Quarterly Securities Report(Second Quarter of the 71st Fiscal Year)
This document is a direct translation into English of the quarterly securities report (“Shihanki-Hokokusho”)
submitted to the Director of the Kanto Local Finance Bureau as stipulated in Article 24, Paragraph 7, Item 1of the Financial Instruments and Exchange Act.

NIPPON KOEI CO., LTD.

Contents[Cover] ............................................................................................................................................................... 1
Part I. Information on the Nippon Koei Group .................................................................................................. 2
I. Overview of the Nippon Koei Group..................................................................................................... 2
1. Key Financial Data and Trends ........................................................................................................ 2
2. Description of Business .................................................................................................................... 2
II. Business Overview ............................................................................................................................... 3
1. Business Risks .................................................................................................................................. 3
2. Operationally Significant Contracts ................................................................................................. 3
3. Analyses of Financial Status, Management Performance and Cash Flow Status ............................. 3
III. Information on the Filing Company .................................................................................................... 7
1. Information on the Company’s Shares ............................................................................................. 7
2. Directors ........................................................................................................................................... 9
IV. Financial Information ........................................................................................................................ 11
1. Quarterly Consolidated Financial Statements................................................................................. 12
2. Other ............................................................................................................................................... 22
Part II. Information on Guarantors for the Filing Company ............................................................................ 23
Independent Auditor’s Quarterly Review Report

[Cover][Document Submitted]

Quarterly Securities Report (“Shihanki-Hokokusho”)[Article of the Applicable Law Requiring
Submission of This Document]

Article 24-4-7, Paragraph 1, of the Financial Instruments andExchange Act of Japan[Submitted to]

Director, Kanto Local Finance Bureau[Date of Submission]

February 12, 2015

[Quarterly Accounting Period]

Second Quarter of the 71st Fiscal Year (from October 1, 2014, toDecember 31, 2014)[Company Name]

Nihon Koei Kabushiki-Kaisha[Company Name in English]

Nippon Koei Co., Ltd. (the “Company”)[Position and Name of Representative]

Ryuichi Arimoto, Representative Director and President[Location of Head Office]4, Kojimachi 5-chome, Chiyoda-ku, Tokyo[Phone No.]+81-3-(3238)8040[Contact for Communications]Kazuyoshi Kato, General Manager of Finance & Accounting
Department[Contact Address]

4, Kojimachi 5-chome, Chiyoda-ku, Tokyo[Phone No.]+81-3-(3238)8040[Contact for Communications]Kazuyoshi Kato, General Manager of Finance & Accounting
Department[Place Where Available for Public
Inspection]

Nagoya Branch, Nippon Koei Co., Ltd.
(17-14, Higashisakura 2-chome, Higashi-ku, Nagoya-shi, Aichi)
Osaka Branch, Nippon Koei Co., Ltd.
(2-5, Nishitenma 1-chome, Kita-ku, Osaka-shi, Osaka)
Tokyo Stock Exchange, Inc.
(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo)

1

Part I

Information on the Nippon Koei Group *I. Overview of the Nippon Koei Group
1. Key Financial Data and Trends

Fiscal period
Period of account(Millions of yen, unless otherwise stated)
70th fiscal year
71st fiscal year
For the six months ended For the six months ended
70th fiscal year
December 31, 2013
December 31, 2014
From July 1, 2013,
From July 1, 2014,
From July 1, 2013,
to December 31, 2013 to December 31, 2014
to June 30, 2014

Net sales

16,485

16,846

79,193

Ordinary income (loss)(3,748)(3,927)

4,542

Net income (loss)(2,656)(1,040)2,998

Comprehensive income(1,880)

(602)

4,221

Net assets

41,671

46,53947,835

Total assets

78,50587,401

76,144

Net income (loss) per share (yen)(35.13)(13.70)39.61

Diluted net income per share (yen)

―

―

―

52.8

52.8

62.4

(12,168)(16,548)

1,340

(109)

3,663

(4,559)

6,096

9,288

62

5,486

5,268

8,465

Shareholders’ equity ratio (%)
Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Cash and cash equivalents at endof period
Fiscal period
Period of accountNet income (loss) per share (yen)Notes:

70th fiscal year
71th fiscal year
Second quarter
Current second quarter
From October 1, 2013, to From October 1, 2014, toDecember 31, 2013
December 31, 2014(12.66)

8.78

1. Key financial data and trends of the Company are not stated because the Group has prepared its
quarterly consolidated financial statements.
2. Net sales are presented exclusive of consumption taxes.
3. “Diluted net income per share” is not stated because there is no dilutive security.

2. Description of Business
During the six months ended December 31, 2014, there were no significant changes in the businesses
conducted by the Group.
There were no changes in the status of the Company’s major subsidiaries and affiliates, either.

