Consolidated Financial Statements
andNon-Consolidated Financial Statements
OYO Corporation
and Consolidated Subsidiaries
Year ended December 31, 2020
with Independent Auditor’s Report

5.【Financial information】
1. Basis of preparation of the consolidated financial statements and non-consolidated financial statements.
(1) The consolidated financial statements of the Company are prepared in accordance with the “Regulations Concerning
the Terminology, Forms and Preparation Methods of Consolidated Financial Statements” (the Ministry of FinanceOrdinance No. 28, 1976).

(2) The non-consolidated financial statements of the Company are prepared in accordance with the “Regulations
Concerning the Terminology, Forms and Preparation Methods of Financial Statements, etc.” (“Regulations for NonConsolidated Financial Statements”, the Ministry of Finance Ordinance No. 59, 1963).
The Company is eligible to submit special financial statements, and prepares its financial statements in compliance withthe provisions of Article 127 of the Regulations for Financial Statements.

2. Audit certification
The consolidated financial statements for the current fiscal year (from January 1, 2020 to December 31, 2020 ) and nonconsolidated financial statements for the current fiscal year (from January 1, 2020 to December 31, 2020) were audited by
Ernst & Young ShinNihon LLC, in accordance with Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act.
3. Ensuring appropriateness of the consolidated financial statements
The Company is committed to ensuring the appropriateness of the consolidated financial statements. In particular, theCompany joined the Financial Accounting Standards Foundation to develop a more comprehensive understanding ofaccounting standards and enhance its systems appropriately to respond to changes in accounting standards.

1

1. 【Consolidated Financial Statements】(1)【Consolidated financial statements】①【Consolidated balance sheets】
Prior fiscal year
(As of December 31,
2019)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Accounts receivable-completed operation
Lease receivables and investment assets
Short-term investment securities
Costs on uncompleted services
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Accumulated impairment loss
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Accumulated impairment loss
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Accumulated impairment loss
Tools, furniture and fixtures, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Software
Software in progress
Goodwill
Other
Total intangible assets

26,352
1,781
22,911
2,934
1,199
755
785
765
1,780
*2
864
(26)
60,105

2(Millions of yen)
Current fiscal year
(As of December 31,
2020)

29,9701,517
21,415
3,822
922
713
776
841
1,999
*2
597
(26)
62,549*1*1

14,359(9,612)
(62)
4,684
6,833
(5,544)
1,288
1,680(1,549)
130
*3
6,146
533
(243)
290
56
12,597

13,654(9,171)
(2)
4,480
6,943
(5,650)
(220)
1,072
1,656
(1,544)
(6)
105
*3
5,886
531
(312)
219
32
11,797

1,013
183
155
1,351

851
25
83
66
1,026

(Millions of yen)
Current fiscal year
(As of December 31,
2020)

Prior fiscal year
(As of December 31,
2019)
Investments and other assets*4

Investment securities

6,297

*4

5,627

Long-term loans receivable23

23

Net defined benefit asset

1,569

1,766

Deferred tax assets

54

49

Real estate for investment

534

534

(222)

(232)

Accumulated depreciation

311

Real estate for investment, net
*2

Other

1,656

301
*2

1,275

Allowance for doubtful accounts

(408)

(370)

Total investments and other assets

9,504

8,671

23,453

21,496

83,55984,045

Total noncurrent assets
Total assets3

(Millions of yen)
Current fiscal year
(As of December 31,
2020)

Prior fiscal year
(As of December 31,
2019)
Liabilities
Current liabilities
Notes and accounts payable-trade*1

Accounts payable-operating

1,831

1,662

Short-term loans payable

104

93

1,266

1,420

125

106

-

325

Income taxes payable

864

718

Advances received on uncompleted contracts

475

397

Provision for bonuses

141

142

Provision for loss on orders received

161

182

Other

4,595

5,014

Total current liabilities

10,201

10,638

Lease obligations

1,971

2,637

Net defined benefit liability

1,866

1,845

Provision for stock benefits

208

49

Lease obligations
Provision for product warranties
Provision for stock benefits

636

*1

573

Noncurrent liabilities

676

Deferred tax liabilities*3

Deferred tax liabilities for land revaluation
Other
Total noncurrent liabilities
Total liabilities

4

327

576
*3

280

151

195

5,200

5,584

15,402

16,223

Prior fiscal year
(As of December 31,
2019)(Millions of yen)
Current fiscal year
(As of December 31,
2020)

Net assets
Shareholders’ equity
Capital stock

16,174

16,174

Capital surplus

15,077

15,077Retained earnings

39,096

40,136

Treasury stock(1,826)(1,820)Total shareholders’ equity

68,521

69,567

Accumulated other comprehensive income

1,760

Valuation difference on available-for-sale securities*3

Revaluation reserve for land

(2,797)1,303*3(2,902)Foreign currency translation adjustment

107

(621)

Remeasurements of defined benefit plans

175

193

Total accumulated other comprehensive income(753)(2,027)389

282

68,157

67,822

83,55984,045

Non-controlling interests
Total net assets
Total liabilities and net assets

5

②【Consolidated statements of income and consolidated statements of comprehensive income】【Consolidated statements of income】
Prior fiscal year
(From January 1, 2019
to December 31, 2019)
53,883

Net sales*1，*2

Cost of sales

38,000(Millions of yen)
Current fiscal year
(From January 1, 2020
to December 31, 2020)
49,608*1，*2

33,972

15,883

15,635

Directors’ compensations

786

786

Salaries and allowances

5,201

5,144

Provision for bonuses

52

55

Provision for stock benefits

78

73

Legal welfare expenses

796

809

Retirement benefit expenses

218

163

Traveling and transportation expenses

518

290

Rent expenses

396

473

Gross profit
Selling, general and administrative expenses

318

Depreciation*3

Research and development expenses

1,612

357
*3

1,427

54

125

-

125

Other

3,266

3,280

Total selling, general and administrative expenses

13,301

13,112

2,581

2,522

Interest income

191

106

Dividends income

96

87

Equity in earnings of affiliates

59

29

Grant income－

178

Insurance and dividends income

88

84

Rent of real estate

57

53

Other

102

139

Total non-operating income

596

680

Amortization of goodwill
Provision of allowance for doubtful accounts

Operating income
Non-operating income6

(Millions of yen)
Current fiscal year
(From January 1, 2020
to December 31, 2020)

Prior fiscal year
(From January 1, 2019
to December 31, 2019)
Non-operating expenses
Interest expenses

711

Foreign exchange losses

37

9Provision of allowance for doubtful accounts

127

Rent cost of real estate

14

14

Loss on retirement of noncurrent assets

22

5

Other

25

6

Total non-operating expenses

119

55

3,058

3,147

-

*425

278

7

Gain on sales of affiliate's stocks

25-

Total extraordinary income

303

33

53

1

*5 166*5 350Total extraordinary loss

219

352

Profit before income taxes

3,142

2,828

Income taxes-current

1,116

1,084

Income taxes-deferred

(163)

48

Total income taxes

952

1,133

2,189

1,694

13

(86)

2,176

1,781

Ordinary income
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities

Extraordinary loss
Loss on sales of investment securities
Impairment loss

ProfitProfit (Loss) attributable to non-controlling interests
Profit attributable to owners of parent

7

【Consolidated statements of comprehensive income】
Prior fiscal year
(From January 1, 2019
to December 31, 2019)
2,189(Millions of yen)
Current fiscal year
(From January 1, 2020
to December 31, 2020)
1,694

Valuation difference on available-for-sale securities

511

(456)

Foreign currency translation adjustment

(196)

(737)

Remeasurements of defined benefit plans

133

18

ProfitOther comprehensive income*1

Total other comprehensive income
Comprehensive income

448

*1

(1,175)

2,638

519

2,625

612

13

(93)

(Breakdown)Comprehensive income (loss) attributable to owners ofparentComprehensive income (loss) attributable to noncontrolling interests8

③【Consolidated statements of changes in net assets】
Prior fiscal year (From January 1, 2019 to December 31, 2019)(Millions of yen)
Capitalstock
Balance at the beginning of theyear
Changes during the year

16,174

Shareholders’ equity
CapitalRetained
Treasury
surplusearnings
stock

15,07737,458(1,828)

Shareholders’equity total

66,881Dividends from surplus

(740)

(740)

Profit attributable to ownersof parent
Purchase of treasury stock

2,176

2,176

(0)

Disposal of treasury stockReversal of revaluation
reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during the year
Balance at the end of year

(0)

(0)

1

1

202

202

－

(0 )

1,637

1

(1,639)16,174

15,07739,096(1,826)

68,521(Millions of yen)

Accumulated other comprehensive income

Balance at the beginning of theyear
Changes during the year

Valuationdifference on
available-forsale securities

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment

1,248(2,594)305

Remeasurements ofdefinedbenefit plans

41

Total
accumulated
othercomprehensiv
e income

Noncontrollinginterests

Total net
assets(1,000)131

66,013

Dividends from surplus(740)

Profit attributable toowners of parent
Purchase of treasury stock

2,176

Disposal of treasury stock1

Reversal of revaluation
reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during the year

202

Balance at the end of year

(0)

511

(202)

(197)

133

246

258

504

511

(202)

(197)

133

246

258

2,143

1,760

(2,797)

107

175

(753)

389

68,1579

Current fiscal year (From January 1, 2020 to December 31, 2020)(Millions of yen)
Capitalstock
Balance at the beginning of theyear
Changes during the year

16,174

Shareholders’ equity
CapitalRetained
Treasury
surplusearnings
stock

Shareholders’equity total(1,826)

68,521

15,07739,096

Dividends from surplus

(846)

(846)

Profit attributable toowners of parent
Purchase of treasury stock

1,781

1,781

Disposal of treasury stockReversal of revaluation
reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during the year
Balance at the end of year

(0)

(0)

6

6
105

6
(1,820)1,046
69,567105

16,174

15,077

1,039
40,136(Millions of yen)
Accumulated other comprehensive income

Balance at the beginning of theyear
Changes during the year

Valuationdifference on
available-forsale securities

1,760

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plans

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests

Total net
assets(2,797)

107

175

(753)

389

68,157

Dividends from surplus(846)

Profit attributable toowners of parent
Purchase of treasury stock

1,781

Disposal of treasury stock6

Reversal of revaluation
reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during the year

105

Balance at the end of year

(0)

(456)

(105)

(729)

18

(1,273)(107)(1,380)

(456)
1,303

(105)
(2,902)

(729)
(621)

18
193

(1,273)(2,027)

(107)
282

(334)

10

67,822

④ 【Consolidated statements of cash flows】
Prior fiscal year
(From January 1, 2019
to December 31, 2019)(Millions of yen)
Current fiscal year
(From January 1, 2020
to December 31, 2020)

Profit before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Increase (decrease) in provision for bonuses
Interest and dividend income
Interest expenses
Equity in (earnings) losses of affiliates
Loss (gain) on sales of investment securities
Loss (gain) on sales of affiliate's stocks
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories
Decrease (increase) in costs on uncompleted services
Increase (decrease) in notes and accounts payable trade
Increase (decrease) in advances received on
uncompleted contracts
Other
Subtotal

3,142
1,159
166
54
3
(288)
7
(59)
(225)
(25)
(2,926)
(100)
1,639
133
(1,195)

2,828
1,192
350
125
1
(193)
11
(29)
(6)
1,643
(426)
39
(216)
(77)

1,222
2,707

706
5,948

Interest and dividend income received
Interest expenses paid
Income taxes paid
Refund of income taxes
Net cash provided by (used in) operating activities
Cash flows from investment activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of short-term investment securities
Proceeds from sales of short-term investment securities
Purchase of property, plant and equipment and intangible
assetsProceeds from sales of property, plant and equipment
and intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries resulting in change in scopeof consolidation
Contingent consideration payments of shares of subsidiaries
Collection of loans receivable
Other
Net cash provided by (used in) investing activities

316
(7)
(686)
184
2,515

234
(11)
(1,299)53
4,925(5,616)
5,689(2,900)3,000(1,151)(5,344)
5,467
(300)
300
(893)

15

385

(13)
603
*2
(251)

(13)
47

0
(1)
(624)

(28)
1
362
(15)

Cash flows from operating activities

11-Prior fiscal year
(From January 1, 2019
to December 31, 2019)
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Repayments of lease obligations
Proceeds from sales of treasury stock
Purchase of treasury stock
Cash dividends paid
Dividends paid to non-controlling interests
Net cash provided by (used in) financing activities(Millions of yen)
Current fiscal year
(From January 1, 2020
to December 31, 2020)

103
(2)
(111)
1
(0)
(740)
(6)
(756)

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 the year
Cash and cash equivalents at end of the year

*1

12

(7)
(112)
6
(0)
(846)
(18)
(979)

32

(210)

