONTROLLING INTERESTSPROFIT (LOSS) ATTRIBUTABLE TO OWNERS
OF PARENT

178

547

¥ (13,076)¥ (18,227)

Earnings per share (Note 9)
Dividends per share (Note 9)

Japanese yen¥ (232.05)¥45.00¥ (323.47)¥45.00

The accompanying notes are an integral part of these consolidated financial statements.

4

MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31, 2020 and 2019

PROFIT (LOSS)OTHER COMPREHENSIVE INCOME:
Unrealized gains on hedging derivatives, net of tax
Foreign currency translation adjustments
Retirement liability adjustments for foreign consolidated
subsidiaries
Share of other comprehensive income (loss) ofunconsolidated subsidiaries and affiliates accounted forusing equity method
Total other comprehensive income
COMPREHENSIVE INCOME

Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

Millions of Japanese yen
2020
2019
(Note 16)
(Note 16)
¥ (12,897)¥ (17,680)
2,155(5,945)399(2,106)

(112)

(368)

(10,962)(14,864)¥ (27,762)(5,809)(7,885)¥ (25,565)

Millions of Japanese yen
2019
2020
¥ (27,779)¥ (25,841)
¥17
¥275

The accompanying notes are an integral part of these consolidated financial statements.

5

MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSFor the years ended December 31, 2020 and 2019
Millions of Japanese yen

Commonstock

Balance on January 1,
2019¥30,122

CapitalsurplusRetainedearnings¥30,851¥93,571

Cumulative effect ofchanges in accounting
policies
Restated balance

Treasurystock, atcost¥ (99)

Unrealized
gains(losses)on
hedging
derivatives,
net of tax¥ (6,864)

Noncontrollinginterests¥5,740¥ (656)¥12,148

Total net
assets¥164,814(361)

30,12230,851

93,210

(361)

(99)

(6,864)

5,740

(656)

12,148164,452(3,031)

Cash dividends paid

(3,031)(89)

Purchase of treasury
stock

(89)

(18,227)

Profit (loss) attributableto owners of parent
Change in ownershipinterest of parent due totransactions with noncontrolling interests(18,227)(1,549)(1,549)Net changes of items
other than those inshareholders’ equity
during the year
Balance on January 1,
2020

Foreigncurrencytranslation
adjustments

Retirement
liability
adjustments
for foreign
consolidated
subsidiaries¥30,122¥29,301¥71,950¥ (188)(4,417)(2,756)(439)(8,573)(16,186)¥ (11,282)¥2,983¥ (1,095)¥3,575¥125,366(2,608)Cash dividends paid

(2,608)Purchase of treasury
stock

(0)

(0)

Disposal of treasury
stock

19

19

(13,076)

Profit (loss) attributableto owners of parent(13,076)

Change in ownershipinterest of parent due totransactions with noncontrolling interests－

Net changes of items
other than those inshareholders’ equity
during the year
Balance on December
31, 2020¥30,122¥29,301¥56,265¥ (169)(3,992)(10,593)

(116)

17

(14,685)¥ (15,274)¥ (7,610)¥ (1,211)¥3,592¥95,015

The accompanying notes are an integral part of these consolidated financial statements.

6

MODEC, INC. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWSFor the years ended December 31, 2020 and 2019
Millions of Japanese yen
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:Profit (loss) before income taxes
Adjustments to reconcile profit before income taxes to net cash provided byoperating activities:
Depreciation and amortization
Amortization of goodwill
Increase (decrease) of allowance for bad debts
Increase (decrease) of net defined benefit liabilities
Increase (decrease) of accrued directors’ bonuses
Increase (decrease) in provision for loss on construction contracts
Increase (decrease) of provision for construction warranty
Increase (decrease) of provision for repairs
Interest and dividend income
Interest expense
Foreign exchange (gains) losses, net
Equity in earnings of unconsolidated subsidiaries and affiliates, net
Loss (gain) on revaluation of derivatives
Loss (gain) on liquidations of subsidiaries and affiliates, net
Loss (gain) on sales of non-current assets
Changes in assets and liabilities:
Decrease (increase) in– Accounts receivable-trade– Inventories
Increase (decrease) in– Accounts payable-trade– Consumption tax payable
Others, net
Total adjustments
Interest and dividend received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities¥ (11,749)¥ (15,558)

3,294
150
612
519
(25)
(1,173)697(6,841)(4,263)654(5,767)(4,467)
84
－
－

3,265
159
(242)
19
6
7,146
1,071
10,568(5,943)964(760)(2,382)
590
(509)
(327)

54,896(14,751)(71,131)688

9,153(2,500)2,156
20,67812,724(704)(1,694)¥31,004

64,684(3,464)
6,608(4,545)
6,846(957)(4,592)¥ (3,248)

The accompanying notes are an integral part of these consolidated financial statements.

7

Millions of Japanese yen
2020
2019
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in time deposits
Purchases of property and equipment and intangible assets
Purchases of investments in subsidiaries and affiliates
Decrease (increase) in short-term loans receivable
Proceeds from sales of property and equipment and intangible assets
Disbursements of long-term loans receivableCollections of long-term loans receivable
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term loans payable
Repayments of long-term loans payable
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Subsidy income
Repayments of finance lease obligations
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation
Net cash provided by (used in) financing activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
(Note 1 (u))

8¥－(3,942)(1,878)5,219
2(3,405)
3,261
(742)

¥73
(2,710)(4,959)34,658
1,381(4,981)
2,796
26,2593,487(13,815)(0)19(2,609)－591(1,562)(26)(6,093)(89)－(3,033)(1,310)－(1,318)－(13,888)(8,880)(20,751)(3,769)12,60352,142(889)
1,369
50,773¥64,746¥52,142