* The Nippon Koei Group: the Company and its subsidiaries; hereinafter collectively the “Group.”2II. Business Overview
1. Business Risks
There were no abnormal fluctuations in the Group’s financial status, management performance andcash flow status during the six months ended December 31, 2014.
There were no significant changes to the “Business Risks” described in the Securities Report for theprior fiscal year.
2. Operationally Significant Contracts
During the current second quarter, the Group reports no operationally significant contracts.
3. Analyses of Financial Status, Management Performance and Cash Flow Status
Items related to future events within the text are the Group’s judgment as of the end of the current second
quarter, or December 31, 2014.
(1) Analysis of management performance
During the six months ended December 31, 2014 (July 1, 2014, through December 31, 2014), theJapanese economy continued to be sluggish due to the prolonged slump in personal consumption that
followed the consumption tax hike in April in addition to a downturn in capital investment and otherfactors.
With regard to the business environment of the Group, our domestic consulting operations and electric
power engineering operations both performed strongly, backed by factors including the adoption of theFundamental Plan for National Resilience and the Plan for Extending the Service Life of Infrastructure,
preparation of facilities for the Tokyo Olympics, investment aimed at putting in place distribution
networks for electric power companies, and demand for renewal and new construction of hydroelectric
power generation facilities taking advantage of the Feed-in Tariff (FIT) Scheme. In our international
consulting operations, the market continued to be lively. Contributing factors included further
acceleration of government-led infrastructure exports to meet development demand among emerging
markets in Asia and other parts of the world, reflecting the maintenance of a certain volume of Official
Development Assistance (ODA) projects by Japan despite changes in content, as well as support owing tostrong enthusiasm for private investment in development.
Under these circumstances, the Group’s orders received for the six months ended December 31, 2014,
were ¥45,053 million, up ¥918 million year on year, and net sales were ¥16,846 million, up ¥361 million
year on year. Operating loss was ¥4,726 million, an increase of ¥732 million year on year, and ordinary
loss was ¥3,927 million, an increase of ¥179 million year on year. As a result, net loss was ¥1,040 million,a decrease of ¥1,615 million year on year.
Net sales of ¥16,846 million for the six months ended December 31, 2014, represented 20.8% of the
full-year forecast for net sales of ¥81,000 million. This result is attributable to the typical characteristics
of our business operations, that is seasonal fluctuations in delivery time for the domestic consultancy
services and products to national and local governments and electric power companies, which are ourmajor customers, that tend to be concentrated toward the end of their fiscal year (March), with thereported net sales coming in clusters. A year earlier, we reached 20.8% of our full-year forecast in the six
months ended December 31, 2013.
Moreover, as costs such as selling, general and administrative expenses accrue almost evenly
throughout the year, operating loss, ordinary loss and net loss were recorded for the six months ended
December 31, 2014.
Business results for each segment are as follows:
Domestic Consulting Operations
Orders received for the six months ended December 31, 2014, decreased by ¥1,044 million year on
year to ¥21,848 million. Net sales decreased by ¥1,531 million year on year to ¥4,523 million. Ordinary
loss increased by ¥399 million year on year to ¥3,406 million.
International Consulting Operations
Orders received for the six months ended December 31, 2014, increased by ¥320 million year on yearto ¥16,565 million. Net sales increased by ¥1,415 million year on year to ¥6,259 million. Ordinary loss
decreased by ¥194 million year on year to ¥714 million.

3

Power Engineering Operations
Orders received for the six months ended December 31, 2014, increased by ¥1,646 million year on
year to ¥6,635 million. Net sales increased by ¥532 million year on year to ¥5,387 million. Ordinary
income increased by ¥431 million year on year to ¥360 million.
Real Estate Leasing Operations
Net sales for the six months ended December 31, 2014, decreased by ¥38 million year on year to ¥525
million. Ordinary income decreased by ¥50 million year on year to ¥385 million.
(2) Analysis of financial status
Total assets at the end of the current second quarter amounted to ¥87,401 million, up ¥11,256 million
from the end of the prior fiscal year.
In the Assets section, current assets were ¥48,424 million, an increase of ¥11,674 million from theend of the prior fiscal year. This was due primarily to a ¥3,095 million decrease in cash and deposits, a¥2,211 million decrease in notes and accounts receivable-trade resulting from their collection and a¥14,802 million increase in work in process.
Non-current assets were ¥38,977 million, a decrease of ¥417 million from the end of the prior fiscal
year. This was due primarily to a ¥2,041 million decrease in property, plant and equipment, a ¥163
million decrease in intangible assets and a ¥1,786 million increase in investments and other assets.
In the Liabilities section, current liabilities were ¥32,702 million, an increase of ¥12,173 million fromthe end of the prior fiscal year. This increase was mainly attributable to a ¥987 million increase in notes
and accounts payable-trade, a ¥9,900 million increase in short-term loans payable, a ¥667 million
decrease in income taxes payable, a ¥5,033 million increase in advances received, a ¥204 million
increase in provision for loss on construction contracts, a ¥1,708 million decrease in accrued
consumption taxes, which are included in “Other” under current liabilities and a ¥1,448 million decreasein accrued expenses.
Non-current liabilities were ¥8,160 million, an increase of ¥379 million from the end of the priorfiscal year. This increase was mainly attributable to an increase of ¥720 million in net defined benefit
liability, a decrease of ¥672 million in long-term lease and guarantee deposited, which are included in“Other” under non-current liabilities, a decrease of ¥456 million in long-term deposits received andothers, and an increase of ¥655 million in deferred tax liabilities (non-current).
Net assets amounted to ¥46,539 million, a decrease of ¥1,296 million from the end of the prior fiscal
year. Primary factors of this decrease were ¥1,040 million in net loss for the six months ended December
31, 2014, which was attributable to the typical characteristics of our business operations, that is seasonal
fluctuations where the recording of net sales tend to concentrate toward the end of the fiscal year (March),¥579 million in cash dividends paid and an increase of ¥339 million in valuation difference on
available-for-sale securities.
As a result, the shareholders’ equity ratio decreased 9.6 percentage points from the end of the priorfiscal year to 52.8%.
(3) Analysis of cash flow status
With regard to cash flows during the six months ended December 31, 2014, net cash used inoperating activities decreased ¥4,379 million year on year to ¥16,548 million, mainly reflecting a loss
before income taxes of ¥1,321 million and an decrease in inventories of ¥14,582 million.
Net cash provided by investing activities increased by ¥3,772 million year on year to ¥3,663 million,
mainly due to the sales of property, plant and equipment.
Net cash provided by financing activities increased by ¥3,191 million year on year to ¥9,288 million,
mainly due to a net increase in short-term loans payable.
As a result, cash and cash equivalents at the end of the current first half decreased by ¥3,197 million
from the end of the prior fiscal year to ¥5,268 million after adding the “Increase in cash and cash
equivalents from newly consolidated subsidiary” resulting from the new consolidation of NIPPON KOEIVIETNAM INTERNATIONAL Co., Ltd. and PT. INDOKOEI INTERNATIONAL.
(4) Research and development activities
Group-wide research and development costs for the six months ended December 31, 2014, totaled¥215 million.