1,166

3,719

19,39920,565

20,565*1

24,285

【Notes】(Significant accounting policies)
1. Scope of consolidation(1) Number of consolidated subsidiaries: 26
Names of major consolidated subsidiaries:
OYO CORPORATION U.S.A.
KINEMETRICS, INC.
GEOMETRICS, INC.
GEOPHYSICAL SURVEY SYSTEMS, INC.
ROBERTSON GEOLOGGING LTD.
NCS SUBSEA,INC.
FONG CONSULT PTE.LTD.
FC INSPECTION PTE.LTD.
NS ENVIRONMENTAL SCIENCE CONSULTANT CORPORATIONOYO RESOURCES MANAGEMENT CORPORATIONTOUHOKU BORING CO., LTD.
OCEAN ENGINEERING CORPORATION
KOEI CONSULTANT CO., LTD.
OYO SEISMIC INSTRUMENTATION CORPORATIONOYO INTERNATIONAL CORPORATIONOYO GEO-MONITORING SERVICE CORPORATIONNANKYU GEO TECHNICS CORPORATIONOYO GEOTECHNICAL SERVICE CORPORATIONKCS CO., LTD.
OYO RMS CORPORATION

During the current fiscal year, P-Cable 3D Seismic AS was excluded from the scope of consolidation due to thecompletion of liquidation procedures.
(2) Names of major non-consolidated subsidiaries
Major non-consolidated subsidiary:
SIGMA KOGYO CO., LTD.
(Reason for excluding from the scope of consolidation)
This unconsolidated subsidiary is small; and the total assets, net sales, net income and loss (amount corresponding to eachcompany’s equity), and retained earnings (amount corresponding to each company’s equity) of the subsidiary have nosignificant impact on the consolidated financial statements.
2. Application of the equity method(1) Number of affiliates accounted for under the equity method: 5Names of major affiliates
IRIS INSTRUMENTS SAS
ENGINEERING & RISK SERVICES CORPORATION(2) Non-consolidated subsidiaries and affiliates not accounted for under the equity method
Name of major non-consolidated subsidiaries:
SIGMA KOGYO CO., LTD.
The Company excluded this non-consolidated subsidiary because it had little impact on the consolidated financial
statements and had no impact overall, considering net income and loss for the year (amount corresponding to eachcompany’s equity) and retained earnings (amount corresponding to each company’s equity).
3. Fiscal year-end, etc. of consolidated subsidiaries
The year-end closing date for consolidated subsidiaries is the same as the consolidated year-end closing date.

13

4. Accounting policies(1) Valuation standards and methods for significant assets(a) Securities
Available-for-sale securities
Securities with fair market value
Stated at fair value based on the quoted market price as of the year-end closing date with any changes in unrealized
gains or losses, net of the applicable income taxes, included directly in net assets. Cost of securities sold is determinedby the moving average method.
Securities without fair market value
Stated at cost determined by the moving average method.
(b) Derivatives
Stated at fair value.
(c) Inventory assets
Costs on uncompleted services
Stated at cost using the specific identification method (balance sheet amounts are determined by writing down the bookvalues based on decrease in profitability).
Merchandise/products/raw materials/work in process
Stated at cost using the weighted-average method (balance sheet amounts are determined by writing down the bookvalues based on decrease in profitability). The lower of cost or market method, cost being determined by the first-in-firstout method, is used by major consolidated subsidiaries.
(2) Depreciation method of significant depreciable assets(a) Property, plant and equipment (excluding lease assets) and real estate for investment
For buildings (excluding structures attached to buildings) of the Company and its domestic consolidated subsidiaries, thestraight-line method is used; and for other property, plant equipment, the declining balance method is used. For overseas
subsidiaries, the straight-line method is used.
Major useful lives are as follows:
Buildings and structures:
2 - 50 years
Machinery, equipment and vehicles:
2 - 15 years(b) Intangible assets (excluding lease assets)
Straight-line method
Software for internal use is amortized over the expected available period (5 - 10 years).
(c) Lease assets
The straight-line method is adopted mainly with a residual value of zero and the lease period deemed equal to the service
life of the asset.
(3) Accounting for significant allowances and provisions(a) Allowance for doubtful accounts
To prepare for expected losses from bad debts, the Company and its domestic consolidated subsidiaries estimate
uncollectible amounts for normal receivables based on the historical experience and for certain specific receivables suchas doubtful accounts receivables, based on the individual probability of recovery. Overseas consolidated subsidiaries
estimate uncollectible amounts for certain receivables, such as doubtful accounts receivables, based on the individual
probability of recovery.
(b) Provision for bonuses
At the Company and its consolidated subsidiaries, to prepare for payment of bonuses to employees, a provision forbonuses is provided based on the expected amount of payment.
(c) Provision for loss on orders received
At the Company and its domestic consolidated subsidiaries, to prepare for future losses on contracts for orders received,a provision for losses on orders received is provided based on the future losses anticipated at the end of the current fiscal
year and the amount of foreseeable losses that can reasonably be estimated.
(d) Provision for product warranties
At the Company and its certain consolidated overseas subsidiaries, to prepare for estimated warranty costs, a provision for
product warranties is provided based on historical experience of free-of-charge repairs of products.

14

(e) Provision for stock benefits
In order to provide for grants of shares of the Company to directors and employees of the Group in accordance with thedirector stock benefit regulations and stock benefit regulations, a provision for stock benefits is provided based on theestimated stock benefit obligations as of the end of the current fiscal year.
(4) Accounting method for retirement benefits(a) Method of attributing the estimated retirement benefits to periods
In calculating retirement benefit obligations, the benefit formula method of attributing estimated retirement benefits toperiods has been applied until the end of the current fiscal year.
(b) Amortization method of actuarial gain or loss and past service cost
Actuarial gain or loss is amortized in the fiscal year following the year in which the gain or loss is incurred by the straightline method over periods (5 years) which are shorter than the average remaining service periods of the employees. Past
service cost is amortized by the straight-line method over periods (5 years) which are shorter than the average remaining
service periods of the employees.
(5) Accounting for significant revenues and expenses(a) Individual contracts from which the outcome can be estimated reliably through the end of the current fiscal year
The percentage-of-completion method is adopted. (The percentage of completion is measured by the proportion of thecost incurred relative to the estimated total cost).
(b) Other contracts
The completed-contract method is adopted.
(6) Significant hedge accounting method(a) Hedge accounting method
Deferral hedge accounting is adopted.
(b) Hedging instruments and hedged items
Hedging instruments: forward-exchange contracts
Hedged items: accounts payable-trade(c) Hedging policy
In order to reduce risks of exchange rate fluctuations, hedges are used to cover liabilities.
(d) Method of assessing hedge effectivenessAn assessment of hedge effectiveness is omitted because the relationship between the hedging instruments and hedged
items is direct.
(7) Amortization of goodwill
Goodwill is amortized by the straight-line method over 10 years.
(8)Cash and cash equivalents in the consolidated statements of cash flows
Cash and cash equivalents on the consolidated statement of cash flows included cash on hand, bank deposits that could be
withdrawn at any time, and low-risk short-term investments easily convertible to cash maturing within three months fromthe date of acquisition.
(9) Other significant items regarding preparation of the consolidated financial statements
Accounting for consumption tax
All amounts exclude consumption tax.

15

(Change in accounting policies)
Not applicable.
(Unapplied accounting standards)
・“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 29, issued
on March 31, 2020)
・“Implementation Guidance on Accounting Standard for Revenue Recognition” (Implementation Guidance No. 30, issued on
March 31, 2020)(1) Summary
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) developed
comprehensive accounting standards related to revenue recognition and issued ”Revenue from Contracts with Customers”
in May 2014 (IFRS 15 for the IASB and Topic 606 for the FASB). Considering that IFRS 15 is applied effective fiscal years
beginning on or after January 1, 2018 and Topic 606 is applied effective fiscal years beginning on or after December 15,
2017, the ASBJ developed a comprehensive accounting standard related to revenue recognition and issued it along with
implementation guidance.
In developing the accounting standard related to revenue recognition, the ASBJ determined that, from the point of view offinancial statement comparability, which is one of the benefits of maintaining consistency with IFRS 15, the accounting
standard should incorporate the basic principles of IFRS 15. Also, if there are any items that should be considered related
to practices in Japan, alternative approaches would be added that do not impair comparability.
(2) Planned date of application
The accounting standards will be applied from the beginning of the fiscal year ending December 31, 2021.
(3) Effect of application
The impact of applying the accounting standards on the consolidated financial statements is currently being evaluated.
・Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019)
・Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, July 4, 2019)
・Accounting Standard for Measurement of Inventories (ASBJ Statement No. 9, July 4, 2019)
・Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019)
・Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, March 31, 2020)(1) Summary
In order to improve the comparability with the provisions of international accounting standards, “Accounting Standard for
Fair Value Measurement” and “Implementation Guidance on Accounting Standard for Fair Value Measurement”(“Accounting Standards for Fair Value Measurement”) have been established. These standards were developed andprovided guidance on how to calculate fair value. Accounting Standards for Fair Value Measurement are applied to the fairvalue of the following items:
・Financial instruments in the “Accounting Standard for Financial Instruments”
・Inventories held for trading purposes in “Accounting Standard for Valuation of Inventories”
In addition, the “Guidance on Disclosures about Fair Value of Financial Instruments” was revised to provide notes on the
breakdown of fair value of financial instruments by level.
(2) Expected date of application
The accounting standards will be applied from the beginning of the fiscal year ending December 31, 2022.
(3) Effect of application
The impact of applying the accounting standards on the consolidated financial statements is currently being evaluated.
・Accounting Standard for Disclosure of Accounting Policies, Accounting Changes and Error Corrections (ASBJ Statement
No. 24 issued on March 31, 2020)(1) Summary
The purpose of the accounting standards is to provide an overview of the accounting principles and procedures adopted in
the event that the relevant accounting standards are not clearly defined.
(2) Expected date of application
The accounting standard will be applied from the end of the fiscal year ending December 31, 2021.

16

・Accounting Standard for Disclosure of Accounting Estimates (ASBJ Statement No. 31, March 31, 2020)(1) Summary
The purpose of the accounting standard is to disclose information that contributes to the understanding of financial
statement users regarding the details of accounting estimates in the items for which amount recorded in the financial
statements for the current fiscal year has a risk of significant impact on the financial statements for the following fiscal
year.
(2) Expected date of application
The accounting standard will be applied from the end of the fiscal year ending December 31, 2021.
(Change in presentation)(Consolidated statements of cash flows)
In the prior fiscal year, “Payments of short-term loans receivable” and “Payments of long-term loans receivable” in “Cashflows from investment activities” were presented separately from the current fiscal year. However, as the amount was
immaterial for the current fiscal year, it was included in “Other.” To reflect this change in presentation, the consolidated
financial statements for the prior fiscal year were reclassified.
As a result, “Payments of short-term loans receivable” in “Cash flows from investment activities” in the amount of (1)million yen, “Payments of long-term loans receivable” in “Cash flows from investment activities” in the amount of (1) million
yen, “Other” in “Cash flows from investment activities” in the amount of 0 million yen in the consolidated statements ofcash flows for the prior fiscal year was reclassified as (1) million yen in “Other.”(Additional information)(Board Benefit Trust)
The Company has introduced the “Board Benefit Trust (BBT)” as directors’ remuneration from June 2, 2014 based on the
resolution at the General Meeting of Shareholders held on March 26, 2014. Based on the resolution at the General Meetingof Shareholders held on March 27, 2018, it was determined to continue the scheme and partially revise it. Also, theCompany introduced the Stock Granting Trust (J-ESOP) on the same day to enhance the motivation and morale ofemployees towards improved stock price and business performance, by elevating linkages between the stock price andbusiness performance of the Company and treatment of the employees, and also to promote achievement of the target in
the mid-term business plan and further increase the corporate value of the Company. It is partially revised and continued.
(Hereinafter, the “System.”)(1) Outline of transaction
In introducing the System, the Company established anew the “Director stock benefit regulations” (Hereinafter, “Director
benefit regulations”) and “Stock benefit regulations” (Hereinafter, “Benefit regulations”).
The Company has entrusted funds to a trust bank to enable the prior purchase of the Company stock to be granted in the
future based on the established director stock benefit regulations and benefit regulations (Hereinafter, “the Trust”).
The Board Benefit Trust (BBT) is a program in which points are awarded to directors based on the director benefit
regulations, and stock is granted to the directors according to the points accumulated. Also, the Stock Granting Trust (JESOP) is a program in which points are awarded based on the Benefit regulations according to the business performanceof the Company and each subsidiary for each fiscal year, and stock is granted to the employees based on the number ofpoints accumulated.
(2) Shares of the Company held by the Trust
Shares of the Company held by the Trust are included in treasury stock in the net assets section of the consolidated balance
sheets based on their book value (excluding associated expenses). The book value and the corresponding number of sharesof the Company totaled 522 million yen and 349,482 shares, respectively, as of the end of the prior fiscal year, and 515
million yen and 345,086 shares, respectively, as of the end of the current fiscal year.

