Consolidated Balance Sheet
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
31 March 2019

Millions of Yen
2018
2019

ASSETS
CURRENT ASSETS:
Cash and deposits (Notes 20 and 21)
Notes and accounts receivable (Note 21)
Short-term investments (Notes 5 and 21)
Land and buildings for sale
Inventories
Other
Allowance for doubtful accounts
Total current assets¥

PROPERTY, PLANT AND EQUIPMENT (Note 6):
Buildings and structures, net (Notes 7, 9 and 15)
Machinery, equipment and vehicles, net (Notes 9 and 18)
Land (Notes 7, 8, 9 and 15)
Construction in progress
Other, net (Note 9)
Total property, plant and equipment, net
INTANGIBLE ASSETSINVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5, 9 and 21)
Long-term loans receivable
Deferred tax assets (Notes 4 and 16)
Assets for retirement benefits (Note 12)
Other
Allowance for doubtful accounts
Total investments and other assets
TOTAL ASSETS (Notes 4 and 25)¥

2

21,38531,189809
112,710
1,813
12,440(267)
180,080¥

20,31731,19951
105,070
1,772
10,099(243)
168,266

Thousands of
U.S. Dollars(Note 1)
2019$

192,675
281,009
7,289
1,015,505
16,339112,083(2,407)
1,622,496

207,375
17,686
218,789
19,272
10,397473,522

193,388
16,672
217,866
19,065
8,632
455,624

1,868,419
159,352
1,971,254
173,645
93,6794,266,351

9,210

9,267

82,98045,362
539
9,904
1,072
12,331(272)
68,937
731,750

43,676
689
9,500
704
11,340(283)
65,627
698,786

408,703
4,860
89,233
9,666
111,106(2,457)621,1126,592,941¥$

Consolidated Balance Sheet (continued)
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
31 March 2019

Millions of Yen
2018
2019

LIABILITIES AND NET ASSETSCURRENT LIABILITIES:
Notes and accounts payable (Notes 9 and 21)
Short-term loans and current portion of long-term loans(Notes 9, 10, 11 and 21)
Current portion of bonds (Notes 10 and 21)
Income taxes payable (Note 16)
Advances received
Provision for employees' bonuses
Provision for unutilised gift tickets
Other
Total current liabilities¥

NONCURRENT LIABILITIES:
Bonds (Notes 10 and 21)
Long-term loans (Notes 9, 10, 21 and 22)
Long-term payables - other
Deferred tax liabilities (Note 4 and 16)
Deferred tax liabilities for land revaluation (Notes 8 and 16)
Accrued retirement benefits for directors and audit and supervisory board
members
Liability for retirement benefits (Note 12)
Other (Note 24)
Total noncurrent liabilities
Total liabilities

11,544¥

11,588

Thousands of
U.S. Dollars(Note 1)
2019$

104,01496,07680,202865,634

10,045
5,505
8,439
2,867
634
43,196
178,310

10,045
4,524
7,521
2,555
565
44,596
161,600

90,51149,60376,03925,8395,717
389,188
1,606,548

90,059138,164442
9,110
33,04780,125
146,026536
10,91533,137

811,420
1,244,838
3,982
82,082
297,751

297

345

2,680

18,36025,262
314,744
493,055

18,79023,749313,626475,226

165,426
227,606
2,835,789
4,442,338

51,466

51,466

463,70328,789134,559

28,787
117,384

259,390
1,212,354(21,626)(21,603)(194,849)

193,189

176,033

1,740,599

8,191
36,373(20)(2,597)
41,94675
3,484
238,695
731,750

10,78736,0886(2,540)44,341
44
3,139
223,559
698,786

73,803
327,722(189)(23,402)377,933
678
31,3912,150,603
6,592,941

COMMITMENTS AND CONTINGENT LIABILITIES (Note 23)
NET ASSETS (Note 13) :Common stock:
Authorised, 319,177,200 shares as at 31 March 2019 and 2018;
Issued, 113,182,703 shares as at 31 March 2019 and 2018
Capital surplus
Retained earnings
Treasury stock, at cost, 5,994,904 shares as at 31 March 2019,
and 5,989,571 shares as at 31 March 2018
Total shareholders' equity
Accumulated other comprehensive income:Net unrealised holding gain on securities
Revaluation reserve for land (Note 8)
Foreign currency translation adjustments
Retirement benefit liability adjustment (Note 12)
Total accumulated other comprehensive income, net
Stock acquisition rights
Non-controlling interests
Total net assets
TOTAL LIABILITIES AND NET ASSETS
See accompanying notes to consolidated financial statements.

3

¥

¥

$

Consolidated Statement of Income
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Year Ended 31 March 2019

REVENUES (Notes 7 and 25)
OPERATING EXPENSES:
Transportation, other service expenses and cost of sales (Note 14)
Selling, general and administrative expenses (Notes 7 and 13)
Total operating expenses
Operating income (Note 25)¥

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Loss on impairment of property, plant and equipment (Notes 7, 15 and 25)
Shares of loss of affiliates, net
Gain on contribution received for construction
Subsidies
Compensation income
Gain on sales of investment securities, net (Note 5)
Loss on sales or disposal of property, plant and equipment, net(Note 7)
Loss on deduction of contributions received for construction fromacquisition costs of property, plant and equipment
Gain on sale of shares of subsidiaries
Loss on valuation of shares of subsidiaries
Compensation for damage
Insurance income related to disaster
Loss on disaster
Other, net
Other (expenses) income, net
PROFIT BEFORE INCOME TAXESINCOME TAXES (Note 16):
Current
Deferred
Total income taxes
PROFITPROFIT ATTRIBUTABLE TO:
Non-controlling interests
Owners of parent¥

See accompanying notes to consolidated financial statements.

4

Millions of Yen
2018
2019
¥ 322,276
326,159

Thousands of
U.S. Dollars(Note 1)2019$
2,938,636

249,885
42,558292,443
33,715

248,780
42,037
290,817
31,4582,251,419
383,4422,634,862
303,774937(2,401)(1,333)
(85)
318
1,366
132
1,922

854
(2,561)
(61)
(59)
516
1,473
－
916

8,443
(21,633)(12,013)
(773)
2,866
12,3081,189
17,324

(869)

(711)

(7,832)(862)(1,042)(7,772)

－
－
－
210
(936)
(64)
(1,666)

3,179
(310)
(152)
－
－
185
2,225

－
－
－
1,896
(8,439)(586)(15,019)

32,04833,684

288,755

11,322(1,160)10,162
21,886

10,701(27)
10,67423,009102,014(10,454)
91,560
197,195

405
21,480¥297
22,712$

3,656
193,538

Consolidated Statement of Comprehensive Income
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Year Ended 31 March 2019

PROFIT
OTHER COMPREHENSIVE (LOSS) INCOME (Note 17):
Net unrealised holding loss on securities
Retirement benefit liability adjustment
Share of other comprehensive (loss) income of affiliates
accounted for using the equity method
Total other comprehensive (loss) income
COMPREHENSIVE INCOME
COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of parent
Non-controlling interests
See accompanying notes to consolidated financial statements.

