ｆAnnual Report 2020
Year ended March 31, 2020

CONTENTS
Operational Results
Management Policy
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
Basis of Presenting Consolidated Financial Statements
Independent Auditor’s Report
Corporate information
Board of Directors and Statutory Auditors

2
8
10
12
13
14
15
16
55
57
58

Operational Results2

1. Operational Results(1) Analysis of Operational Results<Summary of Operational Results for the Consolidated Fiscal Year ended March 31, 2020>
In the fiscal year under review, the Japanese economy as a wholeremained solid in the first half. However, it stalled in the second half
due partly to a consumption tax hike and U.S.–China trade frictions.
The outlook became uncertain due to concerns about a rapid deteriorationof the economy caused by the global spread of COVID-19 toward
the end of the fiscal year.
Under these circumstances, our Group actively implemented several
measures as the first year of the new medium term management plan
2019-21 “To the Growth Cycle” (April 1, 2019 - March 31, 2022),
to improve our corporate quality and deepening our social value.

Representative Director,
President, CEO
Tatsuya Nunohara

As a result, in the current consolidated fiscal year, net sales increased by 5,872 million yen (5.1%)
compared with the preceding consolidated fiscal year to 120,173 million yen. Operating income decreased
by 60 million yen (0.7%) to 8,493 million yen, and the current net income attributable to owners of theparent decreased by 211 million yen (3.4%) to 6,073 million yen.
We would like to present the summary of business on a consolidated basis by segment in comparison withthe preceding fiscal year.
i) Specialty Truck Segment
As domestic demand remained solid, the Group proactively secured orders while striving to rationalize
and streamline its production structure. It did this through means such as boosting production of swap
body vehicles at Mito Factory of NIPPON TREX, a consolidated subsidiary, and a retractable tailgate
lifter at the new Power Gate Center constructed at the Nagoya Plant.
The Group enhanced product capabilities and product lines in new areas. It did this by fully remodeling a
new rotary type refuse truck, in October 2019 and launching “Hyper CP PH80A-26C,” a squeeze-type
concrete pump truck with the longest and highest-spec boom in Japan , in the same month and a woodchip drying container system, in February 2020.
All shares of Trex Thairung Co., Ltd., a specified subsidiary of the Group in Thailand, owned by theGroup and its consolidated subsidiary, NIPPON TREX, were transferred to THAI RUNG UNION CAR
PUBLIC CO., LTD., a local joint venture, effective July 30, 2019. Going forward, the Group will continue
to engage in business in Thailand through technical assistance and invest management resources in areas
with high returns on investment in line with the business restructuring.
Net sales in the Specialty Truck Segment increased by 7,187 million yen (7.6%) to 102,076 million yen.
Segment profit increased by 802 million yen (14.3%) to 6,417 million yen due to cost increase, etc.

Operational Results3

New rotary type refuse truck

New squeeze concrete pump truck“PH80A-26C”
New tailgate lifterii) Environmental Equipment and Systems Segment
As for plant construction, a recycling center for which an order was received from the Osaki Area Integrated
Administration of a Large Region Office Work Association in Miyagi was completed in June 2019. Also,
construction work for a new cleaning plant for an order received from Mito, Ibaraki and “Clean Center” for an
order received from Sasebo, Nagasaki were both completed in March 2020.
In the biogas plant business, the Group won a new contract for constructing biomass power generation facilities
in Okayama from Biodiesel Okayama Co., Ltd., a DOWA Group company, as a result of activities to win newcontracts.
In addition, the Group continued to focus on the stock-type business such as maintenance and entrusted
operation.

Net sales in the Environmental Equipment and Systems Segment decreased by 1,479 million yen(11.4%) to 11,473 million yen. Segment profit decreased by 767 million yen (29.7%) to 1,813 million yen.

Biogas plant

Recycle center in Tsu

Operational Results

4iii) Real Estate Rental Segment
For multistory parking systems, in addition to engaging in activities to win new contracts for new
facilities, the Group focused on securing new contracts for the stock-type business such as renewal
and maintenance. For coin-operated parking, the Group continued to expand business locations
focusing on profitability and started operating six new municipal parking lots for which an order
was received from Kizugawa, Kyoto.
Net sales in the Real Estate Rental Segment increased by 153 million yen (2.2%) to 7,189 million
yen. Segment profit decreased by 18 million yen (1.6%) to 1,142 million yen.

Sasashima Live Parking(The toll parking (Coin-operated) in Nagoya)

Multi-story parking equipment<Forecast of Operations for the Next Consolidated Fiscal Year ending March 31, 2020>
The Japanese economy is expected to face a challenging situation due to a significant impact
caused by the spread of COVID-19.
The Group has established a basic policy for COVID-19 and projected the impact of the spread of
COVID-19 as follows.
The Group has established a basic policy for COVID-19 as “Giving top priority to the safety ofcustomers, local communities, and Group employees while ensuring balance with business
continuation.” Through the implementation of various measures, the Group has striven to reduce
the risk of infection. The Group’s current situation and countermeasures are as provided below.
1. No employee has tested positive for COVID-19.
2. Implemented teleworking/staggered work hours and allowed commuting by personal car.
3. Promoted digitization to continue business amid stay-at-home requests using videoconferencing and online meetings.
4. Maintained normal operation at plants and service bases.
For the Group’s mainstay Specialty Truck Segment, the Group has a backlog of orders ofapproximately 70 billion yen (as of March-end 2020) which is equivalent to over six months’
worth of consolidated net sales of the Specialty Truck Segment. No major problems have occurredin plants’ production activities. While some of the projects which were ordered by customers havebeen cancelled, their impact on the Group’s consolidated performance is limited.
Concerns about a prolonged impact of COVID-19 and the occurrence of second and third waves ofinfections are as listed below.

Operational Results5

1. Delay and cancellation of new business negotiations during sales activities.
2. Delay in installation of truck chassis in production activities and impact on supply chains,
including procurement of parts.
Regarding the forecast for the truck market in the fiscal year under review, it is difficult to predict
the specific number of trucks and demand trends at the moment. Therefore, it is difficult tonumerically forecast the impact of COVID-19 on the Group’s future business performance.
The Environmental Equipment and Systems Segment is operating normally without any delay, etc.
in construction work due to the nature of public works that are essential to people’s daily lives.
Entrusted operations, etc. have also been busy with a higher operating rate caused partly byincreases in household waste. It is expected that there will be almost no impact on businessperformance in the segment.
In the Real Estate Rental Segment, net sales are expected to decrease due to a decline in customer
traffic in the coin-operated parking business, etc. caused by restrictions on going out. However, theextent of impact on business performance will be confirmed based on the situation with
COVID-19 in the future.
Based on the above, the Group’s policy for revising the earnings forecast and medium-term
management plan is as follows.
1. Consolidated earnings forecast for the fiscal year ending March 2021
To be developed and disclosed immediately as soon as the extent of impact of COVID-19 oneach segment along with accompanying market trends and forecasts can be confirmed.
2. Revision of medium-term management plan
To be handled flexibly based on the extent of the impact above through such measures as
considering and implementing policy revisions as needed.
3. Capital investment plan, etc.
Capital investment plans developed before the spread of COVID-19 will be revised as
described above.
Under these circumstances, the Group is promoting priority strategies based on the basic policy
stipulated in the medium-term management plan 2019–21 “To the Growth Cycle” (3-year plan;
April 1, 2019 – March 31, 2022) and making all-out efforts to expand sales and profits and to
improve its corporate value. Meanwhile, the Group will pay close attention to the current andfuture trends and respond flexibly such as by considering and implementing policy revisions, etc.
as needed.

Operational Results

6(2) Analysis on Financial Conditionsi) Situations of Assets, Liabilities and Net WorthIn the current consolidated fiscal year, total assets decreased by 2,298million yen (1.7%) from the end of
the preceding fiscal year to 136,579 million yen.
Current assets increased by 1,995 million yen (2.5%) to 82,753 million yen, due to increases in securities,
etc.
Non-current assets (property, plant and equipment, intangible assets and investments and other assets)
decreased by 4,294 million yen (7.4%) to 53,826 million yen, due to the fall in market prices ofinvestment securities, etc.
Regarding liabilities, current liabilities decreased by 2,256 million yen (5.5%) to 38,615 million yen due todecreases in bills payable and accounts payable, repayment of short-term loans, etc. Non-current liabilities
decreased by 1,751 million yen (24.5%) to 5,397 million yen due to decreases in deferred tax liability, etc.
Total net assets increased by 1,709 million yen (1.9%) to 92,566 million yen due to the posting of net
profit, etc. attributable to owners of parent.
As a result, the capital adequacy ratio stood at 67.5% as of the end of the current fiscal year (64.9% at theend of the preceding fiscal year).
ii) Cash Flow Situation
Consolidated cash and cash equivalents at the end of period increased by 981 million yen (5.1%)
compared with the end of the preceding fiscal year to 20,065 million yen. Cash flow by activity type issummarized as follows:
Cash Flow from Operating Activities
Net cash provided by operating activities amounted to 5,799 million yen (an increase of 1,769 million
yen compared with the preceding fiscal year). This was because of the posting of net profit before tax, etc.
Cash Flow from Investing Activities
Net cash used in investing activities was 2,746 million yen (an increase of 483 million yen comparedwith the preceding fiscal year). This was because of purchases of non-current assets, etc.
Cash Flow from Financing Activities
Net cash used by financing activities amounted to 2,284 million yen (an increase of 772 million yen
compared with the preceding fiscal year). This was because of dividends paid, repayment of long-termloans, etc.

Operational Results

7(3) Principal policy for return of profits to shareholders and payment of dividends for the current
year and next year
The Kyokuto Kaihatsu Kogyo Group regards the return of profits to shareholders as one of the most importantmanagement’s policies. Taking the development of business in the future and business environments into
account, management has been striving to meet investors’ expectations through the improvement of businessperformance and the strengthening of its financial position.
The Meeting of Shareholders on June 25th, 2020 resolved and passed to pay a dividend of 20 yen per share at
the end of March 2018 as originally proposed by management, making its annual dividend 40 yen per shareincluding an interim dividend, increased by 2 yen compared with the preceding fiscal year.
The annual dividend for the year ending March 2021 is undecided, and was disclosed when it became possible
to disclose the expected dividend amount, I will.