17

(Assumption of the impact of the COVID-19 in development of accounting estimates)
COVID-19 is continuing to expand in Japan and other countries worldwide, and the outlook for the economy remains
uncertain, while the oil and natural resource market remains sluggish. Net sales has declined, particularly among Group
companies overseas. These and other factors have had an impact on the Group’s performance.

Vaccines have been launched in some foreign countries, but given that it is expected that it will take some time
before vaccinations are widely implemented in Japan, the Company has made accounting estimates such as
recoverability of deferred tax assets and impairment of noncurrent assets based on the assumption that the impactof the COVID-19 on the global economy and the Japanese economy may continue until the second half of 2021. As theimpact of the COVID-19 on economic activity is highly uncertain, changes in the above assumptions could affect theCompany’s financial position and results of operations in future periods.

(Consolidated balance sheets)※ 1. Treatment of trade notes maturing at the end of the fiscal year
Trade notes maturing at the end of the fiscal year are settled on the clearance date. The following notes are outstanding at
the end of the fiscal year, as the maturity date fell on a business holiday for financial institutions.
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

Notes receivable-trade

2 million yen

3 million yen

Notes payable-trade

3 million yen

9million yen

2. Pledged assets and secured liabilities

Current assets' Other
Investments and other assets' Other
Total

Prior fiscal year
(As of December 31, 2019)1 million yen
164 million yen
165 million yen

Current fiscal year
(As of December 31, 2020)
1 million yen
155 million yen
156 million yen(Prior fiscal year)
Within the limit of the letter of credit (2,410 million yen), the Company provides the restricted deposits of its US
consolidated subsidiaries as securities under the asset-based loan system of the United States of America.
(Current fiscal year)
Within the limit of the letter of credit (2,277 million yen), the Company provides the restricted deposits of its US
consolidated subsidiaries as securities under the asset-based loan system of the United States of America.

18

※ 3. Revaluation of land
Land for business operations was revalued in accordance with the Land Revaluation Law (Law No. 34 issued on March 31,
1998) and a revaluation reserve for land was recorded under net assets.
Revaluation method
Land value is calculated on the basis of taxable amounts for land value tax along with reasonable adjustments, inaccordance with Article 2, Item 4 of the Enforcement Ordinance relating to the Land Revaluation Law (Cabinet Order No.
119 issued on March 31, 1998). Also, part of the value of land is calculated on the basis of the approved values of
noncurrent assets, stated in Article 2, Item 3, with reasonable adjustments.
Revaluation date: December 31, 2001
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

The difference between the fair value of the landat the end of the period of the revaluation andthe book value after the revaluation:(735) million yen(251) million yen

The difference related to real estate for rent outof this:(51) million yen(47) million yen

Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

769 million yen

786 million yen※ 4. Non-consolidated subsidiaries and affiliates

Investment securities (stock)

The amounts of investment in joint ventures included above were 754 million yen in the prior fiscal year and 771 million
yen in the current fiscal year.
5. Guarantee obligation
The Company guarantees a performance bond from a financial institution related to sales order as follows.
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

25 million yen- million yen

Tianjin Smart Sensor Technology Co., LTD.

(Consolidated statements of income)※ 1. Loss on valuation of inventories
Inventories at the end of the year were stated after a reduction of book value due to a decline in profitability and theloss on valuation of inventories included in cost of sales was as follows:
Prior fiscal year
Current fiscal year
(From January 1, 2019
(From January 1, 2020
to December 31, 2019)
to December 31, 2020)
Cost of sales
154 million yen
147 million yen※ 2. Provision for loss on orders received included in cost of sales
Prior fiscal year
(From January 1, 2019
to December 31, 2019)
Cost of sales- million yen

19

Current fiscal year
(From January 1, 2020
to December 31, 2020)
21 million yen※ 3. Research and development expenses included in general and administrative expenses and manufacturing costs

General and administrative
expenses

Prior fiscal year
(From January 1, 2019
to December 31, 2019)

Current fiscal year
(From January 1, 2020
to December 31, 2020)

1,612 million yen

1,427 million yen※ 4. The components of gain on sales of noncurrent assets are as follows

Land

Prior fiscal year
(From January 1, 2019
to December 31, 2019)

Current fiscal year
(From January 1, 2020
to December 31, 2020)- million yen

25 million yen※ 5 Impairment loss
Prior fiscal year (January 1, 2019 to December 31, 2019)
The Group recognized impairment loss on the following assets.
Location

Use

Type

Impairment loss

Fukuoka-city, Fukuoka

OfficeLand and building

156 million yen

Hirosaki-city, Aomori

Rep. OfficeLand

9 million yen

The Group groups business assets in accordance with its management accounting categories, which are organized so that
income and expenses can be continuously monitored, while idle assets not directly used in business operations aregrouped individually.
For the assets indicated above, due to a determination for disposal by sales in the current fiscal year, the book value was
reduced to the recoverable amount and the write-down of 166 million yen (component: land (103 million yen), building(62 million yen)) was recognized as an impairment loss.
Also, the recoverable amount is estimated at net realizable value, which is the amount calculated by deducting the expected
disposal cost from the estimated sales amount.
Current fiscal year (January 1, 2020 to December 31, 2020)
The Group recognized impairment loss on the following assets.
Location

Use

Type

Impairment loss

Texas, U.S.A.

For research
projects

Machinery and equipment

217 million yen

Intangible assets (Other)

62 million yen

California, U.S.A.

For equipment
manufacturing
and sales

Software, etc.

57 million yen

Singapore

For reearch
projects

Vehicles, etc.

12 million yen

20

The Group groups business assets in accordance with its management accounting categories, which are organized so that
income and expenses can be continuously monitored, while idle assets not directly used in business operations aregrouped individually.
For the assets indicated above, because of the decline of profitability due to the deterioration in the market, the bookvalue was reduced to the recoverable amount and the write-down of 280 million yen (2,626 thousand US dollars), 57
million yen (539 thousand US dollars), and 12 million yen (161 thousand Singapore dollars) were recognized as impairment
losses. For Machinery, etc., in Texas, U.S.A., the recoverable amount is calculated based on the net selling price,which is the appraised value by professionals. For vehicles, etc., in Singapore, the recoverable amount is calculated
based on the net selling price, and the recoverable amount is the net selling price minus the expected disposal cost.
For intangible assets (Other) in Texas, U.S.A., software, etc., in California, the recoverable amounts are measured asvalue in use, and the future cash flows are discounted at 17.0% and 14.5%, respectively.

21

(Consolidated statements of comprehensive income)※ 1. Reclassification adjustments and tax effects related to each component of other comprehensive income
Prior fiscal year
(From January 1, 2019
to December 31, 2019)
Valuation difference on available-for-salesecurities:
Amount arising during the current fiscal
Year
Reclassification adjustment
Amount before tax effectTax effect
Valuation difference on available-forsale securities
Foreign currency translation adjustment:
Amount arising during the current fiscal
year
Reclassification adjustment
Foreign currency translation
adjustment:
Remeasurements of defined benefit plans:
Amount arising during the current fiscal
Year
Reclassification adjustment
Amount before tax effectTax effectRemeasurements of defined benefit
plans
Total other comprehensive income

Current fiscal year
(From January 1, 2020
to December 31, 2020)

957 million yen(651) million yen(219) million yen
737 million yen(225) million yen
511 million yen(6) million yen(658) million yen
201 million yen(456) million yen(171) million yen(737) million yen(25) million yen(196) million yen- million yen(737) million yen

178 million yen

133 million yen

14 million yen
192 million yen(59) million yen
133 million yen(107) million yen
26 million yen(8) million yen
18 million yen

448 million yen(1,175) million yen

22

(Consolidated statements of changes in net assets)
Prior fiscal year (From January 1, 2019 to December 31, 2019)
1. Type and number of shares issued and type and number of treasury stock
Number of shares at
Increase in number
Decrease in number
January 1, 2019of shares duringof shares during
the current fiscal
the current fiscal
year
year
Issued shares

Number of shares at
December 31, 201927,582,573--

27,582,573

27,582,573--

27,582,573

Common stock(Notes)2,3

1,469,573

283

1,215

1,468,641

Total

1,469,573

283

1,215

1,468,641

Common stock(Notes)1
Total
Treasury stock(Notes) 1 The number of common stock of treasury stock at the beginning of the current fiscal year and at the end of the current
fiscal year includes 350,672 shares and 349,482 shares of the Company held by Trust & Custody Services Bank, Ltd. (Trust
Account) ( currently renamed; Custody Bank of Japan, Ltd. (Trust Account)).
2 Outline of reasons for the change
Breakdown of increase in the number is as follows:
Increase due to purchase of less than standard unit
Breakdown of decrease in the number is as follows.
Decrease due to demand for sale of less than standard unit
Decrease due to demand for sale by Trust & Custody Services Bank, Ltd.
(Trust Account) (currently renamed; Custody Bank of Japan, Ltd. (Trust Account))

283 shares
25 shares
1,190 shares

2. Subscription rights to shares and treasury stock subscription shares
Not applicable.
3. Dividends(1) Dividends paid
Resolution

Type of shares

Total dividends(Millions of yen)

Dividend pershare (Yen)Record date

Effective date

March 27, 2019
General meeting ofshareholders

Common stock

370

14.00

December 31, 2018

March 28, 2019

August 9, 2019
Board meeting

Common stock

370

14.00

June 30, 2019

September 24,
2019(Notes) 1 The total amount of dividends resolved by the General Meeting of Shareholders of March 27, 2019 includes 4 million
yen of dividends distributed to treasury stock held by Trust & Custody Services Bank, Ltd. (Trust Account) (currently
renamed; Custody Bank of Japan, Ltd. (Trust Account)).
2 The total amount of dividends resolved by the Board of Directors of August 9, 2019 includes 4 million yen of
dividends distributed to treasury stock held by Trust & Custody Services Bank, Ltd. (Trust Account) (currently
renamed; Custody Bank of Japan, Ltd. (Trust Account)).

23

(2) Dividends for which the settlement date was within the current fiscal year but the effective date in the following
fiscal year
Total dividend
Source ofDividend perType of(Millions ofRecord date
Effective date
Resolution
dividends
share (Yen)sharesyen)
March 27, 2020
GeneralCommonRetained
December 31,
March 30,423
16.00
meeting ofstock
earnings
20192020
shareholders(Note) The total amount of dividends resolved by the General Meeting of Shareholders of March 27, 2020 includes 5
million yen of dividends distributed to treasury stock held by Trust & Custody Services Bank, Ltd. (Trust Account)(currently renamed; Custody Bank of Japan, Ltd. (Trust Account)).
Current fiscal year (From January 1, 2020 to December 31, 2020)
1. Type and number of shares issued and type and number of treasury stock
Decrease in numberof shares during
the current fiscal
year

Number of shares at
January 1, 2020

Increase in number ofshares during thecurrent fiscal year

27,582,573--

27,582,573

27,582,573--

27,582,573

1,468,641

256

4,396

1,464,501

1,468,641

256

4,396

1,464,501

Number of shares at
December 31, 2020

Issued shares
Common stock(Notes)1
Total
Treasury stock
Common stock(Notes)2,3
Total(Notes)1 The number of common stock of treasury stock at the beginning of the current fiscal year and at the end of
the current fiscal year includes 349,482 shares and 345,086 shares of the Company held by Custody Bank ofJapan, Ltd. (Trust Account).
2 Outline of reasons for the change
Breakdown of increase in the number is as follows.
Increase due to purchase of less than standard unit
256 shares
Breakdown of decrease in the number is as follows.
Decrease due to demand for sale by Custody Bank of Japan, Ltd. (Trust Account))
4,396 shares

2. Subscription rights to shares and treasury stock subscription shares
Not applicable.

243. Dividends(1) Dividends paid
Resolution

Type of shares

March 27, 2020
General meetingof shareholders

Common stock

August 12, 2020
Board meeting

Common stock(Notes)Total dividends(Millions of yen)

Dividend pershare (Yen)Record date

Effective date

423

16.00

December 31,
2019

March 30, 2020

423

16.00

June 30, 2020

September 23,
2020

1 The total amount of dividends resolved by the General Meeting of Shareholders of March 27, 2020 includes 5 million
yen of dividends distributed to treasury stock held by Trust & Custody Services Bank, Ltd. (Trust Account) (currently
renamed; Custody Bank of Japan, Ltd. (Trust Account)) .
2 The total amount of dividends resolved by the Board of Directors of August 12, 2020 includes 5 million yen of
dividends distributed to treasury stock held by Custody Bank of Japan, Ltd. (Trust Account).