MODEC, Inc. and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting and Reporting Policies(a) Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of MODEC, Inc. (“the Company”) havebeen prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Act and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements of International Financial
Reporting Standards.
The accounts of the Company’s foreign subsidiaries are based on their accounting records
maintained in conformity with generally accepted accounting principles prevailing in therespective countries of domicile and any significant differences between Japanese GAAP and
Local GAAP are adjusted in consolidation. The accompanying consolidated financial
statements have been restructured and translated into English with some expanded
descriptions from the consolidated financial statements of the Company prepared inaccordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the
Ministry of Finance as required by the Financial Instruments and Exchange Act. Some
supplementary information reported in the statutory Japanese language consolidated financial
statements but not required for fair presentation is not presented in the accompanying
consolidated financial statements.
All of the Japanese yen and U.S. dollar amounts presented in the accompanying consolidated
financial statements and notes of the Company are rounded down to millions.
(b) Principles of Consolidation and Equity Method
The accompanying consolidated financial statements include the accounts of the Company
and 21 of its subsidiaries for the year ended December 31, 2020 and 19 of its subsidiaries forthe year ended December 31, 2019. Material inter-company balances, transactions and profits
have been eliminated in consolidation.
Investments in significant unconsolidated subsidiaries and affiliates, which were 20
companies for the year ended December 31, 2020 and 2019 were accounted for using theequity method.
Another 5 subsidiaries and 1 affiliate for the year ended December 31, 2020 and 4 subsidiaries
for the year ended December 31, 2019 were neither consolidated nor accounted for using theequity method as they would not have had a material effect on the accompanying consolidated
financial statements.
The consolidated financial statements are required to include the accounts of the Company
and significant companies that are controlled by the Company through substantial ownershipof more than 50% of the voting rights or through ownership of a high percentage of the voting
rights even if it is equal to or less than 50% and existence of certain conditions evidencing
control by the Company of decision-making bodies of such companies.
Investments in significant unconsolidated subsidiaries and affiliates, of which the Company
has ownership of 20% or more but less than or equal to 50%, and of 15% or more and lessthan 20% and can exercise significant influences over operating financial policies ofinvestees, have been accounted for using the equity method.

9All consolidated subsidiaries have the same balance sheet date, December 31, corresponding
with that of the Company.
(c) Valuation of Assets and Liabilities of Subsidiaries
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries,
including the portion attributable to non-controlling shareholders, were evaluated by using thefair value at the time the Company acquired the control of the respective subsidiaries.
(d) Goodwill
The excess of cost over the underlying investments in consolidated subsidiaries is recognized
as goodwill and is amortized using the straight-line method over their estimated useful lives.
The excess of cost over the underlying investments in affiliates accounted for using the equity
method is treated in the same manner.
(e) Securities
In accordance with the Japanese accounting standard for financial instruments, all companies
are required to examine the intent of holding each security and classify those securities as (a)securities held for trading purposes (“trading securities”), (b) debt securities intended to beheld to maturity (“held-to-maturity debt securities”), (c) equity securities issued byunconsolidated subsidiaries and affiliates, and (d) all other securities that are not classified inany of the above categories (“available-for-sale securities”).
Based on the examination of the intent of holding, the Company classifies its securities as
equity securities issued by unconsolidated subsidiaries and affiliates and available-for-salesecurities. Available-for-sale securities maturing within one year from the balance sheet date
are recorded in current assets. Other securities are recorded in investment securities. The
Company does not have trading securities or held-to-maturity debt securities.
Equity securities issued by unconsolidated subsidiaries and affiliates that are not accounted
for using the equity method are stated at moving-average cost. Available-for-sale securities
with available fair market values are stated at fair market value as of the balance sheet dates.
Unrealized gains and losses on these securities are reported net of applicable income taxes, asa separate component of net assets. Realized gains and losses on sale of such securities arecomputed using moving-average cost. Available-for-sale securities without available fairmarket values are stated at moving-average cost.
(f) Inventories
Both raw materials and costs of uncompleted contracts are stated at cost, determined on an
individual project basis (Balance sheet value reflects downturn in profitability).
(g) Property and Equipment
Property and equipment are stated at cost. Depreciation of Floating Production Storage &Offloading Systems (“FPSOs”) and Floating Storage & Offloading Systems (“FSOs”) ownedby the foreign consolidated subsidiaries are calculated using the straight-line method based on
their lease terms or their economic useful lives.
Depreciation of property and equipment other than FPSOs and FSOs are calculated asfollows. The Company depreciates property and equipment using the declining-balancemethod based on their useful lives and residual values prescribed by the Japanese corporation
tax laws and regulations except for buildings, facilities attached to buildings and structuresacquired on or after April 1, 2016, which are depreciated using the straight-line method.
Foreign consolidated subsidiaries depreciate property and equipment using the straight-line
method based on their estimated useful lives.
10(h) Intangible Assets
The Company amortizes software costs used internally using the straight-line method over theestimated useful lives mainly from 5 to 10 years and amortizes other intangible assets using
the straight-line method based on the useful lives prescribed by the Japanese corporation tax
laws and regulations.
(i) Finance Lease Transaction without Transfer of Ownership
Lessee:The method of amortization of the lease assets related to finance lease transactions withouttransfer of ownership is by the straight-line method corresponding to lease period with zero
residual value.
(j) Allowance for Bad Debts
The Company provides for an allowance for bad debts to cover probable losses on estimateduncollectable portion of specifically identified receivable.
(k) Accrued Employees’ Bonuses
The Company accrues employees’ bonuses based on the estimated amounts to be paid in thesubsequent period.
(l) Accrued Directors’ Bonuses
The Company accrues directors’ bonuses based on the estimated amounts to be paid in thesubsequent period.
(m) Provision for Construction Warranty
Provision for construction warranty is provided based on the estimated amounts for covering
the probable product warranties.
(n) Provision for Repairs
Provision for repairs is provided based on the estimated amounts for foreseeable periodic
repair expenses deemed to correspond to normal wear and tear of equipment as of the end of
the consolidated fiscal year to be paid in the subsequent period.
(o) Provision for loss on construction contracts
Provision for loss on uncompleted construction contracts is provided at the end of this fiscal
year when the losses are certainly anticipated for the next fiscal year and after, and such losses
can be reasonably estimated.
(p) Severance and Retirement Benefits for Employees
The Company and certain foreign consolidated subsidiaries have unfunded lump-sum
severance and retirement payment plans for employees. Under these plans, employees whose
employment is terminated or who retire are entitled to benefits which are, in general,
determined on the basis of length of service and basic salary at the time of termination orretirement.
For calculating retirement benefit obligations, the benefit formula basis is used to allocate
projected retirement benefits over the period to the end of this consolidated fiscal year.
Actuarial gains and losses are fully recognized in the consolidated statement of operations of
the period in which they occur.
The Company and certain foreign consolidated subsidiaries also adopt defined contribution
pension plans.
11(q) Translation of Foreign Currency Accounts
Foreign currency transactions are translated into Japanese yen using the exchange rate ineffect at the time of each transaction or at the applicable exchange rates under forward
exchange contracts.
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at
appropriate year-end current exchange rates, and the resulting gains or losses are recorded inother income (expenses) in the consolidated statements of operations.
Financial statements of foreign consolidated subsidiaries are translated into Japanese yen
using the exchange rates prevailing at the end of each consolidated fiscal year, except theexchange rates in effect at the date of transactions are used for shareholders’ equity. The
Company records foreign currency translation adjustments as a component of net assets in the
consolidated balance sheets.
(r) Derivative Transactions and Hedge Accounting
Derivative financial instruments of the Company are stated at fair value and gains or losses
are recognized for changes in the fair value unless derivative financial instruments are used
for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, theCompany defers recognition of gains or losses resulting from changes in fair value ofderivative financial instruments until the related losses or gains on the hedged items arerecognized.
However, in cases where forward foreign exchange contracts and currency swap contracts areused as hedges and meet certain hedging criteria, forward foreign exchange contracts andcurrency swap contracts and hedged items are accounted for in the following manner.
1) If a forward foreign exchange contract or a currency swap contract is executed to hedge
existing foreign currency receivables or payables,a) the difference, if any, between the Japanese yen amount of the hedged foreign
currency receivable or payable translated using the spot rate at the inception date of
the contract and the book value of the receivable or payable is recognized in theincome statement in the period which includes the inception date, andb) the discount or premium on the contract (that is, the difference between the Japanese
yen amount of the contract translated using the contracted forward rate and thattranslated using the spot rate at the inception date of the contract) is recognized over
the term of the contract.
2) If a forward foreign exchange contract or a currency swap contract is executed to hedge afuture transaction denominated in a foreign currency, the future transaction will berecorded using the contracted forward rate, and no gains or losses on the forward foreignexchange contracts and currency swap contracts are recognized.
Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, thenet amount to be paid or received under the interest rate swap contract is added to or deductedfrom the interest on the assets or liabilities for which the swap contract was executed.
Certain foreign consolidated subsidiaries adopt hedge accounting in accordance with
U.S.GAAP.