Management Policy

8

2. Management Policy(1) Basic Management Policy of the Company
The management philosophy of the Kyokuto Kaihatsu Group is "Value technology and trust, make concerted
efforts to develop the company, and widely contribute to the society."
Our ultimate goal in the management policy is to implement corporate policy recognizing a social role andresponsibility as a public company in a strong relationship with various stakeholders such as customers,
business partners, shareholders, employees, and local societies. In addition, by providing safe, effective andhigh quality products and services through our fair and sound business activities, the Kyokuto Kaihatsu Groupseeks to bring about greater contribution to our society and maximize corporate value.
With this management policy, we devote ourselves to three major business domains including Specialty Truck,
Environmental Equipment and Systems, and Real Estate Rental.
(2) Mid-to-Long Term Management Strategy
Under the medium term management plan 2019-21 “To the Growth Cycle” (3 year plan; April 1, 2019 - March
31, 2022), we are promoting priority strategies for the growth of the group based on the following basic policy.
Basic policies
With the goal of being a global company that responds flexibly to changes, our group is steadily taking
measures that increase productivity and profit margins while balancing contribution to social issues withbusiness growth. The group is aggressively channeling management resources into these measures.
(1) Improving productivity and enhancing profitability
Maximizing the effects of capital investments aimed at enhancing the earnings base. In addition, striving to
make effective use of the IoT, AI, and other technologies and providing higher added value and higher
quality products and services.
(2) Creating future earnings sources
Aggressively channeling management resources while utilizing the Group’s existing resources, alliances,and M&A aimed at solidly establishing an earnings base for the overseas business and businesses in new
areas.
(3) Improving corporate quality and deepening social value
Promoting workstyle reforms, talented personnel development, and social contribution through businessactivities based on thorough enforcement of safety and compliance.
Key Strategies(1) Special purpose vehicles business[1] Streamlining overall business and expanding profits through Group-wide seamless activities from sales
to design and production.
[2] Expanding sales and improving productivity by effectively using facilities in which investments weremade prior to the end of the previous plan and making new capital investment.
[3] Differentiating brands and securing earnings through the provision of services with high customer
satisfaction.
[4] Promoting the development of products that capture the needs of the times, such as automation andenergy saving in operation and safety.

Management Policy

9(2) Environmental business[1] Securing orders for plants through differentiation focusing on proprietary technologies and safety andpromotion of alliances with other companies.
[2] Maintaining a stable base by enhancing capabilities to propose services and respond to construction
works.
[3] Promoting entry and establishment of businesses in new fields through development of new coreproducts and systems.
(3) Parking business[1] For mechanical multistory parking equipment, focusing on renewal projects and promoting thedevelopment of differentiated products and proposal activities.
[2] For pay-by-the-hour parking lots, focusing on securing earnings in each location and engaging inselective order-winning activities for new business locations.
[3] Promoting cultivation of new overseas markets and development of new products for the future.
(4) Overseas business[1] For overseas bases, investing resources to establish an earnings base.
[2] Achieving total optimization by promoting cross-border business expansion through Group-wide
collaboration including in Japan and China.
(5) Other[1] Enhancing added value of products and services and promoting streamlining and automation of internal
operations through proactive use of the IoT, AI, and other technologies.
[2] Creating a work environment that enables each employee to focus on high value added operations bypromoting an approach to develop human resources as a team and conduct workstyle reforms.
[3] Achieving sustainable growth and increasing added value as a company by addressing social issues
through business activities as the society is now at a turning point.

(3) Targeted management index
We set management targets of sales of 110 billion yen or more and operating profit of 9 billion yen or more on aconsolidated base for the term ending March 2022, the last fiscal year of the medium term management plan
2019-21 “To the Growth Cycle” (3 year plan; April 1, 2019 - March 31, 2022).

Consolidated Statements of Comprehensive Income

10

CONSOLIDATED BALANCE SHEETSAt March 31, 2020 and 2019

Thousands of
U.S. dollars(Note 1)Millions of yen
ASSETS
Current assets:
Cash and deposits (Notes 9 & 10)
Short-term securities (Notes 9 & 10)
Trade notes and accounts receivable (Note 10 & 17)
Electronically recorded monetary claims - operating (Note 10 & 17)
Merchandise & finished goods
Work in process
Raw materials & supplies
Other current assets
Allowance for doubtful accounts
Total current assets

2020¥

Property, plant and equipment (Note 11):Land (Note 5)
Buildings and structures (Note 5)
Machinery, equipment and vehicles
Construction in progress
Other
Total
Accumulated depreciation
Net property, plant and equipment

Intangible assets

Investments and other assets:
Investment securities (Notes 3, 6 & 10)
Deferred tax assets (Note 15)
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total
The accompanying notes are an integral part of these statements.

¥

2019

2020

7,804 ¥
12,89035,905
6,815
1,368
5,798
9,484
2,751
(62)
82,753

10,584
9,133
37,595
6,021
1,198
5,561
9,178
1,555
(67)
80,75820,36033,816
18,351
1,012
5,105
78,644(39,597)
39,047

20,56533,34018,253
166
5,275
77,599(38,425)
39,174

187,115
310,782
168,650
9,299
46,915
722,761(363,911)
358,850

701

706

6,440

15,991
272
2,687
(710)
18,24058,120138,878

107,388
2,384
26,126(6,507)
129,391
494,6811,255,209

11,685
259
2,842
(708)
14,07853,826
136,579 ¥$$

71,724
118,460
329,982
62,628
12,57453,281
87,15925,288(568)
760,528

Consolidated Statements of Comprehensive Income

Thousands of
U.S. dollars(Note 1)Millions of yen
LIABILITIES AND NET ASSETS
Current liabilities:
Short-term bank loans (Notes 4 & 10)
Current portion of long-term bank loans (Notes 4 & 10)
Trade notes and accounts payable (Note 10 & 17)
Electronically recorded obligations - operating (Note 10 & 17)
Accrued expenses
Income taxes payable
Other current liabilities (Note 4)
Total current liabilities

2020¥

Non-current liabilities:
Bonds payable (Notes 4 & 10)
Long-term bank loans (Notes 4 & 10)
Net defined benefit liabilities (Note 7)
Liabilities for directors' retirement benefits
Deferred tax liabilities (Note 15)
Other non-current liabilities (Notes 4, 5 & 10)
Total non-current liabilities
Total liabilities

Net assets:
Shareholders' equity:
Common stock (Note 13):
Authorized-170,950,672 shares
Issued-42,737,668 shares in 2020 and 2019
Capital surplus (Note 13)
Retained earnings
Treasury stock, at cost:
3,010,866 shares in 2019
3,011,295 shares in 2020
Total shareholders' equity
Accumulated other comprehensive income (Note 16):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total
The accompanying notes are an integral part of these statements.

¥

11

2019

2020

1,464 ¥
637
15,993
10,629
4,569
1,570
3,753
38,6152,939
600
17,374
10,225
4,320
2,059
3,355
40,872

$

50
56
968
168
1,600
2,556
5,398
44,013

600
780
141
2,742
2,886
7,149
48,021

460
511
8,892
1,546
14,70823,48949,606404,494

11,90011,67968,733

11,90011,71964,280109,364
107,334
631,677(2,153)90,159(2,153)85,746(19,789)
828,586

2,553
127
(657)
2,023
384
92,566
136,579 ¥

4,878
(3)
(463)
4,412
699
90,857
138,878

23,466
1,172(6,040)18,598
3,531
850,715
1,255,209$

13,452
5,853
146,981
97,684
41,99014,42934,499354,888

Consolidated Statements of Comprehensive Income

12

CONSOLIDATED STATEMENTS OF INCOME
Years ended March 31, 2020 and 2019

Thousands of
U.S. dollars(Note 1)Millions of yen
Net sales
Cost of sales (Note 18)
Gross profit
Selling, general and administrative expenses (Note 14)
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Gain on sales of investment securities
Loss on sales or disposition of property and equipment, net
Equity in losses of affiliates
Loss on valuation of investment securities (Note 3)
Loss on sale of investment in a subsidiary (Note 20)
Foreign exchange gain (loss)
Other-net
Other expenses -net
Income before income taxes and non-controlling interests
Income taxes (Note 15):
Current
Deferred
Total income taxes
Net income
Net loss attributable to non-controlling interests
Net income attributable to owners of the parent

¥

¥

2020
120,174 ¥
97,22822,946
14,452
8,494

2019
114,301
91,991
22,31013,755
8,555

$

382
(50)
712
(52)
(192)
(8)
(601)
(34)
49
206
8,700

373
(97)
390
(24)
(96)
12
43
601
9,156

3,514
(456)
6,540
(481)
(1,765)(77)(5,524)
(314)
458
1,895
79,954

2,756
(26)
2,730
5,970
(103)
6,073 ¥

3,268
(173)
3,095
6,061
(224)
6,285

25,329(239)
25,09054,864(950)
55,814$

U.S. dollars(Note 1)

Yen
2020
Amounts per shares:
Basic net income
Diluted net income
Cash dividends applicable to earnings of the year
The accompanying notes are an integral part of these statements.

¥

2020
1,104,437
893,558
210,879
132,820
78,059152.87 ¥
40.00

2019
158.20
38.00

2020
$

1.40
0.37

Consolidated Statements of Comprehensive Income

13

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended March 31, 2020 and 2019

Thousands of
U.S. dollars(Note 1)Millions of yen
Net income¥

Other comprehensive income (Note 16):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income in affiliates accounted forby the equity method
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
The accompanying notes are an integral part of these statements.

