Consolidated Financial Statements
Mitsui E&S Holdings Co., Ltd.
and Consolidated Subsidiaries
For the Years ended March 31,
2019 and 2018
Together with Independent
Auditor’s ReportFinancial Data
Consolidated Balance Sheets
As of March 31, 2019 and 2018ASSETS
Japanese Yen(millions)

Current Assets
Cash and time deposits (Notes 1(r) and 4)
Receivables (Note 15)
Trade
OthersLess allowance for doubtful accounts
Merchandise and finished goods
Raw materials and supplies
Work in progress
Short-term loans
Others (Note 18)
Total current assets

2019¥

U.S.Dollars(thousands)(Note 1(a))

2018
100,857¥

2019
93,698$

908,703

225,765
12,976(1,453)
4,968
8,440
42,294
41,03933,074
467,960

243,768
12,447(1,957)
4,086
5,159
35,66147,22730,944
471,033

2,034,102
116,912(13,091)
44,761
76,043381,061
369,754
297,991
4,216,236

Land (Note 1(p))
Buildings and structures
Machinery, equipment and vehicles
Lease assets
Construction in progress

245,737
198,162
186,539
14,1984,185
648,821245,294
197,753
187,584
16,156
4,332
651,1192,214,046
1,785,404
1,680,683
127,922
37,706
5,845,761

Less accumulated depreciation
Net property, plant and equipment(306,781)
342,040(299,052)
352,067(2,764,042)
3,081,719

29,491

30,234

265,70983,212
46,170733
10,833
19,320(658)
159,61091,472
41,3805,576
18,12320,072(734)
175,889

749,725
415,983
6,604
97,603174,070(5,928)1,438,057

Property, Plant and Equipment (Note 4)

Intangible Assets
Intangible assets

Investments and Other Assets
Investment securities (Notes 2, 3 and 4)
Long-term loans (Note 4)
Net defined benefit assets (Note 10)
Deferred tax assets (Note 12)
Others (Notes 3 and 4)
Less allowance for doubtful accounts
Total investments and other assets
Total assets¥

999,101¥

1,029,223$

9,001,721

The accompanying notes to the consolidated financial statements are integral parts of these statements.

1

Consolidated Statements of Operations

LIABILITIES AND NET ASSETS

Japanese Yen(millions)

For the Years Ended March 31, 2019 and 2018
Japanese Yen(millions)

Current Liabilities
Short-term borrowings (Notes 5 and 7)
Current portion of long-term indebtedness (Notes 4, 6 and 8)
Lease obligations
Trade payables (Notes 14)
Advances from customers
Accrued expenses
Accrued income taxes (Note 12)
Provision for losses on construction contracts (Note 1(m))
Provision for construction warranties (Note 1(n))
Asset retirement obligations
OthersTotal current liabilities

2019¥

U.S.Dollars(thousands)(Note 1(a))

2018
3,535
49,062
1,745
190,956
92,604
23,275
11,84660,972
10,782
3
19,960464,740¥

2019
11,70362,925
1,991
180,787
56,94424,2259,010
10,328
11,4408
13,992
383,353$

31,850442,040
15,722
1,720,479
834,345
209,704
106,730
549,347
97,144
27
179,836
4,187,224

Long-term Liabilities
Long-term indebtedness (Notes 4, 6 and 8)
Lease obligations
Liability for severance and retirement benefits
For directors and corporate auditors
Net defined benefit liabilities (Note 10)
Deferred tax liabilities
On revaluation reserve for land (Notes 1(p) and 12)
Others (Note 12)
Asset retirement obligations
OthersTotal long-term liabilities
Total liabilities

152,0206,521

180,649
7,117

1,369,673
58,753463
13,104346
12,274

4,172
118,065

17,07649,332
1,879
13,726254,12118,00950,243
1,283
19,112
289,033

153,852
444,472
16,929123,669
2,289,585

718,861

672,386

6,476,809

Net Assets (Note 9)2¥

44,38518,747
67,813(4,759)3,366(6,066)37,808740(2,488)206
120,488
280,240¥

999,101

44,38518,800135,354(4,759)7,478(6,786)39,912
6,093(1,317)
217
117,460
356,837¥

1,029,223

399,901
168,907610,983(42,878)
30,327(54,654)
340,644
6,667(22,416)
1,856
1,085,575
2,524,912$

2018
656,504
663,305(6,801)¥

2019703,217654,814
48,403$

5,914,983
5,976,259(61,276)

Selling, General and Administrative Expenses (Note 1(q))
Operating loss

52,902(59,703)53,628(5,225)

476,637(537,913)

Other Income (Expenses)
Interest and dividend income
Interest expenses

8,048(2,909)7,190(3,950)72,511(26,210)

5,675

5,223

51,131(1,257)
11,932
2,558
100
101
(625)
(7,015)
(332)
(404)
(577)
(170)
(200)
(456)
14,469(45,234)(1,200)
7,668
3,879
43
250
492
(732)
(3,672)
(7)
(31)
979
16,132
10,907(11,325)
107,505
23,047901
910(5,631)(63,204)(2,991)(3,640)(5,199)(1,532)(1,802)(4,108)130,363(407,550)

9,170
8,468
17,638(62,872)

7,922
8,285
16,207(5,300)82,62076,295
158,915(566,465)

Equity in earnings of unconsolidated subsidiaries and affiliates
accounted for using equity method
Foreign currency exchange losses
Gain on disposal of non-current assets
Gain on sales of investment securities (Note 2)
Gain on valuation of derivatives
Gain on liquidation of subsidiaries and affiliates
Gain on sales of subsidiaries and affiliates' stocks
Loss on disposal of non-current assets
Loss on impairment of non-current assets (Note 16)
Loss on sales of investment securities (Note 2)
Loss on valuation of investment securities
Loss on reduction of non-current assets
Loss on valuation of shares of subsidiaries and affiliates
Loss on litigation
Loss on compensation for damage
Others, net
Total
Profit (loss) before income taxes
Income Taxes (Note 12)
Current
Deferred
Loss

Common stock
Authorized - 150,000,000 shares
Issued - 83,098,717 shares
Capital surplus
Retained earnings
Treasury stock
Net unrealized holding gains on securities (Note 2)
Unrealized losses on hedging derivatives
Revaluation reserve for land (Note 1(p))
Foreign currency translation adjustments
Remeasurements of defined benefit plans (Note 10)
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

2019
Net Sales
Cost of Sales (Note 1(q))
Gross profit (loss)

U.S.Dollars(thousands)(Note 1(a))

Profit attributable to non-controlling interests
Loss attributable to owners of parent

¥

6,728
(69,600)¥

4,837(10,137)$

60,619(627,084)

Amounts Per Share of Common Stock (Notes 1(a) and 9)
Earnings per share
Diluted earnings per share
Dividends, applicable to the year¥¥¥

(861.09)-¥¥¥(125.42)-$$$(7.758)-(note) Effective October 1, 2017, the Company consolidated every 10 shares of its common stock into 1 share. Earnings per share which is mentioned in“Amounts Per Share of Common Stock” has been converted into those after the share consolidation.

9,001,721

3

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Net Assets

For the Years Ended March 31, 2019 and 2018

For the Years ended March 31, 2019 and 2018
Japanese Yen(millions)

2019
Loss

¥

Other comprehensive income (Note 17)
Net unrealized holding losses on securities
Unrealized losses on hedging derivatives
Foreign currency translation adjustments
Remeasurements of Defined Benefit Plans
Share of other comprehensive income ofaffiliates accounted for using equity method
Total
Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

¥
¥
¥

2018
(62,872)¥

Thousands

U.S.Dollars(thousands)(Note 1(a))

Number ofshares of Common
common
stock
stock

2019
(5,300)$(566,465)

Balance as of April 1, 2017

Change of scope of consolidation

(301)

(301)

Change of scope of equity method

(96)

5,343

Transfer from revaluation reserve for land

(109,451)

Change in treasury stock of parent
arising from transactions
with non-controlling shareholders¥¥(8,398)2,958$$(716,424)
40,508236 ¥117,003 ¥367,608(2,425)(140)(79,516)
4,496

9,957 ¥ (6,612) ¥ 41,264 ¥ 5,596 ¥ (5,212) ¥(10,137)(1,160)(675,916)

830,987 ¥ 44,385 ¥ 18,809 ¥146,961 ¥ (4,779) ¥(10,137)

593$

Treasurystock

Loss attributable to owners of parent(12,148)(5,440)Retainedearnings(2,425)(2,596)(1,247)
1,042
3,821

¥

Capitalsurplus

Cash dividends paid

(4,287)(1,322)(5,807)(1,325)(75,020)(38,625)(11,911)(52,320)(11,938)

Japanese Yen (millions)Net
Remeasure- Subscription
Nonunrealized Unrealized Revaluation Foreign
currency
ments
Total
rightscontrollingholding gains(losses) reservetranslation of defined
to shares
interests net assets
gains(losses) on hedging for land
derivatives
adjustments
benefitplans
on securities

Purchases of treasury stock
Disposal of treasury stock

Share consolidation

(9)

(96)
(9)

(9)

29

20

1,352

1,352

(0)

(0)

(747,888)

Net changes of items other thanthose in Shareholders’ equity
Balance as of April 1, 2018

(2,479)83,099 ¥ 44,385 ¥ 18,800 ¥135,354 ¥ (4,759) ¥Cumulative effects of changes inaccounting policies
Restated balance(174)(1,352)

7,478 ¥ (6,786) ¥ 39,912 ¥

497

3,895

6,093 ¥ (1,317) ¥

(19)

457

217 ¥117,460 ¥356,837

50
44,38518,800Loss attributable to owners of parent

135,404825

50(4,759)7,478(6,786)39,912

6,093(1,317)

217

117,460(69,600)

356,887(69,600)

Change of scope of consolidation

250

250

Change of scope of equity method

(345)

(345)

Purchases of treasury stock(14)

Disposal of treasury stock(4)

Transfer from revaluation reserve for land

(14)

14

10

2,104

Change in treasury stock of parent
arising from transactions
with non-controlling shareholders

2,104

(49)

(49)

Net changes of items other thanthose in Shareholders’ equity
Balance as of March 31, 2019

(4,112)
83,099 ¥ 44,385 ¥ 18,747 ¥ 67,813 ¥ (4,759) ¥720(2,104)

3,366 ¥ (6,066) ¥ 37,808 ¥(5,353)(1,171)740 ¥ (2,488) ¥

(11)

3,028

(9,003)206 ¥120,488 ¥280,240

U.S.Dollars (thousands) (Note 1(a))
Commonstock

Balance as of April 1, 2018

Capitalsurplus1,955 $1,058,294 $3,215,038

450
399,901

169,385 1,219,965

450(42,878)

67,375(61,141) 359,600

54,897(11,865)

1,955 1,058,294 3,215,488

Loss attributable to owners of parent(627,084)

Change of scope of consolidation

2,253

2,253

Change of scope of equity method(3,108)(3,108)Purchases of treasury stock
Disposal of treasury stock
Change in treasury stock of parent
arising from transactions
with non-controlling shareholders
Net changes of items other thanthose in Shareholders’ equity
Balance as of March 31, 2019

(627,084)

(126)
(36)

Transfer from revaluation reserve for land

4

Treasurystock$399,901 $169,385 $1,219,515 $ (42,878) $ 67,375 $ (61,141) $359,600 $ 54,897 $ (11,865) $Cumulative effects of changes inaccounting policies
Restated balance

Retainedearnings

Net
Remeasure- Subscription
unrealized Unrealized Revaluation Foreign
Nonments
Total
currency
holding gains(losses) reserve
rights to controlling net assets
translation of defined
gains(losses) on hedging for land
sharesinterests
benefit plans
derivatives
adjustmentson securities

(126)

126

90

18,957

18,957

(442)

(442)
(37,048)6,487(18,956)$399,901 $168,907 $610,983 $(42,878) $ 30,327 $(54,654) $340,644 $(48,230)(10,551)

6,667 $ (22,416) $(99)

27,281(81,116)

1,856 $1,085,575 $2,524,912

5

Consolidated Statements of Cash Flows
For the Years Ended March 31, 2019 and 2018
Japanese Yen(millions)

Cash Flows from Operating Activities :Profit (loss) before income taxes

2019¥

U.S.Dollars(thousands)(Note 1(a))

2018(45,234)¥

Cash Flows from Investing Activities :2019
10,907$(407,550)

Adjustments to reconcile Profit (loss) before income taxes to net
cash provided by (used in) operating activities