12(s) Revenue Recognition
1) The Company applies the percentage of completion method to the construction contracts
in the event where the outcome of construction contracts can be reliably estimated. The
percentage of completion is calculated by units of work performed method which is basedon a physical progress measurement or percentage of cost method. The other construction
contracts are recognized by the completed contract method.
2) Revenues and cost of sales relating to finance lease transactions are recognized whenlease payments are received.
(t) Income Taxes
The Company provides income taxes at the amounts currently payable based on taxable
income for tax purposes that may be different from income for accounting purposes. The
Company recognizes tax effects of temporary differences between the carrying amounts ofassets and liabilities for tax and financial reporting purposes. The asset and liability approachis used to recognize deferred tax assets and liabilities for the expected future tax consequencesof temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
(u) Cash Flow Statements
In preparing the consolidated statements of cash flows, cash on hand, readily available
deposits and short-term highly liquid investments with maturities not exceeding three months
at the time of purchase are considered to be cash and cash equivalents.
Reconciliations of cash and time deposits shown in the consolidated balance sheets and cash
and cash equivalents in the consolidated statements of cash flows as of December 31, 2020
and 2019 are as follows:
Millions of Japanese yen
2020
2019
¥66,117¥52,381

Cash and time deposits
Deposit pledged as collateral(1,371)(238)

Cash and cash equivalents¥64,746¥52,142

Unapplied Accounting Standards:(v) Accounting Standard for Revenue Recognition (ASBJ Statement No.29, March 31, 2020)(w) Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ
Guidance No. 30, March 31, 2020)
1) Overview
The above standard and guidance provide comprehensive principles for revenue
recognition. Under the standard and guidance, revenue is recognized by applying
following 5 steps:
Step 1: Identify contracts with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligation in the contract.
Step 5: Recognize revenue when or as the entity satisfies a performance obligation.

132) Effective date
The Company has adopted the standard from the beginning of the consolidated fiscal year
ended December 31, 2021.
3) Effect on application of the standards
The application of accounting standards is based on transitional provisions contained inparagraph 84 of accounting guideline for revenue.
The cumulative effect of retroactively applying the new accounting standards before thebeginning of the consolidated fiscal year ended December 31, 2021 has been reflected onretained earnings at the beginning of the consolidated fiscal year ended December
31,2021.
Based on the paragraph 86 of accounting guideline for revenue, the new accounting
standards have not been applied retroactively on the contract that the almost all revenue
had been recognized before the beginning of the consolidated fiscal year ended December
31, 2021.
Regarding contract changed before the beginning of the consolidated fiscal year ended
December 31,2021 based on the paragraph 86 (1) of accounting guideline for revenue,
accounting treatment has been performed based on the changed contract, and thecumulative impact has been reflected on the retained earnings at the beginning of theconsolidated fiscal year ended December 31, 2021.
As a result of the application, the balance of retained earnings at the beginning of theconsolidated fiscal year ended December 31, 2021 decreased by 4,145 million yen.
Additional Information:(x) Impact of COVID-19
Spread of COVID-19 infections have negatively impacted to progress of overall schedule ofongoing EPCI projects due to suspension of construction, delays in procurement of equipment
and access restrictions to construction site. And it is still unclear when COVID-19 is settled.
Responding to this situation, the Company has extended the schedule of EPCI projects andreflected additional cost from extended schedule to accounting estimates based on theassumption that COVID-19 would not be settled in short time period but would not negatively
impact further to the critical path of the extended schedule.
Considering that a global pandemic was declared, the Company has a view that delays of
FPSO delivery caused by COVID-19 would be a Force Majeure event. Thus, the Company
has not incorporated any impacts of liquidated damage due to delays caused by COVID-19 toaccounting estimates.
(y) Change in Calculation Method for Retirement Benefits and Retirement Benefit Expenses
In accordance with the Japanese accounting standard for employees’ severance and pension
benefits, a “simplified method” can be adopted to calculate severance and retirement benefits
for employees if the number of employees is less than 300. This method was adopted until theend of consolidated fiscal year ended December 31, 2019.
From the beginning of the consolidated fiscal year ended December 31, 2020, the Company
has adopted “principle method” considering increasing of the number of employees.
As a result, the retirement benefit obligations increased by￥447 million at the beginning of
the consolidated fiscal year ended December 31, 2020 and the same amount was recorded as
retirement benefit expenses in the consolidated statement of operations for the year ended
December 31, 2020.
14

2. Inventories
Inventories as of December 31, 2020 and 2019 consisted of the following:
Millions of Japanese yen
2020

2019

¥－
19,066¥19,066

Raw materials
Costs of uncompleted contracts

¥1
4,629
¥4,6303. Pledged Assets
Asset pledged as collateral as of December 31, 2020 and 2019 were as follows:
Millions of Japanese yen
2020
Cash and time deposits
Long-term time deposits

2019
－

¥238
1,449

¥1,371¥1,687¥1,371(Note) Above assets were pledged to issue letters of credit. No debt corresponds to these deposits
as of the end of this consolidated fiscal year.