¥

2020
5,970 ¥

2019
6,061

$

2020
54,864(2,324)
66
(195)
72

(1,537)
(51)
(123)
(12)

(21,363)612(1,789)660(2,381)(1,723)(21,880)

3,589 ¥

4,338

3,679
(90)

4,598
(260)

$

32,98433,809(825)

107,699

109,364

109,364

surplusstock

107,334(365)

Capital11,679(40)

11,719Common11,90011,90011,719surplus11,900stock

The accompanying notes are an integral part of these statements.

Balance, March 31, 2020

Other net changes in the year

Cash dividends paid

Appropriation

Change in ownership interest of parent due totransactions with non-controlling interests

Change in scope of consolidation

Net income attributable to owners of the parent$$

Balance, March 31, 2019

Purchases of treasury stock

¥

¥

¥

Balance, March 31, 2020

Other net changes in the year

Cash dividends paid

Appropriationtransactions with non-controlling interests

Change in scope of consolidation
Change in ownership interest of parent due to

Net income attributable to owners of the parent

Purchases of treasury stock

Balance, March 31, 2019

Other net changes in the year

Cash dividends paid

Appropriation

Net income attributable to owners of the parent

Purchases of treasury stock

Balance, March 31, 2018

CapitalCommonCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years ended March 31, 2020 and 2019

Total

(2)

(2)

631,677(14,239)(19,789)

828,586(14,239)

(365)

(650)

(650)

(5)
55,814

788,031(5)equityshareholders'

Total

90,159(19,784)

stock

Treasury(2,153)(1,549)55,814

590,752

earnings

Retained

Shareholders' equity

68,733(1,549)

(40)

(71)

(71)

(0)

(0)
6,073

85,746(2,153)(1,469)6,285

80,932equityshareholders'(2,151)stock

Treasury

6,073

64,280(1,469)6,285

59,464

earnings

Retained

Shareholders' equity

6

(3)

(25)

adjustments

sale securities

23,466(21,365)

1,172

1,146

54

(28)

currencytranslation

gain onavailable-for-Foreign

44,831

plans

(657)

(194)

(463)

(124)

(339)

of defined benefit

Remeasurements(6,040)(1,786)(4,254)plans

of defined benefit

Remeasurements

Accumulated other comprehensive income

127

124

Unrealized

2,553(2,325)

4,878(1,538)22

adjustments

sale securities

6,416

currencytranslation

gain onavailable-for-Foreign

Unrealized

Accumulated other comprehensive income
Total

18,598(22,005)54

40,549incomecomprehensive

otheraccumulated

Total

2,023

(2,395)

6

4,412(1,687)

6,099

incomecomprehensive

otheraccumulated
Non-

Total

92,566(2,710)(1,549)

(40)

(65)

6,073

(0)

90,857(1,864)(1,469)

6,285

(2)

87,907

net assets

3,531(2,897)

6,428

interests

controllingNon-

850,715(24,902)(14,239)

(365)

(596)

55,814(5)

835,008

assetsTotal netThousands of U.S. dollars

384

(315)

699

(177)

876

interests

controlling

Millions of yen

Consolidated Statements of Changes 14
in Shareholders’ Equity

Consolidated Statements of Cash Flows

15

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31, 2020 and 2019

Thousands of
U.S. dollars(Note 1)Millions of yen
2020
Operating activities:
Income before income taxes and non-controlling interests
Depreciation and amortization
Loss on valuation of investment securities
Gain on sales of investment securities, net
Equity in losses of affiliates
Loss on sales or disposition of property and equipment, net
Interest and dividend income
Interest expenses
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Increase (decrease) in net defined benefit liabilities
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for others
Increase (decrease) in consumption taxes payable
Other, net
Sub totalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities¥

Investing activities:
Purchases of securities and investments
Proceeds from sales of securities and investments
Proceeds from maturity of securities and investments
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of shares of subsidiaries
Payments for sales of shares of subsidiaries resulting in change in scopeof consolidation (Note 19)
Net decrease (increase) in short-term loans receivable
Disbursement of loans receivableCollection of loans receivable
Other,net
Net cash used in investing activities

2019

2020

8,700 ¥
2,625
8
(111)
192
18
(382)
50
1,128
(565)
(1,481)
(94)
(8)
(64)
348
(1,717)
8,647
389
(34)
(3,203)
5,799

9,156
2,644
(390)
96
15
(373)
97
(2,911)(2,360)
(193)
(87)
8
206
192
577
6,677
382
(3)
(3,026)
4,030$

79,954
24,12277(1,016)
1,765
165(3,514)456
10,364(5,195)(13,607)
(860)
(73)
(589)
3,199
(15,778)
79,4703,578(313)(29,436)
53,299

(440)
1,200
633
(3,467)295-(1,611)626
500(2,082)17(375)(4,040)11,026
5,818(31,866)
2,707
-

(692)
23
(316)
15
2
(2,747)(353)
42
6(3,230)(6,356)214(2,903)139
17(25,244)

Financing activities:
Net increase (decrease) in short-term bank loans
Repayment of long-term bank loans
Payment of finance lease obligations
Purchases of treasury stock
Dividends paid
Payments from changes in ownership interests in subsidiaries that do
not result in change in scope of consolidation
Net cash used in financing activities

96
(637)
(55)
(0)
(1,549)6(1,348)(101)(2)(1,469)879(5,857)(508)(5)(14,234)(138)(2,283)(143)(3,057)(1,266)(20,991)

Foreign currency translation adjustments on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from a newly consolidated subsidiary
Cash and cash equivalents at end of year (Note 9)(5)764
19,084217
20,065 ¥(16)(2,273)
21,357
19,084(40)
7,024
175,384
1,999
184,407

The accompanying notes are an integral part of these statements.

¥$

Independent Auditor’s Report16

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Kyokuto Kaihatsu Kogyo
Co., Ltd. (the “Company”) and its consolidated subsidiaries (collectively the“Group”) have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting
regulations, and in conformity with accounting principles generally accepted inJapan, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
In preparing the accompanying consolidated financial statements, certain
reclassifications have been made to the consolidated financial statements issued
domestically, in order to present them in a form which is more familiar to readers
outside Japan.
In addition, the notes to consolidated financial statements include additional
information which is not required under generally accepted accounting principles
and practices in Japan.
The financial statements presented herein are expressed in Japanese yen and,solely for the convenience of the readers, have been translated into U.S. dollars
at the rate of ¥108.81=US$1, the approximate exchange rate on March 31, 2020.
These translations should not be construed as representations that the Japanese
yen amounts actually are, have been or could be converted into U.S. dollar
amounts.

2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accounts of the Company andits 11 significant subsidiaries. Investments in 6 nonconsolidated subsidiaries and
1 affiliate are accounted for by the equity method.
Under the concept of control or significant influence, those companies in which
the Company, directly or indirectly, is able to exercise control over operations are
fully consolidated, and those companies which the Group has the ability to
exercise significant influence (affiliated companies) are accounted for by theequity method.

Independent Auditor’s Report

17

In March 31, 2020, 6 subsidiaries are excluded from scope of consolidation. As tothese, investments in all nonconsolidated subsidiaries are accounted for by theequity method. These companies are not material in terms of total assets, net
sales, net income and retained earnings and do not have any significant impact
on the consolidated financial statements.
During the fiscal year ended March 31, 2020, Hokuriku Heavy Industries, Ltd.
has been included into the scope of consolidation, since their materiality has
been increased. Also, Trex Thairung Co., Ltd. has been excluded from the scope of
consolidation, since the Company sold its all shares.
Among the consolidated subsidiaries, the balance sheet date for Kyokuto
Kaihatsu(Kunshan)

Machinery

Co.,

Ltd.,

and

PT.

KyokutoIndomobil

Manufacturing Indonesia is December 31. They are consolidated using thefinancial statements as of their balance sheet date. Significant inter-company
transactions between their balance sheet date and consolidated balance sheet
date are adjusted for consolidation.
Furthermore, the balance sheet date for Kyokuto Special Automobile Trading(Shanghai) Co., Ltd. under the equity method is different from the consolidatedbalance sheet date, but no adjustments were made.
All significant inter-company balances and transactions have been eliminated in
the consolidated financial statements. All material unrealized gains resulting frominter-company transactions have been eliminated.
Assets and liabilities of the consolidated subsidiaries at the time of investment
are all valued at fair value. The goodwill is being amortized on a straight-line
basis over estimated useful lives or 5 years in situations in which the useful lives
cannot be estimated. However, insignificant goodwill is charged to expenses
when incurred.

(b) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible into
cash and exposed to insignificant risk of changes in value. All of cash equivalentsmature or become due within three months from the date of acquisition.

(c) Short-term Securities and Investment Securities
The Group classifies their securities which have readily determinable fair values
as held-to-maturity debt securities, available-for-sale securities, depending on
management’s intent.

Independent Auditor’s Report

18(Held-to-maturity debt securities)
Held-to-maturity debt securities are stated at amortized cost.
(Available-for-sale securities)
Marketable available-for-sale securities are stated at fair value, with unrealized
gains or losses, net of applicable taxes, and reported in accumulated othercomprehensive income. The cost of available-for-sale securities sold is determinedbased on the moving average method.
Non-marketable securities are stated at cost determined by the moving averagemethod.
(d) Inventories
Merchandises are stated at cost determined by the specific identification method,or if lower, the net realizable value.
Raw materials, finished goods and work in process are stated at cost determinedby the periodic average method, or if lower, the net realizable value.
Supplies are stated at cost determined by the last purchase cost method, or if
lower, the net realizable value.

(e) Depreciation
Depreciation is principally computed under the straight-line method, using rates
based on the estimated useful lives of the assets (except for lease assets). The
useful lives are principally ranging from 7 to 60 years for buildings andstructures, and 4 to 17 years for machinery, equipment and vehicles.
Amortization of intangible assets is computed by the straight-line method.