(2) Dividends for which the settlement date was within the current fiscal year but the effective date in the following fiscal
year
Total dividend
Type of
Source ofDividend per
Resolution(Millions ofRecord date
Effective datesharesdividends
share (Yen)yen)
March 26, 2021
423 Retained
16.00 December 31, March 29,
CommonGeneral meeting of
earnings
2020
2021
stock
shareholders(Note)The total amount of dividends resolved by the General Meeting of Shareholders of March 26, 2021 includes 5 million
yen of dividends distributed to treasury stock held by Custody Bank of Japan, Ltd. (Trust Account).

25

(Consolidated statements of cash flows)※ 1. The relationship between the year-end balance of cash and cash equivalents and amounts in the consolidated balance sheets
Prior fiscal year
Current fiscal year
(From January 1, 2019
(From January 1, 2020
to December 31, 2019)
to December 31, 2020)
Cash and deposits
26,352 million yen
29,970 million yen
Short-term investment securities

1,199 million yen

922 million yen

Total

27,552 million yen

30,892 million yen

Time deposits with maturities ofmore than 3 months(6,086) million yen(5,684) million yen

Stock and debt securities withredemption period exceeding
3 months(899) million yen(922) million yen

Cash and cash equivalents

20,565 million yen

24,285 million yen※ 2. Breakdown of assets acquired and liabilities assumed of newly consolidated subsidiary due share acquisition
Prior fiscal year (From January 1, 2019 to December 31, 2019)

Assets and liabilities of FONG CONSULT PTE.LTD. and FC INSPECTION PTE.LTD. on the date of acquisition as well as therelationship between the acquisition cost and net disbursement for the acquisition were presented below:
Current assets
562 million yen
Noncurrent assets

126 million yen

Goodwill

109 million yen

Current liabilities(237) million yen

Noncurrent liabilities(59) million yen

Non-controlling interests(192) million yen

Acquisition cost of shares

309 million yen

Cash and cash equivalents(57) million yen

Difference: Net disbursement for the acquisition

251 million yen

Current fiscal year (From January 1, 2020 to December 31, 2020)
Not applicable.
3. Significant noncash transactions(1) The amount of assets and liabilities related to finance lease transactions
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

119 million yen

46 million yen

Amount of assets and liabilities related tofinance lease transactions

26

(Lease transactions)1. Finance lease transactions (lessee)
Lease transactions which stipulate the transfer of ownership of leased assets to the lessee(a) Lease assets
Property, plant and equipment
Primarily consists of equipment for analysis and measurement (Tools, furniture and fixtures) for geo-engineering andconsultation services.
(b) Depreciation method for lease assets
Described in Significant accounting policies “4. Accounting policies, item (2) Depreciation method of significant depreciable
assets.”
2. Operating lease transactions
Unearned lease payments for noncancellable operating lease transactions(Millions of yen)
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

Due in 1 year or less

128

125

Due after 1 year

426

307

Total

554

433

3. Sublease transactions in the consolidated balance sheets are recorded inclusive of tax on interest(1) Lease receivables and investment assets(Millions of yen)
Prior fiscal year
(As of December 31, 2019)
Current assets

2,934

Current fiscal year
(As of December 31, 2020)
3,822(2) Lease obligations(Millions of yen)
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

Current liabilities

1,154

1,324

Noncurrent liabilities

1,779

2,494

(Financial instruments)
1. Accounting policies(1) Policy for financial instruments
The Group funds business investments and short-term operations with its own resources, in principle. The Group invests
surpluses in highly rated financial instruments. The Group enters into derivative transactions to hedge future risks ofexchange rate fluctuations, but does not engage in speculative trading.

27

(2) Types of financial instruments and related risks
Operating receivables, such as notes and accounts receivable-trade and accounts receivable-completed operations, areexposed to credit risks in relation to customers; and trade receivables denominated in foreign currencies are exposed to
exchange rate fluctuation risks. The Company uses derivative transactions (currency swaps and forward-exchange
contracts) to hedge part of its operating receivables.
Short-term investment securities and investment securities are mainly highly-rated bonds, investment trusts and stock of
the companies with which the Group has business relationships; and these are exposed to market-price fluctuation risks.
Operating payables, such as notes and accounts payable-trade and accounts payable-operating, are mostly payable within
one year or less. Trade payables denominated in foreign currencies are exposed to exchange fluctuation risks. The
Company uses derivative transactions (currency swaps and forward-exchange contracts) to hedge part of its operating
payables.
Derivative transactions are currency swaps and forward-exchange contracts for foreign currency in order to avoid exchange
rate fluctuations. Regarding the hedging instruments, hedged items and hedging policy and method of measuring hedge
effectiveness, refer to the information described in “4. Accounting policies, (6) Significant hedge accounting method”.
(3) Risk management for financial instruments(a) Credit risk (risks related to customers’ contract delinquency) management
In accordance with the Company’s business management policy, the Company regularly monitors its customers' financial
situations and controls record dates and outstanding balances per customer for operating receivables. The Company
applies a similar management system to its consolidated subsidiaries.
For short-term investment securities and investment securities, the Company selects highly rated financial instruments, inaccordance with its securities policy. Accordingly, the credit risk is insignificant.
For derivative transactions, the Company limits counterparties to highly rated financial institutions. Accordingly, the credit
risk is minimal.
(b) Market risk (exchange rate/interest rate fluctuations) management
The Company hedges against the exchange fluctuations utilizing currency swaps and forward-exchange contracts for part ofits operating payables and receivables denominated in foreign currencies.
For short-term investment securities and investment securities, the Company regularly monitors market conditions and thefair values of its securities. The Company also intermittently reviews its status of its shareholdings, considering its
relationships with the companies.
For enforcement and management of derivative transactions, the Company follows the Company’s rules with regard todecision-making authority and the maximum limit for transactions, and the fund management division conducts thetransactions with the approval of the person in charge of decision-making.
The Company applies a similar management system to its consolidated subsidiaries.
(c) Liquidity risk (risk of not being able to complete payment before due date) management
The responsible division of the Company creates and reviews fund management plans on a timely basis and manages theliquidity risk by keeping funds on hand.
The Company applies a similar management system to its consolidated subsidiaries.
(4) Supplementary explanation on fair values of financial instruments
Fair value of financial instruments is defined as the market-based price and the price reasonably calculated when there is nomarket price available. Since various assumptions and factors are reflected in estimating the fair value, different assumptions
and factors could result in a different fair value. In addition, the notional amounts of derivatives in the note “Derivativetransactions” are not necessarily indicative of the market risk regarding the derivative transactions.

28

2. Fair value of financial instruments
The book values on the consolidated balance sheets, fair value and the difference between them are shown in the following
table. The following table does not include items for which the calculation of fair value is not readily determinable (See Note
2 below).
Prior fiscal year (As of December 31, 2019)(1) Cash and deposits(2) Notes and accounts receivable-trade(3) Accounts receivable-completed operations(4) Short-term investment securities andinvestment securities
Available-for-sale securities

26,352
1,781
22,911

Fair value(Millions ofyen)
26,352
1,781
22,911

6,510

6,510

-

Total assets(1) Notes and accounts payable-trade(2) Accounts payable-operating(3) Income taxes payable

57,555
636
1,831
864

57,555
636
1,831
864

-

Total liabilities

3,331

3,331

-

Book value on consolidatedbalance sheets (Millions of yen)

Difference(Millions ofyen)-

Current fiscal year (As of December 31, 2020)

29,9701,517
21,415

Fair value(Millions ofyen)
29,9701,517
21,415

5,524
58,427
573
1,662
718
2,954

5,524
58,427
573
1,662
718
2,954

Book value on consolidatedbalance sheets (Millions of yen)
(1) Cash and deposits(2) Notes and accounts receivable-trade(3) Accounts receivable-completed operations(4) Short-term investment securities andinvestment securities
Available-for-sale securities
Total assets(1) Notes and accounts payable-trade(2) Accounts payable-operating(3) Income taxes payable
Total liabilities

Difference(Millions ofyen)-(Notes) 1. Method of calculating the fair value of financial instruments and matters related to securities and derivativetransactions
Assets(1) Cash and deposits, (2) Notes and accounts receivable-trade, (3) Accounts receivable-completed operations
As these instruments are settled within a short term and their fair values and book values are nearly equal,
their book values are assumed as their fair values.
(4) Short-term investment securities and investment securities
The fair value of stocks is determined by their price on stock exchanges and the fair value of bonds andinvestment trusts is determined by the prices indicated by the dealers or financial institutions. For information
on securities classified by holding purpose, please refer to the note “Securities”.
Liabilities(1) Notes and accounts payable-trade, (2) Accounts payable-operating, (3) Income taxes payable
Since these instruments are settled within a short term and their fair value and book value are nearly equal,
their book value is assumed as their fair value.

29

2. The book value on the consolidated balance sheet of the financial instruments for which fair value is extremely
difficult to determine(Millions of yen)Classifications

December 31, 2019

Investments in a limited partnership
Unlisted bonds
Unlisted stocks
Stocks of subsidiaries and affiliates

December 31, 2020
0
216
769

0
22
216
786

These instruments do not have market prices and it is extremely difficult to determine fair value. Accordingly,
they were not included in “(4) Short-term investment securities and investment securities”.
3. Redemption schedule of receivables and securities with maturities
Prior fiscal year (As of December 31, 2019)26,337
1,781
22,911-

Due after 5
years through10 years(Millions of
yen)
-

-

-

-

-

200
1,000
0
52,230

750
83
833

-

-

Due after 1 year
through 5 years(Millions of yen)

Due after 5
years
through
10 years(Millionsof yen)Due within
1 year(Millions of yen)
Cash and deposits
Notes and accounts receivable-trade
Accounts receivable-completed operation
Short-term investment securities and investment
securities
Available-for-sale securities with maturities
1. Bonds(1) Government bonds/local authority bonds, etc.
(2) Corporate bonds(3) Others
2. Others
Total

Due after 1
year through 5
years (Millionsof yen)Due after
10 years(Millions ofyen)-

Current fiscal year (As of December 31, 2020)
Due within
1 year(Millions of yen)
Cash and deposits
Notes and accounts receivable-trade
Accounts receivable-completed operation
Short-term investment securities andinvestment securities
Available-for-sale securities with maturities
1. Bonds(1) Government bonds/local authority
bonds, etc.
(2) Corporate bonds(3) Others
2. Others
Total

30

Due after
10 years(Millions ofyen)

29,956
1,517
21,415

-

-

-

-

-

-

-

22
900
0
53,811

750
81
831

-

-

4. Repayment schedule of lease obligations due after the balance sheet date.
Prior fiscal year (As of December 31, 2019)

Lease
obligations

Within one
year(Millions ofyen)

Due after 1
year butwithin 2
years(Millions ofyen)

Due after 2
years butwithin 3
years(Millions ofyen)

Due after 3
years butwithin 4
years(Millions ofyen)

Due after 4
years butwithin 5
years(Millions ofyen)

Due after 5
years(Millions of
yen)

1,266

948

576

301

106

37

Current fiscal year (As of December 31, 2020)

Leaseobligations

Within one
year(Millions ofyen)

Due after 1
year butwithin 2
years(Millions ofyen)

Due after 2
years butwithin 3
years(Millions ofyen)

Due after 3
years butwithin 4
years(Millions ofyen)

Due after 4
years butwithin 5
years(Millions ofyen)

Due after 5
years(Millions of
yen)

1,420

1,053

732

501

281

68

31

(Securities)
1. Available-for-sale securities
Prior fiscal year (As of December 31, 2019)
Type

Investments withbook values on the
consolidated balance
sheets exceedingacquisition cost(1) Stocks(2) Bonds(a) Government bonds/local
authority bonds, etc.
(b) Corporate bonds(c) Others(3) Others

Book value on the consolidatedbalance sheets (Millions of
yen)
4,289

Acquisition cost
(Millions of
yen)
1,758

Difference(Millionsof yen)
2,530

-

-

-

652
28
4,969
3

650
19
2,428
4

2
8
2,541
(0)

-

-

-

Sub total
Investments withbook values on the
consolidated balance
sheets not exceedingacquisition cost(1) Stocks(2) Bonds(a) Government bonds/local
authority bonds, etc.
(b) Corporate bonds(c) Others(3) Others

199
200
(0)
1,096
1,100
(3)
240
260
(19)
Sub total
1,540
1,564
(23)
Total
6,510
3,992
2,517
(Note) Unlisted stocks (book value on the consolidated balance sheet: 216 million yen) do not have market prices, and it isextremely difficult to determine the fair values. Accordingly, these securities are not included in the above table,“Available-for-sale securities”.