4. Goodwill
Goodwill included in intangible assets as of December 31, 2020 and 2019 were ¥653 million and¥850 million, respectively.
5. Loans Payable
Short-term loans payable represents notes payable to banks due generally in twelve months or lessand bearing an average interest rate of 1.3% as of December 31, 2020.
Current portion of long-term loans payable represents notes payable to banks due originally morethan twelve months but generally in twelve months or less at end of current year-end and bearing
an average interest of 0.96% and 0.84% as of December 31,2020 and 2019, respectively.
Long-term loans payable as of December 31, 2020 and 2019 are summarized below:
Millions of Japanese yen

Loans from banks and others due through 2025
Less: Current portion included in current liabilities, ataverage rate of 0.96%
Loans from banks and others, at average rate of 1.03% due
through 2025
(Excluding current portion)

2020

2019

¥ 10,495¥ 24,759

5,748

13,931¥4,746¥10,827

The aggregate annual maturities of long-term loans payable are summarized below:
Year ending December 31,
2021
2022
2023
2024
2025

Millions of Japanese yen¥ 5,748
3,452
595
465
232
¥10,495

15

6. Asset Retirement Obligation
The Company and its subsidiaries recognize an asset retirement obligation following the officerental contract. The note is not required to disclose as the total amount of this liability isimmaterial.
The Company and its subsidiaries estimated an unrecoverable security deposit amount as an asset
retirement obligation. This loss is recognized as expense instead of a liability.
7. Unused Balance of Overdraft Facilities and Lending Commitment
The Company and its subsidiary have a commitment line agreement with a syndicate of six as of2020 and 2019 financial institutions, an overdraft facility agreement with two financial institutions
as of 2020 and 2019 for the purpose of providing operating funds. The commitment line amount is$160 million as of December 31, 2020 and 2019 without any drawdown. The overdraft facilityline amount is ¥3,000 million and $30 million without any drawdown as of December 31, 2020
and 2019.
8. Shareholders’ Equity
Under Japanese laws and regulations, the entire amount paid for new shares is required to be
designated as common stock. However, a company may, by a resolution of the Board of Directors,
designate an amount not exceeding one-half of the prices of the new shares as additional paid-in
capital, which is recorded in capital surplus.
Under the Japanese Corporate Law (“the Law”), in cases where a dividend distribution of surplus
is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% ofcommon stock over the total of additional paid-in-capital and legal earnings reserve must be set
aside as additional paid-in-capital or legal earnings reserve. Legal earnings reserve is included inretained earnings in the accompanying consolidated balance sheets.
Under the Law, all additional paid-in-capital and all legal earnings reserve may be transferred toother capital surplus and retained earnings, respectively, which are potentially available fordividends.
The maximum amount that the Company can distribute as dividends is calculated based on theunconsolidated financial statements of the Company in accordance with the Law.
At the annual shareholders’ meeting held on March 19, 2020, the shareholders approved cash
dividends amounting to ¥1,269 million for the year ended December 31, 2019. At the annual
shareholders’ meeting held on March 23, 2021, the shareholders approved cash dividends
amounting to ¥1,198 million for the year ended December 31, 2020. Such appropriations have notbeen accrued in the consolidated financial statements. Such appropriations are recognized in the
period in which they are approved by the shareholders.
9. Per Share Data
Earnings per share is calculated based on the weighted average number of shares of common
stock outstanding during the consolidated fiscal year.
Diluted earnings per share reflect the effect of potential dilution that could occur if securities orother contracts to issue common stock were exercised or converted into common stock. There isno outstanding potential common stock for the years ended December 31, 2020 and 2019.
Dividends per share shown for each consolidated fiscal year in the accompanying consolidated
statements of operations represent dividends declared as applicable to the respective years.
The Company’s stock held by Trust account was included in treasury shares, which is deductedfrom the number of shares used to calculate the average number of shares outstanding during
2020, as trust assets of the Stock Remuneration Plan for Directors in calculating Earnings per
share.
16

The average number of shares of the Company’s stock held by the trust was 55,407 shares and56,470 for the years ended December 31, 2020 and 2019, respectively.
10. Severance and Retirement Benefits for Employees(a) Defined benefit pension plans
The net defined benefit liabilities recorded in the liability section of the consolidated balance
sheets as of December 31, 2020 and 2019 consisted of the following:2020
1.

Defined benefit plansi)

Movements of net defined benefit liabilities recorded in the consolidated balance sheets(principle method)
Millions of Japanese yen
Balance at beginning of year
Increase resulting from changes from the simplified method
to the principle method
Recognized as expenses resulting from changes from thesimplified method to the principle method

ii)

¥－
366
447

Service cost

117

Interest cost

4

Actuarial loss

1

Benefits paid

(50)

Balance at end of year

¥885

Retirement benefit expenses
Millions of Japanese yen
Service cost

¥117

Interest cost

4

Actuarial loss

1

Retirement benefit expenses¥123iii) The assumption used for actuarial calculation
Discount rate

0.57%

Expected rate of salary increase

0.93-1.85%

2019
1.

Defined benefit plansi)

Movements of net defined benefit liabilities recorded in the consolidated balance sheets(simplified method)
Millions of Japanese yen
Balance at beginning of year
Severance and retirement benefit expenses

¥347
84

Benefits paid

(64)

Balance at end of year

¥366

17

ii)

Reconciliation of projected retirement benefit obligation and net defined benefit liabilities
recorded in the consolidated balance sheets
Millions of Japanese yen
Projected retirement benefit obligation(Unfunded termination and retirement allowance plan)
Net defined benefit liabilities recorded in the consolidatedbalance sheets

¥366
¥366

iii) Severance and retirement benefit expenses
Millions of Japanese yen
Severance and retirement benefit expenses (simplified method)¥84(b) Defined contribution pension plans
Contribution to pension plans amounted to ¥117 million and ¥107 million for the years ended
December 31, 2020 and 2019, respectively.
11. Provision for loss on construction contracts
Provision for loss on construction contracts included in cost of sales for the years ended December
31, 2020 and 2019 are as follows.
Millions of Japanese yen
2020
2019
Provision for loss on construction contracts¥(1,173)¥7,146

12. Research and Development Expenses
Research and development expenses included in selling, general and administrative expenses are¥482 million and ¥232 million for the years ended December 31, 2020 and 2019, respectively.
13. Extraordinary repair expense
Extraordinary repair expenses included in other income (expense) is recorded for following
reason.
Some cracks were identified on the hull of FPSO Cidade do Rio de Janeiro MV14 (“the FPSO”)
which has been out of the production since July 2018 and under removal operations from offshore
Brazil. In accordance with a result of discussions with Brazilian Navy, Classification Society, etc.,
in order to tow out the FPSO to a scrap yard outside of Brazil for the final decommissioning, it
has been required to repair the cracks and also to remove NORM (Naturally Occurring
Radioactive Material) and coral in a shipyard in Brazil. Because sharing of repair costs with
ESPADARTE MV14 B.V. which owns the FPSO and insurance payments from our insurers are
yet to be determined due to unfinished root cause analysis of the incident, MODEC, INC. and its
consolidated subsidiaries (MODEC International, Inc. and MODEC Serviços de Petróleo do
Brasil Ltda.) will have no other choice but to record the estimated repair costs of 16,690 million
yen for the year ended December 31, 2019 as Extraordinary repair expenses in the section of otherincome (expense).
14. Income Taxes
The statutory income tax rate in Japan arising out of the aggregation of corporate, enterprise andinhabitants’ taxes is 31.0% for the years ended December 31, 2020 and 2019.
1)

The following table summarizes the significant differences between the statutory tax rate andthe Company and its consolidated subsidiaries’ effective tax rate for financial statement
purposes for the years ended December 31, 2020 and 2019.