6

Depreciation and amortization
Loss on impairment of non-current assets
Amortization of goodwill
Decrease of allowance for doubtful accounts
Increase in net defined benefit liablities
Decrease in net defined benefit assets
Interest and dividend income
Interest expenses
Equity in earnings of unconsolidated subsidiaries and affiliates
accounted for using equity method
Foreign currency exchange losses, net
Gain on sales of investment securities, net
Gain on sales of subsidiaries and affiliates' stocks
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries and affiliates
Gain on liquidation of subsidiaries and affiliates
Gain on disposal of non-current assets, net
Loss on reduction of non-current assets
Loss on litigation
Loss on compensation for damage
Changes in assets and liabilities :Decrease (increase) in
Trade receivables
Inventories
Other assets
Increase (decrease) in
Trade payables
Other liabilities
Others, net
Sub-totalInterest and dividend received
Interest paid
Proceeds from insurance income
Payments for loss on litigation
Income taxes paid
Net cash provided by (used in) operating activities¥

14,496
7,015
1,177
(622)
587
759
(8,048)2,909

17,196
3,672
1,242(1,030)264
1,694(7,190)3,950

130,606
63,204
10,605(5,604)
5,289
6,838(72,511)
26,210(5,675)(5,223)(51,131)41(2,226)(101)
404(11,307)
577
170
200

151
(3,879)
(492)
7
31
(250)
(6,936)-369(20,056)
(910)
3,640
(101,874)
5,199
1,532
1,802

52,437(10,555)
1,393

838
740
1,474

472,448(95,099)
12,551

21,77948,502(4,623)64,055(14,551)(4,589)(1,864)(3,838)196,225
436,994(41,652)
577,125

15,207(2,995)(170)(9,920)66,177

15,615(3,953)
204(11,584)(3,556)

137,012(26,984)(1,532)(89,378)596,243¥$

Japanese Yen(millions)

Net decrease (increase) in time deposits
Capital expenditure
Proceeds from sales of non-current assets
Purchases of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries and affiliates
Proceeds from sales of shares of subsidiaries and affiliates
Payments for investments in capital of subsidiaries and affiliates
Disbursements of loans receivableCollection of loans receivable
Others, net
Net cash provided by (used in) investing activities

2019

U.S.Dollars(thousands)(Note 1(a))

2018

¥

153
(18,289)
19,887(4)
6,866(7,056)523(88,857)
86,997
(351)
(131)

¥

(7,837)
20,195(61,934)(1,909)(15)(4)(1,755)
4(86)(53,341)

2019

¥

(865)
(18,098)
13,298(367)
6,240(12,787)908(1,407)(68,961)
73,733(741)(9,047)¥(2,216)
40,664(42,285)(2,203)
10,000(15,000)(9)(2,417)(1,365)18(14,813)$

1,379(164,781)
179,178(36)
61,862(63,573)
4,712(800,586)
783,827(3,162)(1,180)$(70,610)
181,953(558,014)(17,200)(135)(36)(15,812)36(775)(480,593)

Cash Flows from Financing Activities :Net decrease in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of lease obligations
Proceeds from issuance of bonds
Repayments on bonds
Purchases of treasury stock
Cash dividends
Dividends paid to non-controlling interests
Proceeds from share issuance to non-controlling shareholders
Others, net
Net cash provided by (used in) financing activities

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net increase (decrease) in Cash and Cash Equivalents(2,726)
9,979(76)(27,492)(24,561)
89,909

Increase (decrease) due to changes in scope of consolidation
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year (Note 1(r))

1,117
86,312
97,408(1,816)
115,620
86,312

10,064
777,656
877,629

¥

¥

$

7

Notes to Consolidated Financial Statements
1. Significant Accounting and Reporting Policies
The following is a summary of the significant accounting and reporting policies adopted by the Mitsui E&S Group (the “Group”), which consistsof Mitsui E&S Holdings Co., Ltd. (the “Company”) and its consolidated subsidiaries (the “Subsidiaries”) in the preparation of the accompanying
consolidated financial statements.

(a) Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of the Group have been prepared in accordance with the provisions set forth in the “Japanese
Financial Instruments and Exchange Act” and its related accounting regulations, and in conformity with accounting principles generally acceptedin Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements from International Financial
Reporting Standards.
The accounts of the overseas Subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting
principles prevailing in the respective countries of domicile (“Local GAAP”) and significant differences between Japanese GAAP and Local GAAP
are adjusted in consolidation. The accompanying consolidated financial statements have been restructured and translated into English from theconsolidated financial statements of the Group prepared in accordance with Japanese GAAP and filed with the appropriate Finance Bureau of
the Ministry of Finance as required by the “Financial Instruments and Exchange Act”. Certain supplementary information included in the statutory
Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated
financial statements.
The translation of Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the prevailingexchange rate at March 31, 2019, which was ¥110.99 to U.S. $1. The convenience translations should not be construed as representations that theJapanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

(b) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Group, over which the Company has power of control throughmajority voting rights or existence of certain conditions requiring control by the Company.
Material inter-company balances, transactions and profits have been eliminated in consolidation.
The assets and liabilities of the Subsidiaries, including the portion attributable to non-controlling shareholders, were evaluated using the fair value
at the time the Company acquired control of the respective subsidiaries.
Investments in all significant unconsolidated subsidiaries and affiliates are accounted for using equity method.
Goodwill is generally amortized over certain periods on the straight-line method.
Fiscal years of some of the Subsidiaries end on the 31st of December. The Company consolidates these subsidiaries’ financial statements as of eachsubsidiary’s latest fiscal year and significant transactions occurred between each subsidiary’s fiscal year-end and the Company’s fiscal year-end are
adjusted on consolidation.

(c) Revenue Recognition
Revenue and costs associated with construction contracts
1) Construction of its certainty of achievement on the progressed portion until the fiscal year-end can be recognized:
The percentage-of-completion method(The progress of work is mainly measured by the percentage of cost method)2) Construction other than above:
The completed-contract method
Revenues and costs of sales on finance lease transactions are recognized when lease payments are received.

(d) Securities
The Company and the domestic Subsidiaries examined the intent of holding each security and classified those securities as securities held for
trading purposes (“trading securities”), debt securities intended to be held to maturity (“held-to-maturity debt securities”), equity securities
issued by subsidiaries and affiliated companies, and all other securities that are not classified in any of the above categories (“available-for-salesecurities”). The Company and the domestic Subsidiaries did not have trading securities or held-to-maturity debt securities.
Equity securities issued by the Subsidiaries and affiliated companies, which are not accounted for using equity method, are stated at movingaverage cost. Available-for-sale securities with available fair market values are stated at fair market value. The fair market value is calculated using
mainly the average price of securities one month before the consolidated balance sheet date. Unrealized gains and losses on these securities arereported, net of applicable income taxes, as a separate component of net assets. Realized gains and losses on sale of such securities are computed
using moving-average cost. Available-for-sale securities without fair market value available are stated at moving-average cost.
If the market value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and affiliated companies which are
not accounted for using equity method, and available-for-sale securities decline significantly, such securities are stated at fair market value and thedifference between fair market value and the carrying amount is recognized as loss in the period of the decline. If the fair market values of thesesecurities are not readily available, they should be written down to net asset value with a corresponding charge in the statements of income in theevent net asset value declines significantly. In these cases, such fair market value or the net asset value will be the carrying amount of the securities
at the beginning of the next year.

(e) Derivative Transaction and Hedge Accounting
Japanese accounting standard for financial instruments requires the Company and the domestic Subsidiaries to measure derivative financial
instruments at fair value and to recognize changes in the fair value as gains or losses unless derivative financial instruments are used for hedging
purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Group defers recognition of gains or losses resulting
from changes in fair value of derivative financial instruments until the instruments are applied to hedged items.
In cases where forward foreign exchange contracts are used as hedges and meet certain hedging criteria, the forward foreign exchange contracts
and hedging items are accounted for in the following manner.

81) If forward foreign exchange contracts are entered into to hedge existing foreign currency receivables or payables,i. the difference, if any, between the Japanese yen amount of the hedged foreign currency receivables or payables converted by the contracted
forward foreign exchange rate and the book value of the receivables or payables is recognized in the statement of income of the fiscal year inwhich such contracts are entered into, andii. the difference between the Japanese yen amount converted by the contracted forward foreign exchange rate and the Japanese yen amountby spot rate at the trade date of the contract is allocated to every fiscal period over the term of the contract.
2) If forward foreign exchange contracts are entered into to hedge a future transaction (be contracted but not stated in financial statements)
denominated in foreign currency, recognition of gains and losses resulting from fair value of the forward foreign exchange contracts aredeferred until the contracts are applied to the hedged item.
Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under the interest
rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was allocated.

(f) Allowance for Doubtful Accounts
In order to provide for credit losses, non-recoverable amount is recorded based on write-off ratio for general accounts. For doubtful accounts,
collectability is examined and recoverable amount is estimated individually.

(g) Inventories
Merchandise, finished goods, raw materials and supplies are stated at cost determined mainly by the moving-average method (except steels for
new shipbuilding, which are by identified cost method) (Balance sheet value reflects downturn in profitability). Work in progress is stated using
identified cost method (Balance sheet value reflects downturn in profitability). Construction costs, which are accumulated in inventory, consistof direct materials, labor, other items directly attributable to each contract and an allocable portion of general manufacturing and construction
overheads.

(h) Property, Plant and Equipment and Depreciation
Depreciation of plant and equipment is mainly computed using the straight-line method over their estimated useful lives. Ordinary maintenanceand repairs are charged to the profit and loss account as incurred.

(i) Intangible assets
Intangible assets primarily consist of software, customer-related assets and goodwill. Software for own use is depreciated using the straight-line
method over the estimated useful life (five years). Customer-related assets is also amortized using the straight-line method based on effectedperiod (mainly eighteen years). Goodwill is generally amortized using the straight-line method over a reasonable period in which the economic
benefits are expected to be realized.

(j) Employees’ Severance and Retirement Benefits
In calculating retirement benefit obligations, the benefit formula basis is used to allocate projected retirement benefits over the period to theend of this consolidated fiscal year. Actuarial gains and losses are recognized in the Consolidated Statements of Operations commencing withthe following year using the straight-line method mainly for five or ten years. Prior service costs are recognized in the Consolidated Statements ofOperations using the straight-line method mainly for one or five years.
After being adjusted for tax effect, unrecognized actuarial gains and losses, unrecognized prior service costs are added to “Remeasurements ofdefined benefit plans”, an item within “Accumulated other comprehensive income (net assets)”.

(k) Liability for Severance and Retirement Benefits for Directors and Corporate Auditors
Amount is recorded based on internal regulations in order to prepare for payment of retirement benefit of directors and corporate auditors.

(l) Translation of Foreign Currency Accounts
Under Japanese accounting standard for foreign currency translation, monetary assets and liabilities denominated in foreign currencies aretranslated into Japanese yen at the exchange rates prevailing at each balance sheet date with the resulting gain or loss included in the current
statements of income.
Assets and liabilities of foreign subsidiaries and affiliates are translated into Japanese yen at the exchange rates in effect at each balance sheet
date, except for common stock and capital surplus, which are translated at historical rates. Revenue and expense accounts are also translated at
the exchange rates in effect at each balance sheet date.

(m) Provision for Losses on Construction Contracts
Provision for losses on construction contracts, etc., is provided based on an estimate of the total losses which can probably occur for the next fiscal
year and beyond with respect to construction projects, etc., on which eventual losses are deemed inevitable and amounts thereof can reasonably
be estimated.

(n) Provision for Construction Warranties
Provision for construction warranties for ships and other products is provided based on the estimated amounts calculated by using mainly theaverage proportion of construction warranties against amounts of construction revenue for past two years.

(o) Income Taxes
Deferred income tax is recognized from temporary differences between the carrying amounts of assets and liabilities for tax and financial reporting.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary
differences.

9

(p) Revaluation Reserve for Land
The land used for business operations is revaluated based on real estate tax value on March 31, 2000 and March 31, 2002 respectively, in
accordance with Enforcement Ordinance for the Law Concerning Revaluation Reserve for Land (the “Law”) effective March 31, 1998. The related
unrealized gain, net of income taxes was recorded as “Revaluation reserve for land” in Net assets and the deferred income tax effects wererecorded as Deferred tax liabilities on “Revaluation reserve for land” in Long-term liabilities.
According to the Law, revaluation of the land is not permitted at any time after the above revaluation even in cases where the fair value of theland declines. Such unrecorded revaluation losses are ¥39,079 million ($352,095 thousand) and ¥38,415 million as of March 31, 2019 and 2018,
respectively.