4

There were no significant changes in the status of research and development activities of the Groupduring the six months ended December 31, 2014.
(5) Major Facilities
The facility plan that has been determined during the six months ended December 31, 2014 is asfollows.
(New construction of major facilities)
1) Objective
Approximately 36 years have passed since the completion of the current headquarter building inMarch 1978. Although the building has sufficient earthquake resistance, some problems have been
discovered due to aging deterioration, and the expansion of businesses has resulted in dispersed
business offices. By rebuilding the headquarter building, we intend to secure the safety of thebuilding and integrate office space for greater productivity. Furthermore, we aim to prepare forcontinued global business development and flexibly respond to the rapidly advancing IT
technologies and diverse working styles.
2) Outline of the rebuilding plan(i) Location: 4, Kojimachi 5-chome, Chiyoda-ku, Tokyo (same as the current location)(ii) Site area: approx. 2,200 m2(iii) Total floor area: approx. 17,000 m2 (11 stories above the ground and one basement floor)(iv) Occupied area: approx. 12,000 m2*The above plan is subject to change due to further deliberations.
3) Rebuilding schedule(i) Demolition of the existing building is planned for January 2016.
(ii) The schedules for the commencement and completion of the rebuilding construction are underconsideration.
(6) Business and financial issues to be addressed
There were no significant changes in business and financial issues to be addressed nor new issue
required to be addressed during the six months ended December 31, 2014.
The Company’s basic policy governing corporate decision-makers on financial affairs and operations(“Basic Policy”) is as detailed below.
1) Basic Policy
As a publicly listed company allowing its shares to be traded freely, we believe that whether we will sellshares in response to a particular person’s attempt to acquire a large number of shares (the “Substantial
Acquisition of Shares”) should be determined ultimately by our shareholders.
We are proud of our company’s track record as a good corporate citizen. The Company has been charged
with fulfilling a social mission and public works projects, including construction consulting. The power ofour brand is backed by a wide range of technological expertise, years of experience and a rock-solid
performance record. It would be impossible to manage the Company, improve its corporate value or bringprofit to its shareholders without a good understanding of everything the brand stands for or without therelationship of mutual trust that has been built between the Company and its customers, employees, suppliers
and other stakeholders in Japan and abroad.
We believe that, in the event of a takeover bid, any party attempting the Substantial Acquisition of Shares(the “Large-Volume Purchaser”) should provide shareholders with all the information necessary for the
Substantial Acquisition of Shares to allow our shareholders to make a sound decision.
2) Special measures for realization of the Basic Policy
At the Company, we implement the following special measures in line with the Basic Policy described in1) above.
(i) Medium-term goals
The Nippon Koei Group adheres to the following management philosophy: “Act with integrity &Contribute to society through technology and engineering.” Guided by the slogan “Challenging mind,
Changing dynamics,” the Group is aiming to realize its management philosophy.
Looking ahead at the business environment surrounding the Group over the long-term while adhering thismanagement philosophy and slogan, we see that despite the domestic demand for reconstruction from the5

Great East Japan Earthquake, which may be limited to a certain period, the growth of emerging markets in
Asia and other parts of the world will likely fuel demand for overseas infrastructure construction over a
medium- and long-term perspective. Amid this environment, we will continue to make further inroads into
the global market. Accordingly, while maintaining a secure technical foundation in Japan (construction
consulting and engineering businesses), the Group will focus on the expanding infrastructure development
market in emerging markets to significantly expand its businesses. On the other hand, to attain sustainablegrowth, the overseas bases should take the initiative of exploring and forming new business domains.
In line with this long-term goal, the Group has been addressing the key challenges listed below, based on
the three-year Medium-Term Management Plan (from April 2012 to June 2015).
(1) Development and management of overseas bases and introduction of multi-domestic management(2) Enhancement of existing business sectors and expansion of business domains(3) Exploration of new business models including new initiatives in project management(4) Enhancement of the work-life balance(ii) Enhancing corporate governanceWorking to boost the corporate value of the Company and the Group as a whole, we are continually
improving corporate governance by strengthening management oversight, ensuring transparency andestablishing a system that will enable us to quickly perform our operations. We also focus on compliance andrisk management to enhance the effectiveness of internal controls, and we have adopted an Audit &Supervisory Board system. The Board of Directors provides oversight of our operations, whereas the Boardof Corporate Auditors supervises and audits the directors’ activities.
3) Measures to prevent an undesirable takeover in accordance with the Basic Policy
In line with the Basic Policy described in 1) above, we have established “Anti-Takeover Measuresagainst the Substantial Acquisition of Nippon Koei Shares” (the “Takeover Defense Measures”), which areintended to prevent control by undesirable persons over decisions on our financial and operational policies.
The Takeover Defense Measures generally apply to any Large-Volume Purchaser attempting to acquire alarge number of Nippon Koei shares through the Substantial Acquisition of Shares in a bid to control 20% ormore of the voting rights held by a certain group of shareholders or acquiring enough shares to change thebalance of power to ensure that a certain group of shareholders has 20% or more of the voting rights. The
Takeover Defense Measures require the Large-Volume Purchaser to (a) provide the Board of Directors withall relevant information including written notification declaring his/her exact intention in advance, and (b)begin the Substantial Acquisition of Shares only after the elapse of a tender assessment period to be specified
by the Company’s Board of Directors.
The Takeover Defense Measures were first implemented upon resolution by the Board of Directors in
May 2006, after which the Board voted to partially revise and continue it in June 2007. The Takeover
Defense Measures were later partially revised upon approval of shareholders at the 63rd generalshareholders’ meeting held in June 2008, and were again partially revised upon approval of shareholders at
the 66th general shareholders’ meeting held in June 2011 and at the 69th general shareholders’ meeting heldin September 2013.
The details of the Takeover Defense Measures have been made available on the Company Web site(http://www.n-koei.co.jp/).
4) Board of Directors’ decision concerning the measures described in 2) and 3) above and the reasons
The measures described in 2) above are in line with the Basic Policy described in 1) above because they were
implemented for the purpose of enhancing corporate value and carried out in the common interests of ourshareholders. These measures emphasize protecting the interests of our shareholders over protecting thecorporate directors from being replaced.
The measures described in 3) above (the Takeover Defense Measures) are in line with the Basic Policy
described in 1) above. They protect the interests of our shareholders over protecting the corporate directors
from being replaced in the following ways:a. The Takeover Defense Measures meet the three basic requirements set forth in the Guidelines Regarding
Takeover Defense for the Purposes of Protection and Enhancement of Corporate Value and Shareholders’Common Interests published by the Ministry of Economy, Trade and Industry (METI) and the Ministry ofJustice on May 27, 2005. It also incorporates a June 30, 2008, report entitled “Proper Role of Takeover
Defense Measures in Light of Changes in Various Environments” published by METI’s Corporate Value
Study Group.