Current fiscal year (As of December 31, 2020)
Type

Investments withbook values ontheconsolidatedbalancesheets exceedingacquisition cost

Investments withbook values ontheconsolidatedbalancesheets notexceedingacquisition cost(1) Stocks(2) Bonds(a) Government
bonds/local
authority bonds, etc.
(b) Corporate bonds(c) Others(3) Others

Book value on the
consolidatedbalance sheets(Millions of yen)
3,649

Sub total(1) Stocks(2) Bonds(a) Government
bonds/local
authority bonds, etc.
(b) Corporate bonds(c) Others(3) Others
Sub total
Total

32

Acquisition cost
(Millions of yen)

Difference (Millions of
yen)

1,766

1,882

-

-

-

450
4,099
-

450
2,216
-

0
1,882
-

-

-

-

1,198
226
1,424
5,524

1,200
248
1,448
3,664

(1)
(22)
(23)
1,859

(Note) Unlisted stocks and unlisted bonds (book value on the consolidated balance sheet: 239 million yen) do not have market
prices, and it is extremely difficult to determine the fair values. Accordingly, these securities are not included in theabove table, “Available-for-sale securities”.
2. Available-for-sale securities soldPrior fiscal year (From January 1, 2019 to December 31, 2019)
Sales price
Type(Millions of yen)
(1) Stocks
597

Total gains on sales(Millions of yen)

Total losses on sales(Millions of yen)
278

53

-

-

-

-

-

-

-

-

-

-

-

-

597

278

53

(2) Bonds(a) Government
bonds/local authority
bonds, etc.
(b) Corporate bonds(c) Others(3) Others
Total

Current fiscal year (From January 1, 2020 to December 31, 2020)
Sales priceTotal gains on sales
Type(Millions of yen)
(Millions of yen)
(1) Stocks
8

Total losses on sales(Millions of yen)
0

1

-

-

-

-

-

-

-

-

37

7

0

46

7

1

(2) Bonds(a) Government
bonds/local authority
bonds, etc.
(b) Corporate bonds(c) Others(3) Others
Total

-

33

(Retirement benefits)
1. Description of retirement benefit plans provided by the Company
The Company and certain domestic consolidated subsidiaries have established a contract-type defined pension plan (CashBalance Plan) and retirement lump-sum payment plan as a defined benefit-type program.
The other domestic subsidiaries and overseas subsidiaries adopt a defined contribution program such as the Smaller
Enterprise Retirement Allowance Mutual Aid System.
Defined contribution pension plans have been established by the Company and certain consolidated subsidiaries.
In some cases, an additional retirement allowance, which is not included in the retirement benefit obligation,mathematically calculated in accordance with retirement benefit accounting, may be paid out at retirement of theemployees.
Also, with respect to defined benefit pension plan and lump-sum retirement allowance plan operated by certain domestic
consolidated subsidiaries, the net defined benefit liability and retirement benefit expenses are calculated by acompendium method.
2. Defined benefit plan
(1) Changes in the retirement benefit obligations at beginning of the year and end of the year
(Excluding plans for which a compendium method is applied stated in (3))
Prior fiscal year
(From January 1, 2019
to December 31, 2019)
Retirement benefit obligations at beginning of the year
Service cost
Interest cost
Actuarial gain or loss
Retirement benefits paid
Retirement benefit obligations at end of the year
(2) Changes in plan assets at beginning of the year and end of the year
(Excluding plans for which a compendium method is applied stated in (3))

6,281
276
15
33
(500)
6,106

(Millions of yen)
Current fiscal year
(From January 1, 2020
to December 31, 2020)
6,106
276
15
(93)
(403)
5,902

(Millions of yen)
Prior fiscal year
Current fiscal year
(From January 1, 2019
(From January 1, 2020
to December 31, 2019)
to December 31, 2020)
5,793
Plan assets at beginning of the year
5,655
115
Expected return on plan assets
113
Actuarial gain or loss
40
212
Contribution by the Company
133
128
Retirement benefits paid
(283)
(316)
Plan assets at end of the year
5,799
5,793
(3) Changes in net defined benefit liability calculated using a compendium method at beginning of the year and end of
the year (net)(Millions of yen)
Prior fiscal year
Current fiscal year
(From January 1, 2019
(From January 1, 2020
to December 31, 2019)
to December 31, 2020)
Net defined benefit liability at beginning of the year (net)8(16)
Retirement benefits expenses
14
24
Retirement benefits paid
(21)
(22)
Contribution to the system(18)(9)
Net defined benefit liability at end of the year (net)
(16)
(23)

34

(4) Reconciliation of retirement benefit obligations and plan assets at end of the year and net defined benefit liability and net
defined benefit asset provided on the consolidated balance sheets(Millions of yen)
Prior fiscal year
Current fiscal year
(From January 1, 2019
(From January 1, 2020
to December 31, 2019)
to December 31, 2020)
Funded projected benefit obligations
4,392
4,197
Plan assets(5,961)(5,963)(1,569)(1,766)
Unfunded projected benefit obligations
1,866
1,845
Net liability for projected benefit obligations in the consolidated
296
78
balance sheets
Net defined benefit liability
1,866
1,845
Net defined benefit asset(1,569)(1,766)Net liability for projected benefit obligations in the consolidated
296
78
balance sheets(Note) Including plans for which a compendium method is adopted.
(5) Retirement benefit expenses

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain or loss
Other
Retirement benefit expenses calculated by compendium
methodRetirement benefit expenses related to defined benefit plans

Prior fiscal year
(From January 1, 2019
to December 31, 2019)
276
15
(113)
14
3

(Millions of yen)
Current fiscal year
(From January 1, 2020
to December 31, 2020)
276
15
(115)
(107)
5

14

24

211

99

(6) Remeasurements of defined benefit plans included in other comprehensive income
The breakdown of remeasurements of defined benefit plans (before tax effect) is as follows.
Prior fiscal year
(From January 1, 2019
to December 31, 2019)14
14

Actuarial gain or loss
Total

(Millions of yen)
Current fiscal year
(From January 1, 2020
to December 31, 2020)
(107)
(107)

(7) Remeasurements of defined benefit plans included in accumulated other comprehensive income
The breakdown of accumulated remeasurements of defined benefit plans (before tax effect) is as follows.
(Millions of yen)
Prior fiscal year
Current fiscal year
(From January 1, 2019
(From January 1, 2020
to December 31, 2019)
to December 31, 2020)
Unrecognized actuarial gain or loss
(252)
(279)
Total
(252)
(279)

35

(8) Matters related to plan assets① Major breakdown of plan assets

Ratios of asset classes to total plan assets by major classification are as follows.
Prior fiscal year
(From January 1, 2019
to December 31, 2019)
60 %
24 %
3%
13 %
100 %

Bonds
StocksGeneral accounts
Others
Total

Current fiscal year
(From January 1, 2020
to December 31, 2020)
58 %
22 %
2%
18 %
100 %

② Method of determining long-term expected rates of return on plan assets

In order to determine the long-term expected rates of return on plan assets, the Company considers the present andanticipated allocation of plan assets and the present and expected long-term rates of return on plan assets in the futurefrom various assets that constitute the plan assets.
(9) Actuarial assumptions
Major actuarial assumptions
Prior fiscal year
(From January 1, 2019
to December 31, 2019)0.05 % ～0.5 %2.0 %Discount rates
Long-term expected rates of return on plan assets

Current fiscal year
(From January 1, 2020
to December 31, 2020)
0.05%～0.6%
2.0%

3. Defined contribution pension plans
Required contributions by the Company and its consolidated subsidiaries to defined contribution pension plans were 335
million yen for the prior fiscal year and 337 million yen for the current fiscal year.

36

(Tax effect accounting)
1. Significant components of deferred tax assets and liabilities
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

Net operating loss carryforwards

178 million yen

141 million yen

Net defined benefit liability

486 million yen

484 million yen

Allowance for doubtful accounts

138 million yen

153 million yen

Provision for bonuses

56 million yen

52 million yen

Enterprise tax payable

72 million yen

60 million yen

Loss on valuation of securities

31 million yen

12 million yen

Loss on valuation of inventories

170 million yen

189 million yen

Revaluation reserve for land

1,083 million yen

1,082 million yen

957 million yen

1,083 million yen

Deferred tax assets: Sub total

3,174 million yen

3,261 million yen

Valuation allowance for net(169) million yen(133) million yen(1,914) million yen(2,100) million yen

Valuation allowance (Note1)(2,083) million yen(2,233) million yen

Deferred tax assets: Total

1,090 million yen

1,027 million yen

Balance of investments(valuation difference of noncurrent assets)(219) million yen(221) million yen

Revaluation reserve for land(327) million yen(280) million yen

Valuation differences on assets received
by merger(133) million yen(133) million yen

Valuation difference on available-for-salesecurities(757) million yen(556) million yen

Retained earnings of overseas subsidiaries(135) million yen(116) million yen

Net defined benefit assets(389) million yen(454) million yen

Other(76) million yen(73) million yen

Deferred tax liabilities: Total(2,039) million yen(1,836) million yen

Net deferred tax liabilities(948) million yen(808) million yen

Deferred tax assets

Othersoperating loss carry forwards (Note2)
Valuation allowance for deductible
temporary differences

Deferred tax liabilities

37

(Notes) 1. Valuation allowance decreased by 46 million yen. This decrease was mainly due to the decrease in 64 million
yen in the valuation allowance for net operating loss carryforwards of consolidated subsidiaries.

Prior fiscal year (As of December 31, 2019)
WithinDue after
1 year
1 yearbut
within 2
years
Net operating loss
103
carryforwards (a)Valuation allowance
(10)
(3)

Due after
2 yearsbut
within3 years

Due after
3 yearsbut
within4 years

Due after
4 yearsbut
within5 years

Due after
5 years

11

1

1

150

Due after
3 yearsbut
within4 years

Due after
4 yearsbut
within5 years

Due after
5 years

3

24

95

Total

178 million
yen
(11)
(1)
(1)
(141) (169) million
yen
Deferred tax assets
8 8 million yen(b)(a) Net operating loss carryforwards is the amount obtained by multiplying by the statutory tax rate.
(b) Valuation allowance is not recognized for the portion of net operating loss carryforwards deemed recoverable
based on estimated future taxable income.
Current fiscal year (As of December 31, 2020)
Due after
WithinDue after
2 years
1year
1 yearbut
but
withinwithin 2
3 years
years
11
4
2
Net operating loss
carryforwards (a)Valuation allowance
(11)
(4)
(2)

Total

141 million
yen
(3)
(24)
(87) (133) million
yen
Deferred tax assets
8 8 million yen(b)(a) Net operating loss carryforwards is the amount obtained by multiplying by the statutory tax rate.
(b) Valuation allowance is not recognized for the portion of net operating loss carryforwards deemed recoverable
based on estimated future taxable income.

38

2. The reconciliation between the effective tax rate reflected in the consolidated statements of income and the statutory tax
rate is as follows:
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)-

30.6 %

Permanently non-deductible entertainmentand other expenses

-

0.6 %

Permanently non-taxable dividends andother income-(1.3) %

Per-capita inhabitant tax

-

3.4 %

Equity in earnings of affiliates-(0.3) %

Valuation allowance

-

6.5 %

Statutory effective tax rate in Japan(Reconciliation)

Effect of tax deduction-(3.0) %

Amortization of goodwill

-

1.4 %

Others-2.2 %Effective tax rates-

40.1 %(Note) The reconciliation between the effective tax rate reflected in the consolidated statement of income and the statutory
tax rate for the prior fiscal year was omitted as the difference is less than 5% of the statutory tax rate.

39

(Asset retirement obligations)
The Company recognizes the obligations of properly restoration at the end of a tenancy agreement as asset retirement
obligations.
For asset retirement obligations at the end of the current fiscal year, instead of calculating liabilities, the Company
reasonably estimated the amount of deposits unlikely to be returned at the end of the tenancy agreements and has included
this portion in the current fiscal year as an expense.
(Rental real estate)
The Company and certain of its consolidated subsidiaries own apartment buildings (including land) in Ibaraki Prefecture andother regions.
Income or loss from rental of these properties during the prior fiscal year totaled 33 million yen (Rental income has
principally been included in non-operating income and rental expenses in non-operating expenses).
Income or loss from rental of these properties during the current fiscal year totaled 34 million yen (Rental income has
principally been included in non-operating income and rental expenses in non-operating expenses).
The book value for this rental real estate as stated in the consolidated balance sheets, the amount of increase/decreaseduring the current fiscal year and fair value were as follows:(Millions of yen)Book value in the
consolidated balance
sheetsPrior fiscal year
(From January 1, 2019
to December 31, 2019)

Current fiscal year
(From January 1, 2020
to December 31, 2020)

Balance at the beginning of
the fiscal year

591

581

Increase/decrease during
the fiscal year

(10)

(9)

Balance at the end of the
fiscal year

581

571

543

550

Fair value at the end of the year

(Notes) 1. The book value in the consolidated balance sheets represented acquisition cost less accumulated depreciation.
2. The amount of increase/decrease during the prior fiscal year was mainly due to depreciation (10 million yen).
The amount of increase/decrease during the current fiscal year was mainly due to depreciation (9 million yen).
3. Each fair value at the end of the current fiscal year was calculated by the Company on the basis of the real estateappraisal standards by outside estate surveyors for main properties and on the indexes that were considered tobe reflecting the market price such as land assessments for other properties.