(f) Retirement Benefits
Net defined benefit liabilities are recorded for employees’ pension and severance
payments based on the projected benefit obligations and the fair value of plan
assets at the balance sheet date.
In calculating the projected retirement obligations, the straight-line attribution
is applied for allocation of projected benefits to the periods until the end of thecurrent fiscal year.
Actuarial gains or losses are amortized by declining-balance method over statedIndependent Auditor’s Report

19

years that do not exceed the average remaining service period of the employees(10 years) beginning with the year following the year which incurred.

(g) Allowance for Doubtful Accounts
The allowance for doubtful accounts is provided against potential losses oncollections at an amount determined using a historical bad debt loss ratio and an
amount individually estimated on the collectability of receivables that are
expected to be uncollectible due to bad financial condition or insolvency of the
debtor.

(h) Asset Retirement Obligations
Asset retirement obligations are defined as a statutory or similar obligation withregard to the removal of tangible fixed assets and are incurred when tangible
fixed assets are acquired, constructed, developed or used in an ordinary way. The
asset retirement obligation is recognized as the sum of the discounted cash flow
required for the future asset retirement and is recorded in the period in which
the obligation is incurred if a reasonable estimate can be made.

(i) Revenue from Construction Contracts
Revenues from construction contracts and the related costs are recorded under thepercentage-of-completion method, if the outcome of the construction contract can be
estimated reliably. Otherwise, the completed-contract method is applied if theoutcome cannot be reliably estimated.

(j) Allowance for Losses on Construction Contracts
Estimated losses on construction contracts are charged to income in the period inwhich they are identified.

(k) Leases
Finance lease transactions, except for immaterial or short-term finance leases
transactions which are accounted for as operating leases, are capitalized torecognize lease assets and lease obligations in the balance sheet. Suchcapitalized lease assets are depreciated by the straight-line method over thelease terms assuming no residual value.

Independent Auditor’s Report20(l) Income Taxes
The asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences
between the carrying amount and tax bases of assets and liabilities, andoperating loss carry-forwards.

(m)

Derivatives

All derivatives, except for certain foreign exchange forward contracts andinterest rate swap contracts described below, are stated at fair value. If
derivative financial instruments are used as hedges and meet certain hedging
criteria, the Group defers recognition of gains or losses resulting from a change
in the market value of the derivative financial instruments until the related
gains or losses on the hedged items are recognized. Accounts payable hedged byforeign exchange contracts which meet certain hedging criteria are translated attheir contracted rates. Interest rate swaps which meet certain hedging criteria
are accounted for as if the interest rate applied to the swaps had originallyapplied to the underlying debt.

(n) Per Share Information
Basic net income per share is computed based on net income available to common
stockholders and the weighted average number of shares of common stock
outstanding during each period. The average numbers of shares used in thecomputations are 39,726 and 39,727 thousand shares for 2020 and 2019,respectively.
Diluted net income per share is not disclosed because the Company had nopotentially dilutive shares outstanding at these balance sheet dates.
Cash dividends per share shown in the statements of income are the amounts
applicable to the respective years.

Independent Auditor’s Report21(o) Accounting Standards issued but not yet applied-“Accounting Standard for Revenue Recognition” (Accounting Standards Boardof Japan (ASBJ) Statement No.29, March 31, 2020)-“Implementation Guidance on Accounting Standard for Revenue Recognition”(ASBJ Guidance No.30, March 31, 2020)-“Implementation Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No.19, March 31, 2020)(1) Overview
The International Accounting Standards Board (IASB) and the Financial
Accounting Standards Board (FASB) in the United States jointly developed acomprehensive accounting standard for revenue recognition and publishedthe “Revenue from Contracts with Customers” (as IFRS 15 in the IASB and
Topic 606 in the FASB) in May 2014, respectively. IFRS 15 was applied tofiscal years beginning on or after January 1, 2018 and Topic 606 was applied
from fiscal years beginning after December 15, 2017. Considering thissituation, the ASBJ developed a comprehensive accounting standard forrevenue recognition and implementation guidance and issued them together.
In developing the accounting standards for revenue recognition, the ASBJ
basically integrated the core principles of IFRS 15 from a comparability point
in view of the financial statements, which is one of the benefits of ensuringconsistency with IFRS 15. If there are any items which should be consideredin current practices in Japan, alternative treatments would be added to theextent to which comparability is not impaired.
(2) Scheduled date of application
To be applied from the beginning of the fiscal year ending March 2022.
(iii) Effects of application of these standards
The effects of the application of the aforementioned standard and guidance on
the Company’s consolidated financial statements are currently under theassessment.
-“Accounting Standard for Fair Value Measurement” (ASBJ Statement No.30,

July 4, 2019)-“Accounting Standard for Measurement of Inventories (ASBJ Statement No.9,

July 4, 2019)

Independent Auditor’s Report-22“Accounting Standard for Financial Instruments” (ASBJ Statement No.10,

July 4, 2019)-“Implementation

Guidanceon

AccountingStandard

for

Fair

Value

Measurement” (ASBJ Guidance No.31, July 4,2019)-“Implementation Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No.19, March31, 2020)(i) Overview
IASB and FASB in the United States established almost the same detailed
guidance

regarding

fair

value

measurement

(IFRS

13

“Fair

Value

Measurement” in IFRS and Topic 820 “Fair Value Measurement” in FASB).
Considering this situation, the ASBJ has worked for consistency between
Japanese accounting standards and international accounting standards
regarding fair value of financial instruments and disclosure and issued“Accounting Standard for Fair Value Measurement” and others above.
The basic approach taken by the ASBJ in the development of the accounting
standards for fair value measurement was, to incorporate essentially all
details of IFRS 13 in order to improve the comparability with financial
statements of Japan and overseas. If there are any items which should beconsidered in current practices in Japan, exceptional treatments would be
added to the extent to which the comparability is not impaired significantly.
(ii) Scheduled date of application
To be applied from the beginning of the fiscal year ending March 2022.
(iii) Effects of application of these standards
The effects of the application of the aforementioned standards and guidanceon the Company’s consolidated financial statements are currently under theassessment.
-“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ
Statement No.31, March 31, 2020)(i) Overview
With regard to the disclosure of “Sources of estimation uncertainty” required byparagraph 125 of International Accounting Standards (IAS) 1 “Presentation of
Financial Statements” (hereinafter, “IAS 1”) issued in 2003 by IASB, because thisinformation is highly useful to users of the financial statements, there wereIndependent Auditor’s Report

23

requests to consider disclosing this under Japanese GAAP as information
included in explanatory notes, and the ASBJ developed and issued the“Accounting Standard for Disclosure of Accounting Estimates” (hereinafter, the“Standard”).
The basic approach taken by the ASBJ in the development of the Standard was,rather than to expand individual notes, to state the general principle (disclosure
objectives), and then to allow the company to make a decision on specific content
to be disclosed according to the disclosure objectives. In the development, the
ASBJ also made it its policy to make reference to the provisions of paragraph 125
of IAS 1.
(ii) Scheduled date of application
To be applied from the beginning of the fiscal year ending March 2021.
-“Accounting Standard for Accounting Policy Disclosures, Accounting Changes
and Error
Corrections” (ASBJ Statement No.24, March 31, 2020)(i) Overview
Having been presented with a proposal that consideration should be given toenriching the information in the explanatory notes on “the principles andprocedures for accounting treatments adopted in cases where the provisions of
relevant accounting standards and regulations are not clear,” the ASBJ
performed the necessary revisions to the Standard, and issued the revisedStandard as the “Accounting Standard for Accounting Policy Disclosures,
Accounting Changes and Error Corrections”.
In addition, when seeking to enrich the information in the explanatory notes on“the principles and procedures for accounting treatments adopted in cases where
the provisions of relevant accounting standards and regulations are not clear,” inorder to avoid affecting business that has been conducted under conditions where
the provisions of relevant accounting standards and regulations are clear, it isassumed to inherit the provisions of the Annotations on the Corporate
Accounting Principles (Annotation No. 1-2).
(ii) Scheduled date of application
To be applied from the beginning of the fiscal year ending March 2021.

Independent Auditor’s Report

24(p) Changes in presentation methods(Consolidated balance sheets)
From fiscal year ended March 31, 2020,“ Electronically recorded monetary claims- operating” which was included in “Trade notes and accounts receivable”
under “Current assets” in the previous fiscal year,

is presented separately

because its amount has become significant. The financial statements for theprevious fiscal year have been reclassified to reflect this change in presentation
method.
As a result, ¥43,616 million which was presented in “Trade notes and accounts
receivable” on the consolidated balance sheets for the previous fiscal year has
been reclassified as ¥37,595 million in “Trade notes and accounts receivable” and¥6,021 million in “Electronically recorded monetary claims- operating”.

(q) Additional information(Accounting estimates of the impacts of the new COVID-19 infection)
The Company believes that it is difficult to predict how the impacts of the new
COVID-19 infection will spread or when they will converge. However, we makethe accounting estimates based on the assumption which the impact on financial
position and operating results of the Group will continue over the period until
the fiscal year ending March 31, 2021 based on external information available atthis time.