(q) Research and Development
Costs relating to research and development activities are charged to the profit and loss account as incurred. The amounts for the years ended
March 31, 2019 and 2018 were ¥3,200 million ($28,831 thousand) and ¥3,531 million, respectively.

(r) Cash Flow Statement
In preparing the Consolidated Statements of Cash flows, cash and cash equivalents consists of cash on hand, readily available deposits including
short-term loans and short-term highly liquid investments with maturities not exceeding three months at the time of purchase which involve only an
insignificant risk in their movements of value.
Reconciliation of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents in the Consolidated Statementsof Cash flows as of March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)

2019
Cash and time deposits
Time deposits with maturities exceeding 3 months
Cash equivalents included in marketable securities
Cash and cash equivalents¥¥

U.S.Dollars (thousands)

2018
100,857(3,449)97,408¥¥

2019
93,698(7,490)104
86,312$$908,703(31,074)
877,629(s) Finance Lease Transactions without Transfer of Ownership
Lessee:The method of amortization of the lease assets related to finance lease transactions without transfer of ownership is by the straight-line method
corresponding to lease period. The residual value is the guaranteed residual value in case such value is set forth in the lease contract but otherwise
is zero value.
Lessor:Revenues and costs of sales on finance lease transactions, other than those that transfer ownership of the leased property to the lessee, arerecognized when lease payments are received.

(t) Reclassifications
Certain reclassifications have been made in the financial statement of the previous fiscal year to conform to the classification used in this fiscal year.
These reclassifications had no effect on previously reported profit or net assets.

(u) Change in Accounting Policy
Application of IFRS No. 15 “Revenue from Contracts with Customers”
The Subsidiaries adapting IFRS have applied IFRS No. 15 “Revenue from Contracts with Customers” (“IFRS 15”), effective April 1, 2018. In
application of IFRS 15, the Subsidiaries chose to recognize the accumulated effect of applying IFRS 15 as of the date of the start of application,
as allowed by the provision on transitional measures set forth in IFRS 15.
As a result of this change, retained earnings as of April 1, 2018 increased by ¥50 million ($450 thousand) in comparison with those under theprevious standard. Impacts of application of IFRS 15 on the consolidated financial statements of the Company is immaterial.

(v) Accounting Standards and Guidance Issued but not yet Applied- “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 30, 2018)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 30, 2018)
1) Outline:
The International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) jointly developed
comprehensive accounting standards for revenue recognition and published the “Revenue from Contracts with Customers” (IFRS 15 for the
IASB and Topic 606 for the FASB) in May 2014. IFRS 15 is effective for fiscal years beginning on or after January 1, 2018 and Topic 606 is
effective for fiscal years beginning after December 15, 2017. Given these circumstances, the ASBJ has developed comprehensive accounting
standards for revenue recognition and published them with the implementation guidance thereon.
The basic policy of the ASBJ in developing accounting standards for revenue recognition is thought to set such accounting standards byadopting basic principles of IFRS 15 as a starting point, from the viewpoint of comparability among financial statements, which is one of benefitsof ensuring consistency with IFRS 15, and to additionally provide for alternative accounting treatments to the extent that it would not impair
comparability, if there is an item to be taken into consideration in practices that have been conducted in Japan.
2) Planned date of application:
To be applied from the beginning of the fiscal year ending March 31, 2022.
3) Impact of application of the accounting standards:
The impacts of the application of the “Accounting Standard for Revenue Recognition” and the “Implementation Guidance on AccountingStandard for Revenue Recognition” on the Group’s consolidated financial statements are currently being evaluated.

10- “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, January 16, 2019)- “Implementation Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ
Guidance No. 10, January 16, 2019)1) Outline:“Accounting Standard for Business Combinations” and “Implementation Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” were revised and issued by the Accounting Standards Board of Japan (ASBJ) based on its
discussion following the proposal issued by the Standards Advisory Council, which requested ASBJ to discuss on the accounting treatment incase of partial repayment of considerations in relation to contingent considerations for acquisition under ASBJ Statement No. 21.
Main revisions were to add “repayment of considerations” in the definition of “contingent considerations for acquisition” and to add accounting
for “repayment of considerations in relation to contingent considerations for acquisition.”In the revision of “Implementation Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures” (Guidance 10), descriptions for accounting for shareholders of parties to the business combination were amended to be consistent
with “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013). Furthermore, with respect to the tax effectaccounting of divesting company in case where the split-off-type demerger is non-qualified organizational restructuring and the effective date of
demerger is the beginning of the fiscal year of the divesting company, because the treatment of deemed fiscal period in split-off-type demerger
has already been abolished since fiscal 2010 Tax Reform, the related provisions in Guidance 10 were deleted.
2) Planned date of application:
To be applied to organizational restructurings effected on or after the beginning of the fiscal year ending March 31, 2020.
3) Impact of application of the accounting standards:
The impacts of the application of the “Accounting Standard for Business Combinations” and “Implementation Guidance on AccountingStandard for Business Combinations and Accounting Standard for Business Divestitures” on the Group’s consolidated financial statements are
currently not yet determined.

(w) Changes in Presentation
Changes due to adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting”
The Company adopted ASBJ Statement No. 28, “Partial Amendments to Accounting Standard for Tax Effect Accounting” issued on February
16, 2018 (“ASBJ 28”), from the beginning of the year ended March 31, 2019. Accordingly, “Deferred tax assets” and “Deferred tax liabilities”
are presented in “Investments and other assets” and “Long-term liabilities”, respectively, in the accompanying consolidated balance sheets and“Note on Income Taxes” has been modified.
As a result, certain line items in the consolidated balance sheet as of March 31, 2018 has been reclassified to conform to the 2019 presentation
as follows: “Deferred tax assets” of ¥9,492 million previously presented in “Current assets” are now included in “Deferred tax assets” of¥18,123 million in “Investments and other assets”, and “Deferred tax liabilities” of ¥293 million previously presented in “Current liabilities” arenow included in “Deferred tax liabilities” of ¥50,243 million in “Long-term liabilities”.
In addition, certain information are added to “Note on Income Taxes” as defined by No. 8 (except for the total amount of valuation allowance)and No.9 of Annotations on ASBJ 28, which are referred to by Articles 3 to 5 of ASBJ 28. Such information for the year ended March 31, 2018
are not presented in accordance with the transitional measures prescribed in Article 7 of ASBJ 28.
Consolidated Statements of Cash flows
In the year ended March 31, 2018, “Payments from changes in ownership interests in subsidiaries that do not result in change in scope of
consolidation” was presented individually in “Cash flows from financing activities”, but now is included in “Other” since its materiality in amount
has decreased. Consolidated financial statements for the year ended March 31, 2018 has been reclassified in order to reflect this change inpresentation.
As a result, in the consolidated cash flow statement as of March 31, 2018, ¥(0) million previously presented in “Payments from changes inownership interests in subsidiaries that do not result in change in scope of consolidation” in “Cash flows from financing activities” is now
included in “Others”.

2. Investment Securities(a) The following tables summarize acquisition costs, book values and fair values of securities with available fair values
as of March 31, 2019 and 2018:2019
Available-for-sale securities:
Securities with book values exceeding acquisition costs:
Equity securities
Sub Total
Securities with book values not exceeding acquisition costs:
Equity securities
Sub Total
Total

Acquisition cost

¥

¥

2018
Available-for-sale securities:
Securities with book values exceeding acquisition costs:
Equity securities
Sub Total
Securities with book values not exceeding acquisition costs:
Equity securities
Sub Total
Total

8,369
8,369

6,746
6,746
15,115Acquisition cost¥¥

15,496
15,496

4,688
4,688
20,184

Japanese Yen (millions)Book value¥¥

14,712
14,712

5,653
5,653
20,365Difference¥¥

Japanese Yen (millions)Book value¥¥

27,511
27,511

4,070
4,070
31,581

6,343
6,343

(1,093)(1,093)5,250

Difference¥¥

12,01512,015(618)(618)
11,39711

2019Acquisition cost

Available-for-sale securities:
Securities with book values exceeding acquisition costs:
Equity securities
Sub Total

U. S. Dollars (thousands)
Book value

DifferenceLong-term indebtedness as of March 31, 2019 and 2018 were summarized below:
Japanese Yen (millions)$

Securities with book values not exceeding acquisition costs:
Equity securities
Sub Total
Total

75,40375,40360,78060,780136,183$$

132,552
132,552$

50,93350,933
183,485$

57,14957,149(9,847)(9,847)47,302$(b) Proceeds from sales of available-for-sale securities and realized gains and losses on sales of available-for-salesecurities for the years ended March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)

2019
Proceeds from sales of available-for-sale securities
Securities
Realized gains on sales of available-for-sale securities
Securities
Realized losses on sales of available-for-sale securities
Securities

6. Long-Term Indebtedness¥

U.S. Dollars (thousands)

2018
6,867

¥

2019
6,240

$

2019
Secured by mortgages on plant and equipmentloans from Japanese banks, due on various dates through 2026
Unsecured or non-guaranteed1.14% bonds, due December 12, 2019
0.63% bonds, due December 12, 2019
0.62% bonds, due September 14, 2020
0.46% bonds, due September 15, 2021
1.03% bonds, due December 10, 2021
1.01% bonds, due September 14, 2022
0.62% bonds, due December 15, 2022
0.70% bonds, due September 15, 2023

¥

2,558

¥

3,879

$

23,047

¥

363

¥

-

$

3,271

For the year ended March 31, 2019, loss on impairment of ¥403 million ($3,631 thousand) for available-for-sale securities was recognized.
When the fair value of a security at the fiscal year-end declines by more than 50% compared to the acquisition cost, the full amount is recognized
as loss on impairment. When the decline is around 30% to 50%, loss on impairment is recognized for the amount deemed necessary, taking into
consideration the recoverability etc.

¥

2019

11,919$92,153

5,000
5,000
5,000
10,0005,000
5,000
10,000
5,000

5,000
5,000
5,000
10,0005,000
5,000
10,0005,000

45,04945,04945,04990,09845,04945,04990,09845,049loans from banks, insurance companies andtrading companies due on various dates through 2028

140,854

181,655

1,269,070

Less: Current portion included in current liabilities

201,082(49,062)
152,020

243,574(62,925)
180,649

1,811,713(442,040)
1,369,673¥¥$

The aggregate annual maturities of long-term indebtedness are summarized below:

Year ended March 31,(c) Securities for which impairment loss was recognized2018

10,22861,870¥U.S.Dollars (thousands)

2020
2021
2022
2023
2024 and thereafter

Japanese Yen (millions)

U.S.Dollars (thousands)¥$

49,06249,36738,07334,57830,002201,082¥442,040444,788
343,031311,542
270,312
1,811,713$

3. Investments in Unconsolidated Subsidiaries and Affiliates
Investments in unconsolidated subsidiaries and affiliates included in investment securities as of March 31, 2019 and 2018 were ¥56,012 million($504,658 thousand) and ¥52,000 million, respectively. Investments in unconsolidated subsidiaries and affiliates included in other assets as of March
31, 2019 and 2018 were ¥6,969 million ($62,789 thousand) and ¥7,940 million, respectively.

7. Unexecuted Balance of Overdraft Facilities and Lending Commitments
The unexecuted balance of overdraft facilities and lending commitments at the Group as of March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)

4. Pledged Assets

2019

Assets pledged as collateral for long-term indebtedness as of March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)

2019
Land
Buildings and structures
Machinery, equipment and vehicles
Investment securities
Cash and time deposits
Long-term loans
Long-term deposits

¥

2018
2,399
172
7,919
1,103
425
814
1,457
14,289¥U.S. Dollars (thousands)

¥

2019
2,514
182
9,016
1,133
3,186
1,476
17,507¥$

21,6151,550
71,349
9,938
3,829
7,334
13,127
128,742$

Long-term indebtedness secured by the above pledged assets as of March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)2019
Long-term indebtedness¥¥

U.S. Dollars (thousands)

2018
10,228
10,228¥¥2019
11,91911,919$$92,152
92,152

Total overdraft facilities and lending commitments
Less amounts currently executed
Unexecuted balance¥

2018
65,824
3,452
62,372¥¥

Short-term borrowings represent notes payable to banks due within twelve months. The average interest rate for the year ended March 31, 2019 is
0.27%.