40

(Segment information)【Segment information】
1. Outline of reportable segments
The reportable segments of the Company are, among the Group's business units, those for which separate financial
information can be obtained and that are regularly reviewed by the Board in order to decide the distribution of resources
and to assess business performance.
From the current fiscal year, the Company reviewed the scope of the following business divisions: Infrastructure
Maintenance Business Division, the Sabo (Erosion Control Engineering and Disaster Engineering) Business Division, theRegional and the Global Aqua Engineering Business Division, and reorganized them into the Infrastructure MaintenanceBusiness Division, the Water and Disaster Engineering Business Division, and the Infrastructure Development Business
Division.
The Infrastructure Maintenance Business Division after the reorganization focuses on the maintenance and management of
infrastructure. On the other hand, the Infrastructure Development Business Division focuses on the new infrastructurebusinesses. The Water and Disaster Engineering Business Division focuses on prevention and mitigation of increasingly
severe natural disasters.
As a result of this reorganization, certain operations related to the Regional and Global Aqua Engineering Business, whichwere previously included in “Infrastructure Maintenance, Management, and Renovation,” have been reclassified as “Natural
Disaster Prevention and Mitigation.”
In addition, from the current fiscal year, the allocation of selling, general and administrative expenses has been changed inorder to more appropriately evaluate the performance of individual segments.
Segment information for the prior fiscal year has been prepared based on the new classification for reportablesegments and the revised allocation methods.
An outline of the new segments is as follows.
<Infrastructure Maintenance, Management, and Renovation>
This segment mainly provides solution services to support the renovation and maintenance of social infrastructure. The
main services include services related to surveying, diagnostics, and maintenance of social infrastructure managed bynational and local governments, construction of maintenance and management systems, surveying and design services formaintenance for resilient infrastructure, development and sales of non-destructive inspection products and construction,
installation, and renovation of monitoring systems.
<Natural Disaster Prevention and Mitigation>
This segment mainly provides solution services and systems that reinforce society and businesses against natural disasters(earthquakes/tsunami, volcanic disasters, heavy rainfall, landslides, and others). The main services include surveying anddesign for restoration of affected areas following natural disasters, damage simulations involving earthquakes, tsunami, fires,and others that are related to disaster prevention for national and local governments, surveys, damage projection, andcountermeasure consulting for natural disaster risk related to business continuation plans for corporations, construction,
installation, and renovation of monitoring services related to natural disasters such as seismometer networks and forest firemonitoring.
<Environment>This segment provides solution services and systems to support conservation of the social environment and to reduce theburden on the earth’s environment. The main services are consulting for surveys and measures to protect the social
environment concerning waste treatment, soil and groundwater contamination and asbestos, surveying and consulting forthe natural environment, such as measures against global warming and conservation of biodiversity, and construction,
installation, and renovation of environment monitoring systems.
<Natural Resources and Energy>
This segment provides solution services to support development, conservation, and resource and energy efficiency. The main
component is advanced geological survey consulting for constructing power plants, development and surveying of methane
hydrate, support of renewable energy such as geothermal and earth thermal energy, development and sales of resource
analysis, and 3D subsea exploration services and systems.

41

2. Calculation method of net sales, income and loss, assets and other items
The accounting method for reportable business segments is the same as is described in "Significant accounting policies."
Income for reportable segments is based on operating income. Segment assets are not disclosed since they are not subject toa determination of management resource allocation or evaluation of business results. Inter-segment sales or transfers are
based on actual market prices.
3. Information on net sales, income or loss, assets and other items per reportable segment
Prior fiscal year (From January 1, 2019 to December 31, 2019)(Millions of yen)
Infrastructure
Maintenance,
Management,
andRenovation

Reportable segments
NaturalNaturalDisaster
Resources
Prevention
Environment
andandEnergyMitigation

Total

Adjustment(Note 1)

Book value on
consolidated
financialstatements(Note 2)

Net sales
Sales to third parties

20,83313,804

8,974

10,27053,883-53,883

Inter-segment sales ortransfer

600

63

34

8

707

(707)

-

21,434

13,868

9,009

10,27854,591(707)

53,883

871

900

704

109

2,584

(2)

2,581

Depreciation andamortization

434

235

243

245

1,159

-

1,159

Amortization of goodwill

37

-

-

17

54

-

54

Equity in earnings (loss)of affiliates

(8)

3

-

64

59

-

59

Total
Segment income (loss)
Other items(Notes) 1. An adjustment of (2) million yen in the segment income (loss) was due to the elimination of inter-segment revenues.
2. Segment income was adjusted by the amount of operating income as stated on the consolidated statements ofincome.
3. Segment assets are not disclosed since they are not subject to a determination of management resource allocation or
evaluation of business results. However, depreciation is allocated to each business segment based on areasonable distribution basis.

42Current fiscal year (From January 1, 2020 to December 31, 2020)(Millions of yen)
Reportable segments
Adjustment(Note 1)

Book value on
consolidated
financialstatements(Note 2)49,608-49,608

28

714

(714)

-

9,387

8,329

50,322(714)

49,608

860

962

(335)

2,495

27

2,522

417

216

231

327

1,192

-

1,192

Amortization of goodwill

13

-

-

111

125

-

125

Equity in earnings (loss)of affiliates

(0)

-

-

30

29

-

29

Infrastructure
Maintenance,
Management,
andRenovation

NaturalDisasterPrevention
andMitigation

Sales to third parties

18,734

Inter-segment sales ortransfer

Environment

NaturalResourcesandEnergyTotal

13,225

9,347

8,301

599

45

40

Total

19,333

13,271

Segment income (loss)

1,007

Depreciation andamortization

Net sales

Other items(Notes) 1. An adjustment of 27 million yen in the segment income (loss) was due to the elimination of inter-segment revenues.
2. Segment income (loss) was adjusted by the amount of operating income as stated on the consolidated statements ofincome.
3. Segment assets are not disclosed since they are not subject to a determination of management resource allocation or
evaluation of business results. However, depreciation is allocated to each business segment based on a reasonabledistribution basis.

43

【Related information】
Prior fiscal year (From January 1, 2019 to December 31, 2019)
1. Breakdown by product and service
Details are omitted because identical information is disclosed in the segment information section.
2. Breakdown by area
(1) Net sales(Millions of yen)Japan

United States

OthersTotal

42,6804,427
6,774(Note) Net sales are based on the location of customers and are classified by geographic proximity.

53,883(2) Property, plant and equipment(Millions of yen)Japan

United States
11,194

Others
1,317

Total
85

12,597

3. Breakdown by customer
This information is omitted because there is no single external customer that accounts for 10% or more of net sales on
the consolidated statements of income.
Current fiscal year (From January 1, 2020 to December 31, 2020)
1. Breakdown by product and service
Details are omitted because identical information is disclosed in the segment information section.
2. Breakdown by area
(1) Net sales(Millions of yen)Japan

the United States
41,304

Others

3,078

Total
5,225

49,608(Note) Net sales are based on the location of customers and are classified by geographic proximity.
(2) Property, plant and equipment
This information is omitted because the amount of property, plant and equipment located in Japan exceeds 90% of theamount of property, plant and equipment on the consolidated balance sheet.
3. Breakdown by customer
Name of the customer
Ministry of Land,
Infrastructure,
Transport and Tourism

Net sales

Relevant segment
6,672

Infrastructure Maintenance, Management, and Renovation;
Natural Disaster Prevention and Mitigation; Environment;
and Natural Resources and Energy

44

【Information about impairment loss of noncurrent assets per reportable segment】
Prior fiscal year (From January 1, 2019 to December 31, 2019)(Millions of yen)

Impairment loss

Infrastructure
Maintenance,
Management,
and Renovation

Natural Disaster
Prevention and
Mitigation--

Environment

9Natural Resources
and Energy

Eliminations
or
corporate

0

156

Total

166

Current fiscal year (From January 1, 2020 to December 31, 2020)(Millions of yen)

Impairment loss

Infrastructure
Maintenance,
Management,
and Renovation

Natural Disaster
Prevention and
Mitigation

12-

Natural Resources
and Energy

Environment-

Eliminations
or
corporate

338

Total

-

350

【Information about amortization of goodwill and unamortized balance per reportable segment】
Prior fiscal year (From January 1, 2019 to December 31, 2019)(Millions of yen)Amortization
during the year
Balance at theend of the year

Infrastructure
Maintenance,
Management,
and Renovation

Natural Disaster
Prevention and
Mitigation

37

-

-

17

-

54

71

-

-

111

-

183

Natural Resources
and Energy

Environment

Current fiscal year (From January 1, 2020 to December 31, 2020) (Millions of yen)
Infrastructure
Natural Disaster
Maintenance,
Natural Resources
Prevention andEnvironment
Management,
and Energy
Mitigation
and Renovation
Amortization
13
111
during the year
Balance at the83
end of the year

Eliminations
or
corporate

Eliminations
or
corporate【Information about gain on negative goodwill per reportable segment】
Not applicable.
【Related-party information】
Related-party transactions
Transactions between the filing party of these consolidated financial statements and related parties
Not applicable.

45

Total

Total

-

125

-

83

(Per share information)

Net assets per share

Prior fiscal year
(From January 1, 2019
to December 31, 2019)
2,595.07 yen

Current fiscal year
(From January 1, 2020
to December 31, 2020)
2,585.94 yen

83.35 yen

68.20 yen

Earnings per share(Notes) 1. Fully diluted net income per share is not stated as no residual securities exist.
2. With respect to the remaining shares of the Company held by the trust, which are recorded as treasury stock inshareholders’ equity, the shares included in treasury stock are deducted in determining the average number ofshares during the period in the calculation of net income per share. Also, the shares included in treasury stock are
deducted from the total number of outstanding shares at the end of the fiscal year in the calculation of net assets
per share.
The number of outstanding shares of treasury stock at the end of the fiscal year that were deducted in thecalculation of net assets per share was 349,482 shares in the prior fiscal year and 345,086 shares in the current
fiscal year. The average number of shares of the treasury stock during the period that were deducted in thecalculation of net income per share was 350,320 shares in the prior fiscal year and 347,844 shares in the current
fiscal year..
3. The basis for the calculation of net income per share is as follows:

Earnings per share
Profit attributable to owners of parent (Millions ofyen)
Net income not attributable to common shareholders(Millions of yen)
Profit attributable to owners of parent related tocommon stock (Millions of yen)
Average number of shares outstanding (share)

Prior fiscal year
(From January 1, 2019
to December 31, 2019)

Current fiscal year
(From January 1, 2020
to December 31, 2020)

2,176

1,781

-

-

2,176

1,781

26,113,248

26,115,389(Significant subsequent events)(Purchase and disposal of treasury stock)
At the Board of Directors’ meeting held on February 12, 2021, it was resolved to purchase treasury stock based on Article 165(3) of the Companies Act as applied to Article 156 of the Companies Act and subsequently dispose of treasury stock based on
Article 178 of the Companies Act.
1. Reason for purchase and disposal of treasury stock
The objective is to implement a more flexible capital policy that corresponds to changes in the management environment andto improve capital efficiency.
2. Details on purchase of treasury stock(1) Type of stock to be purchased(2) Number of shares to be purchased(3) Total amount(4) Purchase date(5) Purchase method

Common stock
1,200,000 shares (Maximum)(4.59% of total number of issued shares (excluding treasury stock)
1,567,200,000 yen (Maximum)
February 15, 2021
Purchase through Tokyo Stock Exchange Off-Auction Own Share
Repurchase Trading (ToSTNeT-3)

46

3. Results of purchase of treasury stock(1) Type of stock purchased(2) Number of shares purchased(3) Total amount(4) Purchase date(5) Purchase method

4. Disposal of treasury stock(1) Type of stock disposed(2) Number of shares disposed(3) Total number of issued shares after disposal(4) Disposal dateCommon stock
918,200 shares
1,199,169,200 yen
February 15, 2021
Purchased through Tokyo Stock Exchange Off-Auction Own Share
Repurchase Trading (ToSTNeT-3)

Common stock
918,200 shares (3.32% of total number of issued stock)
26,664,373 shares
February 26, 2021

(Absorption-type merger of a consolidated subsidiary)
At the Board of Directors’ meeting held on December 17, 2020, it was resolved to absorb and merge (the “Merger”) its
consolidated subsidiary, OYO INTERNATIONAL CORPORATION.
1. Purpose of the merger
By absorbing and merging OYO INTERNATIONAL CORPORATION, the Company expects to integrate management andstreamline its overseas business development.
2.Summary of the merger(1) Schedule of the merger
Board of Directors’ resolution to approve the merger agreement
December 17, 2020
Signing date of merger agreement
February 10, 2021
Date of merger (Effective date)
April 1, 2021 (planned)※Since the “Merger” is a simple merger as stipulated in Paragraph 2 of Article 796 of the Corporate Law with respect to
the Company and is a summary merger as stipulated in Paragraph 1 of Article 784 of the Corporate Law with respect to
OYO INTERNATIONAL CORPORATION, the Company will not hold a general meeting of shareholders to approve themerger agreement.
(2) Merger method
OYO INTERNATIONAL CORPORATION will be dissolved through an absorption-type merger with the Company as thesurviving entity.
(3) Consideration for Merger
There is no monetary consideration, etc. for shares and other in the Merger.
(4) Subscription rights to shares and bonds with subscription rights to shares in connection with the Merger
Not applicable.
3. Summary of the merged entity (December 31, 2020)Name
OYO INTERNATIONAL CORPORATION
Overseas construction consulting services (Earthquake disaster prevention,
Description of Businesses
Groundwater development, Infrastructure development, etc.)
Address
1-17, Koishikawa 1-chome, Bunkyo-ku, Tokyo
Job Title/Name of
Ryo Miyazaki, President and Representative Director
Representative
Amount of Capital Stock
100 million yen
4. Post-merger status
There is no change in the company’s name, address, position and name of the representative, description of businesses,
capital stock and fiscal year-end as a result of the Merger.