Independent Auditor’s Report25

3. Securities
The following is a summary of held-to-maturity securities and available-for-salesecurities at March 31, 2020 and 2019:
Millions of yen

Held-to-maturity securities

March 31, 2020

Gross

Gross

Carrying

unrealized

unrealized

amountgains

losses¥¥Fair value

Debt securities,
whose fair value exceeds
carrying amount

¥

－

－

－

¥

－

whose fair value does
not exceed carrying
amount
Total

600
¥

600

(2)

－
¥

－

¥

(2)

598
¥

598

Millions of yen

Held-to-maturity securities

March 31, 2019

Gross

Gross

Carrying

unrealized

unrealized

amountgains

losses¥¥Fair value

Debt securities,
whose fair value exceeds
carrying amount

¥

－

－

－

¥

－

whose fair value does
not exceed carrying
amount
Total

800
¥

800

－
¥

－

800

－
¥

－

¥

800

Independent Auditor’s Report

26

Thousands of U.S. dollars

Held-to-maturity securities

March 31, 2020

Gross

Gross

Carrying

unrealized

unrealized

amountgains

lossesFair value

$ －

$ －

$ －

$ －

5,514

－

(18)

5,496

5,514

$ －

Debt securities,
whose fair value exceeds
carrying amountwhose fair value does notexceed carrying amount
Total

$

$

(18)

$

5,496

Millions of yen

Available-for-sale securities

March 31, 2020

Gross

Gross

Book Value

unrealized

unrealized(Estimatedgains

lossesfair value)

(273)

¥

Cost

Market value available:
Equity securities¥ 5,372

Other securities

229

Subtotal¥ 5,601

¥

3,982

¥

(4)

－
¥

3,982

¥

(277)

9,081
225

¥

Market value not available:

9,306
1,779

Total

¥

11,085

Millions of yen

Available-for-sale securities

March 31, 2019

Gross

Gross

Book Value

unrealized

unrealized(Estimatedgains

lossesfair value)

Cost

Market value available:
Equity securities¥ 5,858

Other securities

332

Subtotal¥ 6,190

¥

7,100

¥

7,100

¥

(13)

－
¥

(57)

¥

(70)

319
¥

Market value not available:
Total

12,901
13,2201,971¥

15,191

Independent Auditor’s Report

27

Thousands of U.S. dollars

Available-for-sale securities
Gross

Gross

Book Value

unrealized

unrealized(Estimated

Cost

gains

lossesfair value)

Equity securities$ 49,368$ 36,595$ (2,511)$ 83,452

Other securities

2,106

－

(35)

2,071

Subtotal$ 51,474$ 36,595$ (2,546)$ 85,523

March 31, 2020
Market value available:

Market value not available:
Total

16,351$ 101,874

Impairment losses of available-for-sale securities were recorded during the fiscal year
ended March 31, 2020. They were immaterial. No impairment losses were recorded
during the fiscal year ended March 31, 2019.

28

Independent Auditor’s Report

4. Short-term Bank Loans and Long-term Debts
The annual average interest rates applicable to short-term bank loans at March
31, 2020 and 2019 were 0.48% and 1.34%, respectively.
Long-term debts at March 31, 2020 and 2019 consisted of the following:Thousands ofMillions of yen

2020
Bonds payable¥

U.S. dollars

2019

50

¥

2020
-

$

460

Long-term bank loans

693

1,200

6,364

Lease obligations

158

291

1,459

Other

439

666

4,034

Total

¥ 1,340¥ 2,157$ 12,317

Aggregate annual maturities of long-term debts subsequent to March 31, 2020
were as follows:
Thousands ofYear ending March 31

Millions of yen

U.S. dollars¥

953$ 8,762

2022

270

2,479

2023

52

483

2024

35

319

2025 and thereafter

30

274

¥ 1,340$ 12,317

2021

Total

To set up a commitment line by multiple finance institutions, the Company
renewed an agreement with a syndicate of 6 and 7 banks for the years ended
March 31, 2020 and 2019, respectively.
The unexecuted balance of lending commitments of the Company at March 31,
2020 and 2019 were as follows:
Thousands ofMillions of yen

Total lending commitments
Less amounts currently executed
Unexecuted balance

U.S. dollars

2020

2019

2020

¥ 5,000¥ 5,000$ 45,952－－－¥ 5,000¥ 5,000$ 45,952

29

Independent Auditor’s Report

5. Pledged Assets
The following assets were pledged as collateral for the following borrowings at
March 31, 2020 and 2019:
Thousands ofMillions of yen

Land
Buildings
Total

U.S. dollars

2020

2019

2020

¥

¥

$

750

750

6,889

1,565

1,645

14,383¥ 2,315¥ 2,395$ 21,272
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Other non-current liabilities¥ 1,320¥ 1,553$ 12,135

Total¥ 1,320¥ 1,553$ 12,135

6. Lending Securities
Out of investment securities, ¥ 41 million ($ 376 thousand) was for lending securities
at March 31, 2020.

7. Retirement Benefits
The Company, a domestic subsidiary and a foreign subsidiary have defined
benefit corporate pension plans and lump-sum retirement benefit plans. Other
domestic subsidiaries join the Smaller Enterprise Retirement Allowance Mutual
Aid Scheme which is a kind of defined contribution plans.
The changes in defined benefit obligations for the year ended March 31, 2020 and2019 were as follows:Independent Auditor’s Report30

Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

¥ 7,698¥ 7,219$ 70,747

Service cost

502

476

4,614

Interest cost

14

20

130

Actuarial gains or losses

128

230

1,181

Retirement benefits paid

(346)

(246)

(3,189)Translation adjustments

0

(1)

4

7,698

$ 73,487

Benefit obligations at beginning of year

Benefit obligations at end of year

¥

7,996

¥

The changes in plan assets for the year ended March 31, 2020 and 2019 were as
follows:
Thousands ofPlan assets at beginning of year

Millions of yen

U.S. dollars

2020

2019

2020

¥

¥

6,531

$ 63,576

6,918

Expected return on plan assets

138

131

1,272

Actuarial gains or losses

(289)

(49)

(2,659)Contributions from employers

546

514

5,022

Retirement benefits paid

(285)

(209)

(2,616)

6,918$ 64,595

Plan assets at end of year

¥

7,028

¥

The reconciliation of the defined benefit obligations and plan assets to the net
defined benefit liabilities recognized in the consolidated balance sheet as ofMarch 31, 2020 and 2019 were as follows:31

Independent Auditor’s ReportThousands ofFunded benefit obligations

Millions of yen

U.S. dollars

2020

2019

2020

¥

¥

7,685

$ 73,320

7,028

6,918

64,595

950

767

8,725

18

13

167

7,978

Plan assets at end of year
Non funded benefit obligations
Net amount of liabilities and assets
recognized in consolidated balance sheet
Net defined benefit liabilities

¥

968

¥

780

$

8,892

¥

968

¥

780

$

8,892

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

－
¥

968

－
¥

780

－
$

8,892

The retirement benefit expenses for the year ended March 31, 2020 and 2019were as follows:
Thousands ofService cost

Millions of yen

U.S. dollars

2020

2019

2020

¥

¥

$

502

Interest cost
Expected return on plan assets

4,614

14

20

130

(138)

(131)

(1,272)

137

100

1,262

Recognition of actuarial gains orlossesSeverance and pension costs

476

¥

515

¥

465

$

4,734

Remeasurements of defined benefit plans recognized in other comprehensive
income (amount before income tax effect) were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Recognized actuarial gains or losses

¥

(281)

¥

(180)

$ (2,577)

Total

¥

(281)

¥

(180)

$ (2,577)

32

Independent Auditor’s Report

Remeasurements of defined benefit plans recognized in accumulated othercomprehensive income (amount before income tax effect) were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Unrecognized actuarial gains or losses

¥

947

¥

667

$

8,702

Total

¥

947

¥

667

$

8,702

The components of plan assets as of March 31, 2020 and 2019 were as follows:
Ratio

2020

2019

Bonds

57%

41%

Securities

19%

31%

General account asset

17%

21%

Other

7%

7%

Total

100%

100%

The major actuarial assumptions for the year ended March 31, 2020 and 2019were as follows:
2020

2019

The Company and a domestic subsidiary

0.0 to 0.3%

0.0 to 0.6%

A foreign subsidiary

5.8 to 8.6%

8.4%

The Company and a domestic subsidiary

2.0%

2.0%

A foreign subsidiary-%-%

4.3 to 7.3%

4.3 to 7.3%

7.0%

7.0%

Discount rateLong-term rate of return on plan assets

Future salary increase
The Company and a domestic subsidiary
A foreign subsidiary

Long-term rate of return on plan assets was determined by considering thecurrent and future portfolio of plan assets and the current and future long-term
performance of various assets comprise the plan assets.
The required amount of the defined contribution pension plan were ¥ 118 million($ 1,081 thousand) and ¥ 111 million for the year ended March 31, 2020 and 2019
in the Company and other domestic subsidiaries.

33

Independent Auditor’s Report

8. Contingencies
At March 31, 2020 and 2019, the Group was contingently liable as follows:
Thousands ofMillions of yen

U.S. dollars

2019

2020

2020
As a guarantor of indebtedness of :
Other
Total

¥

9

¥

10

$

80

¥

9

¥

10

$

80

The Company guarantees all liabilities which MITHRA KYOKUTO SPECIALPURPOSE VEHICLE CO., PVT. LTD. is liable for in the transactions with thespecified customer. As of the end of the current consolidated fiscal year, there are notransactions for which the Company might perform our obligations.

9. Cash and cash equivalents
Cash and cash equivalents at March 31, 2020 and 2019 were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

Cash and deposits¥ 7,804¥ 10,584$ 71,724

Short-term securities

12,8909,133

118,460

(590)

(633)

(5,419)

(39)

－

(358)

¥ 20,065¥ 19,084$ 184,407

Securities with redemption term of over 3
monthsTime deposits with an original maturity ofover 3 months
Cash and cash equivalents

Independent Auditor’s Report34

10. Financial Instruments and Related Disclosures(1) Policy for financial instruments
The Group manages funds by utilizing short-term deposits, etc. The Group
raises money by borrowing from financial institutions and by issuing bonds.
Derivatives are used, not for speculative nor trading purpose, but to hedge
the exposure to foreign exchange rate risks with the debts and credits
denominated in foreign currencies and interest rate risks associated withcertain interest payments on borrowings.
(2) Types of financial instruments and related risk, and risk management for
financial instruments
Trade notes and accounts receivable are exposed to credit risk in relation tocustomers. In order to monitor credit risk, the Group manages, according to
the credit management guideline of the Group, the due date and the balanceof operating receivables from customers.
Investment securities consist of mainly held-to-maturity securities andequity securities issued by the Group’s business partners and these securities
are exposed to market risk. The Group periodically monitors the fair value ofsuch equity securities, which is reported to the board meeting.
Trade notes and accounts payable have payment due dates mainly within one
year. Trade notes and accounts payable denominated in foreign currencies are
exposed to the market risk of fluctuation in foreign currency exchange rate.
Such risk is hedged principally by forward foreign currency contract.
Short-term bank loans are raised mainly in connection with businessactivities and long-term bank loan and bonds payable, which are due mainly
within five years, are raised principally for the purpose of making capital
investments.
Long-term debts with variable interest rates are exposed to interest rate
fluctuation risk, so the Group enters into interest rate swap transactions tomanage such interest rate exposure.
Derivatives are managed in accordance with policies and procedures for risk
assessment (see Note 12 “Derivatives”) and also the Group enters into
derivative transactions only with financially stable financial institutions to
reduce institutions’ credit risk.
Based on a report from the Company and consolidated subsidiaries, theGroup prepares and updates its cash flow plans on a monthly basis to manage
the Group’s liquidity.