18

2020
Statutory income tax rates
Difference of statutory tax rate between the Company and foreignsubsidiaries

2019

31.0%

31.0%

(7.7)

(8.3)

Equity in earnings of unconsolidated subsidiaries and affiliates, net

11.8

4.7

Valuation allowance(40.8)(40.5)

Controlled foreign company income inclusion

(2.6)

－

Others

(1.4)

(0.5)

Effective tax rates(9.7) %

(13.6) %2)

Significant components of deferred tax assets and liabilities as of December 31, 2020 and2019 are as follows:
Millions of Japanese yen
2020

2019

Deferred tax assets:
Accrued enterprise taxes¥53

Accrued employees’ bonuses

¥55

4

3

Unrealized gains on fixed assets

1,258

1,101

Tax loss carry forward

17,501

14,337Retirement benefit liability

274

113

Depreciation

54

67

Foreign tax credit

263

1,326

Provision for construction loss

578

1,513

Provision for construction warranty

1,180

1,152

Provision for repairs

1,265

3,277

81
－

84

Estimated costs for construction contracts, etc.
Difference on percentage-of-completion method

1,933

821

Others

6,969

7,802

Deferred tax assets subtotal

31,42031,707

Valuation allowance for tax loss carryforwards
Valuation allowance for the total of future deductible temporary
differences, etc.

(15,303)(13,451)

Allowance for bad debts

Valuation allowance subtotal
Offsetting of deferred tax liability
Total deferred tax assets

47(8,590)(12,282)(23,894)(25,733)(2,694)

－

4,832

5,973
－

Deferred tax liability:
Difference on percentage-of-completion method(1,335)(1,317)Pending profit of overseas subsidiaries

(456)

(363)

Others

(964)

(567)

(2,756)(2,247)

2,694

－

(62)

(2,247)¥4,769¥3,725

Deferred tax liability subtotal
Offsetting of deferred tax asset
Total deferred tax liability
Net deferred tax assets (liabilities)

1915. Contingent Liabilities and Commitments
1)

As of December 31, 2020, and 2019, the Company was contingently liable for the following:
Millions of Japanese yen
2020
Guarantees of bank loans and other indebtedness for affiliates¥ 181,963

2019¥ 73,200

For the years ended December 31, 2020 and 2019, the share of the fair market values of swap
contracts of affiliates accounted for using the equity method are included in the consolidated
financial statements due to the adoption of “Practical Solution on Unification of Accounting
Policies Applied to Associates Accounted for Using the Equity Method” (PITF No.24 issued
by the Accounting Standards Board of Japan on March 10, 2008).
2)

Consolidated subsidiaries, MODEC MANAGEMENT SERVICES PTE. LTD., MODEC(GHANA) LTD. and affiliate accounted for using equity method, T.E.N. GHANA MV25
B.V. (“the companies”) received tax audit reports from the Ghana Revenue Authority(“GRA”) in November 2019 which assessed additional tax liability as a result of tax audit
which covers fiscal year from 2012 to 2018. In year 2020, GRA has resumed tax audit again
and GRA issued revised tax audit reports in November 2020. However, The Company
views the companies have filed their tax returns properly and the objection letter for the tax
assessment was submitted to GRA. Therefore, the Company has not reflected any impact tothe financial statements for the year ended December 31, 2020 and has not foreseen any
material impact to the Company’s financial forecast.

20

16. Comprehensive Income
The following represents each component of other comprehensive income for the years ended
December 31, 2020 and 2019:
Millions of Japanese yen
2020

2019

Unrealized gains (losses) on hedging derivatives, net of tax
Amount of generation

2,204

(434)

Amount of rearrangement adjustment

320

869

Before adjusting the tax effect

2,524

435

Tax effect

(369)

(36)

Unrealized gains on hedging derivatives, net of tax

2,155

399

(5,945)(1,674)－(432)(5,945)(2,106)－－(5,945)(2,106)

Amount of generation

(678)

(103)

Amount of rearrangement adjustment

521

(170)

Before adjusting the tax effect

(157)

(273)

45

(94)

(112)

(368)

(13,656)(7,092)

2,694

1,283

(10,962)(5,809)¥ (14,864)¥ (7,885)

Foreign currency translation adjustments
Amount of generation
Amount of rearrangement adjustment
Before adjusting the tax effectTax effectForeign currency translation adjustments
Retirement liability adjustments for foreign consolidated subsidiaries

Tax effect
Retirement liability adjustments for foreign consolidated subsidiaries
Share of other comprehensive income (loss) of unconsolidated
subsidiaries and affiliates accounted for using equity method
Amount of generation
Amount of rearrangement adjustment
Share of other comprehensive income (loss) of unconsolidated
subsidiaries and affiliates accounted for using equity method
Total