5

¥

¥
¥

Millions of Yen
2018
2019
23,00921,886¥

Thousands of
U.S. Dollars(Note 1)2019
$ 197,195(2,627)
(56)

(456)
797

(23,669)
(509)

(27)

8

(245)

(2,710)19,17518,801
374

¥
¥

349
23,35923,039319$$(24,423)
172,771
169,3933,377

Consolidated Statement of Changes in Net Assets
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Year Ended 31 March 2019
Millions of Yen

BALANCE at 1 APRIL 2017
Cash dividends
Profit attributable to owners of parent
for the period
Reversal of revaluation reserve for land
Change in treasury shares of parent
arising from transactions with
non-controlling interests
Purchase of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders' equity
BALANCE at 1 APRIL 2018
Cash dividends
Profit attributable to owners of parent
for the period
Reversal of revaluation reserve for land
Change in scope of consolidation
Change in treasury shares of parent
arising from transactions with
non-controlling interests
Purchase of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders' equity
BALANCE at 31 MARCH 2019

Retirement
BenefitLiability
Adjustment¥(3,338)－

Total
Accumulated
Other
Comprehensive
Income, Net¥
43,509－Stock
Acquisition
Rights¥27－

Noncontrolling
Interests
¥
2,857
－

CommonStock¥51,466－

CapitalSurplus¥28,782－Retained
Earnings¥
98,392(3,215)

TreasuryStock¥ (21,580)－

Total Shareholders'Equity¥157,060(3,215)

Net Unrealised
Holding Gain on
Securities¥
11,266－

Revaluation
Reserve forLand¥
35,584－Foreign
Currency
Translation
Adjustments
¥
(2)
－

－

－

22,712－

22,712

－

－

－

－

－

－

－

22,712

－

－

(504)

－

(504)

－

－

－

－

－

－

－

(504)

－

5

－

－

5

－

－

－

－

－

－

－

5

－
－

－
(0)

－
－

(36)
13

(36)
12

－
－

－
－

－
－

－
－

－
－

－
－

－
－

(36)
12

Total
Net Assets
203,455(3,215)

－

－

－

－

－

(479)

504

8

797

831

16

282

1,130

51,466－28,787－

117,384(4,019)(21,603)－

176,033(4,019)10,787－36,088－6－(2,540)－44,341
－

44
－

3,139
－

223,559(4,019)－－21,480－21,480

－

－

－

－

－

－

－

21,480

－
－

－
－

(285)
(0)

－
－

(285)
(0)

－
－

－
－

－
－

－
－

－
－

－
－

－
－

(285)
(0)

－

2

－

－

2

－

－

－

－

－

－

－

2

－
－

－
0

－
－

(23)
0

(23)
0

－
－

－
－

－
－

－
－

－
－

－
－

－
－

(23)
0

－
¥

¥

51,466－¥28,789－¥134,559－¥(21,626)－¥(2,596)

193,189

¥

8,191

285
¥

36,373

(27)
¥

(20)

(56)
¥

(2,597)(2,394)¥41,946

30
¥

75

344
¥

3,484

(2,019)¥238,695

Thousands of U.S. Dollars (Note 1)

BALANCE at 1 APRIL 2018
Cash dividends
Profit attributable to owners of parent
for the period
Reversal of revaluation reserve for land
Change in scope of consolidation
Change in treasury shares of parent
arising from transactions with
non-controlling interests
Purchase of treasury stock
Disposal of treasury stock
Net changes in items other thanshareholders' equity
BALANCE at 31 MARCH 2019

Retirement
BenefitLiability
Adjustment$ (22,892)－

Total
Accumulated
Other
Comprehensive
Income, Net$
399,507－

Stock
Acquisition
Rights$403－

Noncontrolling
Interests$
28,286－Total
Net Assets$
2,014,230(36,216)

CommonStock$ 463,703－

CapitalSurplus$ 259,366－

Retained
Earnings$ 1,057,609(36,216)

TreasuryStock$ (194,647)－

Total Shareholders'Equity$ 1,586,032(36,216)

Net Unrealised
Holding Gain on
Securities$
97,193－

Revaluation
Reserve forLand$ 325,150－

Foreign
Currency
Translation
Adjustments
$
56
－

－

－

193,538－

193,538

－

－

－

－

－

－

－

193,538－－－－(2,571)(5)－－(2,571)
(5)

－
－

－
－

－
－

－
－

－
－

－
－

－
－

(2,571)
(5)

－

22

－

－

22

－

－

－

－

－

－

－

22

－
－

－
0

－
－

(207)
6

(207)
6

－
－

－
－

－
－

－
－

－
－

－
－

－
－

(207)
6

－
$

463,703

$

－

－

－

259,390$ 1,212,354$ (194,849)－$(23,390)

1,740,599$

See accompanying notes to consolidated financial statements.

6

73,803

2,571$

327,722

(245)
$

(189)

(509)
$

(23,402)(21,573)$

377,933

274
$

678

3,104
$

31,391(18,194)$

2,150,603

Consolidated Statement of Cash Flows
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Year Ended 31 March 2019

Millions of Yen
2018
2019
OPERATING ACTIVITIES:Profit before income taxes
Adjustments for:
Depreciation and amortisation
Loss on impairment of property, plant and equipment
Loss on sales or disposal of property, plant and equipment, net
Loss on deduction of contributions received for construction fromacquisition costs of property, plant and equipment
Gain on contribution received for construction
Loss on valuation of shares of subsidiaries
Gain on sales of shares of subsidiaries
Gain on sales of investment securities
Share of loss of affiliates, net
Interest and dividend income
Interest expense
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for employees' bonuses
Increase (decrease) in liability for retirement benefits
Increase in assets for retirement benefits
Decrease (increase) in trade receivables(Increase) decrease in inventories
Increase in trade payables
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities¥

INVESTING ACTIVITIES:
Decrease in time deposits, net
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Proceeds from contribution received for construction
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation (Note 20)
Proceeds from sales of shares of subsidiaries
resulting in change in scope of consolidation (Note 20)
Decrease in loans receivable
Other, net
Net cash used in investing activities
FINANCING ACTIVITIES:
Increase (decrease) in short-term loans, net
Proceeds from long-term loans
Repayments of long-term loans
Proceeds from issuance of bonds
Redemption of bonds
Cash dividends paid
Dividends paid to non-controlling interests
Purchase of treasury stock
Other, net
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly consolidated subsidiary
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 20)
See accompanying notes to consolidated financial statements.

7¥

32,048¥33,684

Thousands of
U.S. Dollars(Note 1)
2019$288,755

20,2281,333
358

19,512
61
677

182,253
12,013
3,230

862

1,042

7,772

(318)
－
－
(1,916)
85
(937)
2,401
12
312
104
(975)
406
(7,042)
97
1,169
48,232939(2,394)(10,303)36,473(516)
310(3,179)
(916)
59
(854)
2,561
(269)
(94)
(404)
(109)
(5,600)
8,159
1,039
3,223
58,388854(2,628)(12,175)
44,438(2,866)－－(17,268)773(8,443)
21,633
116
2,814
942
(8,792)
3,662(63,453)
882
10,538434,5648,460(21,577)(92,830)
328,6169(43,329)502
315(5,867)2,353

140(41,018)
8,637
140(5,251)
1,022

82(390,390)
4,531
2,841
(52,867)
21,202

－

490

－

－

2,826

－

37
(2,079)(48,059)

1,911(1,503)(32,603)334(18,740)(433,006)

2,400
44,923(39,310)
19,862(10,045)(4,012)(26)(23)(1,112)
12,655
1,069
20,3007
21,377(1,655)30,781(34,595)－(45)(3,218)(15)(36)(1,071)(9,858)
1,976
18,324－20,30021,630404,748(354,184)
178,958(90,511)(36,149)
(235)
(207)
(10,021)
114,026
9,636
182,906
66
192,609¥$

Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year Ended 31 March 2019
1.

BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements of Keihan Holdings Co., Ltd. (the “Company”) and its
consolidated subsidiaries (collectively, 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 andin conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards (“IFRS”).
Japanese yen figures less than one million yen are rounded down to the nearest million yen and U.S. dollar
figures less than one thousand dollars are rounded down to the nearest thousand dollars, except for per sharedata. As a result, the totals shown in the accompanying consolidated financial statements in Japanese yen
and U.S. dollars do not necessarily agree with the sums of the individual amounts.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been
made to the consolidated financial statements issued domestically in order to present them in a form which
is more familiar to readers outside Japan. In addition, the notes to the accompanying consolidated financial
statements include information which is not required under Japanese GAAP but is presented herein as
additional information.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts
are included solely for the convenience of readers outside Japan and have been made at the rate of ¥110.99
to $1, the approximate rate of exchange at 31 March 2019. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation - The accompanying consolidated financial statements include the accounts of theCompany and the significant companies which it controls directly or indirectly. Companies overwhich the Company exercises significant influence in terms of their operating and financial policies
have been included in the accompanying consolidated financial statements on an equity basis.
For the purpose of consolidation, all significant intercompany balances and transactions have been
eliminated in consolidation.
Certain subsidiaries are excluded from the scope of consolidation because the effect of their total
assets, operating revenue, profit or loss, and retained earnings (each amount of net profit or loss andretained earnings in proportion to the interest held by the Group) on the accompanying consolidated
financial statements is not significant individually or in the aggregate.
Investments in two affiliates are accounted for by the equity method for the years ended 31 March2018 and 2019.

8

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)a.

Consolidation (continued)
Investments in unconsolidated subsidiaries are not accounted for by the equity method but stated atcost, because the effect of their profit or loss and retained earnings (each amount in proportion to theinterest held by the Group) on the accompanying consolidated financial statements is not significant
individually or in the aggregate.
The fiscal year end of the consolidated subsidiaries is 31 March, which is same as that of the Company.

b.

Securities - Securities are classified into two categories: held-to-maturity debt securities or othersecurities. Held-to-maturity securities are stated at amortised cost, and amortisation for each period
through to the maturity date is determined on a straight-line basis. Marketable securities classified asother securities are stated at fair value determined primarily by the average market price for one monthprior to the year-end. Unrealised gains and losses on these securities are reported, net of applicable
income taxes, as “Net unrealised holding gain on securities” in a separate component of net assets
through the consolidated statement of comprehensive income. The cost of securities sold isdetermined primarily by the moving-average method. Non-marketable securities classified as othersecurities are stated at cost determined primarily by the moving-average method.

c.

Inventories - Inventories are stated at lower of cost or net selling value, determined by the following
methods.
Merchandise: Primarily by retail cost method
Land and buildings for sale: Specific identification method
Supplies: Primarily by moving-average methodd.

Property, Plant and Equipment (excluding Leased Assets) - Property, plant and equipment excluding
leased assets are stated at cost. Depreciation is determined primarily by the declining-balance method.
However, certain assets are depreciated using the straight-line method over the estimated useful livesof the respective assets.

e.

Intangible Assets (excluding Leased Assets) - Intangible assets excluding leased assets are amortisedusing the straight-line method. Software for internal use is amortised over its estimated useful life of
5 years.

f.

Leased Assets - Leased assets under finance lease transactions which do not transfer ownership to thelessee are capitalised and depreciated over the respective lease terms to a nil residual value by thestraight-line method. Finance lease transactions commencing on or before 31 March 2008 other thanthose in which the ownership of the leased assets is transferred to the lessee are accounted for in thesame manner as operating leases.

g.

Goodwill - Goodwill is amortised using the straight-line method over its estimated useful life.
Insignificant amounts of goodwill are charged to expense as incurred.

h.

Allowance for Doubtful Accounts - Allowance for doubtful accounts is provided at an amountcalculated based on the Company’s historical experience of bad debts on ordinary receivables and loan
receivables plus an additional estimate of probable specific bad debts from customers experiencing
financial difficulties.

9

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)i.

Provision for Employees’ Bonuses - Provision for employees’ bonuses is provided at an estimatedamount of bonuses to be paid to employees.

j.

Provision for Unutilised Gift Tickets
Unutilised gift tickets are credited to income after a certain period has passed from their respective
dates of issuance. Provision for unutilised gift tickets is provided at a reasonably estimated amountof future utilisation.

k.

Employees’ Retirement Benefits(1) Attribution method of retirement benefits over the service period
The assets and liability for retirement benefits are provided based on the amount of the projected
benefit obligation after deducting plan assets at fair value at the end of the year.
The retirement benefit obligation is attributed to each period by the straight-line method.
(2) Accounting for actuarial gains and losses and prior service costs
Prior service costs are amortised as incurred by the straight-line method over a period of primarily 15
years, which is within the estimated average remaining years of service of the eligible employees.
Actuarial gains and losses are amortised from the year following the year in which the gain or loss isrecognised, by the straight-line method over a period of primarily 15 years, which is within theestimated average remaining years of service of the eligible employees.

l.

Retirement Benefits for Directors and Audit and Supervisory Board Members - Certain consolidated
subsidiaries provide liability for retirement benefits for directors and audit and supervisory board
members based on the amount required at the balance sheet date in accordance with the internal
policies of such consolidated subsidiaries.

m. Income Taxes - Income taxes are calculated based on taxable income and charged to income on an
accrual basis. Certain temporary differences exist between taxable income and profit reported forfinancial reporting purposes which enter into the determination of taxable income in a different period.
n.

Significant Hedge Accounting - The Company and three consolidated subsidiaries adopt hedge
accounting. Under Japanese GAAP, interest rate swaps which meet certain conditions are accounted
for as if the interest rates of the swaps had originally been applied of the underlying debt (the “special
accounting treatment”).
(1) Method of accounting
For interest rate swap contracts that meet certain conditions, the special accounting treatment isapplied.
(2) Hedging instruments
Interest rate swaps(3) Hedged items
Interest on loans(4) Hedging policy
Interest rate swaps are used to mitigate the fluctuation risk of interest rates on loans, and the hedged
items are identified by individual contracts.

10

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)n.

Hedge Accounting (continued)(5) Assessment of hedge effectivenessHedge effectiveness is not assessed as the notional principal, contractual terms (interest rates and datesof receipt and payment of interest), and maturities of the interest rate swap transactions are almost
same as those of the respective hedged items, and thus, these transactions meet the criteria for
application of the special accounting treatment.

o.

Contributions for Construction - Three consolidated subsidiaries receive contributions forconstruction as part of construction cost from local authorities and others at railway track business.
Contributions received are deducted directly from the acquisition costs of the related assets at the timeof completion of construction of the railway business.
Gain on contributions received for construction is included in other income (expenses) and the amountdirectly deducted from the acquisition costs of the assets is recorded as loss on deduction ofcontributions received for construction from the acquisition costs of property, plant and equipment inother income (expenses) in the consolidated statement of income.

p.

Cash and Cash Equivalents - For the purpose of the consolidated statement of cash flows, cash andcash equivalents are composed of cash on hand, bank deposits available for withdrawal on demand,
deposits and short-term investments which are readily convertible to cash and subject to little risk ofany change in their value, and which were purchased with an original maturity of three months or less.

q.

Consumption Taxes - Consumption taxes, in general, are not included in income and expenses but
recorded at the net amount on the consolidated balance sheet.

3.