12

201967,496
2,778
64,718¥$593,062
31,102561,960$

8. Financial CovenantsLong-term borrowings include those based on syndicated loan contracts and commitment line contracts entered into between the Company andfinancial institutions, which are subject to financial covenants. Main covenants are as follows:
Syndicated loans (Long-term borrowings, current portion of long-term borrowings):- At the end of each fiscal year, total net assets in the consolidated and non-consolidated balance sheets must be maintained above a definedlevel, respectively.
- Ratings by rating agencies must be maintained above a defined level.
Commitment line contracts (short-term borrowings):- At the end of each fiscal period (including quarter period), total net assets in the consolidated and non-consolidated balance sheets must be
maintained above a defined level, respectively.
The balance of long-term borrowings based on such contracts as of March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)2019

5. Short-Term Borrowings

U.S.Dollars (thousands)

Long-term borrowings¥¥

U.S.Dollars (thousands)

2018
15,481
15,481¥¥

2019
21,921
21,921$$

139,481
139,481(note) Long-term borrowings includes the current portion.
At the end of the second-quarter of the year ended March 31, 2019, the Company violated the financial covenants of commitment line contracts.
However, the covenants were subsequently changed at the renewal of the contracts and, as a result, the violation has been resolved as of March
31, 2019.

13

9. Net Assets and Per Share Dataiv) Severance and retirement benefit expenses:

Under the Japanese Corporate Law (“the Law”) and regulations, the entire amount paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half the price of the newshares as additional paid-in capital, which is included in capital surplus.
In cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% ofcommon stock over the total of additional paid-in-capital and legal earnings reserve must be set aside as additional paid-in-capital or legal earnings
reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets.
Legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit by a resolution in the shareholders’ meeting or
could be capitalized by a resolution in the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in-capital and all legal
earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of theCompany in accordance with Japanese laws and regulations.
Earnings per share is computed based on the weighted average number of shares of common stock outstanding during each period. Cashdividends per share represent the cash dividends declared applicable to the respective year. Effective October 1, 2017, the Company consolidated
every 10 shares of its common stock into 1 share.

10. Liability for Severance and Retirement Benefits
The Group has system of funded and unfunded severance and retirement benefits, and defined contribution pension plans.
Severance and retirement benefits (all funded) pay out lump-sum payment or annual pension based on salary and length of service.
Part of funded severance and retirement benefits is entrusted.
Lump-sum payment (part of which becomes funded as a result of benefit trust although the system is unfunded) is paid out based on salary andlength of service as retirement benefits.
Some of the domestic Subsidiaries have adopted a “simpler method” to calculate liability for severance and retirement benefits for employees.

48,565
2,710
302
416
(3,035)
166
563
49,687¥ii) Movements of pension assets:¥

Net defined benefit assets / liabilities recorded in the
consolidated balance sheets
Defined benefit liabilities
Defined benefit assets
Net defined benefit assets / liabilities recorded in the
consolidated balance sheets

14

2019

Japanese Yen (millions)

¥

¥

2019
¥

12,371¥

12,371v) Remeasurements of defined benefit plans(before deducted tax effects):
Prior service costs
Actuarial differences
Others
Total

Unrecognized prior service costs
Unrecognized actuarial differences
Others
Total

2018
2,710
302
(17)
2,684
(1)
(504)
5,174

¥

U.S.Dollars (thousands)

¥

2019
2,713
353
(19)
4,773
(127)
7,693

¥

Japanese Yen (millions)

2019
¥

¥

U.S.Dollars (thousands)

2019
108
5,646
(193)
5,561

¥

Japanese Yen (millions)

2019
¥

¥

vii) The major categories of pension assets:$¥

U.S.Dollars (thousands)

2019
(120)
1,681
574
2,135

¥

72
(11,380)(3,892)(15,200)

$

2018
(128)
2,943
1,006
3,821

24,4172,721(153)
24,182(9)(4,541)
46,617$2018
8(1,263)(432)(1,687)¥$$(1,153)
26,516
9,064
34,427$

Percentage of composition

Bonds
Securities
Cash and deposits
Others
Total

2018
4%
73%
18%
5%
100%

viii) The principal actuarial assumptions at reporting
date are summarized below:
Discount rate
Expected rate of return on pension plan assets
Expected rate of pay raises

3%
76%
17%
4%
100%

2019

2018

0.0% - 0.9%
Not applicablePrimarily 1.7% - 3.6%

0.0% - 1.0%
Not applicablePrimarily 2.0% - 3.8%

To determine the expected rate of return on pension plan assets, allocation of pension assets expected in present and future, and long-term rateof return on portfolio assets expected in present and future are considered.

(c) Defined contribution pension plan
The contribution paid to the defined contribution pension plan is summarized below:
Japanese Yen (millions)2019
Contribution paid to the defined contribution pension plan¥

U.S.Dollars (thousands)

2018
166

¥

2019
159

$

1,496

U.S.Dollars (thousands)

201941,336(41,867)

$

6,698

6,698

380,052(336,210)
67,619$12,274(5,576)¥377,214153(29,534)657(12,037)(243)
336,210$

7,229

13,104
(733)
¥

$

2018
42,182(37,316)
7,505

¥

$

2019
41,95519
1,559
204(1,848)(22)
41,867¥437,562
24,417
2,721
3,748(27,345)
1,496
5,072
447,671

U.S.Dollars (thousands)

Japanese Yen (millions)

¥

$

2018
41,86717(3,278)73(1,336)(27)
37,316¥iii) Reconciliation of projected retirement benefit
obligation and net defined benefit assets / liabilities
recorded in the consolidated balance sheets:
Retirement benefit obligation (funded non-contributory)
Less fair value of pension assets
Retirement benefit obligation (Unfunded termination andretirement allowance plan)

U.S.Dollars (thousands)

48,035
2,713
353
719
(2,845)(253)(157)
48,565¥2019
Balance at beginning of year
Expected return on pension assets
Actuarial differences on pension assets
Contribution to pension plans
Benefits paid
OthersBalance at end of year

¥

2019

(b) Breakdown of information concerning severance and retirement benefitsi) Movements of severance andJapanese Yen (millions)retirement benefit obligation:
2019
2018
¥

2019
Current service costs
Interest costs
Expected return on pension assets
Amortization of actuarial differences
Amortization of prior service costs
OthersSeverance and retirement benefit expensesvi) Unrecognized actuarial differences(before deducted tax effects):(a) Overview of adopting severance and retirement benefits plans

Balance at beginning of year
Current service costs
Interest costs
Actuarial differences on pension plan obligation
Benefits paid
Change of scope of consolidation
OthersBalance at end of year

Japanese Yen (millions)

111,461
118,065(6,604)$111,46115

11. Stock options

12. Income Taxes(a) The stock options outstanding at March 31, 2019 are as follows:

The Company and the domestic Subsidiaries are subject to a number of income taxes, which, in the aggregate, indicate a statutory tax rate inJapan of approximately 30.8% for the year ended March 31, 2019 and 2018.
The following table summarizes the significant differences between the statutory tax rate and the Group’s effective tax rate for financial statement
purposes for the year ended March 31, 2018:

FY2015 Stock option

FY2014 Stock option

Directors of MES: 9(including executive officers additional post)
Executive officers of MES: 13(excluding directors additional post)
Deputy directors of MES: 17

Directors of MES: 14
Deputy directors of MES: 21

Class and number of shares
Grant dateCommon stock 49,700 shares
August 21, 2015

Common stock 36,600 shares
August 22, 2014

Vesting conditions

It continues in the position of Director, Executive
officer or Deputy director until (June 30, 2016 or
March 31, 2016) on data of vested after (August 21,2015) on date of grant.

It continues in the position of Director or Deputy
director until (June 30, 2015 or March 31, 2015) ondata of vested after (August 22, 2014) on date of
grant.

(Directors of MES)
From July 1, 2015 to June 30, 2016
(Executive officers of MES)
From April 1, 2015 to March 31, 2016
(Deputy directors of MES)
From April 1, 2015 to March 31, 2016
From August 22, 2015 to August 21, 2045

(Directors of MES)
From July 1, 2014 to June 30, 2015
(Deputy directors of MES) (continuously - appointed)
From July 1, 2014 to March 31, 2015
(Deputy directors of MES) (newly - appointed)
From April 1, 2014 to March 31, 2015
From August 23, 2014 to August 22, 2044

Persons granted

Service period

Exercise period

2018
Statutory tax rate
Valuation allowance
Revaluation of land
Non-deductible expenses for tax purposes
Amortization of goodwill
Taxation on per capita basis
Equity in earnings of unconsolidated subsidiaries and affiliates accounted for using equity method
Income of foreign subsidiaries taxed at lower than Japanese normal rate
Non-taxable dividend income
Increase of deferred tax assets, net of liabilities at fiscal year-end by the change of tax rate
Corporate income taxes, etc. paid in past fiscal years
Others
Effective tax rate

30.8%
166.6
5.8
1.7
3.3
1.4
(14.7)(30.8)
1.4
1.6(18.5)(0.0)
148.6%(note) Such information for the year ended March 31, 2019 is not presented, because loss before income taxes was recorded.
FY2013 Stock option
Persons granted
Class and number of shares
Grant dateSignificant components of deferred tax assets and liabilities as of March 31, 2019 and 2018 were as follows:

Directors of MES: 14
Deputy directors of MES: 19
Common stock 62,400 shares
August 23, 2013

Japanese Yen (millions)

2019

Vesting conditions

It continues in the position of Director or Deputy
director until (June 30, 2014) on data of vested after(August 23, 2013) on data of grant.

Service period
Exercise period

From July 1, 2013 to June 30, 2014
From August 24, 2013 to August 23, 2043

(note) Effective October 1, 2017, the Company consolidated every 10 shares of its common stock into 1 share. The number of shares has been
converted into those after the share consolidation.

(b) The numbers of and changes in stock options during the year ended March 31, 2019 are as follows:
FY2015 Stock option
Non-vested:
Outstanding at March 31, 2018
GrantedForfeited
VestedOutstanding of non-vested at March 31, 2019
Vested:Outstanding at March 31, 2018
VestedExercised
Forfeited
Outstanding of non-vested at March 31, 2019
Exercise price - Yen (U.S. Dollars)
Average share price at exercise - Yen (U.S. Dollars)
Fair value price at grant date - Yen (U.S. Dollars)¥¥¥

FY2014 Stock option

FY2013 Stock option

-

-

-

48,5001,500
47,000
1 ($0.009)
1,350 ($12.163)
1,690 ($15.227)

36,4002,000
34,400
1 ($0.009)
1,404 ($12.650)
1,910 ($17.209)

45,4003,300
42,100
1 ($0.009)
1,297 ($11.686)
1,440 ($12.974)

¥
¥
¥

¥
¥
¥

(note) Effective October 1, 2017, the Company consolidated every 10 shares of its common stock into 1 share. The number of shares has been
converted into those after the share consolidation.

(c) Calculation method for the number of rights vested
Only actual forfeited number of the vested stock option is used for calculation for the number of rights vested, since it is difficult to reasonably
estimate the number of options that will forfeited in the future.