47

5. Summary of accounting treatment to be implemented
In accordance with the “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, January 16, 2019) andthe “Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures”(ASBJ Guidance No. 10, January 16, 2019), the transaction will be accounted for as a transaction under common control.

48

⑤【Consolidated supplementary schedules】【Schedule of corporate bonds 】
Not applicable.
【Schedule of borrowings】
Classification

Balance at January 1,
2020(Millions of yen)
104-

Balance at December
31, 2020(Millions of yen)
93-

Average interest
rate
(%)
4.00
-

Period ofrepayment

Short-term loans payable
Long-term loans due forrepayment
within one year
Lease obligations due for
1,266
1,420
1.89
repayment within one year
Long term loans (excluding thosedue for repayment within one
year)
Lease obligations (excluding those2022-2027
1,971
2,637
1.90
due for repayment within one
year)
Other interest-bearing liabilities
3,341
4,150
Total
(Notes) 1. The average interest rate is calculated on the basis of year-end interest rate and balance.
2. The following table shows the aggregate amounts of scheduled repayment of lease obligations (excluding the ones
due for repayment within one year) for 5 years subsequent to December 31, 2020.
Due after 1 year
Due after 2 years
Due after 3 years
Due after 4 years
but within 2
but within 3
but within 4
but within 5
years (Millions
years (Millions
years (Millions
years (Millionsof yen)of yen)of yen)of yen)
1,053
732
501
281
Lease obligations【Schedule of asset retirement obligations】
Not applicable.
(2)【Other】
Quarterly information for the current fiscal year
Cumulative

1st quarter2nd quarter3rd quarter

Current fiscal year

Net sales (Millions of yen)

14,383

24,40336,31049,608

Profit before income taxes (Millionsof yen)

1,894

1,900

2,502

2,828

1,187

1,128

1,610

1,781

45.46

43.21

61.68

68.20

Quarterly (current) profit
attributable to owners of parent(Millions of yen)
Earnings per share (Yen)

Each quarter
Quarterly earnings (loss) per
share (Yen)

1st quarter2nd quarter

45.46(2.26)

49

3rd quarter
18.48

4th quarter
6.52

2. 【Non-consolidated financial statements】(1) 【Non-consolidated financial statements】① 【Non-consolidated balance sheets】
Prior fiscal year
(As of December 31,
2019)
AssetsCurrent assets
Cash and deposits
Notes receivable-trade
Accounts receivable-completed operation
Accounts receivable-trade
Short-term investment securities
Costs on uncompleted services
Merchandise and finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Other
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Lease assets
Construction in progress
Total property, plant and equipment
Intangible assets
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Long-term loans receivable
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

50(Millions of yen)
Current fiscal year
(As of December 31,
2020)

11,588*1
42
18,131
271
1,199
415
303
75
263
142
518
32,953

15,030*1
86
17,375
225
900
542
298
104
271
146
282
35,263

3,243
79
509
5
24
4,266
76
49
8,255

3,145
71
586
5
31
4,034
45
18
7,939

929
8
938

820
5
8
833

5,479
12,821
107
2,408
(41)
20,77529,96862,922

4,840
12,786
60
2,204
(42)
19,84828,622
63,886

Prior fiscal year
(As of December 31,
2019)
Liabilities
Current liabilities
Accounts payable-operating
Accounts payable-trade
Accounts payable-other
Income taxes payable
Accrued expenses
Advances received on uncompleted contracts
Deposits payable
Provision for bonuses
Provision for loss on orders received
Provision for product warranties
Provision for stock benefits
Other
Total current liabilities
Noncurrent liabilities
Provision for retirement benefits
Provision for stock benefits
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Other
Total noncurrent liabilities
Total liabilities

51(Millions of yen)
Current fiscal year
(As of December 31,
2020)

1,276
25
2,190
446
302
148
314
104
161
14
54
5,038

1,372
46
2,686
377
369
201
316
107
182
14
325
76
6,075

1,818
208
321
327
72
2,748
7,786

1,803
49
232
280
72
2,437
8,512

Prior fiscal year
(As of December 31,
2019)
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Total retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Revaluation reserve for land
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

52(Millions of yen)
Current fiscal year
(As of December 31,
2020)

16,174

16,174

4,043
10,422
14,465

4,043
10,422
14,465488

488

23,307
3,572
27,367(1,826)56,18023,307
4,358
28,153(1,820)56,973

1,752(2,797)(1,044)55,13662,922

1,303(2,902)(1,599)55,37363,886

②【Non-consolidated statements of income】

Prior fiscal year
(From January 1, 2019
to December 31, 2019)30,20322,877
7,325
*1
6,713
611

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest and dividends income
Insurance and dividends income
Rent of real estate
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Provision of allowance for doubtful accounts
Rent cost of real estate
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of affiliate's stocks
Gain on sales of investment securities
Total extraordinary income
Extraordinary loss
Loss on valuation of affiliates’ stock
Impairment loss
Loss on sales of investment securities
Total extraordinary loss
Profit before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Profit53(Millions of yen)
Current fiscal year
(From January 1, 2020
to December 31, 2020)

28,591
20,129
8,462
*1
6,924
1,537

*2

396
77
*2
86
*2
44
604

*2

0
4
1
26
2
36
1,180

0
7
24
2
36
2,183

0
275
275

*3

75
156
53
285
1,170
459
(152)
307
863

63
0
64
2,144
554
62
616
1,527

456
77
*2
76
*2
69
681

25
-

25

【Breakdown of cost of sales】
A. Cost of sales for completed geo-engineering services

Classification

Prior fiscal year
(From January 1, 2019 to
December 31, 2019)
Amount(Millions ofRatio (%)
yen)
880
4.3

Notes

Materials cost

Current fiscal year
(From January 1, 2020 to
December 31, 2020)
Amount(Millions ofRatio (%)
yen)
908
4.6

Labor cost

5,425

26.7

6,084

31.3

Subcontract cost

10,448

51.5

9,393

48.3

3,067

15.8

19,454100.0

Overhead cost
Transportation expenses

1,147

912

Report preparation cost50

50

Depreciation

349

360

2,008

3,555

17.5

Total cost for geo-engineering services

20,310100.0

Costs on uncompleted services at beginningof the year

1,915

249

22,225

19,703249

376

21,976

19,327

Provision for loss on orders received-

21

Reversal of provision for loss on orders received--

21,976

19,348

Other

Total
Costs on uncompleted services at the endof the year
Cost of sales for completed geoengineering services

Cost of sales for completed geoengineering services during the year
(Note)

Method of cost accounting is Job order cost accounting.

54

1,743

B. Cost of sales for measuring instruments

Classification

Note

Finished goods at beginning of the year

Prior fiscal year
(From January 1, 2019
to December 31, 2019)
Amount(Millions ofRatio (%)
yen)
239

Current fiscal year
(From January 1, 2020
to December 31, 2020)
Amount(Millions ofRatio (%)
yen)
303

533

Cost of purchased goods during the year

420

Cost of products manufactured during
the yearMaterials cost

317

52.6

335

53.5

Labor cost

192

31.9

197

31.6

Overhead cost

93

15.5

93

14.9

Total manufacturing costs

603

100.0

626

100.0

Work in process at the beginning of the
year

92

75

696

701

89

103

Total
Transfer to other accounts※2

75

Work in process at the end of the year

532

104

494

1,305

1,218

101

138

Finished goods at the end of the year

303

298

Cost of sales for measuring instruments
during the year

900

780

Total
Transfer to other accounts※3(Notes) 1. Method of cost accounting is group process costing※ 2. Transfer to other accounts
Research and development expenses(Selling, general and administrative expenses)※ 3. Transfer to other accounts
Transfer to cost of geo-engineering services

Prior fiscal year
41 million yen

Current fiscal year
45 million yen

Prior fiscal year
101 million yen

Current fiscal year
138 million yen

C. Reconciliation of cost of sales for completed geo-engineering services, cost of sales for measuring instruments and cost of
sales
Prior fiscal year
Current fiscal year
(From January 1, 2019
(From January 1, 2020
to December 31, 2019)
to December 31, 2020)
AmountAmountClassification
Note(Millions of yen)
(Millions of yen)
Cost of sales for completed
19,34821,976geo-engineering services
Cost of sales for measuring
780
900
instruments
20,129
Cost of sales
22,87755

③【Non-consolidated statements of changes in net assets】

Prior fiscal year (From January 1, 2019 to December 31, 2019)(Millions of yen)
Shareholders’ equity
Total
retained
Other retained earnings

earnings

Retained

Balance at the beginning of theyear
Changes during the year

Legal

Other

Total

Legal

earnings

Capitalstock

capitalcapitalcapitalretained

Generalbrought

surplussurplussurplusearnings

reserveforward16,174

4,043

10,422

14,465488

23,307

3,247

27,042

(740)
863

(740)
863

202

202

324
3,572

324
27,367

Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stockReversal of revaluation
reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during the year
Balance at the end of year(0)16,1744,043(0)10,422(0)(0)
14,465488

23,307(Millions of yen)
Shareholders’ equity

Treasurystock
Balance at the beginning of theyear
Changes during the year

(1,828)Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stockReversal of revaluation
reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during the year
Balance at the end of year

(0)
1

1
(1,826)

Valuation and translation adjustments

Shareholders’equity total

55,854

Total
valuation
andValuationdifferenceonavailablefor-salesecurities

Revaluation
reservefor landadjustments

1,243(2,594)(1,351)translation

(740)
863
(0)
1
202

Total net
assets54,502

(740)
863
(0)
1
202

326
56,180

56

509

(202)

307

307

509
1,752

(202)
(2,797)307(1,044)633
55,136

Current fiscal year (From January 1, 2020 to December 31, 2020)(Millions of yen)
Shareholders’ equity
Other retained earnings

Balance at the beginning of theyear
Changes during the year

Legal

Other

Total

Legal

Capitalcapitalcapitalcapitalretained

Generalstock

surplussurplussurplusearnings

reserve

16,174

4,043

10,422

14,465488

23,307Retainedearnings
brought
forwardDividends from surplus
Net income

Total
retainedearnings

3,572

27,367

(846)
1,527

(846)
1,527

105

105

786
4,358

786
28,153Purchase of treasury stock
Disposal of treasury stockReversal of revaluation
reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during the year
Balance at the end of year

16,174

4,043

10,422

14,465488

23,307(Millions of yen)
Shareholders’ equity

Valuation and translation adjustments
Total

Treasurystock
Balance at the beginning of theyear
Changes during the year

(1,826)

Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stockReversal of revaluation
reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during the year
Balance at the end of year

(0)
6

6
(1,820)Shareholders’equity total

Valuationdifferenceonavailablefor-salesecurities

Revaluation
reservefor landadjustments

56,1801,752(2,797)(1,044)valuationandtranslation

(846)
1,527
(0)
6
105

Total net
assets55,136
(846)
1,527
(0)
6
105

792
56,973

57

(449)

(105)

(555)

(555)

(449)
1,303

(105)
(2,902)(555)(1,599)237
55,373

【Notes】(Significant accounting policies)
1. Valuation method and standards for securities(a) Stocks of subsidiaries and affiliates
Stated at cost determined by the moving average method.
(b) Available-for-sale securities
Securities with fair market value
Stated at fair value based on the quoted market price as of the year-end closing date with any changes in unrealized gains
or losses, net of the applicable income taxes, included directly in net assets. Cost of securities sold is determined by themoving average method.
Securities without fair market value
Stated at cost determined by the moving average method.
2. Valuation method and standards for derivatives
Stated at fair value.
3. Valuation method and standards for inventories(a) Costs on uncompleted services
Stated at cost using the specific identification method (balance sheet amounts are determined by writing down the bookvalues based on decrease in profitability).
(b) Merchandise/products/raw materials/work in process
Stated at cost using weighted-average method (balance sheet amounts are determined by writing down the book values
based on decrease in profitability).
(c) Supplies
Last cost method (balance sheet amounts are determined by writing down the book values based on decreased
profitability).
4. Depreciation method of noncurrent assets(a) Property, plant and equipment (excluding lease assets) and real estate for investment
The straight-line method is used for buildings (except structures attached to buildings), and the declining balance method
is used for other property, plant and equipment.
Major useful lives are defined as follows:
Buildings: 2 – 50 years
Machinery and equipment: 2 – 7 years(b) Intangible assets (excluding lease assets)
Straight-line method
Software for internal use is amortized over the expected available period (5 -10 years).
(c) Lease assets
The straight-line method is adopted mainly with a residual value of zero and the lease period deemed equal to the service
life of the asset.
(d) Long-term prepaid expenses
Straight-line method
5. Accounting standards for provisions(a) Allowance for doubtful accounts
To prepare for expected losses from bad debts, the Company estimates uncollectible amounts for normal receivables basedon the historical experience and for certain specific receivables, such as doubtful accounts receivables, based on theindividual probability of recovery.
(b) Provision for bonuses
To prepare for the payment of bonuses to employees, a provision for bonuses is provided based on the expected amount of
payment.