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

・ Accounting Standard and Implementation Guidance for Revenue Recognition(1) Summary
On 30 March 2018, the Accounting Standards Board of Japan (hereinafter referred to as the “ASBJ”)
issued “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29) and“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance
No.30). The International Accounting Standards Board (hereinafter referred to as the “IASB”) andthe Financial Accounting Standards Board (hereinafter referred to as the “FASB”) in the United States
co-developed comprehensive accounting standards for revenue recognition and issued “Revenue fromContracts with Customers” (issued as IFRS 15 by the IASB and Topic 606 by the FASB) in May 2014.
The ASBJ developed comprehensive accounting standards on revenue recognition and issued them inconjunction with the implementation guidance based on the fact that IFRS 15 is being applied fromfiscal years starting on or after 1 January 2018 and Topic 606 is being applied from fiscal years starting
after 15 December 2017.
As the basic policy in developing accounting standards for revenue recognition, the ASBJ defined theaccounting standard starting with incorporating the basic principle of IFRS 15 from a standpoint ofcomparability between financial statements, which is one benefit of ensuring consistency with IFRS
15. Furthermore, the ASBJ added alternative accounting treatment without impairing comparability
when there are matters to be considered related to accounting practices common in Japan.

11

3.

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE (continued)(2) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the
beginning of the fiscal year ending 31 March 2022.
(3) Effect of the adoption of accounting standard and implementation guidance
The Company is currently assessing the effect of the adoption of the accounting standard and theimplementation guidance on its consolidation financial statements.
4.

CHANGE IN PRESENTATION

・ Partial Amendments to Accounting Standard for Tax Effect Accounting
The Company and its consolidated subsidiaries have adopted “Partial Amendments to Accounting Standard
for Tax Effect Accounting” (ASBJ Statement No.28, 16 February 2018) (hereinafter, the Partial
Amendments”) from the beginning of the fiscal year ended 31 March 2019. As such, deferred tax assets
and deferred tax liabilities are included within investments and other assets and noncurrent liabilities,
respectively, and related income tax disclosures have been expanded.
As a result, in the consolidated balance sheet as of 31 March 2018, deferred tax assets in current assets
have decreased by ¥3,223 million, and deferred tax assets in investments and other assets have increasedby ¥2,802 million, and deferred tax liabilities in noncurrent liabilities have decreased by ¥420 million. Also,
as deferred tax assets and deferred tax liabilities under the same taxable entity are offset, total assets havedecreased by ¥420 million in comparison with the amount before the change.

12

5.

SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIES(1) Held-to-maturity securities
The following table summarises the carrying value and fair value of held-to-maturity securities as at
31 March 2019 and 2018.
Millions of Yen
2019
Carrying
value
Securities with fair value exceeding
carrying value:
National and municipal bonds
Corporate bonds
Total

¥
¥

176
1,400
1,577

Fair value
¥
¥

183
1,439
1,623

Difference
¥
¥

7
38
45

Millions of Yen
2018
Carrying
value
Securities with fair value exceeding
carrying value:
National and municipal bonds
Corporate bonds
Other
Total

¥
¥

227
1,400
200
1,828

Fair value
¥
¥

234
1,459
200
1,894

Difference
¥
¥

7
58
0
65

Thousands of U.S. Dollars
2019
Carrying
value
Fair value
Difference
Securities with fair value exceeding
carrying value:
National and municipal bonds
Corporate bonds
Total

$
$

1,591
12,618
14,210

13

$
$

1,656
12,966
14,623

$
$

64
348
412

5.

SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIES (continued)(2) Marketable securities classified as other securities
The following table summarises the carrying value and acquisition cost of marketable securities
classified as other securities as at 31 March 2019 and 2018.

Carrying
value
Securities with carrying value
exceeding acquisition cost:
Equity securities
Other
Sub total
Securities with carrying value notexceeding acquisition cost:
Equity securities
Debt securities
Sub total
Total

¥

¥

16,854
1,556
18,41060300
360
18,771

Carrying
value
Securities with carrying value
exceeding acquisition cost:
Equity securities
Other
Sub total
Securities with carrying value notexceeding acquisition cost:
Equity securities
Debt securities
Sub total
Total

¥

¥

20,961
1,603
22,56474300
374
22,938

14

Millions of Yen
2019
Acquisition
cost
¥

¥

5,625
1,209
6,835
69
300
369
7,204

Difference¥¥

Millions of Yen
2018
Acquisition
cost
¥

¥

6,053
1,209
7,263
79
300
379
7,642

11,229346
11,575(9)–(9)
11,566

Difference¥¥

14,907393
15,300(4)–(4)
15,295

5.

SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIES (continued)(2) Marketable securities classified as other securities (continued)
Thousands of U.S. Dollars
2019
Carrying
Acquisition
value
cost
Difference
Securities with carrying value
exceeding acquisition cost:
Equity securities
Other
Sub total
Securities with carrying value notexceeding acquisition cost:
Equity securities
Debt securities
Sub total
Total

$

$

151,856
14,022
165,878
544
2,702
3,247
169,126$$

50,683
10,90061,584
626
2,702
3,329
64,913$$

101,172
3,122
104,294(82)–(82)
104,212

Unlisted equity securities with a carrying value of ¥14,573 million ($131,302 thousand) and ¥8,907
million as at 31 March 2019 and 2018, respectively, are not included in the above tables because there
is no market price and the fair value is not readily determinable.
(3) The following table summarises other securities sold for the years ended 31 March 2019 and 2018.
Gain on sales are included in gain on sales of investment securities, net and loss on sales are included
in other , net in other income (expenses) in the consolidated statement of income, respectively.

Equity securities

Millions of Yen
2019
Proceeds
Gain on sale Loss on sale¥
2,353 ¥
1,922 ¥
6

Equity securities

Millions of Yen
2018
Proceeds
Gain on sale Loss on sale¥
1,022 ¥
916 ¥–Equity securities

Thousands of U.S. Dollars
2019
Proceeds
Gain on sale Loss on sale$
21,202 $17,324 $
55

15

5.

SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIES (continued)(4) Investments in unconsolidated subsidiaries and affiliates
Investments in unconsolidated subsidiaries and affiliates as at 31 March 2019 and 2018 consisted of
the following:

Investments in unconsolidated
subsidiaries and affiliates
6.

¥

Millions of Yen
2018
2019

Thousands of
U.S. Dollars
201911,249$¥10,052

101,354

PROPERTY, PLANT AND EQUIPMENT

Accumulated depreciation included in property, plant and equipment as at 31 March 2019 and 2018
amounted to ¥454,172 million ($4,092,009 thousand) and ¥444,658 million, respectively.
Accumulated contributions deducted from the acquisition costs of property, plant and equipment as at 31
March 2019 and 2018 amounted to ¥180,953 million ($1,630,361 thousand) and ¥181,199 million,
respectively.
7.

RENTAL PROPERTIESThe Company and certain consolidated subsidiaries own rental properties including office buildings andcommercial facilities in Osaka and other areas in Japan.
For the year ended 31 March 2019, rental income, net of related expenses, relevant to these properties
amounted to ¥10,640 million ($95,865 thousand) and loss on impairment of these properties was recognisedin the amount of ¥1,171 million ($10,551 thousand).
For the year ended 31 March 2018, rental income, net of related expenses, relevant to these properties
amounted to ¥9,967 million and net gain on sales of these properties amounted to ¥232 million.
Rental income is included in operating revenues and expenses are mainly included in operating expenses in
the consolidated statements of income. Net gain on sales and net loss on impairment of these properties areincluded in Loss on sales or disposal of property, plant and equipment, net and Loss on impairment ofproperty, plant and equipment, respectively, in other income (expenses) in the consolidated statement ofincome.

16

7.