Deferred tax assets:
Net defined benefit liabilities
Elimination of intercompany profit of fixed assets
Tax loss carry forward
Losses on revaluation of inventories
Accrued expenses
Provision for construction warranties
Allowance for doubtful accounts
Provision for losses on construction contracts
Loss on impairment of non-current assets
Loss on revaluation of marketable and investment securities
Stock investment to subsidiaries and affiliates
OthersTotal deferred tax assets
Valuation allowance related to net tax loss carriedforward
Valuation allowance related to the total of future deductible amount, etc.
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Net unrealized holding gains on securities
Accelerated depreciation on non-current assets
Reserve for advanced depreciation of non-current assets
Gains on contribution of securities to trust
for employees’ retirement benefit
Percentage of completion
Undistributed earnings of foreign subsidiaries
Unrealized gain on assets and liabilities of consolidated subsidiaries
OthersTotal deferred tax liabilities
Net deferred tax assets

¥

2018

11,662
2,203
28,121
345
5,813
901
481
18,594
8,757
270
15,8779,365
102,389(27,924)(52,494)(80,418)
21,971¥

U.S.Dollars (thousands)

¥

2019

9,520
3,184
22,015
255
6,135
2,647
1,246
3,165
7,849
413
16,225
15,57488,228(57,222)31,006$

105,073
19,849253,365
3,108
52,3748,118
4,334
167,528
78,8992,433
143,049
84,377922,507(251,590)(472,962)(724,552)
197,955(2,899)(464)(2,474)(4,747)(628)(2,904)(26,119)(4,181)(22,290)(1,276)(1,288)(11,497)(2,083)(320)(47,789)(3,165)(60,470)

(810)
(267)
(48,132)(4,351)(63,127)(18,767)(2,883)(430,571)(28,516)(544,824)(38,499)¥(32,121)$(346,869)(note) Increase in valuation allowance of ¥23,196 million ($208,992 thousand) is mainly attributable to the allowance for the provision for losses on
construction contracts.
For the year ended March 31, 2019, the breakdown of tax loss carry forward and corresponding deferred tax assets by expiration date is asfollows:
Japanese Yen (millions)Tax loss carry forward (a)Valuation allowance
Deferred tax assets

16

Within 1 year

Over 1 year ~ Over 2 years ~ Over 3 years ~ Over 4 years~
within 2 years within 3 years within 4 years within 5 years

Over 5 years

Total

¥
¥
¥

¥
¥
¥

¥ 27,176¥ (27,132)¥
44¥ 28,121¥ (27,924)
¥
197

465
(465)
0

109
(90)
19

¥
¥
¥

140
(95)
45

¥
¥
¥

118
(74)
44

¥
¥
¥

113
(68)
45

17

15. Notes Matured on the Year-End Date that Falls on a Bank Holiday

US dollars (thousands)

Tax loss carry forward (a)Valuation allowance
Deferred tax assets

Within 1 year

Over 1 year ~ Over 2 years ~ Over 3 years ~ Over 4 years~
within 2 years within 3 years within 4 years within 5 years

Over 5 years

Total

$
$
$

$
$
$

$ 244,851$ (244,454)$
397$ 253,365$ (251,591)
$
1,774

4,190
(4,190)
0

982
(811)
171

$
$
$

1,261
(856)
405

$
$
$

1,063
(667)
396

$
$
$

1,018
(613)
405

Notes matured on the year-end date that falls on a bank holiday are accounted for as settled on their clearing date though it belongs to the next
fiscal year. As March 31, 2019 and 2018 were bank holidays, the notes matured on the year-end date were included in the year-end balance asfollows:
Japanese Yen (millions)

2019(a) Tax loss carry forward is calculated by multiplying the statutory tax rate.

Notes receivable
Notes payable

13. Business Combination(a) Transition to a holding company structure by means of an absorption-type company split
Following the approval at the Ordinary General Meeting of Shareholders held on June 28, 2017, the Company executed an absorption-typecompany split on April 1, 2018, with the Company as the splitting company and the Company’s three wholly owned subsidiaries as succeedingcompanies, and shifted to a holding company structure.
As of the same date, the Company also changed its trade name to Mitsui E&S Holdings Co., Ltd.
Transactions under common control
1) Summary of transactions
i. Business operations subject to the transaction
Ship and ocean business, Machinery and systems business, and Engineering business of the Company
ii. Date of business combination
April 1, 2018iii. Legal form of business combination
Absorption-type company split, with the Company as the splitting company and the Company’s three wholly owned subsidiaries as succeedingcompanies.
iv. Name of companies after business combination
The succeeding companies for each business, with their trade names being changed as of April 1, 2018, are as follows:
Ship and ocean business – Mitsui E&S Shipbuilding Co., Ltd.
(formerly, MES Ship Split Preparation Co., Ltd.)
Machinery and systems business – Mitsui E&S Machinery Co., Ltd.
(formerly, MES Machinery and Systems Split Preparation Co., Ltd.)Engineering business – Mitsui E&S Engineering Co., Ltd.
(formerly, MES Engineering Split Preparation Co., Ltd.)v. Other transaction summary
Business environment surrounding the Company is entering a period of major changes. In addition to fluctuations of crude oil prices,
slowdown of recovery speed of investment for large plants, exchange-rate fluctuations (risk of switching of the U.S. exchange policy), anddelay of recovery of demand in the market of commercial ships, there is a rapid catch-up by ship constructing competitors in emerging
countries such as China and South Korea including in technical aspects. On the other hand, opportunities of business expansion are increasingin the context of growing energy demand mainly in emerging countries and increasing tendency toward environmental efficiency and energy
conservation. Under this business environment, the Group decided to spin off each of the Company’s ship and ocean business, machinery &systems business, and engineering business into separate operating companies and shift to a holding company structure in order to accelerate
deepening of management of the Group.
Transitioning to a holding company structure will enable the Company to transfer authority and responsibility over business execution
to the spin-off operating companies and establish clear independence of business execution and management responsibility. Under thisarrangement, the operating companies will formulate and execute strategies quickly, adapt their strategies to changes in the businessenvironment flexibly, execute bold strategies such as M&A activities (or business partnerships), pursue a selection-and-concentration strategy,
and thereby further enhance their corporate value.
As a pure holding company, the Company will work to enhance collaboration between the Group companies and the spin-off operatingcompanies, whose independence of business execution has been strengthened, develop business plans and other business strategies so as tofoster an organic sense of unity among Group companies, concentrate corporate resources on business domains that the Company identifies
as growth areas, and thus enhance the corporate value of the Group as a whole.
2) Summary of accounting applied
The transaction was accounted for as transactions under common control in accordance with “Accounting Standard for Business Combinations”(ASBJ Statement No. 21, September 13, 2013) and “Implementation Guidance on Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures” (ASBJ Guidance No. 10, September 13, 2013).

¥¥

U.S.Dollars (thousands)

2018
511
107

¥
¥

2019
430
66

$
$

4,604
964

16. Loss on Impairment of non-current assets
The Group adopted the accounting standard for impairment of non-current assets. The non-current assets are grouped by each segment. Idle noncurrent assets are grouped individually. The book value of the non-current assets is reduced to the collectable amount.
The loss on impairment of non-current assets for the years ended March 31, 2019 and 2018 were comprised of the following.

2019
Location
Major use
Asset category
AmountReason: Oita City, Oita Prefecture etc.
: Idle assets: Land: ¥ 28 million ($ 252 thousands): Decline in market value

Location
Major use
Asset category
AmountReason: Ichihara City, Chiba Prefecture etc.
: Business assets: Land, Building etc.
: ¥ 5,833 million ($ 52,554 thousands): Deterioration of business environment

Location
Major use
Asset category
AmountReason: Akishima City, Tokyo: Assets to be disposed: Building etc.
: ¥ 195 million ($ 1,757 thousands): Determination of disposal

Location
Major use
Asset category
AmountReason: Germany:: Goodwill: ¥ 959 million ($ 8,641 thousands): Decline in MES Germany Beteiligungs GmbH’s expected income

2018
Location
Major use
Asset category
AmountReason: Etajima City, Hiroshima Prefecture.
: Idle assets: Land: ¥ 0 million: Decline in market value

Location
Major use
Asset category
AmountReason: Takamatsu City, Kagawa Prefecture etc.
: Business assets: Land, Building, Machinery and Equipment etc.
: ¥ 3,672 million: Decline in market value and deterioration of business environment

14. Contingent Liabilities
Contingent liabilities of the Group as of March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)

2019
Guarantees of bank loans and other indebtedness

18¥

U.S.Dollars (thousands)

2018
32,240¥2019
65,659$290,47719

17. Comprehensive Income
Each component of other comprehensive income for the years ended of March 31, 2019 and 2018 were the following:
Japanese Yen (millions)2019
Net unrealized holding gains (losses) on securities:
Amount of generation at this fiscal term
Amount of rearrangement adjustment
Before adjusting the tax effectTax effectNet unrealized holding losses on securities
Unrealized gains (losses) on hedging derivatives:
Amount of generation at this fiscal term
Amount of rearrangement adjustment
Before adjusting the tax effectTax effectUnrealized losses on hedging derivatives
Foreign currency translation adjustments:
Amount of generation at this fiscal term
Amount of rearrangement adjustment
Before adjusting the tax effectTax effectForeign currency translation adjustments
Remeasurements of defined benefit plans:
Amount of generation at this fiscal term
Amount of rearrangement adjustment
Before adjusting the tax effectTax effectRemeasurements of defined benefit plans
Share of other comprehensive income of affiliates accounted for using equity method:Amount of generation at this fiscal term
Amount of rearrangement adjustment

¥

Total

2018

(4,611)(1,529)(6,140)1,853(4,287)

Share of other comprehensive income of affiliates accounted for using equity method¥

U.S.Dollars (thousands)

¥

2019

199
(3,876)(3,677)1,081(2,596)$(41,544)(13,776)(55,320)
16,695(38,625)(1,966)556(1,410)88(1,322)(1,619)(63)(1,682)435(1,247)(17,713)
5,009(12,704)
793(11,911)(5,776)(34)(5,810)3(5,807)

1,493
(249)
1,244
(202)
1,042

(52,041)(306)(52,347)27(52,320)(3,699)2,012(1,687)362(1,325)

916
4,645
5,561
(1,740)3,821(33,328)
18,128(15,200)
3,262(11,938)

(269)
862
593
(12,148)(2,271)
1,111(1,160)(140)(2,423)
7,766
5,343(109,451)¥$

18. Leases

2) Substances and risks of financial instruments
Trade receivables are exposed to credit risks of customers. Trade receivables in foreign currency, which the Company and certain Subsidiaries
receive from foreign operations, are exposed to currency fluctuation risks. Forward foreign exchange contracts are applied to these hedged
items in principle. Investment securities, mainly of companies with business relationships, are exposed to market fluctuation risks. Short-termand long-term loans for operating funds and capital expenditures of SPC’s, which are established for charter project of FPSO or for generating
electricity, are exposed to credit risks of customers.
Almost all of the trade payables are due within one year. Foreign currency trade payables for overseas procurement are exposed to currency
fluctuation risks, but those trade payables are controlled not to exceed the balance of trade receivables in the same foreign currencies.
Short-term borrowings are mainly for the purpose of funding commercial transactions. Long-term borrowings and bonds are mainly for the
purpose of funding capital investments. Although the portions of those debts with floating interest rates are exposed to interest rate fluctuation
risks, interest rate swap contracts are applied to hedge the risks.
Derivative transactions are the above mentioned forward foreign exchange contracts, as well as interest rate swap contracts. They are for the
purpose of hedging currency fluctuation risks and rising interest rate risks.
As to details on hedging instruments, hedged items, hedging policy and hedge effectiveness testing, please refer to “1. Significant Accounting
and Reporting Policies (e) Derivative Transaction and Hedge Accounting.”
3) Risk management in financial instruments
i. Management of credit risks (Risks for breach of contracts)
The Group monitors due dates and balances of trade receivables and regularly investigates the credit standings of main customers for early
detection and reduction of default risks according to internal regulation. Certain Subsidiaries reduce their balance of loan receivables by
arranging project finance or through cooperation with business partners such as general trading companies.
As to derivative transactions, credit risks are minimized by dealing solely with top-ranked financial institutions.
ii. Management of market risks (Exchange rate or interest rate fluctuation risks)
The Company and certain Subsidiaries utilize forward foreign exchange contracts, interest rate swap contracts, and interest rate and currency
swap contracts. Forward foreign exchange contracts are for the purpose of hedging currency fluctuation risks arising from foreign currency
receivables and payables in principle, and the others are utilized for the purpose of hedging interest rate fluctuation risks arising from shortterm and long-term borrowings and bonds.
Holding position of investment securities are continuously reviewed by researching fair market value and financial status of importantcustomers regularly and taking into account of market condition and relationship with customers.
Execution and management of derivative transactions are based on each company’s internal regulation restricting scope of authority.
As to derivative transactions, the Group utilizes them to offset risks within the range of trade demand.
iii. Management of liquidity risks of raising funds (Default risks)
The Finance & Accounting department of the Group makes and updates finance plans, and maintains a certain level of liquidity on hand tominimize liquidity risks.
4) Supplementary explanation about fair value of financial instruments
Fair value of financial instruments includes not only fair market value based on market price but also reasonably estimated value if market
price is not available. Reasonably estimated fair value may fluctuate because it depends on an estimation process which is based on certain
preconditions.
The contract amounts for derivatives stated in the following “(b) Articles concerning fair value of financial instruments,” do not indicate themarket risks of derivatives.