6

b. The Takeover Defense Measures enable our shareholders to make an informed decision on whether atakeover would be beneficial, prevents any apparent infringement on the Company’s corporate value and isin the best interest of Nippon Koei and its shareholders.
c. The Rules on Substantial Acquisition of Shares and the necessary conditions for taking countermeasures
are reasonable in light of our aim to maintain and enhance the Company’s corporate value and protect theinterests of its shareholders.
d. The Rules on Substantial Acquisition of Shares and the necessary conditions for taking countermeasures
are concrete and clear enough to make it possible for the shareholders, investors and the potential
Large-Volume Purchaser to make fair predictions about the future.
e. The Takeover Defense Measures are deemed to be enacted by a vote of the shareholders at a shareholders’meeting. The Company’s Board of Directors may convene a shareholders’ meeting to verify theshareholders’ intention to implement a countermeasure. The decision about whether to maintain, rescind oralter the Takeover Defense Measures, to be made in the form of a resolution to be voted on at a generalshareholders’ meeting, will ensure that the intention of the shareholders is fully reflected on such judgment
regarding the Takeover Defense Measures.
f. The Takeover Defense Measures establish objective and clear requirements for taking countermeasures. It
also establishes prior conditions needed to implement countermeasures, requiring that the Company’s Boardof Directors consult its independently established ad hoc committee in advance concerning the initiation ofcountermeasures. Only after carefully considering the recommendations of the ad hoc committee will the
Board make its final decision on implementing anti-takeover measures. The Takeover Defense Measures
ensure that all decisions of the Board regarding countermeasures are objective and reasonable.
g. The Takeover Defense Measures empower the ad hoc committee to seek the advice of independent experts
at the Company’s expense. The Takeover Defense Measures go to such great lengths that it leaves no roomfor doubt about the fairness and objectivity of the ad hoc committee’s recommendations.
h. The Takeover Defense Measures are not intended to be a dead-hand takeover defense and may beabolished subject to a vote at the Company’s shareholders’ meeting or at a Board of Directors’ meeting
comprising directors elected at a shareholders’ meeting. It is not a slow-hand takeover defense either because
the term of the Company’s Board members is one year.
III. Information on the Filing Company
1. Information on the Company’s Shares(1) Total number of shares, etc.
1) Total number of shares
Class

Total number of shares authorizedCommon stock

189,580,000

Total

189,580,000

2) Total number of shares issued

Class

As of the end of
the current second
quarter(December 31,
2014)

As of the filingdate(February 12,
2015)

Stock exchange
on which theCompany is listed

Description

Common stock

86,656,510

86,656,510

First Section of
the Tokyo Stock
Exchange

Share unit number is 1,000

Total

86,656,510

86,656,510

―

―

7

(2) Status of the stock acquisition rights
Not applicable(3) Status of the exercise of bonds with stock acquisition rights with an exercise price amendment
Not applicable(4) Rights plans
Not applicable(5) Changes in the total number of shares issued and the amount of capital stock and other(Millions of yen, unless otherwise stated)
Changes in Balance of thethe total
total number Changes inChanges in Balance ofBalance of
number ofof shares
capitallegal capital legal capital
capital stock
shares issued
issuedstock
surplussurplus(Shares)(Shares)

Date

December 31, 2014――

86,656,510

7,393

―

6,092

(6) Major shareholders
As of December 31, 2014
Percentage ofsharesheld toNumber ofthetotal
shares heldnumber of(Shares)issued shares(%)

Name of person or company

Address

The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Meiji Yasuda Life Insurance
Company
The Koei Employees’
Stockholders Association
The Master Trust Bank ofJapan, Ltd. (trust a/c)
Japan Trustee Services Bank,
Ltd. (Trustee)
Japan Trustee Services Bank,
Ltd. (Trustee 4)7-1, Marunouchi 2-chome, Chiyoda-ku,
Tokyo, Japan
1-1, Marunouchi 2-chome, Chiyoda-ku,
Tokyo, Japan4, Kojimachi 5-chome, Chiyoda-ku,
Tokyo, Japan
11-3, Hamamatsucho 2-chome,
Minato-ku, Tokyo, Japan
8-11, Harumi 1-chome, Chuo-ku, Tokyo,
Japan
8-11, Harumi 1-chome, Chuo-ku, Tokyo,Japan5-5, Otemachi 1-chome, Chiyoda-ku,
Tokyo, Japan
5-1, Harumi 3-chome, Chuo-ku, Tokyo,
Japan
388 GREENWICH STREET, NY, NY
10013, USA(27-30, Shinjuku 6-chome, Shinjuku-ku,
Tokyo, Japan)
P.O. BOX 2992 RIYADH 11169
KINGDOM OF SAUDI ARABIA(7-1, Marunouchi 2-chome, Chiyoda-ku,
Tokyo, Japan)