RENTAL PROPERTIES (continued)

Movements in the carrying value during the years ended 31 March 2019 and 2018, and the fair value of therental properties as at 31 March 2019 and 2018 are as follows:

1 April 2018¥
158,763

Millions of Yen
2019
Carrying value
Net change
31 March 2019¥
(6,717)¥152,046

Fair value
31 March 2019¥
225,909

1 April 2017
162,652

Millions of Yen
2018
Carrying value
Net Change
31 March 2018¥
(3,889)¥158,763

Fair value
31 March 2018¥
218,788

1 April 2018$
1,430,429

Thousands of U.S. Dollars
2019
Carrying value
Net Change
31 March 2019$(60,522)$
1,369,907

Fair value
31 March 2019$
2,035,405¥

Notes: 1. Carrying value recognised in the consolidated balance sheet represents the acquisition cost lessaccumulated depreciation and accumulated loss on impairment.
2. The main components of net changes in the carrying value during the years ended 31 March 2019and 2018 are the decrease due to changes of holding purpose of properties of ¥4,857 million($43,776 thousand) and the decrease due to the sales of real estate of ¥5,346 million, respectively.
3. Fair values of the major rental properties as at each year end are estimated in accordance with theappraisal standards for valuing real estate properties. Fair values of the other rental properties are
estimated internally by the Group based on certain assessments and property indices that areconsidered to reflect applicable market value.
8.

REVALUATION OF LAND

In accordance with the “Act on Revaluation of Land” (Act No. 34 promulgated on 31 March 1998) and the“Act for Partial Revision of the Act on Revaluation of Land” (Act No. 19 promulgated on 31 March 2001),
the Company and two consolidated subsidiaries revaluate its land held for business. The resulting
revaluation difference, net of applicable tax effect on revaluation gains has been stated as “Revaluation
reserve for land” in net assets. The applicable tax effect has been stated as “deferred tax liabilities for land
revaluation” in liabilities.
Details of the revaluation are as follows:Method of revaluation
Fair values are determined based on the appraisal value publicly announced for tax assessment purposeswith certain reasonable adjustments in accordance with Article 2-3 and 2-5 of the “Ordinance for
Enforcement of the Act on Revaluation of Land” (Cabinet Ordinance No. 119 promulgated on 31 March
1998)



Date of revaluation
31 March 2002
17

9.

PLEDGED ASSETS

Assets pledged as collateral and the corresponding liabilities as at 31 March 2019 are summarised as follows:
Thousands of
U.S. Dollars
2019
The Group’s
Railwayfoundation
Total
mortgage

Millions of Yen
2019
The Group’s
Railwayfoundation
Total
mortgage
Assets pledged as collateral:
Buildings and structures
Machinery, equipment andvehiclesLand
Other property, plant andequipment
Investment securities
Total

¥

¥

64,282¥(64,072 )

14,56253,676

(
(

953
800
134,275((¥($

579,175$(

577,277 )

14,562 )53,627 )131,209483,619((

131,209 )483,171 )

953 )
– )
133,215 )

8,587
7,207
1,209,800$

Thousands of
U.S. Dollars
2019
The Group’s
Railwayfoundation
Total
mortgage

Millions of Yen
2019
The Group’s
Railwayfoundation
Total
mortgage
Corresponding liabilities:
Accounts payables
Long-term loans(including current portionof long-term loans)
Total

¥

58

¥(

– )

¥

55,37655,434(¥(55,224 )55,224 )(8,587 )(–)
$ ( 1,200,246 )

$

529

$(

– )

$

498,928
499,457($(

497,559 )497,559 )Figures in parentheses in the above table represent the amounts of assets pledged as the Group’s railway
foundation mortgage and the corresponding liabilities.

18

10. SHORT-TERM LOANS, BONDS AND LONG-TERM LOANS
The average interest rate applicable to the short-term bank loans, which is calculated as the weighted-averagerate to the year end balances, was 0.526% for the years ended 31 March 2019 and 2018.
Long-term debt as at 31 March 2019 and 2018 is summarised as follows:
Bonds

Euro-yen zero coupon unsecured
convertible bonds with stockacquisition rights in yen, due 30
March 2021¥
Unsecured Keihan Holdings bonds,
payable in yen at rates ranging from
0.34% to 1.89%, due from 2020
through 2038
Unsecured Keifuku Electric Railroad
bonds, payable in yen at rate of
0.210%, due 30 September 2020
Total
Less current portion
Bonds, less current portion¥

Millions of Yen
2018
2019

Thousands of
U.S. Dollars
2019

20,039$¥20,059180,556

80,00070,000720,785

65
100,105(10,045)
90,059111
90,171(10,045)
80,125 $591
901,932(90,511)
811,420¥

The aggregate annual maturities of bonds subsequent to 31 March 2019 are summarised as follows:Year ending 31 March,
2020
2021
2022
2023
2024
2025 and thereafter
Total

Thousands ofMillions of Yen U.S. Dollars
10,045¥$90,511
20,019180,373
10,00090,09810,00090,09810,00090,09840,039360,752¥ 100,105$
901,932

Euro-yen zero coupon unsecured convertible bonds in the nominal amount of ¥20,000 million with stockacquisition rights issued on 30 March 2016 are convertible at ¥5,307.1 ($47.81) per share in the period from
13 April 2016 to 16 March 2021 subject to adjustment in certain circumstances.
From 1 April 2019, these bonds are convertible at ¥5,301.2 ($47.76). The price was adjusted pursuant to theclauses on price adjustment of the bonds because the proposal on dividend per share of ¥17.5 ($0.15) wasapproved at the 97th Ordinary General Meeting of Shareholders held on 19 June 2019.

19

10. SHORT-TERM LOANS, BONDS AND LONG-TERM LOANS (continued)
Long-term loans

Thousands of
U.S. Dollars
2019

Millions of Yen
2018
2019
Loans from banks and other financial
institutions, due serially from 2020
to 2039 at weighted-average rates
ranging from 0.516% to 0.727%
Less current portionLong-term loans, less current portion¥¥

185,747(47,583)
138,164¥¥

180,135 $ 1,673,553(34,109)(428,714)
146,026 $ 1,244,838

The aggregate annual maturities of long-term loans subsequent to 31 March 2019 are summarised as follows:Year ending 31 March,
2020
2021
2022
2023
2024
2025 and thereafter
Total

Thousands ofMillions of Yen U.S. Dollars
47,583¥$428,71433,438301,273
8,133
73,277
21,329192,175
9,593
86,43865,669591,673¥ 185,747$ 1,673,553

11. OVERDRAFT AND LOAN COMMITMENTS
The Company and 16 consolidated subsidiaries entered into overdraft and loan commitment agreements with19 banks for efficient funding of working capital as at 31 March 2019.
The unused portions of the credit line under these agreements as at 31 March 2019 are as follows:

Total overdraft limits and loan
commitments
Loan executions
Unused credit line

Millions of Yen
2019

Thousands of
U.S. Dollars
2019

¥

$

¥

90,692(44,252)
46,43920$

817,123(398,708)
418,41412. RETIREMENT BENEFITSThe Company and its consolidated subsidiaries provide several defined benefit plans, such as defined benefit
corporate pension plans, retirement lump-sum benefit plans and smaller enterprise retirement allowancemutual aid plans, and defined contribution pension plans. Certain consolidated subsidiaries maintain aretirement benefit trust.
(1) The changes in the defined benefit obligation for the years ended 31 March 2019 and 2018 (except for
the retirement benefit obligation calculated by the simplified method presented in (3) below) are as
follows:

Balance at the beginning of year
Service costs
Interest cost
Actuarial (loss) gain
Retirement benefits paid
Balance at the end of year¥¥