(a) Lessee(b) Articles concerning fair value of financial instrumentsi) Unexpired lease payments of operating lease transactions as of March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)2019
Due within one year
Due after one year
Total

¥

2018
1,900
4,277
6,177

¥

U.S.Dollars (thousands)

¥

2019
1,908
6,032
7,940

¥

$

17,11938,53555,654$(b) Lessor

Consolidated balance sheet amounts, fair value of financial instruments and the differences between them for the fiscal years ended March 31,
2019 and 2018 were as follows. Financial instruments in which the fair value is considered to be extremely difficult to recognize are not included in
the list below.

2019(1) Cash and time deposits(2) Trade receivables
Less allowance for doubtful accounts *1¥i) Unexpired lease receivables of operating lease transactions as of March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)2019
Due within one year
Due after one year
Total

¥
¥

U.S.Dollars (thousands)

2018
1,229
6,804
8,033

¥
¥

2019
1,315
8,027
9,342

$
$

11,07361,30372,376

19. Financial Instruments(a) Articles concerning status of financial instruments
1) Policies for financial instruments
The Group restricts the fund management to short-term financial instruments. The Group transfers funds to each other through an intercompany cash management systems (CMS).
Regarding the funding, the Group raises the short-term working capital through bank loans and the issuance of commercial paper (CP), andraises the long term capital investment through bank loans and the issuance of bonds. Derivative financial instruments are utilized to hedge therisks described hereinafter and not for speculative transactions as a matter of policy.

20(3) Short-term loans(4) Investment securities
Available-for-sale securities(5) Long-term loans
Less allowance for doubtful accounts *1
Total assets¥(1) Trade payables(2) Short-term borrowings(3) Current portion of long-term borrowings(4) Current portion of bonds(5) Accrued income taxes(6) Bonds(7) Long-term borrowings
Total liabilities¥

Derivative transactions *2
i. Derivative transactions for which hedge accounting has not been appliedii. Derivative transactions for which hedge accounting has been applied
Total derivative transactions¥¥¥

Book value
100,857
225,765(1,005)
224,760
41,03920,365
46,170(426)
45,744
432,765
190,956
3,535
39,062
10,00011,84640,000112,020
407,419

2,462
(278)
2,184

Japanese Yen (millions)
Fair value¥
100,857

¥
¥

¥

¥
¥

Difference¥-

224,760
41,0390-

20,365-45,958432,979
190,956
3,535
39,10010,011
11,846
40,135112,263
407,846

2,462
(278)
2,184

¥
¥

¥

¥
¥

214
214
38
11
135
243
427

-

21

2018
(1) Cash and time deposits(2) Trade receivables
Less allowance for doubtful accounts *1¥(3) Short-term loans(4) Investment securities
Available-for-sale securities(5) Long-term loans
Less allowance for doubtful accounts *1
Total assets¥(1) Trade payables(2) Short-term borrowings(3) Current portion of long-term borrowings(4) Current portion of bonds(5) Accrued income taxes(6) Bonds(7) Long-term borrowings
Total liabilities¥

Derivative transactions *2
i. Derivative transactions for which hedge accounting has not been appliedii. Derivative transactions for which hedge accounting has been applied
Total derivative transactions

¥

¥
¥

$

(3) Short-term loans(4) Investment securities
Available-for-sale securities(5) Long-term loans
Less allowance for doubtful accounts *1
Total assets$(1) Trade payables(2) Short-term borrowings(3) Current portion of long-term borrowings(4) Current portion of bonds(5) Accrued income taxes(6) Bonds(7) Long-term borrowings
Total liabilities$

Derivative transactions *2
i. Derivative transactions for which hedge accounting has not been appliedii. Derivative transactions for which hedge accounting has been applied
Total derivative transactions

31,581
41,380(394)
40,986455,362
180,787
11,70362,9259,010
50,000130,649
445,074

Japanese Yen (millions)
Fair value¥
93,698

¥

-

(1)
-

31,581-

180,787
11,70362,9699,010
50,222
130,783
445,474¥¥

241,869
47,227

41,691
456,066¥

Difference

705
704

¥
¥

44
222
134
400

¥

$

$
$

2,551
919
3,470

Book value
908,7032,034,102(9,055)2,025,047
369,754
183,485
415,983(3,838)412,1453,899,134
1,720,479
31,850351,942
90,098
106,730
360,393
1,009,280
3,670,772

22,182(2,505)
19,677

¥

2,551
919
3,470

¥

U.S. Dollars (thousands)
Fair value$
908,703

$
$

$

¥

-

¥

Difference$-

2,025,047
369,7540-

183,485-

414,073
3,901,062

1,928
1,928

1,720,479
31,850352,284
90,197
106,730
361,609
1,011,470
3,674,619$$

22,182(2,505)
19,677

$
$

$

$
$

342
99
1,216
2,190
3,847

-

*1 Allowance for doubtful accounts is deducted from each account.
*2 Net credit or debt arising from derivative transactions is indicated by the offset amount and which is indicated as ( ) in case of the offset amount is debt.
(note 1) Articles concerning calculation method of fair value, marketable securities and derivative transactions.
Assets(1) Cash and time deposits, (3) Short-term loans
Fair value of these accounts is stated at the book value because these accounts are settled in the short term, so they are considered to be close
to the balance sheet amounts.
(2) Trade receivables
Fair value of these accounts is stated at the present value discounted over the maturity term of each receivable divided into certain classified term.
(4) Investment securities
Fair value of these accounts is based on available market price.
(Please see 2. Marketable Securities and Investment Securities)(5) Long-term loans
Fair value of these accounts is stated at the present value using future cash flows discounted by the premium added rate on the appropriate
index like yield on government bonds.

22

Liabilities(1) Trade payables, (5) Accrued income taxes
Fair value of these accounts is stated at book value because these accounts are settled in the short term, so they are considered to be close to
the balance sheet amounts.
(2) Short-term borrowings, (3) Current portion of long-term borrowings, (7) Long-term borrowings
Fair value of borrowings at fixed interest rates is calculated using the total amount of the principal and interest discounted by the interest rateon condition that the borrowing is newly executed at the date of fair value evaluation.
Fair value of borrowings at variable interest rates is stated at balance sheet amounts because variable interest rates reflects the latest market
conditions and the Company’s credit standings is considered to be almost same as when funds were borrowed, so fair value is considered to beclose to the balance sheet amounts.
Some borrowings at variable interest rates are subjected to exceptional treatment of interest swaps or batch treatment of interest rate andcurrency swaps that fulfill special treatment requirements. Those fair values are calculated using the total amount of the principal and interest
as accounted for as a single item with those swaps, discounted by the reasonably estimated interest rates which would be applied if a similarborrowing were executed.
(4) Current portion of bonds, (6) Bonds
These fair values consist of both the fair value based on fair market value and the present value using the total of the principal and interest
discounted by a risk-free interest rate over the remaining term of each bond.
Derivative transactions
Please refer to “20. Derivative Transactions.”(note 2) Financial instruments in which the fair value is considered to be extremely difficult to recognize are as follows.
Japanese Yen (millions)Book value

2019(1) Cash and time deposits(2) Trade receivables
Less allowance for doubtful accounts *1

Book value
93,698
243,768(1,898)
241,870
47,2272019(1) Unlisted equity securities(2) Trust property
Total

¥

2018
62,636
211
62,847¥

U.S.Dollars (thousands)
Book value¥

2019
59,684207
59,891¥$

564,339
1,901
566,240$

As to these financial instruments, there’s no available fair market price and it is considered to cost a great deal to estimate future cash flows. So
these financial instruments are not included in investment securities because it is considered to be extremely difficult to recognize fair value.
(note 3) The expected redemption amount of monetary credit and securities with maturity after the fiscal years ended March 31, 2019 and 2018
were as follows.
Japanese Yen (millions)

2019
Cash and time deposits
Trade receivables
Short-term loans
Long-term loans
Total

Within one year¥¥

100,789
225,743
41,039367,571

Over one year but
within five years

Over five years but
within ten years

¥

¥

¥

22
4,111
4,133

¥

14,952
14,952

Over ten years¥¥

27,107
27,107

Japanese Yen (millions)2018
Cash and time deposits
Trade receivables
Short-term loans
Long-term loans
Total

Within one year¥¥

93,628242,753
47,227
4383,612Over one year but
within five years

Over five years but
within ten years

¥

¥

¥

1,009
6,223
7,232

¥

6
15,224
15,230Over ten years¥¥

19,92919,929U.S. Dollars (thousands)

2019
Cash and time deposits
Trade receivables
Short-term loans
Long-term loans
Total

Within one year$$

908,091
2,033,904
369,754
3,311,749

Over one year but
within five years

Over five years but
within ten years

$

$

$

198
37,04037,238$

134,715
134,715Over ten years$$

244,228
244,228

23

(note 4) The expected redemption amount of bonds and borrowings after the fiscal years ended March 31, 2019 and 2018 were as follows.

2019
Short-term borrowings
Bonds
Long-term borrowings
Total

Within one year
¥

¥

3,535
10,00039,062
52,597

Over one year but Over two years but Over three years but Over four years but
within two years
within three years
within four years
within five years¥

5,000
44,36749,367¥¥¥

15,00023,07338,073¥15,00019,57834,578¥¥5,000
10,987
15,987¥

Over five years¥¥

14,01514,015

Japanese Yen (millions)2018
Short-term borrowings
Bonds
Long-term borrowings
Total

Within one year¥¥

11,70362,92574,628Over one year but Over two years but Over three years but Over four years but
within two years
within three years
within four years
within five years¥

10,00036,115
46,115

¥

¥

¥

5,000
42,90847,908¥15,00021,762
36,762¥

U.S. Dollars (thousands)
Contract amount
Fair value
Total
Due after one year

2019

Japanese Yen (millions)¥

15,00019,39534,395¥

Over five years
¥

¥

5,000
10,46915,469Currency related derivatives
Market trades
Forward contracts
To buy U.S. Dollars
To sell U.S. Dollars
Off-market trades
Forward contracts
To buy U.S. Dollars
Japanese Yen
Swiss FrancTo sell U.S. Dollars
Currency swap
To receive Japanese Yen, pay U.S. Dollars

Unrealized gain (loss)$

11,94732,201

$

-

$

(45)
72

$

(45)
72

$

21,984550
270
214,344

$

27
-

$

216
18
18
2,063

$

216
18
18
2,063

$
$

161,393442,689$$

133,354
133,381$$

19,84022,182$$

19,84022,182

U.S. Dollars (thousands)

2019
Short-term borrowings
Bonds
Long-term borrowings
Total

Within one year$$

31,85090,098351,942473,890

Over one year but Over two years but Over three years but Over four years but
within two years
within three years
within four years
within five years$

45,049399,739444,788$$$

135,147
207,884
343,031$

135,148
176,394
311,542$$45,04998,991
144,040$

Over five years$$

126,272
126,272

20. Derivative Transactions
Derivative transactions of the Group for market value information as of March 31, 2019 and 2018 were as follows:(a) Derivative transactions for which hedge accounting has not been applied
Japanese Yen (millions)Contract amount
Fair value
Total
Due after one year

2019
Currency related derivatives
Market trades
Forward contracts
To buy U.S. Dollars
To sell U.S. Dollars
Off-market trades
Forward contracts
To buy U.S. Dollars
Japanese Yen
Swiss FrancTo sell U.S. Dollars
Currency swap
To receive Japanese Yen, pay U.S. Dollars

¥

24

¥

-

¥

(5)
8

¥

(5)
8

2019

¥

¥
¥

2,440
61
30
23,790¥17,91349,134

¥
¥

3
-

¥

14,80114,804

¥
¥

24
2
2
229

¥

2,202
2,462

¥
¥

Japanese Yen (millions)Contract amount
Fair value
Total
Due after one year

24
2
2
229

Japanese Yen (millions)Contract amount
Fair value
Total
Due after one year

Hedged items

Deferral hedge accounting
Currency related derivatives
Forward contracts
To buy U.S. Dollars
Euro
STG Pounds
Indonesian Rupiah
Singapore Dollars
Swiss FrancTo sell U.S. Dollars
STG Pounds

Trade payables¥

Trade receivables

Interest swap
Basic treatment:
To receive float, pay fix
Exceptional treatment * :To receive float, pay fix
Interest rate and currency swap
Batch treatment *2:
To receive float, pay fix
To receive U.S. Dollars, pay Japanese Yen
2

2018
Currency related derivatives
Market trades
Forward contracts
To buy U.S. Dollars
Off-market trades
Forward contracts
To buy U.S. Dollars
Swiss Franc
Chinese Yuan
To sell U.S. Dollars
Currency swap
To receive Japanese Yen, pay U.S. Dollars