3,699,263

4.27

3,529,522

4.07

3,050,078

3.52

2,877,000

3.32

2,585,000

2.98

2,263,000

2.61

1,910,634

2.20

1,843,000

2.13

1,444,000

1.67

1,435,000

1.66―

24,636,497

28.43

Mizuho Corporate Bank, Ltd.
Tsukishima Kikai Co., Ltd.
CBNY DFA INTL SMALLCAP VALUE PORTFOLIOJAPAN RE FIDELITY
Total

Note: Besides the above, the Company holds 9,430,412 shares of treasury stock (10.88%).

8

(7) Status of voting rights
1) Issued shares
Number of shares(Shares)Classification

As of December 31, 2014
Number of voting rights
Details(Units)Shares without voting rights

―

―

―

Shares with limited voting rights(e.g., treasury stock, etc.)
Shares with limited voting rights(others)
Shares with full voting rights(e.g., treasury stock etc.)
Shares with full voting rights(others)

―

―

―

―

―

―

(Treasury stock)
Common stock

10,563,000

Common stock

74,917,000

Common stock

1,176,510―

─

86,656,510――

Shares less than one unit
Total number of shares issued

1,133

─

74,917

─Total voting rights held by all―
76,050―shareholders
Notes: 1. The number of shares of common stock in the “Shares with full voting rights (e.g., treasury stocketc.)” includes 9,430,000 treasury stock held by the Company and 1,133,000 shares held by The
Master Trust Bank of Japan, Ltd. (ESOP trust account).
2. The number of shares of common stock in the “Shares with full voting rights (others)” and the“Shares less than one unit” includes 1,000 shares (1 unit of voting rights) and 812 shares,
respectively, held by Japan Securities Depository Center, Inc.
3. The number of shares in the “Shares less than one unit” includes 412 shares of treasury stock
held by the Company.
2) Treasury stock, etc.

Shareholder(Treasury stock)
Nippon Koei Co., Ltd.

Address ofshareholder

As of December 31, 2014
Percentage of
Number of
Number ofshares held toshares held
shares held
Total
the total
under theunder own name(Shares)number ofnames of others(Shares)issued shares(Shares)(%)

4, Kojimachi
5-chome,
Chiyoda-ku, Tokyo

9,430,000

1,133,000

10,563,000

12.18

―

9,430,000

1,133,000

10,563,000

12.18

Total

Note: Reason for holding Nippon Koei shares under the name of others:
The Master Trust Bank of Japan, Ltd. (ESOP trust account: 11-3, Hamamatsucho 2-chome,
Minato-ku, Tokyo) holds the relevant shares as a trust estate under the employee stock ownershipplan (ESOP).
2. Directors
Changes in directors during the six months ended December 31, 2014, after the date of submission of
Securities Report for the prior fiscal year, were as follows.
(1) Newly appointed directors
Not applicable9(2) Retired directors
Not applicable(3) Changes in position
New position

Previous position

Name

Date of change

Director(Director General of
Corporate Headquarters)

Director(Director General of
Corporate Headquarters
and Director General ofBusiness Promotion
Headquarters)

Akira Mizukoshi

October 1, 2014

Director(Deputy Director Generalof Corporate
Headquarters)

Director(Deputy Director
General of Corporate
Headquarters andGeneral Manager ofFinance & Accounting
Department)

Naoki Honjo

October 1, 201410

IV. Financial Information
1. Basis of preparation of the quarterly consolidated financial statements
The quarterly consolidated financial statements of the Company are prepared in accordance with the“Regulations Concerning the Terminology, Forms and Preparation of Quarterly Consolidated Financial
Statements” (Cabinet Office Ordinance No. 64, 2007).
2. Audit and review reports
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, theCompany’s quarterly consolidated financial statements for the current second quarter (from October 1,
2014, to December 31, 2014) and for the six months ended December 31, 2014 (from July 1, 2014, toDecember 31, 2014) were reviewed by Deloitte Touche Tohmatsu LLC.

11

1. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheet(Millions of yen)
Prior fiscal year
(As of June 30, 2014)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets*1

12Current second quarter(As of December 31, 2014)

8,967
13,790
9,799
311
3,907
(27)
36,7495,872
11,57924,601
346
6,048
(25)
48,424

8,501
17,247840
26,5886,442
17,266837
24,547

232
554
787

78
545
624

9,210
3,150
(341)
12,01939,394
76,144

*1

9,876
4,301
(371)
13,80638,97787,401

(Millions of yen)
Prior fiscal year
(As of June 30, 2014)
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Advances received
Provision for bonuses
Provision for directors’ bonuses
Provision for loss on construction
contracts
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Provision for directors’ retirement benefits
Provision for environmental measures
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeMinority interests
Total net assets
Total liabilities and net assets

13

Current second quarter(As of December 31, 2014)

3,361
100
130
842
7,586
983
78

4,349
10,000130
174
12,620
998
―

205

409

7,240
20,5284,019
32,702

1,690
59
34
3,245
54
2,696
7,780
28,309

1,625
59
34
3,966
52
2,422
8,160
40,862

7,393
6,209
36,366(3,344)
46,624

7,393
6,209
34,468(3,268)44,802

1,364

1,703

(176)
(13)
(269)

(121)
(66)
(139)