21

17. Financial Instruments(a) Concerning status of financial instrumentsi) Policies for financial instruments
The Company and its consolidated subsidiaries adopt only short-term financial instrumentsfor operating funds.
The Company and its consolidated subsidiaries have the policy of procuring bank-loans toraise funds.
The Company and some of its consolidated subsidiaries transfer funds to each other throughan inter-company cash management systems (CMS).
As to derivative financial instruments, the Company and its consolidated subsidiaries utilize
them for hedging purpose only and not for speculation.
ii) Substances and risks of financial instruments and managing of financial instruments
Accounts receivable-trade is exposed to credit risks of customers. The Company and its
subsidiaries research the credit standings and select credit worthy customers, and manage thebalance of accounts receivable-trade at regular intervals to reduce credit risks.
Short-term and long-term loans receivable that are granted to support the affiliates are mainly
established to accomplish charter projects which are exposed to credit risks of their customers.
The Company reduces the share of risks by arranging project financing or through thecooperation with general trading companies and other business partners.
Majority of accounts receivable-trade and loans receivable are denominated in foreign
currencies and the net of these balances with accounts payable-trade and loans payable areexposed to currency fluctuation risks. These risks are basically hedged by using forward
foreign exchange contracts.
Majority of accounts payable-trade are due within one year. Accounts payable-tradedenominated in foreign currencies arising from overseas procurement of materials are exposed
to currency fluctuation risks, but these accounts payable-trade are managed to not exceed
accounts receivable-trade in the same foreign currencies.
Short-term and long-term loans payable are primarily for raising funds for the affiliates.
Majority of loans payable are exposed to currency fluctuation risks, but these loans payable
are managed to not exceed loans receivable in the same foreign currencies. In addition, theCompany arranges the interest rate swap transaction for some of long-term loans payable byeach contract to fix the interest expense and to reduce the interest rate fluctuation risks.
Derivative transactions consist of mainly forward foreign exchange contracts and currency
swap contracts arranged for the purpose of hedging currency fluctuation risks arising fromforeign currency accounts receivable-trade and accounts payable-trade, and interest rate swap
transaction for the purpose of interest rate fluctuation risks arising from loans payable.
Accounts payable-trade and loans payable are exposed to the liquidity risks. To manage theliquidity risks, our finance department appropriately prepares and updates the cash
management plan.
iii) Supplementary explanation about fair value of financial instruments
The fair value is based on their fair market value quoted market price, if available, or
reasonably estimated value if market price is not available. Since various assumptions andfactors are reflected in estimating the fair value, different assumptions and factors could resultin different fair value.

22

The contract amounts of derivative transactions mentioned in Note 18. Derivative
Transactions do not indicate the actual market risks involved in the derivative transactions.
(b) Concerning fair value of financial instruments
Consolidated balance sheets amounts, fair value of financial instruments and the difference
between them for the years ended December 31, 2020 and 2019 are as follows. Financial
instruments for which the fair value is considered to be extremely difficult to obtain are notincluded in the list below.
2020:
Book Value¥66,117
124,741－
38,004¥228,863(1) Cash and time deposits(2) Accounts receivable-trade(3) Short-term loans receivable(4) Long-term loans receivable from affiliates (*1)
Assets total

Millions of Japanese yen
Fair Value¥66,117
124,741－
41,948¥232,807

Difference－－－¥3,943¥3,943－(5) Accounts payable-trade¥151,331¥151,331－(6) Short-term loans payable
3,001
3,001
(7) Long-term loans payable (*1)－
10,495
10,495
Liabilities total－¥164,828¥164,828(8) Derivative transactions (*2)i) Derivative transactions for which hedge accounting－
has not been applied
¥518
¥518
ii) Derivative transactions for which hedge accounting
has been applied
260
152
(107)
Derivative transactions total
¥778
¥671
¥ (107)*1: Long-term loans receivable from affiliates and Long-term loans payable both include current portion.
*2: Derivative transactions are presented net of receivables and payables. Figures with parenthesis indicate payables.
2019:
Book Value¥52,381
163,364
4,961
41,312¥262,020(1) Cash and time deposits(2) Accounts receivable-trade(3) Short-term loans receivable(4) Long-term loans receivable from affiliates (*1)
Assets total

Millions of Japanese yen
Fair Value¥52,381
163,364
4,961
43,173¥263,880

Difference－－－¥1,860¥1,860－(5) Accounts payable-trade¥150,847¥150,847(6) Short-term loans payable－－－(7) Long-term loans payable (*1)－
24,75924,759Liabilities total－¥175,606¥175,606(8) Derivative transactions (*2)i) Derivative transactions for which hedge accounting－¥1,530¥1,530has not been appliedii) Derivative transactions for which hedge accounting
has been applied
(309)
(354)
(44)
Derivative transactions total¥1,221¥1,176¥ (44)*1: Long-term loans receivable from affiliates and Long-term loans payable both include current portion.
*2: Derivative transactions are presented net of receivables and payables. Figures with parenthesis indicate payables.

(note 1) Articles concerning calculation method of fair value, marketable securities andderivative transaction
Assets(1) Cash and time deposits, (2) Accounts receivable-trade and (3) Short-term loans
receivable

23

Fair values of these accounts are stated at the balance sheet amounts because they are
considered to be close to the balance sheet amounts and these accounts are settled in
short-term.
(4) Long-term loans receivable from affiliates
Fair value of this account is stated at the present value calculated from the future cash
flows discounted by the premium-added rate on the proper index like yield on thegovernment bonds.
Liabilities(5) Accounts payable-trade, (6) short-term loans payable and Current portion of long-termloans payable
Fair values of these accounts are stated at the balance sheet amounts because they are
considered to be close to the balance sheet amounts and these accounts are settled in
short-term.
(7) Long-term loans payable
Fair value of long-term loans payable with fixed interest rate is calculated using the total
amount of the principal and interest discounted by the interest rate on condition that theborrowing is newly executed at the date of fair value evaluation.
Fair value of long-term loans payable with floating interest rate is stated at the balance
sheet amounts. Considering that floating interest rate reflects latest market conditions
and credit of the Company considered being almost same as before, fair value of longterm loans payable is close to the balance sheet amounts.
Derivative Transactions
Please see Note 18. Derivative Transactions.
(note 2) Consolidated balance sheets amounts of financial instruments for which the fairvalue is considered to be extremely difficult to obtain are as follows:
Millions of Japanese yen
2020
Privately owned equity securities¥67,5432019¥72,202

As to these financial instruments, there is no available fair market value and it is considered
to cost a great deal to estimate future cash flows. Therefore, these financial instruments are
not included in (b) Concerning fair value of financial instruments because it is considered to
be extremely difficult to obtain fair value.
(note 3) The expected redemption amount of monetary asset and securities with maturity
after December 31, 2020 and 2019 are as follows:
2020:

Cash and time deposits
Accounts receivable-tradeLong-term loans
receivable from affiliates

Millions of Japanese yen
Within one year
¥66,117
124,741－

Over one year but
within five years

Over five years but
within ten years－－¥8,763－－¥8,81924

Over ten years－－¥20,420

2019:

Millions of Japanese yen

Cash and time deposits
Accounts receivable-trade
Short-term loans
receivable
Long-term loans
receivable from affiliates

Within one year
¥52,381
163,364
4,961

Over one year but
within five years

Over five years but
within ten years

－
－
－

－
－
－

Over ten years－－－¥2,928¥15,219¥19,737¥3,426(note 4) The aggregate annual maturities of long-term loans payable are as follows:Year ending December 31,
2021
2022
2023
2024
2025
Total