1,326
3,574

Unrealized gain (loss)(b) Derivative transactions for which hedge accounting has been appliedLong-term borrowings

4,735
12,3582,162
21,8281,854
21¥

26,264
12,20881,430¥17,588

¥

2,555
843
1,141
2,326
539
-

¥

638
(126)
(73)
(421)
(39)
0

¥

1,062
6,744
15,210

¥

(223)
600
356

¥

14,648¥(634)

Long-term borrowings

37,97927,233-Long-term borrowings

3,929

1,964

-

¥

59,496¥

43,845

¥

(634)

2,202
2,462

Unrealized gain (loss)

¥

2

¥

-

¥

0

¥

0

¥

1,768
184
302
6,355

¥

-

¥

98
(3)
5
12

¥

98
(3)
5
12

¥
¥

21,02529,636¥¥

17,913
17,913

¥
¥

2,439
2,551

¥
¥

2,439
2,551

25

2018

Hedged items

Deferral hedge accounting
Currency related derivatives
Forward contracts
To buy U.S. Dollars
Euro
STG Pounds
Indonesian Rupiah
Singapore Dollars
To sell U.S. Dollars
STG Pounds
Mauritian Rupee
Alternative method *Currency related derivatives
Forward contracts
To sell U.S. Dollars

Trade payables

21. Segment Information

Japanese Yen (millions)Contract amount
Fair value
Due after one year
Total

¥

Trade receivables

7,777
7,764
3,354
13,322
568

¥

3,109
275
1,919
3,557
-

¥

(a) Overview of Reportable Segment

377
(39)
(99)
(679)
21

35,302
14,085
52

3,557
8,004
-

1,446
958
(0)

¥

920
83,144¥

20,421

¥

1,985

¥

20,601¥

17,661¥(1,066)

1

Interest swap
Basic treatment:
To receive float, pay fix
Exceptional treatment *2:
To receive float, pay fix
Interest rate and currency swap
Batch treatment *2:
To receive float, pay fix;
To receive U.S. Dollars, pay Japanese Yen

Loan receivables

Long-term borrowings
Long-term borrowings

45,45926,089-Long-term borrowings

5,893

3,929

-

¥

2019
Deferral hedge accounting
Currency related derivatives
Forward contracts
To buy U.S. Dollars
Euro
STG Pounds
Indonesian Rupiah
Singapore Dollars
Swiss FrancTo sell U.S. Dollars
STG Pounds$

Trade receivables$

Interest swap
Basic treatment:
To receive float, pay fix
Exceptional treatment *2:
To receive float, pay fix
Interest rate and currency swap
Batch treatment *2:
To receive float, pay fix;
To receive U.S. Dollars, pay Japanese Yen¥

47,679

¥(1,066)

U.S. Dollars (thousands)
Contract amount
Fair value
Total
Due after one year

Hedged items

Trade payables

71,953

42,662
111,344
19,479196,666
16,704
189
236,634
109,992
733,670$$

23,020
7,595
10,28020,957
4,856
9,569
60,762137,039

$

$

5,748
(1,135)(658)(3,793)(352)
0(2,009)
5,406
3,207

Reportable Segment is composed of the segment by products and services belonging to the operating companies and subject to be reviewed
periodically by the Board of Directors to decide the allocation of management resources and to evaluate the performance.
Under the Company (a pure holding company), the Group develops the operation with each operating company making strategies of its products
and services in both Japan and abroad comprehensively.
Reportable Segment is classified into 4 segments: Ship, Ocean Development, Machinery and Engineering. Main products and services of each
Reportable Segment are as follows.
Ship: commercial ships, naval ships, high speed passenger/vehicle ferries, offshore structures, underwater TV vehicles, steel structures
Ocean Development: FPSOs (floating production storage offloading vessels)
Machinery: marine and stationary diesel engines, marine equipment, gas engines, steam turbines, blowers, process compressors, gas turbines,
cogeneration system, regulating system, container cranes, industrial cranes, container terminal management systems, HWM manipulators,
equipment of radar sensing for underground and construction, bridges, port structures, induction heaters
Engineering: renewable energy power generation plants, power generation business, overseas civil works, chemical plants, waste treatment
plants, water treatment plants, resources recycling plants, PCB disposal plants(b) Calculation method used for Sales, Operating income and loss, Assets, Liabilities and other items for each
Reportable Segment
The accounting method used for Reportable Segment is almost same as the method stated in “Significant Accounting and Reporting Policies.”
Operating income and loss in Reportable Segment is based on the one in Consolidated Statements of Operations.
Inter segment profit and transfer are based on the market price.
Change in Calculation method used for Operating income and loss, Assets and other items for each Reportable Segment:
From the year ended March 31, 2019, accompanying the transition to a holding company structure, the basis of allocation of Corporate assets has
been revised.
As a result of this change, segment assets as of March 31, 2019 have increased by ¥126 million ($1,135 thousand) for “Machinery” and by ¥9,912
million ($89,305 thousand) for “Adjustments”, and have decreased by ¥7,215 million ($65,005 thousand) for “Ship” and by ¥2,823 million ($25,435
thousand) for “Others”, compared with the previous method. Also, segment operating income for the year ended March 31, 2019 has increasedby ¥30 million ($270 thousand) for “Others” and decreased by ¥71 million ($639 thousand) for “Machinery”, and segment operating loss has
improved by ¥40 million ($360 thousand) for “Ship”, compared with the previous method.
Segment information for the year ended March 31, 2018 has been restated to reflect the changes.

(c) Changes in Reportable Segments
From the year ended March 31, 2019, due to the change in administrative jurisdiction accompanying the transition to a holding company structure,
Burmeister & Wain Scandinavian Contractor A/S, which previously classified as “Engineering” and carries on Stationary diesel power generation
plants, was changed into “Others”.
Segment information for the year ended March 31, 2018 has been restated to reflect the changes.

(d) Information about Sales, Operating income and loss, Assets, Liabilities and other items for each Reportable Segment
Reportable Segment information for the years ended March 31, 2019 and 2018 were as follows:
Japanese Yen (millions)2019
Long-term borrowings$

158,465$

131,976$(5,712)Long-term borrowings

342,184

245,365-

Long-term borrowings

35,39917,695-$536,048$

395,036$(5,712)*1 When certain conditions are met, translation of foreign currency receivables is based on yen amount fixed by forward contract. The fair value isincluded in that of the hedged items (trade payables or loan receivables), which is shown in “19. Financial Instruments.”*2 As interest swap subject to exceptional treatment of interest swap and batch treatment of interest swap are accounted for as a single item with
underlying long-term borrowings, which are hedged items, their fair value is included in that of long-term borrowings.

Ocean
Machinery Engineering
Development

Sub total

96,8804,619
101,499¥ (8,112)¥ 109,078¥ 222,458
222,458¥ 14,895¥ 293,215¥ 186,935
9,102
196,037¥ 10,212¥ 179,678¥

68,973562
69,535¥ (79,671)¥ 38,854

¥

3,351

¥

2,084

¥

4,335

¥

¥

841

¥

258

¥

-

¥

¥

9,563

¥

1,790

¥

-

Loss on impairment of
non-current assets

¥

6,218

¥

-

¥

Increase in property,
plant and equipment andintangible assets

¥

2,621

¥

3,150

¥

Net Sales:
Outside customers
Inter segment
Total
Operating income (loss)
AssetsDepreciation andamortization
Amortization of goodwill
Year-end balance of
goodwill

Ship¥

OthersTotal¥ 575,246
14,283
589,529¥ (62,676)¥ 620,825

81,2589,147
90,405¥2,973¥ 260,473¥ 656,504
23,430679,934¥ (59,703)¥ 881,298¥(23,430)(23,430)¥¥ 117,803¥ 656,504
656,504¥ (59,703)¥ 999,101

728¥

10,498

¥

3,420

¥

13,918¥578¥

14,496

22

¥

1,121

¥

56

¥

1,177

¥

-

¥

1,177

¥

112

¥

11,465¥151¥

11,616¥-¥

11,616

29

¥

556

¥

6,803

¥

195

¥

6,998

¥

17

¥

7,015

6,674

¥

703

¥

13,148

¥

6,073

¥

19,221

¥

(366)

¥

18,855¥Adjustments Consolidated(note 1) “Others” is the segment which is not included in Reportable Segment and includes Stationary diesel power generation plants, Transport
equipment related business, Systems development, Real estate lease business and others.
(note 2) Adjustments are as follows:(1) Adjustments of ¥117,803 million recorded for assets include primarily comprised of surplus funds (cash and time deposits), long-term
investment (investment securities) and assets related to the administration divisions of the Company of ¥125,295 million that are notallocated to any Reportable Segment.
(2) Adjustments of ¥578 million recorded for depreciation and amortization include depreciation for property, plant and equipment, andamortization for intangible assets related to the administration divisions of ¥587 million.
26

27

(3) Adjustments of ¥17 million recorded for loss on impairment of non-current assets are the impairment loss for Corporate.
(4) Adjustments of ¥(366) million recorded for increase in property, plant and equipment and intangible assets result from thereclassification of a part of assets, which used to be classified as the assets related to the administration divisions, to Reportable
Segments. Regarding the revision of the basis of allocation of Corporate assets, please refer to “(b) Calculation method used for Sales,
Operating income and loss, Assets, Liabilities and other items for each Reportable Segment”.
(note 3) Operating income (loss) is adjusted with operating loss in Consolidated Statements of Operations.

Net Sales:
Outside customers
Inter segment
Total
Operating income (loss)
AssetsDepreciation andamortization
Amortization of goodwill
Year-end balance of
goodwill

Ship

Ocean
Machinery Engineering
Development

Sub total¥

Total

Adjustments Consolidated¥ 112,473
2,735
115,208¥ (15,229)¥ 131,056¥ 191,182
191,182¥ 11,321¥ 299,067¥ 181,734
7,355
189,089¥ 11,331¥ 169,687¥ 127,645
237
127,882¥ (15,775)¥ 58,933¥ 613,034
10,327623,361¥ (8,352)¥ 658,743

90,183987
91,170¥3,127¥ 253,394¥ 703,217
11,314
714,531¥ (5,225)¥ 912,137¥(11,314)(11,314)¥¥ 117,086¥ 703,217
703,217¥ (5,225)¥1,029,223

¥

3,849

¥

4,674

¥

3,927

¥

1,134

¥

13,584

¥

3,149

¥

16,733¥463¥

17,196

¥

882

¥

260

¥

31

¥

9

¥

1,182

¥

60

¥

1,242

¥

-

¥

1,242

¥

11,907

¥

2,069

¥

-

¥

88

¥

14,064¥

197¥

14,261¥-¥

14,261

¥

1,583

¥

-

¥

28

¥

1,984

¥

3,595

¥

77

¥

3,672

¥

0

¥

3,672

Increase in property,
plant and equipment andintangible assets

¥

2019

¥

Japanese Yen (millions)
BrazilAfricaOthers143,723¥
84,934¥ 147,553¥

Total
656,504Japan¥ 287,826¥

Brazil
90,970Japanese Yen (millions)Asia
Africa89,073¥81,702¥Others153,646

Japan$ 2,525,399

U.S. Dollars (thousands)
BrazilAfricaOthers$ 1,294,918$ 765,240$ 1,329,426

Japan¥ 280,294

Net sales

2018
Net sales

2019
Net sales

¥

¥

Total
703,217

Total$ 5,914,983*Sales amount is based on the place of customer and classified by country or geographical area.
2) Property, plant and equipment

2,548

¥

3,125

¥

5,090

¥

293

¥

11,056

¥

2,189

¥

13,245¥917¥

14,162(note 1) “Others” is the segment which is not included in Reportable Segment and includes Stationary diesel power generation plants, Transport
equipment related business, Systems development, Real estate lease business and others.
(note 2) Adjustments are as follows:(1) Adjustments of ¥117,086 million recorded for assets include primarily comprised of surplus funds (cash and time deposits), long-term
investment (investment securities) and assets related to the administration divisions of the Company of ¥118,649 million that are notallocated to any Reportable Segment.
(2) Adjustments of ¥463 million recorded for depreciation and amortization include depreciation for property, plant and equipment, andamortization for intangible assets related to the administration divisions of ¥463 million.
(3) Adjustments of ¥0 million recorded for loss on impairment of non-current assets are the impairment loss for Corporate.
(4) Adjustments of ¥917 million recorded for increase in property, plant and equipment and intangible assets include increase in assets
related to the administration divisions.
(note 3) Operating income (loss) is adjusted with operating loss in Consolidated Statements of Operations.