Independent Auditor’s Report

35(3) Supplementary explanation of the estimated fair value of financial
instruments
With regard to the below mentioned contract prices etc. of derivatives, thecontract prices themselves do not present the market risk on the derivativetransactions.
Summarized in the table below are the carrying amounts and the estimated fairvalue of financial instruments outstanding at March 31, 2020 and 2019.
Financial instruments for which it is extremely difficult to determine the fairvalue are not included in the table below.
Millions of yen

Carrying

Unrecognized

March 31, 2020

amountFair value

gain/loss

Cash and deposits¥ 7,804¥ 7,804¥

Trade notes and accounts receivable

35,90535,905

－

6,815

6,815

－

Short-term securities

12,89012,890－Investment securities

9,906

9,904

(2)

(15,993)(15,993)－(10,629)(10,629)－

Short-term bank loans(1,464)(1,464)－Long-term bank loans

(693)

(691)

2

Bonds payable

(50)

(50)

(0)

Long-term deposits

(439)

(453)

(14)

－

－

－

Electronically recorded monetary claims- operating

Trade notes and accounts payable
Electronically recorded obligations- operating

Derivatives－

Independent Auditor’s Report

36

Millions of yen

Carrying

Unrecognized

March 31, 2019

amountFair value

gain/loss

Cash and deposits¥ 10,584¥ 10,584¥

37,59537,595

－

6,021

6,021

－

Short-term securities

9,133

9,133

－

Investment securities

14,02014,020－Trade notes and accounts payable(17,374)(17,374)－(10,225)(10,225)－

Short-term bank loans(2,939)(2,939)－Long-term bank loans(1,200)(1,201)

(1)

－

－

－

(666)

(695)

(29)

－

－

－

Trade notes and accounts receivable
Electronically recorded monetary claims- operating

Electronically recorded obligations- operating

Bonds payable
Long-term deposits
Derivatives－

Thousands of U.S. dollars

Carrying
March 31, 2020
Cash and deposits
Trade notes and accounts receivable$

Unrecognizedaccount

Fair value

71,724$

gain/loss

71,724$－

329,982

329,982－

62,62862,628－

Short-term securities

118,460

118,460－

Investment securities

91,03791,019(18)(146,981)(146,981)－(97,684)(97,684)－

Short-term bank loans(13,452)(13,452)－

Long-term bank loans(6,364)(6,355)

9

(460)

(461)

(1)

(4,034)(4,165)

(131)

－

－

－

Electronically recorded monetary claims- operating

Trade notes and accounts payable
Electronically recorded obligations- operating

Bonds payable
Long-term deposits
Derivatives

Methods to determine the estimated fair value of financial instruments and othermatters related to securities and derivative transactions:Independent Auditor’s Report

(a)

“Cash

and

deposits”,“Tradenotes

andaccounts

receivable”

37

and

“Electronically recorded monetary claims - operating”
Their carrying amounts approximate fair value because of their short maturity.
(b) “Short-term securities”
The fair values of held-to-maturity debt securities are based on quotes provided
by the financial institutions.
The carrying amounts of the other securities than the above debt securities
approximate fair value because of their short maturity.
(c) “Investment securities”
The fair values of marketable securities are based on quoted market prices. The
fair values of debt securities are based on quotes provided by the financial
institutions. For information on securities classified by holding purpose, pleaserefer to Note 3 “Securities”.
(d) “Trade notes and accounts payable”, “Electronically recorded obligations operating” and “Short-term bank loans”
Their carrying amounts approximate fair value because of their short maturity.
(e) “Long-term bank loans”
The fair value of long-term bank loans is estimated based on present value of thetotal of principal and interest discounted by an assumed current interest rate forloans with similar terms and remaining maturities.
(f) “Long-term deposit”
The fair value of long-term deposit is estimated based on present value of thetotal of principal and interest discounted by an assumed interest rate, if possible,
based on debt’s maturity and credit risk.
(g) “Derivatives”
Please refer to Note 12 “Derivatives”.
Financial instruments for which it is extremely difficult to determine the fairvalue at March 31, 2020 and 2019 consist of the following:Independent Auditor’s Report

38

Thousands ofMillions of yen

Non-listed equity securities

U.S. dollars

2020

2019

2020

¥

¥

1,971

$16,351

1,425

13,070Long-term deposit

1,779
1,422

The annual maturities of financial assets and investment securities with
contractual maturities subsequent to March 31, 2020 and 2019 were as follows:
Millions of yen
Due in one year
or less

March 31, 2020

Due after one

Due after five

year throughyears throughfive years

ten years¥¥

Cash and deposits¥ 7,804

Trade notes and accounts receivable

35,905

－

－

6,815

－

－

Short-term securities

12,890－－Investment securities

－

600

－

Electronicallyrecordedmonetaryclaims - operating

Total¥ 63,414

¥

－

600

¥

－

－

Millions of yen
Due in one year

March 31, 2019
Cash and deposits

or less¥ 10,584

Due after one

Due after five

year throughyears throughfive years

ten years

¥

－

¥

－

37,595

－

－

6,021

－

－

Short-term securities

9,133

－

－

Investment securities

800

－

－

Trade notes and accounts receivable

Electronically recorded monetary claims- operating

Total¥ 64,133

¥

－

¥

－

Independent Auditor’s Report

39

Thousands of U.S. dollars
Due after one

Due after fiveDue in one year

year throughyears throughMarch 31, 2020or less

five years

ten years

Cash and cash equivalents$ 71,724

Trade notes and accounts receivable

329,982－－

62,628－－

Short-term securities

118,460－－

Investment securities

－

5,514

－

$ 582,794$ 5,514

Electronically recorded monetary claims- operating

Total

$

－

$

$

－

－

11. Investment Property
The company and certain subsidiaries hold some rental properties including landin Tokyo and other areas (“investment properties”). The amounts of net income
related to investment properties (rental income is recognized in operating
revenue and rental expense is principally charged to operating expenses) were
¥ 952 million ($ 8,747 thousand) and ¥ 998 million for the year ended March 31,
2020 and 2019, respectively.
The carrying amount, changes in such balances and market prices of investment
properties were as follows:
Millions of yen

Carrying amount

Fair value

Increase/
April 1, 2019

¥ 6,980(decrease)¥ (68)March 31, 2020

March 31, 2020

¥ 6,912¥ 10,045
Millions of yen

Carrying amount

Fair value

Increase/
April 1, 2018

¥ 7,101(decrease)¥ (121)March 31, 2019

March 31, 2019

¥ 6,980¥ 9,972

Independent Auditor’s Report

40

Thousands of U.S. dollars

Carrying amount

Fair value

Increase/
April 1, 2019

$ 64,150(decrease)$ (627)

March 31, 2020

March 31, 2020

$ 63,523$ 92,317(a) Carrying amount is net of accumulated depreciation and accumulated
impairment losses, if any.
(b) Increase during the year ended march 31, 2020 was mainly due to theexpenditure for provision of site for lent in amount of ¥ 32 million ($ 290
thousand). Decrease during the year ended March 31, 2020 was mainly due
to depreciation in an amount of ¥ 135 million ($ 1,238 thousand).
Increase during the year ended march 31, 2019 was mainly due to theexpenditure for setting signboards of coin parking in amount of ¥ 11 million.
Decrease during the year ended March 31, 2019 was mainly due todepreciation in an amount of ¥ 144 million.
(c) Fair value at March 31, 2020 and 2019 were principally measured based on thereal estate appraisal assessed by the external real estate appraiser.

12. Derivatives
Derivative financial instruments are utilized by the Company principally to
reduce interest rate risk and foreign exchange rate risk. The Company has
established a control environment which includes policies and procedures for risk
assessment and for the approval, reporting and monitoring of transactions
involving derivative financial instruments. The Company does not hold or issue
derivative financial instruments for trading purposes.
At March 31, 2020 and 2019,the notional amounts and the estimated fair valueof derivative financial instruments, for which deferred hedge accounting has
been applied or has not been applied were none, respectively.

41

Independent Auditor’s Report

13. Shareholders’ Equity
Changes in common stock and additional paid-in capital have resulted from thefollowing:

Millions of yen

Balance at March 31, 2018
Movement of stock during 2019
Balance at March 31, 2019
Movement of stock during 2020
Balance at March 31, 2020

Number ofCommonCapitalShares issued

Stock

Surplus42,737,668¥ 11,900¥ 11,719－－－

42,737,668

11,90011,719－－(40)

42,737,668¥ 11,900¥ 11,679

Thousands of U.S. dollars

Balance at March 31, 2019
Movement of stock during 2020
Balance at March 31, 2020

CommonCapitalStocksurplus$ 109,364$ 107,699

－

(365)

$ 109,364$ 107,334

Decrease of capital surplus during 2020 was change in ownership interest due totransactions with non-controlling interests.
The Company adopted 100 shares of common stock as “unit amount of shares”. A
holder of shares representing less than one unit cannot exercise any voting rights
with respect to such shares. However, the holder is entitled to receive dividends
and other distributions. A holder of a fraction of a unit may at any time request
the Company to purchase such shares at the prevailing market price.