905

1,375

304
47,83576,144361
46,53987,401

(2) Quarterly Consolidated Statement of Operations and Comprehensive Income
Six months ended December 31(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating loss
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission fee
Other
Total non-operating expenses
Ordinary loss
Extraordinary income
Gain on sales of non-current assets
Gain on step acquisitions
Total extraordinary income
Loss before income taxes and minority
interests
Income taxes - current
Income taxes - deferred
Total income taxes
Loss before minority interests
Minority interests in loss
Net loss
Minority interests in loss
Loss before minority interests
Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans,
net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable toowners of parent
Comprehensive income attributable tominority interests

For the six months
ended December 31, 2013
(From July 1, 2013
to December 31, 2013)
16,485
13,241
3,244
*1
7,239
(3,994)

For the six months
ended December 31, 2014
(From July 1, 2014
to December 31, 2014)
16,846
13,425
3,421
*1
8,148
(4,726)

24
143
32
75
275

41
236
569
67
914

18
9
2
29
(3,748)

24
86
5
116
(3,927)

―
―
―

2,560
45
2,606

(3,748)(1,321)258(1,329)(1,070)(2,678)(22)(2,656)(22)(2,678)

312
(585)
(273)
(1,048)(7)(1,040)(7)(1,048)

700

339

(100)
2

54
(78)

195

129

798
(1,880)445(602)(1,859)

(570)

(20)

(32)

14

(3) Quarterly Consolidated Statement of Cash Flows(Millions of yen)
For the six months
ended December 31, 2013
(From July 1, 2013
to December 31, 2013)
Cash flows from operating activities
Loss before income taxes and minority interests
Depreciation
Amortization of goodwill
Loss (gain) on sales of property, plant andequipment
Loss (gain) on step acquisitions
Increase (decrease) in provision for loss on
construction contracts
Interest and dividend income
Foreign exchange losses (gains)
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable-trade
Increase (decrease) in advances received
Decrease (increase) in consumption taxes refund
receivable
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Net decrease (increase) in time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation
Purchase of treasury shares of subsidiaries
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
payableProceeds from long-term debt
Repayments of long-term loans payable
Repayments of lease obligations
Proceeds from sales of treasury shares
Purchase of treasury shares
Cash dividends paid
Cash dividends paid to minority shareholders
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 in cash and cash equivalents from newly
consolidated subsidiary
Cash and cash equivalents at end of period*115

For the six months
ended December 31, 2014
(From July 1, 2014
to December 31, 2014)(3,748)445
154(1,321)
697
194

(0)

(2,560)

—

(45)

47

204

(167)
(47)

(277)
(152)

1,747

2,532

(12,841)(14,582)

719

767

4,882

4,708

(26)

(2,237)(2,935)(11,770)
144
(18)
(523)

(3,605)(15,678)242(23)(1,090)(12,168)(16,548)

(24)
(199)

30
(1,076)

2

5,093

(87)
(109)
364

(57)
(815)
592

—

43

—
(135)
78
1

(61)
(158)
69
4

(109)

3,663

6,090

9,900

300
(114)
(19)
84
(47)
(192)
(3)

—
(65)
(25)
81
(5)
(583)
(13)

6,096

9,288

54

133

(6,127)(3,462)

11,613

8,465

—

265

5,486

*1

5,268

[Notes](Changes in Accounting Policies, etc.)(Application of the accounting standard, etc. for retirement benefits)
Effective from the first quarter of the fiscal year ending June 30, 2015, Paragraph 35 of the“Accounting Standard for Retirement Benefits” (Accounting Standards Board of Japan (ASBJ) Statement
No. 26, May 17, 2012; hereinafter the “Accounting Standard”) and Paragraph 67 of the “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012; hereinafter the“Guidance”) have been applied. Accordingly, the calculation methods for retirement benefit obligations
and service costs have been reviewed. As a result, the method for period allocation of the projected
retirement benefit has been changed from the point basis to the benefit formula basis, and the calculation
method for the discount rate has been changed from calculation based on a period approximately equal tothe average remaining service years of the employees, to calculation using a single weighted average
discount rate reflecting the estimated payment period of retirement benefits and the amount thereof foreach estimated payment period.
Regarding the application of the Accounting Standard and the Guidance, the effect of the changes in
the calculation method for retirement benefit obligations and service costs is reflected in “Retained
earnings” at the beginning of the six months ended December 31, 2014, in accordance with thetransitional treatment provided for in Paragraph 37 of the Accounting Standard.
As a result, net defined benefit liability increased by ¥984 million and retained earnings decreased by¥645 million at the beginning of the six months ended December 31, 2014. The effect of this change on
profits and losses for the six months ended December 31, 2014, was negligible.
(Application of the Practical Solution on Transactions of Delivering the Company’s Own Stock to
Employees, etc., through Trusts)
Effective from the first quarter of the fiscal year ending June 30, 2015, the “Practical Solution on
Transactions of Delivering the Company’s Own Stock to Employees, etc., through Trusts” (ASBJ
Practical Issues Task Force No. 30, December 25, 2013) has been applied. Accordingly, any difference
arising from the disposal of the Company’s treasury stock to a trust has been recognized at the time ofsuch disposal, and the net amount of any profits or losses on the sale of those shares by the trust to theemployee stock ownership association, the Company’s dividends on the shares held by the trust andexpenses associated with the trust has been recognized as liability. As the method of said practicalsolution is the same as the method conventionally applied by the Company, there is no effect due to thisapplication.
(Specific Accounting Policies Adopted in Preparing Quarterly Consolidated Financial Statements)(Deferment of cost variance)
As any cost variance attributable to seasonal fluctuations in capacity utilization, etc., is mostly
expected to be eliminated by the end of the cost accounting period, such cost variance is deferred as othercurrent liability.
(Additional Information)
For the purpose of offering benefits to its employees, the Company engages in the transaction of
issuing its shares to the employee stock ownership association through a trust.
(1) Overview of the transaction
At a meeting of the Board of Directors held on February 12, 2013, the Company resolved to
introduce an employee stock ownership plan (ESOP) trust (hereinafter the “ESOP trust”) as atrust-type employee shareholding incentive plan to provide the Group’s employees with incentives toincrease the medium- to long-term corporate value, enhance their benefits package and encourage
employees’ stock ownership, thereby enhancing the morale of the employees and promoting continued
growth of the Group.
According to the trust-type employee shareholding incentive plan, the Company establishes an
ESOP trust at a trust bank. The ESOP trust prospectively acquires, through third-party allotment, theCompany’s common stock in an amount that is expected to be acquired by the Group’s employee
stock ownership association over the next five years, using borrowings as capital for the acquisition.
Subsequently, the ESOP trust sells these Company shares to said association on a continual basis. If
the ESOP trust has accumulated gains on sale of the Company shares when the trust is terminated, the16trust’s proceeds equivalent to the accumulated gains are distributed to eligible beneficiaries. The
Company guarantees obligations for the ESOP’s borrowing of funds to acquire the Company’scommon stock. Therefore, if the ESOP trust has accumulated losses on sale of the Company shares
when the trust is terminated, the trust’s outstanding debt equivalent to the accumulated losses is repaidby the Company in accordance with a guarantee clause included in the loan contract, which means noburden on the employees.
(2) The Company’s shares remaining in the trust
The Company’s shares remaining in the trust are recognized at the trust’s book value thereof(excluding the amount of ancillary expenses) as treasury stock under net assets. The book value andnumber of said treasury stock were ¥463 million and 1,375 thousand shares for the fiscal year ended
June 30, 2014, and ¥381 million and 1,133 thousand shares for the second quarter of the fiscal year
ending June 30, 2015.
(3) Book value of borrowings posted through the application of the gross price method¥520 million for the fiscal year ended June 30, 2014¥455 million for the second quarter of the fiscal year ending June 30, 201517