2019

Ocean
Machinery Engineering
Development

Sub total

OthersTotal$ 872,871
41,616914,487$ (73,087)$ 982,773$2,004,307
2,004,307$ 134,201$2,641,815$1,684,251
82,007
1,766,258$ 92,008$1,618,866$ 621,434
5,064
626,498$ (717,821)$ 350,068$5,182,863
128,687
5,311,550$ (564,699)$5,593,522$ 732,120
82,413
814,533$ 26,786$2,346,815$5,914,983
211,100
6,126,083$ (537,913)$7,940,337(211,100)(211,100)$$1,061,384$5,914,983
5,914,983$ (537,913)$9,001,721$

30,192$

18,776$39,058

$

6,559

$

94,585$30,814$ 125,399

$

5,207

$ 130,606

$

7,577

$

2,325

$

-

$

198

$

10,100$505$

10,605$-$$

86,161$

16,128

$

-

$

1,009

$ 103,298

$

1,360

$ 104,658$-$ 104,658

Loss on impairment of
non-current assets$

56,023

$

-

$

261

$

5,010

$

61,294

$

1,757

$

63,051$

153

Increase in property,
plant and equipment andintangible assets$

23,615$28,381$60,131$

6,334$ 118,461$

54,717$ 173,178$(3,298)Ship

2019
Property, plant and equipment

2018
Property, plant and equipment

Japanese Yen (millions)Japan
Others¥ 324,066¥
17,974¥

Total
342,040

Japanese Yen (millions)Japan
Others¥ 331,126¥
20,941¥

Total
352,067

U.S. Dollars (thousands)
Japan
OthersTotal$ 2,919,777$ 161,942$ 3,081,719

2019
Property, plant and equipment(f) Information by major customer
Information by major customer for both 2019 and 2018 is not described because there is no customer with the sales amount exceeds 10% of thesales amount in Consolidated Statements of Operations.

U.S. Dollars (thousands)
Adjustments Consolidated$$

10,60563,204$ 169,880(note 1) “Others” is the segment which is not included in Reportable Segment and includes Stationary diesel power generation plants, Transport
equipment related business, Systems development, Real estate lease business and others.
(note 2) Adjustments are as follows:(1) Adjustments of $1,061,384 thousand recorded for assets include primarily comprised of surplus funds (cash and time deposits), longterm investment (investment securities) and assets related to the administration divisions of the Company of $1,128,885 thousand thatare not allocated to any Reportable Segment.
(2) Adjustments of $5,207 thousand recorded for depreciation and amortization include depreciation for property, plant and equipment,
and amortization for intangible assets related to the administration divisions of $5,289 thousand.
(3) Adjustments of $153 thousand recorded for loss on impairment of non-current assets are the impairment loss for Corporate.
(4) Adjustments of $(3,298) thousand recorded for increase in property, plant and equipment and intangible assets result from thereclassification of a part of assets, which used to be classified as the assets related to the administration divisions, to Reportable
Segments. Regarding the revisioin of the basis of allocation of Corporate assets, please refer to “(b) Calculation method used for Sales,
Operating income and loss, Assets, Liabilities and other items for each Reportable Segment”.
(note 3) Operating income (loss) is adjusted with operating loss in Consolidated Statements of Operations.

28

Information by products and services is the same as Reportable Segment and the description is omitted.

1) SalesOthersLoss on impairment of
non-current assets

Net Sales:
Outside customers
Inter segment
Total
Operating income (loss)
AssetsDepreciation andamortization
Amortization of goodwill
Year-end balance of
goodwill(d) Information by products and services(e) Information by geographical area

Japanese Yen (millions)

2018[Related information][Information about gain on bargain purchase for each Reportable Segment]2019
Not applicable.

2018
Not applicable.

22. Investment and Rental Property(a) Articles concerning situation of investment and rental property
The Company and certain Subsidiaries own rental office building, commercial facilities, and houses (including land) in Tokyo, Okayama and otherareas. Idle land is also owned in Tokyo, Oita and other areas.

(b) Articles concerning fair value of investment and rental property
The book value of investment and rental properties stated in the consolidated balance sheets, the increase or decrease in this fiscal year, and fairvalue are shown below.
Japanese Yen (millions)Book value

2019
Usage
Facilities for lease
Idle assets (Land)
Total

Beginning balance as ofApril 1, 2018¥¥

99,13812,829111,967

Increase (Decrease)
¥
¥

6,111
(3,236)
2,875

Fair value

Ending balance as ofMarch 31, 2019

As of March 31, 2019

¥

¥

¥

105,249
9,593
114,842¥

104,611
20,943
125,554

29

U.S. Dollars (thousands)
Book value
Beginning balance as ofApril 1, 2018

Usage
Facilities for lease
Idle assets (Land)
Total

$

893,216
115,587
1,008,803$

Increase (Decrease)$

55,059(29,156)
25,903$

23. Related Party Transactions

Fair value

Ending balance as ofMarch 31, 2019

As of March 31, 2019

Transactions between the Subsidiaries and related parties for the fiscal years ended March 31, 2019 and 2018 were as follows:
Unconsolidated subsidiaries and affiliates of the Company

$

$

2019

948,275
86,431
1,034,706$$

942,526
188,693
1,131,219(note 1) Book value stated in the consolidated balance sheets is net of accumulated depreciation and accumulated impairment losses.
(note 2) The increase in rental properties in this fiscal year is mainly due to new acquisitions (¥4,461 million/ $40,193 thousand), and the decrease
in rental properties is mainly due to depreciation (¥1,369 million/ $12,334 thousand) and sales of rental properties (¥223 million/ $2,009
thousand).
In addition, reclassification amounts (¥3,213 million/ $28,949 thousand) are included both in the increase of rental properties and in thedecrease of idle assets.
(note 3) Fair value at the end of this fiscal year is mainly estimated based on the “Real estate appraising standard” with an adjustment using acertain indicator.

Category

2019

Japanese Yen (millions)

Facilities for lease
Idle assets (Land)
Total

Rental income¥

Rental expenses

7,566
7,566

¥

¥

4,247
4,247

¥

Others(Profit or Loss on sales of assets, etc.)

Difference
¥

3,319
3,319

¥

¥

1,075
(49)
1,026

¥

Transaction
amountAccount
title

Outstandingbalance at
the year-end

Time Charter The equipment
of FPSO
capital collection

36,204

Short-term
loans

-

The equipment
capital lending

71,453

Short-term
loans

40,098The equipment
capital collection

31,869Name ofcompany

Address

Capital(thousands)

Business

Voting shares

CARIOCA
MV27 B.V.

Amsterdam,
The Netherlands

EURO
169,420

Charter of
FPSO

Indirect
29.4%

TARTARUGA
Amsterdam,
MV29 B.V.
The Netherlands

USD
206,138

Charter of
FPSO

Indirect29.4%

Time Charterof FPSO

Businessrelationship

Affiliate

The profit and loss from investment and rental properties in this fiscal year are shown below.

Usage

Japanese Yen (millions)

SEPIA MV30
B.V.

Amsterdam,
The Netherlands

USD
100

Charter of
FPSO

Indirect29.4%

Time Charterof FPSO

Constructionof FPSO

47,129Receivable

22,381LIBRA MV31
B.V.

Amsterdam,
The Netherlands

USD
100

Charter of
FPSO

Indirect29.4%

Time Charterof FPSO

Constructionof FPSO

37,557

Receivable

25,483

Transaction
amountAccount
title

Outstandingbalance at
the year-end

2018
Category

Japanese Yen (millions)
Name ofcompany

Address

T.E.N. GHANA Amsterdam,
MV25 B.V.
The Netherlands

Capital(thousands)

Business

Voting sharesEURO
149,650

Charter of
FPSO

Indirect25.0%Time Charter The equipment
of FPSO
capital collection

33,535

Short-term
loans

-

Indirect29.4%

Time Charterof FPSO

Short-term
loans

37,612Charter of
FPSO

The equipment
capital lending

37,079EURO
169,420

The equipment
capital collection

31,088Constructionof FPSO

37,364

Receivable

29,156

Guarantee
Obligation

49,846--

Transaction
amountAccount
title

Outstandingbalance at
the year-end

Businessrelationship

U.S. Dollars (thousands)
Usage
Facilities for lease
Idle assets (Land)
Total

Rental income$

Rental expenses

68,16868,168$$38,26538,265$

Others(Profit or Loss on sales of assets, etc.)

Difference$

29,90329,903

$

$

9,685
(441)
9,244

$

(note 1) Rental expenses include depreciation, repair, insurance and taxes-and-dues. Rental income is recognized as revenue from operations, andrental expenses are recognized as operating expenses.
(note 2) Others include gain/loss on disposal of non-current assets, loss on impairment of non-current assets and taxes-and-dues, which arerecognized as other income (expenses).

CARIOCA
MV27 B.V.

Japanese Yen (millions)Book value

2018
Beginning balance as ofApril 1, 2017

Usage
Facilities for lease
Idle assets (Land)
Total

¥

98,387
17,257
115,644¥

Increase (Decrease)

Amsterdam,
TARTARUGAThe Netherlands
MV29 B.V.

¥

751(4,428)(3,677)¥

As of March 31, 2018¥¥

99,13812,829111,967¥¥

97,546
13,087
110,633(note 1) Book value stated in the consolidated balance sheets is net of accumulated depreciation and accumulated impairment losses.
(note 2) The increase in rental properties in this fiscal year is mainly due to new acquisitions (¥1,019 million), and the decrease in rental properties
is mainly due to sales of rental properties (¥3,242 million) and depreciation (¥1,296 million). In addition, reclassification amounts (¥4,325
million) are included both in the increase of rental properties and in the decrease of idle assets.
(note 3) Fair value at the end of this fiscal year is mainly estimated based on the “Real estate appraising standard” with an adjustment using acertain indicator.
The profit and loss from investment and rental properties in this fiscal year are shown below.
Japanese Yen (millions)
Usage
Facilities for lease
Idle assets (Land)
Total

Rental income
¥
¥

7,697
7,697

Rental expenses
¥
¥

4,719
4,719

Others(Profit or Loss on sales of assets, etc.)

Difference
¥
¥

2,978
2,978

¥
¥

USD
110

Charter of
FPSO

Indirect
29.4%

2019

Fair value

Ending balance as ofMarch 31, 2018

Amsterdam,
The Netherlands

Affiliate

Category

Contents oftransaction

Time Charterof FPSO

Contents oftransaction

U.S. Dollars (thousands)
Name ofcompany

Address

Capital(thousands)

Business

Voting shares

CARIOCA
MV27 B.V.

Amsterdam,
The Netherlands

EURO
169,420

Charter of
FPSO

Indirect29.4%

Time Charter The equipment
of FPSO
capital collection

326,192

Short-term
loans

-

Charter of
FPSO

Indirect29.4%

Time Charterof FPSO

Short-term
loans

361,276

USD
206,138

The equipment
capital lending

643,779TARTARUGA
Amsterdam,
MV29 B.V.
The Netherlands

The equipment
capital collection

287,134

Businessrelationship

Affiliate

Contents oftransaction

SEPIA MV30
B.V.

Amsterdam,
The Netherlands

USD
100

Charter of
FPSO

Indirect29.4%

Time Charterof FPSO

Constructionof FPSO

424,624

Receivable

201,649

LIBRA MV31
B.V.

Amsterdam,
The Netherlands

USD
100

Charter of
FPSO

Indirect29.4%

Time Charterof FPSO

Constructionof FPSO

338,382

Receivable229,597

1. The transaction amount does not include foreign currency exchange gains and losses, while outstanding balance at the year-end includes
foreign currency exchange gains and losses. The transaction amount and outstanding balance at the year-end do not include sales tax.
2. Policies for determining terms and conditions are as follows:(1) FPSO/FSO construction and operation trade are deliberately determined in consideration by each project plan.
(2) The equipment capital lending is deliberately determined in consideration by each project plan.
(3) Guarantee Obligation is deliberately determined in consideration by each project plan.

5,792
(21)
5,771

(note 1) Rental expenses include depreciation, repair, insurance and taxes-and-dues. Rental income is recognized as revenue from operations, andrental expenses are recognized as operating expenses.
(note 2) Others include gain/loss on disposal of non-current assets, loss on impairment of non-current assets and taxes-and-dues, which arerecognized as other income (expenses).

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