Millions of Japaneseyen¥ 5,748
3,452
595
465
232
¥10,495

18. Derivative Transactions
The Company and its consolidated subsidiaries utilize forward foreign exchange contracts andcurrency swap contracts in order to hedge currency fluctuation risks arising from export ofproducts in addition to hedging through increases in overseas production and overseas
procurement of materials.
The Company and its consolidated subsidiaries also utilize interest rate swaps as derivativetransactions in order to hedge interest rate risks of loans payable.
As the derivative transactions are made solely with leading financial institutions, the Company
and its consolidated subsidiaries do not expect any credit risks.
The Company follows its internal regulations for derivatives, which stipulates the policy,
objective, scope, organization, procedures, and financial institutions to deal with, and has areporting system for derivative transactions reflecting proper internal control functions.
The following summarizes hedging derivative financial instruments used and items hedged:
Hedging instruments:
Forward foreign exchange contracts
Currency swap contracts
Interest rate swap contracts

Hedged items:
Foreign currency receivables, payables andfuture transactions
Foreign currency receivables and payables
Loans payable

The Company evaluates hedge effectiveness on a quarterly basis by comparing the cumulativechanges in cash flows from or the changes in fair value of hedged items with the corresponding
changes in the hedging derivative instruments.
The following tables summarize market value information as of December 31, 2020 and 2019 ofderivative transactions:25

(a) Derivative transactions for which hedge accounting has not been applied
2020:
Currency related derivatives
Type
Forward contract (principle method)
To buy EuroTo buy STG pounds
To buy Singapore dollars
To buy Brazilian real
To buy Mexican peso
Currency swap
To receive Japanese yen, to pay U.S.
dollars
Total
2019:
Currency related derivatives
Type
Forward contract (principle method)
To buy EuroTo buy Norwegian Krone
To buy Japanese yen
To buy STG pounds
To buy Singapore dollars
To buy Schweizer Franken
To buy Brazilian real
To buy Canadian dollar
To buy Mexican peso
Currency swap
To receive Japanese yen, to pay U.S.
dollars
Total

Millions of Japanese yen
Contract AmountDue after
Contract AmountTotal
one yearless Market Value

Unrealized
gain (loss)

5,751
216
96
3,348
13

－
－
－
－
－

(127)
1
(73)
21
0

(127)
1
(73)
21
0

¥4,788¥14,214¥1,676¥1,676

¥696
¥518

¥696
¥518

Millions of Japanese yen
Contract AmountDue after
Contract AmountTotal
one yearless Market Value

Unrealized
gain (loss)

6,240
55
283
317
753
2,157
1,428
183
4,378

－
－
－
－
－
－
－
－
600

(85)
0
(2)
(3)
(1)
(21)
54
61
(44)

(85)
0
(2)
(3)
(1)
(21)
54
61
(44)

¥14,800¥30,597¥4,788¥5,388¥1,573¥1,530¥1,573¥1,530(b) Derivative transactions for which hedge accounting has been applied
2020:
Currency related derivatives
Type
Forward contract (principle method)
To buy EuroTo buy STG pounds
To buy Singapore dollars
To buy Brazilian real
To buy Mexican peso
Total

Millions of Japanese yen
Contract AmountDue after
Contract AmountTotal
one yearless Market Value

Hedged Items

Accounts payabletrade and others

26¥8,093
363
520
3,348
13
¥12,338

¥585
－
12
－
－
¥598

¥654
17
17
(354)
(0)
¥334

2019:
Currency related derivatives
Type
Forward contract (principle method)
To buy EuroTo buy Norwegian Krone
To buy Japanese yen
To buy STG pounds
To buy Singapore dollars
To buy Schweizer Franken
To buy Brazilian real
To buy Canadian dollar
To buy Mexican peso
Total

Millions of Japanese yen
Contract AmountDue after
Contract AmountTotal
one yearless Market Value

Hedged Items

Accounts payabletrade and others

2020:
Interest related derivatives
TypeInterest rate swap (principle method)
To receive float, pay fix
Interest rate swap
(exceptional method)
To receive float, pay fix

¥136
－
－
－
－
－
－
－
600
¥736

¥ (68)
10
(10)
6
1
24
(33)
(54)
61
¥ (62)

Millions of Japanese yen
Contract AmountDue after
Contract AmountTotal
one yearless Market Value

Hedged Items
Long-term loans
payableLong-term loans
payable

Total
2019:
Interest related derivatives
TypeInterest rate swap (principle method)
To receive float, pay fix
Interest rate swap
(exceptional method)
To receive float, pay fix¥8,474
727
610
397
1,809
2,337
1,845
859
4,378
¥21,440¥4,530¥1,590¥ (74)

2,810

1,868

(107)

¥7,340¥3,458¥ (181)Millions of Japanese yen
Contract AmountDue after
Contract AmountTotal
one yearless Market Value

Hedged Items
Long-term loans
payable¥14,370

Long-term loans
payableTotal¥4,530¥ (247)

5,066

2,974

(44)

¥19,436¥7,504¥ (291)

19. Segment Information(1) Overview of reportable segment
The Company and its subsidiaries construct FPSOs and FSOs and operate their related
services as single business therefore overview of reportable segment is not presented.
(2) Information by products and services
The Company and its subsidiaries construct FPSOs and FSOs and operate their related
services as single business therefore information by products and services is not presented.
(3) Information by geographical area(a) Sales
2020:
Millions of Japanese yen
Brazil¥184,804

West
Africa¥58,713

Mexico¥40,274

Oceania¥11,232

27

Asia¥4,289Other¥10,610

Total¥309,925

2019:
Millions of Japanese yen
WestBrazilMexicoAfricaOceaniaAsia
Other¥215,618¥46,014¥43,316¥7,014¥5,979¥14,700(Note) Sales amount is classified by country or geographical area based on the location of customers.

Total¥332,644(b) Property and equipment
2020:
Millions of Japanese yen
Singapore¥2,129Brazil¥1,185Ghana¥676

U.S.A.
¥567

Total¥4,728

Other
¥169

2019:
Singapore¥2,577

Brazil
¥1,227

Millions of Japanese yen
U.S.A.
¥753

Total

Other
¥489

¥5,048(4) Information by major customer
2020:
Customers
Buzios5 MV32 B.V.
Marlim1 MV33 B.V.
Area1 Mexico MV34 B.V.

Millions of Japanese yen
Sales¥ 58,847¥ 53,482¥ 40,274

Related Segment(note1)(note1)(note1)

2019:
Customers
Libra MV31 B.V.
Sepia MV30 B.V.
Area1 Mexico MV34 B.V.