58

(c) Provision for retirement benefits
To prepare for payment of employees’ retirement allowances, a provision is provided based on the anticipated projected
benefit obligation and pension assets at the end of the current fiscal year.
Actuarial gain or loss is amortized in the fiscal year following the year in which the gain or loss is incurred by the straightline method over periods (5 years) which are shorter than the average remaining period of the employees.
(d) Provision for loss on orders received
To prepare for future losses on contracts for orders received, a provision for loss on orders received is provided based on
the future losses anticipated at the end of the current fiscal year and the amount of foreseeable losses that can reasonably
be estimated.
(e) Provision for product warranties
To prepare for estimated warranty costs, a provision for product warranties is provided based on historical experience of
free-of-charge repairs of products.
(f) Provision for stock benefits
In order to provide for grant of shares of the company to employees according to the stock benefits regulations, it isprovided based on the estimated stock benefit obligations as of the end of the current fiscal year.
6. Accounting standards for revenue and expenses(a) Individual contracts from which the outcome can be estimated reliably through the end of the current fiscal year:
The percentage-of-completion method is adopted (The percentage of completion is measured by the proportion of the cost
incurred relative to the estimated total cost).
(b) Other contracts:
The completed-contract method is adopted.
7. Hedge accounting method(a) Hedge accounting method
Deferral hedge accounting is adopted.
(b) Hedging instruments and hedged items
Hedging instruments: forward-exchange contracts
Hedged items: accounts payable-trade(c) Hedging policy
In order to reduce risks of exchange rate fluctuations, hedges are used to cover liabilities.
(d) Method of assessing hedge effectivenessAn assessment of hedge effectiveness is omitted because the relationship between the hedging instruments and hedged
items is direct.
8. Other significant accounting policies
Accounting of consumption tax
All figures exclude consumption tax.

(Additional information)
As the same information has been described in the “Notes” (Additional information) in the consolidated financial statements,
this note has been omitted.

59

(Items related to balance sheet)※１ Trade notes maturing at the end of the fiscal year are settled on the clearance date. The following outstanding notes
maturing at the end of the fiscal year were included in the corresponding accounts as the maturity date fell on a businessholiday for financial institutions.

Notes receivable-trade

Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

2 million yen

1 million yen

2. Guarantee obligation
A consolidated subsidiary’s loans payable is guaranteed as follows.
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

Tianjin Smart Sensor Technology Co., LTD.

25 million yen- million yen

FONG CONSULT PTE. LTD.

97 million yen

93 million yen(Non-consolidated statements of income)※ 1.

Among selling expenses and general and administrative expenses, major cost items, amounts and their approximate ratios
are as follows.
Prior fiscal year
Current fiscal year
(From January 1, 2019
(From January 1, 2020
to December 31, 2019)
to December 31, 2020)
Salaries and allowances
3,090 million yen
3,178 million yen

Provision for bonuses
Retirement benefit expenses
Depreciation

42 million yen
153 million yen
182 million yen

Approximate ratio
Selling expenses

58 %General and administrative expenses

42 %※ 2. Income or loss related to transactions with subsidiaries and affiliates
Prior fiscal year
(From January 1, 2019
to December 31, 2019)
Dividends income
289 million yen
Other non-operating income
including real estate rent

44 million yen
95 million yen
234 million yen

57 %
43 %

Current fiscal year
(From January 1, 2020
to December 31, 2020)
362 million yen

57 million yen

45 million yen※ 3. The components of gain on sales of noncurrent assets are as follows.
Prior fiscal year
(From January 1, 2019
to December 31, 2019)Land- million yen

Current fiscal year
(From January 1, 2020
to December 31, 2020)
25 million yen

60

(Securities)
Prior fiscal year (As of December 31, 2019)
Stocks of subsidiaries or affiliates (12,771 million yen of subsidiary stocks and 49 million yen of affiliate stocks on the balance
sheets) do not have market prices, and it is extremely difficult to determine fair value. Accordingly, their fair values were notdisclosed.
Current fiscal year (As of December 31, 2020)
Stocks of subsidiaries or affiliates (12,736 million yen of subsidiary stocks and 49 million yen of affiliate stocks on the balance
sheets) do not have market prices, and it is extremely difficult to determine fair value. Accordingly, their fair values were notdisclosed.
(Tax effect accounting)
1. Significant components of deferred tax assets and liabilities

Deferred tax assets
Provision for bonuses
Enterprise tax payable
Loss on valuation of securities
Provision for retirement benefits
Revaluation reserve for land
Valuation differences on assets received bymerger
Other
Deferred tax assets : Sub total
Valuation provision
Deferred tax assets: Total
Deferred tax liabilities
Valuation difference on available-for-salesecurities
Prepaid
pension cost
Revaluation reserve for land
Valuation differences on assets received bymerger
Other
Deferred tax liabilities: Total
Net deferred tax liabilities

Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

36 million yen
45 million yen
13 million yen
471 million yen
1,082 million yen
52 million yen

37 million yen
36 million yen
12 million yen
471 million yen
1,082 million yen
51 million yen

569 million yen
2,272 million yen(1,325) million yen
946 million yen

542 million yen
2,234 million yen(1,345) million yen
889 million yen(754) million yen(319) million yen(327) million yen(133) million yen(556) million yen(371) million yen(280) million yen(133) million yen(60) million yen(1,595) million yen(648) million yen(60) million yen(1,402) million yen(513) million yen

61

2. The reconciliation between the effective tax rate reflected in the non-consolidated statements of income and the statutory
tax rate is as follows:
Prior fiscal year
(As of December 31, 2019)

Current fiscal year
(As of December 31, 2020)

Statutory effective tax rate in Japan(Reconciliation)
Permanently non-deductive entertainment andother expenses

30.6 %

Dividends and other income permanently
included in gross profit(8.1) %

(5.4) %

Per-capita inhabitants tax
Valuation provision
Tax deduction
Other
Effective tax rate

6.5 %(3.5)%-%
0.3 %
26.2 %

3.5 %0.9 %(1.1) %
0.2 %
28.8 %

0.5 %(Significant subsequent events)
As the same information has been described in the “Notes” (Significant subsequent events) in the consolidated financial
statements, this note has been omitted.

6230.6 %
0.1 %④【Non-consolidated supplementary schedules】【Schedule of tangible non-current assets】

Type of assets

Balance at
December31, 2020(Millions ofyen)

Accumulated
depreciationor
amortization
for thecurrent fiscal
year (Millionsof yen)Balance atJanuary 1,
2020(Millions ofyen)

Increase in thecurrent fiscal
year (Millionsof yen)Decrease in thecurrent fiscal
year (Millionsof yen)Depreciation /amortization
for the current
fiscal year
(Millions of
yen)

3,243
79
509

136
303

73
0
7

160
8
219

3,145
71
586

6,792
700
2,656

5
24

3
21

0
0

3
13

5
31

109
297

4,266
[(2,540)]
76
49
8,255

-

232
[152]
0
49
362

Property, plant andequipment
Buildings
Structures
Machinery andequipment
VehiclesTools, furniture andfixtures
Land

4,034
[(2,692)]
45
18
7,939

-

-

Lease assets
93982
Construction in progress
18
Total Property, plant and
492
445
10,638equipment
Intangible assets
Software
929
94
203
820
932
Software in progress
5
5
Other
8
8
Total intangible assets
938
99
203
833
932
(Notes) From current fiscal year, figures in square brackets in the "Balance at January 1, 2020," " Decrease in the current
fiscal year" and "Balance at December 31, 2020" columns indicate amounts outstanding as a revaluation reserve
for land (before tax).
【Schedule of provisions】
Classification
Allowance for doubtful
accounts
Provision for bonuses
Provision for loss on orders
received
Provision for productwarranties
Provision for stock benefits

Balance atJanuary 1, 2020
(Millions of yen)
41

Increase in thecurrent fiscal year
(Millions of yen)
7

Decrease in thecurrent fiscal year
(Millions of yen)
6

Balance at
December 31, 2020
(Millions of yen)
42

104
161

107
21

104
0

107
182

14

14

14

14

208

177

11

374

63

(2)【Details of major assets and liabilities】
Statement has been omitted since consolidated financial statements are prepared.
(3)【Other】① Events arising after the balance sheet date

Not applicable.
② Lawsuits

Not applicable.

64Independent Auditor’s Report

The Board of Directors
OYO Corporation

OpinionWe have audited the accompanying consolidated financial statements of OYO Corporation andits consolidated subsidiaries (the Group), which comprise the consolidated balance sheet as at
December 31, 2020, and the consolidated statements of income, comprehensive income, changes
in net assets, and cash flows for the year then ended, and notes to the consolidated financial
statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2020, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management, the Corporate Auditor and the Board of Corporate
Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing theGroup’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation inaccordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Board of Corporate Auditors
regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Board of Corporate Auditors with a statement that
we have complied with the ethical requirements regarding independence that are relevant to our
audit of the financial statements in Japan, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

Ernst & Young ShinNihon LLC
Tokyo, Japan[March 26, 2021]/s/Tomohisa Yura
Designated Engagement Partner
Certified Public Accountant/s/Kenji Fujita
Designated Engagement Partner
Certified Public Accountant_____________________________________________________________________________(Notes) 1. The above is a digitization of the text contained in the original copy of the Independent
Auditor’s Report, which is in custody of the Company.
2. XBRL data is not included in the scope of the audit.

Independent Auditor’s Report

The Board of Directors
OYO Corporation

OpinionWe have audited the accompanying non-consolidated financial statements of OYO
Corporation, which comprise the non-consolidated balance sheet as at December 31, 2020, andthe non-consolidated statements of income and changes in net assets for the year then ended, andnotes to the non-consolidated financial statements.
In our opinion, the accompanying non-consolidated financial statements present fairly, in allmaterial respects, the non-consolidated financial position of OYO Corporation as at
December 31, 2020, and its non-consolidated financial performance for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Non-consolidated Financial Statements section of our report. We are independentof the entity
in accordance with the ethical requirements that are relevant to our audit of the non-consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Responsibilities of Management, the Corporate Auditor and the Board of Corporate
Auditors for the Non-consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these non-consolidated
financial statements in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of nonconsolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the non-consolidated financial statements, management is responsible for assessing
the entity’s ability to continue as a going concern and disclosing, as required by accounting
principles generally accepted in Japan, matters related to going concern.
The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing theentity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Non-consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the non-consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these non-consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the non-consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the non-consolidated financial statements is not expressing an opinion on the effectiveness ofthe entity’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the entity’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the non-consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the entity to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the non-consolidated financial
statements, including the disclosures, and whether the non-consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation inaccordance with accounting principles generally accepted in Japan.
We communicate with the Corporate Auditor and the Board of Corporate Auditors
regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Board of Corporate Auditors with a statement that
we have complied with the ethical requirements regarding independence that are relevant to our
audit of the financial statements in Japan, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the entity which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

Ernst & Young ShinNihon LLC
Tokyo, Japan[March 26, 2021]/s/Tomohisa Yura
Designated Engagement Partner
Certified Public Accountant/s/Kenji Fujita
Designated Engagement Partner
Certified Public Accountant_____________________________________________________________________________(Notes) 1. The above is a digitization of the text contained in the original copy of the Independent
Auditor’s Report, which is in custody of the Company.
2. XBRL data is not included in the scope of the audit.