Millions of Yen
2018
2019
34,44433,548 ¥
1,332
1,280
91
86
21
(563)
(2,341)(2,371)33,54831,979 ¥Thousands of
U.S. Dollars
2019$ 302,262
11,539778(5,079)(21,371)$ 288,129(2) The changes in plan assets for the years ended 31 March 2019 and 2018 (except for plan assets
calculated by the simplified method presented in (3) below) are as follows:

Balance at the beginning of year
Expected return on plan assets
Actuarial (gain) loss
Contributions by the Group
Retirement benefits paid
Balance at the end of year¥¥

Millions of Yen
2018
2019
16,841
17,690 ¥
282
295
344
(605)
1,374
705
(1,152)(1,155)
17,69016,930 ¥21

Thousands of
U.S. Dollars
2019$ 159,391
2,663(5,454)
6,353(10,414)$ 152,539

12. RETIREMENT BENEFITS (continued)(3) The changes in the assets and liabilities for retirement benefits calculated by the simplified method
for the years ended 31 March 2019 and 2018 are as follows:

Balance at the beginning of year
Retirement benefit expenses
Retirement benefits paid
Contributions to pension plans
Increase due to consolidation of a new
subsidiary
Balance at the end of year¥¥

Thousands ofMillions of Yen
U.S. Dollars
2018
2019
2019
2,141 $
2,228 ¥
20,074
275
253
2,285
(173)
(178)
(1,605)
(61)
(64)
(585)
–
2,238

¥

45
2,228

$

–
20,169Under the simplified method, the retirement benefit obligation is calculated at the amount payable atthe year-end if all eligible employees terminated their services voluntarily.
(4) Reconciliation of the ending balances of the retirement benefit obligation and plan assets and asset
and liability for retirement benefits recorded in the consolidated balance sheet as at 31 March 2019and 2018 are as follows:

Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits
Liability for retirement benefits
Asset for retirement benefits
Net liability for retirement benefits¥¥

Thousands ofMillions of Yen
U.S. Dollars
2018
2019
2019
15,850 $ 136,047
15,099 ¥(18,255)(17,523)(157,885)(2,404)(2,423)(21,837)
20,49019,711
177,597
18,085
17,287
155,759
18,79018,360165,426(704)(1,072)(9,666)18,085 $ 155,759
17,287 ¥Note: The above table includes the retirement benefit obligation calculated by the simplified method.

2212. RETIREMENT BENEFITS (continued)(5) The components of retirement benefit expenses for the years ended 31 March 2019 and 2018 are as
follows:

Service costs
Interest cost
Expected return on plan assets
Amortisation of actuarial loss
Amortisation of prior service costs
Retirement benefit expenses
calculated by the simplified method
Retirement benefit expenses fordefined benefit plans¥

Millions of Yen
2018
2019
1,332
1,280 ¥
91
86
(282)
(295)
1,123
234
(256)
(266)

Thousands of
U.S. Dollars
2019$11,539778(2,663)
2,115(2,404)

275

2,285

253
¥

1,293

¥

2,284

$

11,651(6) The components of retirement benefit liability adjustment (before tax effects) in other comprehensive
income for the years ended 31 March 2019 and 2018 are as follows:

Prior service costs
Actuarial gain
Total

¥
¥

Millions of Yen
2018
2019
256
266 ¥
(1,447)(193)(1,191)73 ¥Thousands of
U.S. Dollars
2019
$
2,404
(1,741)$
663(7) The components of retirement benefit liability adjustment (before tax effects) in accumulated othercomprehensive income as at 31 March 2019 and 2018 are as follows:

Unrecognised prior service costs
Unrecognised actuarial gain
Total

¥
¥

Millions of Yen
2018
2019
(2,053)(1,786) ¥
5,934
5,741
3,881
3,955 ¥

23

Thousands of
U.S. Dollars
2019$ (16,095)
51,730$35,635

12. RETIREMENT BENEFITS (continued)(8) Plan assets
a. The components of plan assets by major category as at 31 March 2019 and 2018 are as follows:
2019
45%
33
13
4
5
100%

Debt securities
Equity securities
Insurance company general accounts
Cash and deposits
Other
Total

2018
43%
36
13
2
6
100%

Note: 18% and 20% of the total plan assets were in the retirement benefit trust as at 31 March
2019 and 2018, respectively.
b. Method of determining long-term expected rate of return on plan assets
The long-term expected rate of return on plan assets is determined as a result of consideration ofboth the portfolio allocation at present and in the future, and long-term expected rate of returnfrom multiple plan assets at present and in the future.
(9) Assumptions used in accounting for the defined benefit plans for the years ended 31 March 2019 and2018 are set forth as follows:
Discount rates
Long-term expected rates of return onplan assets

2019
0.0-0.7%

2018
0.0-0.7%

1.5-3.0%

1.5-3.0%(10) Defined contribution plans for the years ended 31 March 2019 and 2018
The total contributions to be paid by the Company and its consolidated subsidiaries to defined
contribution plans were ¥562 million ($5,067 thousand) and ¥566 million for the years ended 31
March 2019 and 2018, respectively.

2413. SHAREHOLDERS’ EQUITYThe Companies Act of Japan (the “Act”) provides that an amount equal to 10% of the amount to be disbursed
as distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the capital stock account. Such distributions can be made at any
time by resolution of the shareholders, or by the Board of Directors if certain conditions are met.
Under the Act, upon the issuance of new shares of common stock, the entire amount of the proceeds isrequired to be accounted for as common stock, although a company may, by resolution of the Board of
Directors, account for an amount not exceeding one-half of the proceeds of new shares as additional paid-in
capital included in capital surplus.
Under the Act, the distribution of retained earnings with respect to a given financial period is made byresolution of the shareholders at a general meeting held subsequent to the close of the financial period. The
distribution of retained earnings with respect to the interim financial period is made by resolution of theBoard of Directors. The accounts for the period do not reflect such distributions.
Stock options
The Company has stock option plans. Stock option expenses, included in selling, general and administrative
expenses, charged to profit or loss for the years ended 31 March 2019 and 2018 amounted to ¥30 million($270 thousand) and ¥27 million, respectively.
The stock option plans of the Company as of 31 March 2019 are summarised as follows:
The 2016 Plan
Individuals coveredby the plan
Class and numberof options granted
Grant date
Vesting conditions
Vesting period forservices received
Exercisable period

The 2017 Plan
6 Directors (excluding
Audit and Supervisory
Committee Members andoutside directors)
7 Executive officers

The 2018 Plan
6 Directors (excluding
Audit and Supervisory
Committee Members andoutside directors)
7 Executive officers

Common stock 8,000 shares

Common stock 8,000 shares

Common stock 8,000 shares

4 July 2016
None
No vesting period forservices received has been
stipulated.
From 5 July 2016 to 4 July2046

6 July 2017
None
No vesting period forservices received has been
stipulated.
From 7 July 2017 to 6 July2047

6 July 2018
None
No vesting period forservices received has been
stipulated.
From 7 July 2018 to 6 July
2048

5 Directors (excluding
outside directors)
8 Executive officers

2513. SHAREHOLDERS’ EQUITY (continued)
Size and movement of stock options are summarised as follows:
The 2016 plan
Number of stock options not yet vested:
Outstanding at 31 March 2018
GrantedForfeited
VestedOutstanding at 31 March 2019
Number of stock options already vested:
Outstanding at 31 March 2018
VestedExercised
Forfeited
Outstanding at 31 March 2019

The 2017 plan

The 2018 plan

–
–
–
–
–

–
–
–
–
–

–
8,000
–
8,000
–

5,000
–
–
–
5,000

8,000
–
–
–
8,000

–
8,000
–
–
8,000

The fair value of stock options for the stock option plan of the Company during the year ended 31 March
2019 is summarised as follows:

Exercise price
Average stock priceat the exercise date
Fair value as of the
grant date

Yen
U.S. dollars
Yen
U.S. dollars
Yen
U.S. dollars
The 2016 plan The 2016 plan The 2017 plan The 2017 plan The 2018 plan The 2018 plan
¥
1
$
0
¥
1
$
0
¥
1
$
0
–

–

–

–

–

–

3,485

32

3,425

32

3,811

34

The number of existing stock options as of 31 March 2019 represents the corresponding number of shares.
In addition, the number of shares has been converted due to the consolidation of the Company’s common
stock at a ratio of 1 share for 5 shares on 1 October 2017.
The valuation method for estimating fair value was the Black-Scholes model. The major assumptions used
are as follows:
Major assumptions
Expected volatility
Expected holding period
Expected dividend

Note
(a)
(b)
(c)

Risk-free rate(d)

The 2018 plan
21.776%
3.0 years¥35 per share($0 per share)(0.123%)(a) Expected volatility was computed by the weekly historical volatility of the Company’s stock during theperiod from 7 July 2015 to 6 July 2018.
(b) Expected holding period was computed by estimating the expected tenure of new stock option holders
and weighted average unit of stock options granted to each new stock option holder.
(c) Expected dividend was calculated based on the actual amounts paid for the year ended 31 March 2018,
which was converted on the basis of the number of shares after the consolidation of the Company’scommon stock at a ratio of 1 share for 5 shares on 1 October 2017.
26

13. SHAREHOLDERS’ EQUITY (continued)(d) Risk-free rate was computed using the average of compound interest on long-term interest-bearing
government bonds with redemption dates within a period of three months before and after the end of
the holding period from the grant date of the stock acquisition rights.
The number of vested stock options is the same as the number of granted stock options as they vested on the
grant date.
Common stock and treasury stock(1) Movements in issued shares of common stock and treasury stock during the years ended 31 March
2019 and 2018 are as follows:
Number of shares
2019
Increase
Decrease

1 April 2018
Issued shares:
Common stock
Treasury stock(Notes 1 and 2)

31 March 2019

113,182,703––

113,182,703

5,989,571

5,519

186

5,994,904

Notes: 1. The increase in the number of shares of treasury stock of 5,519 shares was due torepurchase of fractional shares of less than one voting unit.
2. The decrease in the number of shares of treasury stock of 186 shares was due to sales offractional shares of less than one voting unit.
Number of shares
2018
Increase
Decrease

1 April 2017
Issued shares:
Common stock(Notes 1 and 2)
Treasury stock(Notes 1, 3 and 4)

31 March 2018565,913,515–

452,730,812

113,182,703

29,912,535

28,191

23,951,155

5,989,571

Notes: 1. The Company executed a share consolidation at a ratio of 1 share for 5 shares on 1 October2017.
2. The decrease in the number of shares of common stock of 452,730,812 was due to the shareconsolidation.
3. The increase in the number of shares of treasury stock of 26,367 shares (21,783 shares
before the date of the consolidation of shares, and 4,584 shares after the date) was due torepurchase of fractional shares of less than one voting unit, and of 1,824 shares was due torepurchase of fractional shares of less than one voting unit as a result of the consolidationof shares.
4. The decrease in the number of shares of treasury stock of 15,000 shares (before the date of
the consolidation of shares) was due to disposal of treasury stock as a result of exercise ofstock options, of 23,934,691 shares was due to the consolidation of shares, and of 1,464
shares (954 shares before the date of the consolidation of shares, and 510 shares after thedate) was due to sales of fractional shares of less than one voting unit.

27

13. SHAREHOLDERS’ EQUITY (continued)(2) Information regarding dividend payments during the years ended 31 March 2019 and 2018 is asfollows:
For the year ended 31 March 2019a. Dividend payment:
2019
Resolutions
General shareholders’meeting held on
19 June 2018
Board meeting held on
5 November 2018

Type ofsharesDividends paid

Dividend
per share

Record dates

Effective
dates

Commonstock¥2,143 million($19,315 thousand)¥20.0($0.18)31 March
2018

20 June2018

Commonstock¥1,875 million($16,900 thousand)¥17.5($0.15)30 September
2018

3 December
2018

b. Dividend payment with an effective date in the following fiscal year:
2019
Resolution
General shareholders’meeting held on
19 June 2019

Type ofsharesDividends paid

Commonstock¥1,875 million($16,900 thousand)Source of Dividend
dividend per share

Recorddate

Effective
date

Retainedearnings¥17.5($0.15)31 March
2019

20 June2019

For the year ended 31 March 2018a. Dividend payment:
2018
Resolutions
General shareholders’meeting held on
20 June 2017
Board meeting heldon 30 October 2017

Type ofsharesDividends paid

Dividend
per share

Record dates

Effective
dates

Commonstock¥1,608 million¥3.0

31 March
2017

21 June2017

Commonstock¥1,607 million¥3.0

30 September
2017

1 December
2017

Notes: The Company executed a share consolidation at a ratio of 1 share for 5 shares on 1 October
2017. Dividend per share by the resolution of Board meeting held on 30 October 2017
represents the amount on the basis of the number of shares before the share consolidation.
b. Dividend payment with an effective date in the following fiscal year:
2018
Resolution
General shareholders’meeting held on
19 June 2018

Type ofsharesDividends paid

Source of Dividend
dividend per share

Recorddate

Effective
date

Commonstock¥2,143 million

Retainedearnings

31 March
2018

20 June
2018

¥20.0

14. COST OF SALES
Cost of sales included loss on devaluation of inventories of ¥903 million ($8,138 thousand) and ¥331 million
for the years ended 31 March 2019 and 2018, respectively.

28

15. LOSS ON IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are assessed for impairment either on an individual asset basis such as property
or store, or on a group basis such as business segment, which is determined based on the managerial
accounting segment.
The Group recognised loss on impairment of property, plant and equipment in the amounts of ¥1,333 million($12,013 thousand) and ¥61 million for the years ended 31 March 2019 and 2018, respectively. The details
are summarised as follows:
For the year ended 31 March 2019
2019
Usage
Rentalproperties

Location
Chuo-ku, Osakaand other

Classification
Buildings and structures

Millions of Yen
¥

Land
Other
Sub-total
Commercial
storesIdle assets
Hotel facilities

Yawata, Kyoto
Buildings and structuresand other
Katsuyama, Fukui Land
Sakyo-ku, Kyoto Buildings and structures
Other
Sub-total
Total

¥

1,290
24
2
1,317
8
6
1
0
1
1,333

For the year ended 31 March 2018
2018
Usage
Commercial
storesHotel facilities

Location
Hirakata, Osakaand other

Sakyo-ku, Kyoto

Classification
Buildings and structures
Other
Sub-total
Buildings and structures
Total

29

Millions of Yen
¥

¥

54
1
56
5
61

Thousands of
U.S. Dollars$$

11,625219
20
11,866
74
55
12
4
17
12,013

15. LOSS ON IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT (continued)
For rental properties, as a decision to dismantle the corresponding properties was made or a decline inprofitability was expected; for commercial stores, as a decision to withdraw from the business was made; foridle assets, as the usage of the assets was changed from assets used for business to idle assets; and for hotel
facilities, as a decline in profitability was expected to continue, the Group wrote down the carrying value ofthe assets to the recoverable amount and loss on impairment of property, plant and equipment was recorded
as other expenses for the year ended 31 March 2019.
For commercial stores, as a decision to withdraw from the business was made or a decline in profitability
was expected, and for hotel facilities as a decline in profitability was expected to continue, the Group wrote
down the carrying value of the asset to the recoverable amount and loss on impairment of property, plant andequipment was recorded as other expenses for the year ended 31 March 2018.
The recoverable amounts of rental properties were determined using value in use or net realisable value.
When using value in use, rental properties were written down to the nominal value as future cash flow was
not expected due to decision to dismantle the corresponding properties was made, and when using net
realisable value, the recoverable amounts of rental properties were determined basically based on thevaluation used for property tax purposes for the year ended 31 March 2019.
The recoverable amounts of commercial stores were determined using value in use. Commercial stores were
written down to the nominal value as future cash flow was not expected due to a decision to withdraw fromthe business for the years ended 31 March 2019 and 2018.
The recoverable amounts of idle assets were determined using net realisable value basically based on thevaluation used for property tax purposes for the year ended 31 March 2019.
The recoverable amounts of hotel facilities were determined using net realisable value basically based on theappraisal value assessed by an external appraiser for the years ended 31 March 2019 and 2018.