(Notes to Quarterly Consolidated Balance Sheet)*1. Contingent liabilities(1) The Group provides guarantees of bank loans related to employees.

Employees

Prior fiscal year
(As of June 30, 2014)85(Millions of yen)
Current second quarter(As of December 31, 2014)72(2) Lawsuit
On June 19, 2014, Nippon Civic Consulting Engineers Co., Ltd. (“NCC”), one of the consolidated
subsidiaries, was sued by Osaka Prefecture for damages resulting from a project related to designing ashield tunnel due to liability for tort. The amount of the damages claimed is ¥750 million (including ¥572
million in damages and 5% per annum delinquency charges). NCC has concluded that it did not engage inan illegal act in the course of the project and intends to contest the claims brought forth by Osaka Prefecture
in court.
Due to the court petition by Osaka Prefecture, a decision was made to execute a provisional seizure
concerning said claims. Therefore, NCC deposited the money for release from a provisional seizure of ¥750
million (included in “Other” under “Investments and other assets”)*1 in July 2014 with the Legal Affairs
Bureau.
(Notes to Quarterly Consolidated Statement of Operations and Quarterly Consolidated Statement ofComprehensive Income)*1. Major items and amounts of selling, general and administrative expenses(Millions of yen)
For the six months ended
For the six months ended
December 31, 2013
December 31, 2014
(From July 1, 2013,(From July 1, 2014,
to December 31, 2013)
to December 31, 2014)
Employees’ salaries and
2,440
2,673
allowances
Provision for bonuses
Periodic benefit cost

514
385

521
328

2. Seasonal fluctuations in net sales
For the six months ended December 31, 2013 (from July 1, 2013, to December 31, 2013) and the six
months ended December 31, 2014 (from July 1, 2014, to December 31, 2014)
The Group’s net sales are subject to seasonal fluctuations because the completion of construction projects
relating to the Group’s primary operations tends to concentrate toward the end of the third quarter of eachfiscal year.
(Notes to Quarterly Consolidated Statement of Cash Flows)*1. Relationship between the quarter-end balance of cash and cash equivalents and the amount ofconsolidated balance sheet items(Millions of yen)
For the six months
For the six months
ended December 31, 2013
ended December 30, 2014
(From July 1, 2013,(From July 1, 2014,
to December 31, 2013)
to December 31, 2014)
Cash and deposits
5,698
5,872
Time deposits with maturities of more
(71)
(392)
than three months
Specified deposits for the ESOP trust
(139)
(212)
Cash and cash equivalents

5,486

18

5,268

(Notes to Shareholders’ Equity)
For the six months ended December 31, 2013 (from July 1, 2013, to December 31, 2013)
1. Dividends paid
Resolution

Type ofsharesTotal
dividends(Millions ofyen)

Dividend
per share(Yen)

Record date

Effective date

Source ofdividends

Extraordinary
meeting of
the Board of
CommonJune 30,
September 12, Retained
154
2.00
Directors on
stock
2013
2013
earnings
August 20,
2013
Note: The total dividends according to the resolution at the extraordinary meeting of the Board of
Directors on August 20, 2013, include dividends of ¥3 million on the Company’s shares held by the ESOP
trust.
2. Dividends whose record date falls in the six months ended December 31, 2013, but whose effective datecomes after December 31, 2013
Not applicable
For the six months ended December 31, 2014 (from July 1, 2014, to December 31, 2014)
1. Dividends paid
Resolution

Type ofsharesTotal
dividends(Millions ofyen)

Dividend
per share(Yen)

Record date

Effective
date

Source ofdividends

The Boardof Directors
CommonJune 30,
September 5,
Retainedmeeting on
579
7.50
stock
2014
2014
earnings
August 11,2014
Note: The total dividends according to the resolution at the Board of Directors meeting on August 11, 2014,
include dividends of ¥10 million on the Company’s shares held by the ESOP trust.
2. Dividends whose record date falls in the six months ended December 31, 2014, but whose effective datecomes after December 31, 2014
Not applicable19