Millions of Japanese yen
Sales¥ 67,681¥ 67,480¥ 46,010

Related Segment(note1)(note1)(note1)(note 1) The Company and its subsidiaries construct FPSOs and FSOs and provide related services as single businesstherefore related segment is not presented.

(5) Information about losses on impairment for each reportable segment
The Company and its subsidiaries construct FPSOs and FSOs and operate their related
services as singles business therefore information about losses on impairment for eachreportable segment is not presented.
(6) Information about goodwill amortization amount and year-end balance for eachreportable segment
The Company and its subsidiaries construct FPSOs and FSOs and operate their related
services as singles business therefore information about goodwill amortization amount andyear-end balance for each reportable segment is not presented.
(7) Information about gains on negative goodwill for each reportable segment
The Company and its subsidiaries construct FPSOs and FSOs and operate their related
services as singles business therefore information about gains on negative goodwill for eachreportable segment is not presented.

28

20. Related Party Transactions
Significant related party transactions and corresponding balances between the Company andunconsolidated subsidiaries or affiliates for the year ended December 31, 2020 are as follows:
2020:
Related parties
Sepia MV30 B.V.
Sepia MV30 B.V.
Libra MV31 B.V.
Libra MV31 B.V.
Buzios5 MV32 B.V.
Buzios5 MV32 B.V.
Marlim1 MV33 B.V.
Marlim1 MV33 B.V.
Area1 Mexico MV34 B.V.
Area1 Mexico MV34 B.V.

Transactions
Construction of FPSO (Sales)
Guarantees of bank loans
Construction of FPSO (Sales)
Guarantees of bank loans
Construction of FPSO (Sales)
Guarantees of bank loans
Construction of FPSO (Sales)
Guarantees of bank loans
Construction of FPSO (Sales)
Guarantees of bank loans

Millions ofJapanese yen
11,07534,63725,05730,18459,92651,75054,085
26,91038,63130,594

Consolidated balance sheets accounts
Long-term loans receivable from affiliates
Accounts receivable-trade
Accounts receivable-trade
Accounts receivable-trade
Accounts receivable-trade
Advances received

Millions ofJapanese yen¥4,222
15,48832,39722,56815,674307

2020:
Related parties
Tupi Pirot MV22 B.V.
Sepia MV30 B.V.
Libra MV31 B.V.
Buzios5 MV32 B.V.
Marlim1 MV33 B.V.
Area1 Mexico MV34 B.V.

Significant related party transactions and corresponding balances between the consolidated
subsidiaries and unconsolidated subsidiaries or affiliates for the year ended December 31, 2020are as follows:
2020:
Related parties
T.E.N. Ghana MV25 B.V.
Carioca MV27 B.V.
Buzios5 MV32 B.V.
Buzios5 MV32 B.V.
Marlim1 MV33 B.V.
Marlim1 MV33 B.V.

Transactions
Operation of FPSO
Disbursements of loans for working capital
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure

Millions ofJapanese yen¥ 8,6411,771
9,414
11,125
6,358
9,605

Consolidated balance sheets accounts
Long-term loans receivable from affiliates
Accounts receivable-tradeLong-term loans receivable from affiliates
Long-term loans receivable from affiliates
Long-term loans receivable from affiliates
Long-term loans receivable from affiliates
Short-term loans receivable
Short-term loans receivable

Millions ofJapanese yen¥5,665
6,116
4,597
5,757
5,598
6,272
365
71

2020:
Related parties
Guara MV23 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
Cernambi Norte MV26 B.V.
Carioca MV27 B.V.
Tartaruga MV29 B.V.
Buzios5 MV32 B.V.
Marlim1 MV33 B.V.

Significant related party transactions and corresponding balances between the Company and its
parent company for the year ended December 31, 2019 are as follows:2019:
Related party
Mitsui E&S Holdings Co., Ltd.
Mitsui E&S Holdings Co., Ltd.
Mitsui E&S Holdings Co., Ltd.

Transaction
Disbursements of loans for working capital
Collections of working capital
Receipts of interest

29

Millions ofJapanese yen¥109,626
109,356591

Significant related party transactions and corresponding balances between the Company andunconsolidated subsidiaries or affiliates for the year ended December 31, 2019 are as follows:2019:
Related parties
Tupi Pirot MV22 B.V.
Tupi Pirot MV22 B.V.
Tartaruga MV29 B.V.
Sepia MV30 B.V.
Sepia MV30 B.V.
Libra MV31 B.V.
Libra MV31 B.V.
Libra MV31 B.V.
Libra MV31 B.V.
Buzios5 MV32 B.V.
Buzios5 MV32 B.V.
Buzios5 MV32 B.V.
Area1 Mexico MV34 B.V.
Area1 Mexico MV34 B.V.

Transactions
Collections of working capital
Receipts of interest
Disbursements of loans for capital expenditure
Construction of FPSO (Sales)
Guarantees of bank loans
Construction of FPSO (Sales)
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure
Guarantees of bank loans
Construction of FPSO (Sales)
Disbursements of loans for capital expenditure
Collections of loans for capital expenditure
Construction of FPSO (Sales)
Guarantees of bank loans

Millions ofJapanese yen¥388
418
40,09767,49527,076
68,392
5,564
5,569
20,63432,7894,213
4,284
45,393
15,280Consolidated balance sheets accounts
Long-term loans receivable from affiliates
Accrued income
Accounts receivable-trade
Accounts receivable-trade
Accounts receivable-trade
Accounts receivable-trade

Millions ofJapanese yen¥4,4698
34,59644,56630,814
5,660

2019:
Related parties
Tupi Pirot MV22 B.V.
Tupi Pirot MV22 B.V.
Sepia MV30 B.V.
Libra MV31 B.V.
Buzios5 MV32 B.V.
Area1 Mexico MV34 B.V.

Significant related party transactions and corresponding balances between the consolidated
subsidiaries and unconsolidated subsidiaries or affiliates for the year ended December 31, 2019are as follows:2019:
Related parties
T.E.N. Ghana MV25 B.V.

Transactions
Operation of FPSO

Millions ofJapanese yen¥ 9,099

Consolidated balance sheets accounts
Long-term loans receivable from affiliates
Accounts receivable-tradeLong-term loans receivable from affiliates
Long-term loans receivable from affiliates
Long-term loans receivable from affiliates
Long-term loans receivable from affiliates

Millions ofJapanese yen¥ 5,996
5,080
4,865
6,093
4,051
6,638

2019:
Related parties
Guara MV23 B.V.
T.E.N. Ghana MV25 B.V.
T.E.N. Ghana MV25 B.V.
Cernambi Norte MV26 B.V.
Carioca MV27 B.V.
Tartaruga MV29 B.V.

30