14. Research and Development
Research and development expenditure which is included in “Selling, generaland administrative expenses” were ¥ 1,479 million ($ 13,594 thousand) and¥ 1,406 million for the years ended March 31, 2020 and 2019, respectively.

Independent Auditor’s Report42

15. Income Taxes
The Company and its domestic subsidiaries are subject to several taxes based on
income, which in the aggregate resulted in a statutory tax rate of approximately
30.58% for the years ended March 31, 2020 and 2019. Foreign subsidiaries are
subject to income taxes of the countries in which they operate.
The tax effects of significant temporary differences which resulted in deferred
tax assets and liabilities at March 31, 2020 and 2019 were as follows:
Thousands ofMillions of yen

U.S. dollars

2019

2020

2020
Deferred tax assets:
Tax loss carry forward

¥

230

¥

413

$

2,113

Allowance for doubtful accounts

237

239

2,178

Accrued Bonuses

730

634

6,712

Provision for product warranties

300

302

2,757

－

9

－

135

150

1,244

Loss on valuation of inventories

146

134

1,339

Forecast of construction cost

41

24

374

Net defined benefit liabilities

295

238

2,711

256

256

2,357

231

309

2,127

33

33

305

Excess depreciation

344

308

3,157

Other

702

473

6,448

3,680

3,522

33,822

(214)

(379)

(1,964)(1,111)(926)(10,209)

Valuation allowance sub-total(1,325)(1,305)(12,173)

Total deferred tax assets¥2,355¥ 2,217$ 21,649

Allowance for repairs
Accrued corporation enterprise
tax

Fixed assets – elimination ofintercompany profits
Loss on impairment of long-lived
assetsLoss on valuation of investment
for subsidiaries and affiliates

Deferred tax assets sub-total
Less valuation allowance
relevant to tax loss
carry forward
Less valuation allowance
relevant to total
deductible
temporary differenceIndependent Auditor’s Report

43

Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

¥ (1,134)¥ (2,145)$ (10,420)(1,380)(1,393)(12,688)(1,131)(1,115)(10,396)

(51)

(34)

(469)

(3,696)(4,687)(33,973)¥ (1,341)¥ (2,470)$ (12,324)

Deferred tax liabilities:
Unrealized gain on investment securities
Reduction reserve for fixed assets
Unrealized gain on subsidiaries’ fixed
assets by revaluation at the
beginning of consolidation
Special depreciation reserve
Total deferred tax liabilities
Net deferred tax assets (liabilities)(Note) Tax loss carry forward and related deferred tax assets by expiration
periods were as follows.
At March 31, 2020
Millions of yen

After 1After 2After 3After 4

year

year

year

year

throughthroughthroughthrough

2years

3years

4years

5years

67

34

7

62

60

－

230

(67)

(34)

(7)

(62)

(44)

－

(214)

－

－

－

－

16

－

16

Within
1
year

After
5

Total

years

Tax losscarryforwardValuation
allowance
Deferredtax assets

44

Independent Auditor’s Report

At March 31, 2019
Millions of yen

After 1After 2After 3After 4

year

year

year

year

throughthroughthroughthrough

2years

3years

4years

5years

62

67

65

75

144

－

413

(62)

(57)

(56)

(68)

(136)

－

(379)

－

10

9

7

8

－

34

Within
1
year

After
5

Total

years

Tax losscarryforwardValuation
allowance
Deferredtax assets
At March 31, 2020
Thousands of U.S. dollars

After 1After 2After 3After 4

year

year

year

year

throughthroughthroughthrough

2years

3years

4years

5years

615

312

65

566

555

－

2,113

(615)

(312)

(65)

(566)

(406)

－

(1,964)

－

－

－

－

149

－

149

Within
1
year

After
5

Total

years

Tax losscarryforwardValuation
allowance
Deferredtax assets(a) Tax loss carry forward is shown as an amount multiplied by the statutory tax
rate.
(b) The deferred tax assets of ¥ 16 million ($ 149 thousand) and ¥ 34 million
were recognized for the balance of tax loss carry forward (an amount
multiplied by the statutory tax rate) of ¥ 230 million ($ 2,113 thousand) and¥ 413 million at March 31, 2020 and 2019, respectively.
Valuation allowance has not been recognized in the portion of tax loss
carryforward based on judgement of recoverability through future taxable
income.

Independent Auditor’s Report

45

The reconciliation between the statutory tax rate and the effective income tax
rate for the year ended March 31, 2020 and 2019 were as follows:
2020
Statutory tax rate

2019

－

30.58%

Non-deductible expenses for income tax purpose

－

0.67

Non-taxable dividend income－(0.23)

Inhabitant per capita tax

－

0.95

Effect of tax rate change

－

0.15

Tax credit－(0.67)

Change in valuation allowance

－

1.06

Equity in earnings of affiliated companies

－

0.32

Other

－

0.97

－

33.80%

Effective tax rate

The reconciliation between the statutory tax rate and the effective income tax rate forthe year ended March 31, 2020 was omitted because the difference is less than 5% of
the statutory income tax rate.

Independent Auditor’s Report46

16. Comprehensive Income
The components of other comprehensive income for the year ended March 31, 2020
and 2019 were as follows:
Thousands ofMillions of yen

U.S. dollars

2020

2019

2020

¥ (2,627)¥ (1,818)$ (24,151)

(704)

(390)

(6,463)

Amount before income tax effect(3,331)(2,208)(30,614)

Income tax effect

1,007

671

9,251

¥ (2,324)¥ (1,537)$ (21,363)

Unrealized gain on available-for-sale securities:
Gains (Losses) arising during the year
Reclassification adjustments for gain (loss)

Total
Foreign currency translation adjustments:
Adjustments arising during the year

¥

60

¥

(51)

$

558

Reclassification adjustments for gain (loss)

6

－

54

Amount before income tax effect

66

(51)

612

Income tax effect

－

－

－

Total

¥

66

¥

(51)

$

612

(418)

¥

(280)

$ (3,839)

Remeasurements of defined benefit plans:
Gains (Losses) arising during the year¥

Reclassification adjustments for gain (loss)

137

100

1,262

Amount before income tax effect

(281)

(180)

(2,577)

86

57

788

Income tax effect
Total

¥

(195)

¥

(123)

$

(1,789)

Share of other comprehensive income in affiliates
accounted for by equity method:
Gains (Losses) arising during the year

¥

72

¥

(12)

$

660

Total

¥

72

¥

(12)

$

660

Total other comprehensive income¥ (2,381)¥ (1,723)$ (21,880)

Independent Auditor’s Report47

17. Trade Note Maturities
The following trade notes and electronically recorded monetary claims andobligations which matured but were not settled on March 31, 2019 because that day
fell on a bank holiday, were included in the balance sheet as of March 31, 2019:
Thousands ofMillions of yen

2020

2019

¥ －

Trade notes receivable

U.S. dollars

¥

2020

880

$ －

Electronically recorded monetary claims - operating

－

84

－

Trade notes payable

－

868

－

Electronically recorded obligation - operating

－

1,949

－

18. Provision of reserve for Losses on Construction Contracts
Provision of reserve for losses on construction contracts included in Cost of Sales
were ¥ 55 million ($ 510 thousand) and ¥ 101 million for the years ended March
31, 2020 and 2019, respectively.

19. Supplemental cash flow information
Assets and liabilities of Trex Thairung Co., Ltd. (“TTR”) that have been excluded fromthe scope of consolidation as a result of the sales of all shares, the sales amount ofshares and the expenditures associated with the sales of shares were as follows:
Thousands ofMillions of yen

Current assets¥

567

U.S. dollars

$

5,209

Non-current assets

1,578

14,504Current liabilities(1,825)(16,773)

Non-current liabilities

(100)

(920)

Non-controlling interests(121)(1,111)

6

54

Loss on sale of subsidiary shares(601)(5,524)

Net sales price of shares of TTR(496)(4,561)

Cash and cash equivalents of TTR(196)(1,795)

Foreign currency translation adjustments

Payments associated with the sales of shares

¥

(692)

$

(6,356)

Independent Auditor’s Report

48(Note) Net sales price of TTR was included the amount of capital increase inworking capital requirements.

20. Business Combination(Business divestiture)
The Company’s board of directors decided at the meeting held on July 24, 2019 that it
would transfer all shares of specified subsidiary, Trex Thairung Co., Ltd. (TTR). And
then, the Company concluded the share transfer agreement on July 25, 2019, and has
transferred them on July 30, 2019.
(a) Summary of the business divestiture(i) Name of the consolidated subsidiary divested and its business description
Name : Trex Thairung Co., Ltd.
Business description : Manufacturing and sales of Wing Van, 10 doors Van,
Dump, Mixer(ii) Name of the counterparty of the business divestiture
THAI RUNG UNION CAR PUBLIC CO., Ltd.
(iii) Major reason for the business divestiture
TTR was established on May, 2014 in Thailand in the form of a joint venturewith the Company, Nihon Trex Co., Ltd (Nihon Trex) which is a specified
subsidiary, THAI RUNG UNION CAR PUBLIC CO., LTD. (THAI RUNG)
which is supplier of vehicles and construction machines, and performing the
car dealership business, sales of vehicles under its own brand in Thailand,
and

MITSIAM

INTERNATIONAL,

LIMITED(MITSIAM)

which

is

subsidiary of MITSUI & CO. (THAILAND) LTD. The Business of TTR has
been manufacturing and sales of Van bodies and specially equipped vehicles
in Thailand since the factory completion in October, 2015.
However, the demand for Wing Van which was expected as a core productheavily had fallen below the initial plan and their production level hasn’t
been improved due to the local unstable employment practices. As a result, it
has been facing the severe management environment since starting
operation and the improvement in performance couldn’t be expected over the
medium term. Therefore, it was decided that the all shares which theCompany, Nihon Trex and MITSIAM owned were transferred to THAIRUNG, and hereafter the Group would continue the business in Thailand in
the way of technical support.