(Segment Information, etc.)[Segment information]
For the six months ended December 31, 2013 (from July 1, 2013, to December 31, 2013)
1. Information about net sales and income or loss for each reportable segment(Millions of yen)
Reportable segment
Domestic International
Power
Real EstateConsulting Consulting Engineering Leasing
Operations Operations Operations Operations

Subtotal

Others(Note)Total

Net sales
Net sales to externalcustomers
Intersegment sales ortransfers
Total
Segment profit (loss)

6,054

4,844

4,855

563

16,318167

16,485

155

―

89

62

307

1

308

6,210

4,844

4,944

625

16,625

168

16,793(3,006)

(908)

(71)

435

(3,551)(187)(3,738)

Note: The “Others” category refers to a group of operations from which no profits are gained or that produce
only incidental gains.
2. Amount and outline of difference between the total segment profit or loss and ordinary income or loss inquarterly consolidated statement of income
IncomeAmount (Millions of yen)
(3,551)

Reportable segment total
Profit (loss) of “Others” category(187)

Elimination of intersegment transactions(10)

Ordinary loss in quarterly consolidated statementof operations and comprehensive income(3,748)20

For the six months ended December 31, 2014 (from July 1, 2014, to December 31, 2014)
1. Information about net sales and income or loss for each reportable segment(Millions of yen)
Reportable segment
Domestic International
Power
Real EstateConsulting Consulting Engineering Leasing
Operations Operations Operations Operations

Subtotal

Others(Note)Total

Net sales
4,5

Net sales to externalcustomers

6,259

5,387

525

16,695150

16,846

149

17

94

62

324

1

325

4,672

6,277

5,482

587

17,020151

17,172(3,406)

(714)

360

385

(3,375)(545)(3,920)23

Intersegment sales ortransfers
Total
Segment profit (loss)

Note: The “Others” category refers to a group of operations from which no profits are gained or that produce
only incidental gains.
2. Differences between the total segment profit or loss and ordinary income or loss in quarterly consolidated
statement of operations and comprehensive income and the main details of these differences
IncomeAmount (Millions of yen)
(3,375)

Reportable segment total(545)

Profit (loss) of “Others” category
Elimination of intersegment transactions(7)

Ordinary loss in quarterly consolidated statement ofoperations and comprehensive income(3,927)

3. Changes concerning each reportable segments, etc.
In accordance with the changes in the method of calculating retirement benefit obligations and service
costs effective from the first quarter of the fiscal year ending June 30, 2015, as stated in “Changes in
Accounting Policies,” the method of calculating retirement benefit obligations and service costs forreportable segments has also been changed in the same manner.
The effect of this change on segment profit or loss for the six months ended December 31, 2014 is
negligible.

21

(Per share information)
The amount and basis for calculation of net loss per share are as follows:(Millions of yen, unless otherwise stated)
For the six months ended
For the six months ended
December 31, 2013
December 31, 2014
Item
(From July 1, 2013
(From July 1, 2014
to December 31, 2013)
to December 31, 2014)
Net loss per share (yen)(35.13)(13.70)(2,656)(1,040)(Basis for calculation)
Net lossAmount not attributable to――common shareholders
Net loss related to common(2,656)(1,040)stock
Weighted average number of
75,615,586
75,974,261
common stock outstanding forthe period
Notes: 1. Diluted net income per share is not stated because there was no dilutive security.
2. The Company’s shares remaining in a trust, which are accounted for as treasury stock under
Shareholders’ equity, are included in the number of treasury stock to be deducted when calculating
the weighted average number of common stock for the period—a number used in calculating the
net loss per share.
The weighted average numbers of treasury stock deducted when calculating the net loss per sharefor the six months ended December 31, 2013, and the six months ended December 31, 2014, were1,658,054 and 1,257,005, respectively.
(Significant subsequent events)
Not applicable
2. Other
Not applicable22Part II Information on Guarantors for the Filing Company
Not applicable23Independent Auditor’s Quarterly Review ReportFebruary 6, 2015

The Board of Directors
Nippon Koei Co., Ltd.
Deloitte Touche Tohmatsu LLC
Designated and Engagement Partner
Certified Public Accountant Yasuyuki Ohnaka
Designated and Engagement Partner
Certified Public Accountant Junichi Uchida
Pursuant to Article 193-2, Paragraph 1, of the Financial Instruments and Exchange Act of Japan, we havereviewed the accompanying quarterly consolidated financial statements of Nippon Koei Co., Ltd. (the“Company”) and its consolidated subsidiaries, which comprise the quarterly consolidated balance sheet, thequarterly consolidated statement of operations and comprehensive income, and quarterly consolidated
statement of cash flows, for the second quarter of the fiscal year ending June 30, 2015 (from July 1, 2014, toDecember 31, 2014) and for the six months ended December 31, 2014 (from July 1, 2014, to December 31,2014), and the related notes included in “Financial Information.”Management’s Responsibility for the Quarterly Consolidated Financial Statements
The Company’s management is responsible for the preparation and fair presentation of these quarterly
consolidated financial statements in conformity with the accounting principles for quarterly consolidated
financial statements generally accepted in Japan, and for designing and operating such internal control as
management determines is necessary to enable the preparation and fair presentation of quarterly consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion independently on these quarterly consolidated financial
statements based on our review. We conducted our review in accordance with the review standards forquarterly financial statements generally accepted in Japan.
A review of quarterly consolidated financial statements consists of making inquiries, primarily of
management and persons responsible for financial and accounting matters, and applying analytical and otherquarterly review procedures. A review is substantially less in scope than an audit conducted in accordancewith auditing standards generally accepted in Japan.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the quarterly consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Nippon Koei Co., Ltd. as at December 31, 2014, and its
consolidated financial performance for the second quarter then ended in conformity with accounting
principles generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.
End