Independent Auditor’s Report

49(iv) Date of the business divestiture
July 30, 2019(v) Legal form of the business divestiture
Share transfer in consideration for cash(b) Summary of the accounting treatment(i) Amount of gain / loss on the share transfer
Thousands ofMillions of yen

Loss on sale of investment in a subsidiary¥

601

U.S. dollars

$

5,524

(ii) Details of balance sheet amount of assets and liabilities of divested businessThousands ofMillions of yen

Current assets¥

Non-current assets

567

U.S. dollars

$

5,209

1,578

14,504

Total assets¥ 2,145$ 19,713

Current liabilities¥ 1,825$ 16,773

100

920¥ 1,925$ 17,693

Non-current liabilities
Total liabilities(iii) Accounting treatment

The difference between the book value of the transferred interest in the
consolidated balance sheet including the amount of capital increase which
the Company underwrote and the net sales price was “Loss on sale ofinvestment in a subsidiary” in “Other income (expenses)” in the consolidated
statement of income for the year ended March 31, 2020.
(c) Name of segment in which the divested business was included“Specialty truck business” (Industry A)(d) Estimated Net sales and Operating income of the divested business included in
the consolidated statement of income for the year ended March 31, 2020
Thousands ofMillions of yen

Net sales
Operating income

¥

87
(88)

U.S. dollars

$

802
(811)

Independent Auditor’s Report50

21. Segment Information(1) Description of reportable segments
The Group’s reportable segments are those for which separately financial
information is available and regular evaluation by the Board of Directors is being
performed in order to decide how resources are allocated among the Group. The
Group conducts several types of businesses including specialty truck business,environmental equipment and systems and real estate rental business. The
Company and its consolidated subsidiaries are engaged in each business as anindependent management unit. The Group consists of three reportable segments,
which are “Specialty truck business” (Industry A), “Environmental equipment
and systems business” (Industry B) and “Real estate rental business” (Industry
C). Industry A manufactures and distributes specialty trucks such as dump
trucks, tailgate lifters, tank trucks, refuse trucks, trailers, etc. Industry B
manufactures and distributes recycle facilities, including maintenance andconsignment business. Industry C manufactures multistory parking equipment
and offers operating services for toll parking and real estate rental services.
(2) Methods of measurement for the amounts of sales, profit, assets, liabilities
and other items for each reportable segment
The accounting policies of each reportable segment are consistent to those
disclosed in Note 2, “Summary of Significant Accounting Policies”. Intersegment
sales or transfers are based on the market prices.

Independent Auditor’s Report

51(3) Information about sales, profit, assets and other items for the years ended
March 31, 2020 and 2019 are as follows:
Millions of yen
Reportable segments
Consolidated(Note a)(Note b)Industry

IndustryA

B

C¥ 102,035¥ 11,472¥ 6,667¥ 120,174

－

42

1

522

565

(565)

－

102,077

11,4737,189

120,739(565)

120,174

Segment profit

6,417

1,814

1,143

9,374

(880)

8,494

Segment assets

80,904

8,244

11,810100,958

35,621

136,579

2,168

59

368

2,595

1

2,596

3,626

108

239

3,973

－

3,973

2020

Total

Reconciliations

Industry

Net sales:
External customers
Intersegment sales or transfers
Total

¥

120,174

Other items:
Depreciation
Increase in tangible andintangible fixed assets(a) Reconciliations of segment profit in an amount of ¥ (880) million which
consists of elimination of intersegment transactions in an amount of ¥ 9 million
and corporate expenses which are not allocated to each reportable segment in an
amount of ¥ (889) million. Corporate expenses are mainly general administrative
expenses not attributable to any other reportable segments.
Reconciliations of segment assets are surplus fund (cash and deposits andsecurities) and long-term investment fund (investment securities) of theCompany.

Independent Auditor’s Report

52(b) Segment profit is reconciled with operating income in the consolidated
statements of income.
Millions of yen
Reportable segments
Consolidated(Note a)(Note b)Industry

IndustryA

BC¥ 94,877¥ 12,950¥ 6,474¥ 114,301

－

12

2

562

576

(576)

－

94,88912,952

7,036

114,877(576)

114,301

Segment profit

5,615

2,582

1,161

9,358

(803)

8,555

Segment assets

81,11910,50912,269103,897

34,981

138,878

2,165

54

382

2,601

1

2,602

1,815

75

176

2,066

－

2,066

2019

Total

Reconciliations

Industry

Net sales:
External customers
Intersegment sales or transfers
Total

¥

114,301

Other items:
Depreciation
Increase in tangible andintangible fixed assets(a) Reconciliations of segment profit in an amount of ¥ (803) million which
consists of elimination of intersegment transactions in an amount of ¥ 7 million
and corporate expenses which are not allocated to each reportable segment in an
amount of ¥ (810) million. Corporate expenses are mainly general administrative
expenses not attributable to any other reportable segments.
Reconciliations of segment assets are surplus fund (cash and deposits andsecurities) and long-term investment fund (investment securities) of theCompany.

Independent Auditor’s Report

53(b) Segment profit is reconciled with operating income in the consolidated
statements of income.
Thousands of U.S. dollars
Reportable segments
Consolidated(Note a)(Note b)Industry

IndustryA

B

C$ 937,733$ 105,429$ 61,275$ 1,104,437－$ 1,104,437

383

13

4,795

5,191

(5,191)－

938,116

105,442

66,0701,109,628(5,191)

1,104,437

Segment profit

58,977

16,66910,504

86,150(8,091)78,059Segment assets

743,53175,766

108,539

927,836

327,373

1,255,209

19,921547

3,384

23,852

6

23,85833,329995

2,193

36,517－36,517

2020

Total

Reconciliations

Industry

Net sales:
External customers
Intersegment sales or transfers
Total

Other items:
Depreciation
Increase in tangible andintangible fixed assets(a) Reconciliations of segment profit in an amount of $ (8,091) thousand which
consists of elimination of intersegment transactions in an amount of $ 84
thousand and corporate expenses which are not allocated to each reportablesegment in an amount of $ (8,175) thousand. Corporate expenses are mainly
general administrative expenses not attributable to any other reportablesegments.
Reconciliations of segment assets are surplus fund (cash and deposits andsecurities) and long-term investment fund (investment securities) of theCompany.
(b) Segment profit is reconciled with operating income in the consolidated
statements of income.

54

Independent Auditor’s Report

22. Subsequent Event
The following appropriations of the Company’s retained earnings in respect of
the year ended March 31, 2020 were as proposed by the Board of Directors andapproved by the shareholders at the annual general meeting held on June 25,
2020.
Thousands ofAppropriations
Cash dividends of ¥ 20 ($ 0.18) per share

Millions of yen¥

795

U.S. dollars

$

7,302

Independent Auditor’s Report55Independent Auditor’s Report56

Board of Directors andStatutory
Auditors
Corporate
Information
CORPORATE INFORMATION
Kyokuto Kaihatsu Kogyo Co., Ltd.
Established: June 1, 1955
Paid-in Capital: 11,899,867,400 yen (March 31, 2020)
Number of Employees: consolidated 2,883; non-consolidated 1,072 (March 31, 2020)
Headquarters:
6-1-45, Koshienguchi, Nishinomiya-shi, Hyogo, 663-8545 Japan
Tel.+81-798-66-1000, Fax.+81-798-66-8146
Tokyo Office (Overseas Business Department):
3-15-10, Higashi-shinagawa, Shinagawa-ku, Tokyo, 140-0002, Japan
Tel.+81-3-5781-9828, Fax+81-3-5781-3431
Plants:Yokohama Plant
Occupies 96,657 ㎡
Located in Yamato, Kanagawa (Japan)
Nagoya Plant
Occupies 109,611 ㎡
Located in Komaki, Aichi (Japan)
Miki Plant
Occupies 100,728 ㎡
Located in Miki, Hyogo (Japan)
Fukuoka Plant
Occupies 43,503 ㎡
Located in Iizuka, Fukuoka (Japan)
Head Plant of NIPPON TREX Co., Ltd.
Occupies 125,285 ㎡
Located in Toyokawa, Aichi (Japan)
Otowa Plant of NIPPON TREX Co., Ltd.
Occupies 20,889 ㎡
Located in Toyokawa, Aichi (Japan)
Plant of KYOKUTO KAIHATSU (KUNSHAN) MACHINERY CO., LTD.
Occupies 83,140 ㎡
Located in Kunshan, Jiangsu (China)
Plant of MITHRA KYOKUTO SPECIAL PURPOSE VEHICLE CO., PVT. LTD.
Occupies 60,405 ㎡
Located in Veerapanenigudem, Andhra Pradesh (India)
Plant of PT KYOKUTO INDOMOBIL MANUFACTURING INDONESIA
Occupies 20,028 ㎡
Located in Purwakarta, Jawa Barat (Indonesia)

57

Board of Directors and Statutory Auditors

BOARD OF DIRECTORS AND STATUTORY AUDITORS
Kazuya Takahashi,

Representative Director, Chairperson

Tatsuya Nunohara,

Representative Director, President, CEO

Takeo Norimitsu,

Director, Associate Senior Executive Officer

Noboru Horimoto,Director,Executive Officer

Kazuhiko Harada,

Director,Executive Officer

Sadanobu Kato,

Director,Executive Officer

Yoji Kido,

Outside Director

Akira Michigami,

Outside Director

Harumi Sugimoto,Standing Auditor

Soichiro Ochi,

AuditorYoshihiko Norikura,

Outside Corporate Auditor

Kuniaki Fujiwara,

Outside Corporate Auditor

Mitsuhiko Nakashima,

Associate Senior Executive Officer

Akira Sakurai,

Executive Officer

Yukihiro Hosozawa,

Executive Officer

Teruyuki Kizu,

Executive Officer

Shinichi Takahama,Executive Officer

Yutaka Yoshida,

Executive Officer

Masashi Ushio,

Executive Officer

Shinsaku Chijiiwa,

Executive Officer

58