30

16. INCOME TAXES
Income taxes applicable to the Company and its domestic subsidiaries comprise corporation tax, inhabitants’taxes and enterprise taxes which, in the aggregate, resulted in normal statutory tax rates of approximately
30.6% and 30.8% for the years ended 31 March 2019 and 2018, respectively.
The tax effects of significant temporary differences and tax loss carry forwards which resulted in net deferred
tax assets and liabilities at 31 March 2019 and 2018 are as follows:
Millions of Yen
2018
2019
Deferred tax assets:
Liability for retirement benefits
Difference arising from company
split
Loss on impairment of property,
plant and equipment
Loss on devaluation of land,buildings and structures for saleTax loss carry forwards
Unrealised gain
Provision for employees’ bonuses
Loss on devaluation of securities
OthersSub-total
Valuation allowance
Total deferred tax assets
Offset by deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities:
Difference on valuation of assets ofconsolidated subsidiaries
Net unrealised holding gain on
securities
Gain on securities contributed to
employee retirement benefit trust
Reserve for deduction in costs ofproperty, plant and equipment
OthersTotal deferred tax liabilities
Offset by deferred tax assets
Net deferred tax liabilities

¥

¥

9,455

9,831

Thousands of
U.S. Dollars
2019$85,188

4,248

4,248

38,279

2,026

1,383

18,257

¥

1,615
1,296
1,143
950
786
3,681
25,203(9,154)
16,048(6,144)
9,904

¥

1,712
1,097
1,129
861
795
3,255
24,314(9,624)
14,689(5,189)9,500 $

14,558
11,67810,306
8,559
7,083
33,166
227,078(82,481)
144,597(55,363)
89,233¥(8,312)¥(8,250)(74,892)¥$(3,231)(4,353)(29,111)(2,774)(2,774)(25,000)

(150)
(786)
(15,255)
6,144(9,110)

(158)
(567)
(16,105)
5,189(10,915)(1,356)(7,085)(137,446)
55,363(82,082)¥$

Reconciliations between the statutory tax rate and the effective tax rate for the years ended 31 March 2019and 2018 are omitted as the effective tax rate in the accompanying consolidated statement of income for theyears ended 31 March 2019 and 2018 differs from the statutory tax rate by less than 5%.

31

17. OTHER COMPREHENSIVE (LOSS) INCOME
Reclassification adjustments and related income tax effects on components of other comprehensive (loss)
income for the years ended 31 March 2019 and 2018 are as follows:
Millions of Yen
2018
2019
Net unrealised holding loss on securities:
Amount arising during the year
Reclassification adjustments for gain
included in profit
Before tax effectTax effect
Total
Retirement benefit liability adjustment:
Amount arising during the year
Reclassification adjustments for (gain) loss
included in profit
Before tax effectTax effect
Total
Share of comprehensive (loss) income ofaffiliates accounted for using equity method
Amount arising during the year
Other comprehensive (loss) income, net¥¥(1,848)¥275

Thousands of
U.S. Dollars
2019$(16,652)(1,900)(3,749)1,122(2,627)

(910)
(635)
178
(456)

(17,125)(33,778)
10,109(23,669)

(41)

323

(374)

(32)
(73)
17
(56)

867
1,191
(393)
797

(288)
(663)
153
(509)

(27)
(2,710)

8
349

(245)
(24,423)¥$

18. LEASES(1) Finance Leases
Leased assets under finance lease transactions which do not transfer ownership to the lessee mainly
consist of machinery, equipment and vehicles, such as buses used for the transportation business.
As described in Note 2 “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (f) Leased
Assets,” leased assets under finance lease transactions which do not transfer ownership to the lessee
are capitalised and depreciated over the respective lease terms to a nil residual value by the straightline method.
Finance lease transactions commencing on or before 31 March 2008 other than those in which theownership of the leased assets is transferred to the lessee are accounted for in the same manner as
operating leases. The details of these finance lease transactions are omitted because the amounts are
immaterial.

32

18. LEASES (continued)(2) Operating Leases
Future minimum lease payments under non-cancelable operating leases as at 31 March 2019 and 2018
are as follows:
Millions of Yen
2018
2019
Future minimum lease payments:
Due within one year
Due after one year
Total

¥
¥

¥

1,983
45,26847,251¥

1,439
41,668
43,108

Thousands of
U.S. Dollars
2019
$
$

17,871
407,857
425,728

19. AMOUNTS PER SHARE
Yen
Net assets
Profit attributable to owners of parent:
Basic
Diluted2019¥ 2,193.68

2018¥ 2,055.87

U.S. Dollars
2019
$
19.76

¥
¥

¥
¥

$
$

200.40200.36211.87211.851.80
1.80

The Company executed a share consolidation at a ratio of 1 share for 5 shares on 1 October 2017. Per share
information noted above was calculated as if the share consolidation had been implemented at the beginningof the year ended 31 March 2018.
The financial data used in the computation of basic and diluted profit attributable to owners of parent for theyears ended 31 March 2019 and 2018 in the table above is summarised as follows:

Profit attributable to owners of parent¥

Millions of Yen
2018
2019
¥ 22,712
21,480Thousands of
U.S. Dollars
2019$ 193,538

Thousands of shares
Weighted-average number of shares ofcommon stock outstanding
Increase in shares of common stock
for the calculation of dilutive effect

2019

2018

107,190

107,197

18

11

Potential shares which do not have dilutive effect for the years ended 31 March 2019 and 2018 are euro-yen
zero coupon convertible bonds with stock acquisition rights (400 units) in yen, due 30 March 2021 in theaggregate amount of ¥20,000 million ($180,196 thousand).

33

20. CASH AND CASH EQUIVALENTS
The balances of cash and deposits reflected in the accompanying consolidated balance sheet as at 31 March
2019 and 2018 are reconciled with cash and cash equivalents presented in the accompanying consolidated
statement of cash flows for the years then ended as follows:

Cash and deposits
Time deposits with a maturity of more than
three months
Cash and cash equivalents¥

Millions of Yen
2018
2019
20,317
21,385 ¥Thousands of
U.S. Dollars
2019$ 192,675¥(7)
21,377(16)
20,300(66)
192,609¥$

The Company acquired all shares in Zero Corporation Co., Ltd., which became a newly consolidated
subsidiary. Major components of assets and liabilities of the newly consolidated subsidiary due to acquisitionof shares, acquisition cost of its shares, and proceeds from the acquisition during the year ended 31 March2018 are as follows:
Millions of Yen
2018
¥
9,760
618
317
(6,942)(2,700)1,054(1,544)Current assets
Non-current assets
Goodwill
Current liabilities
Non-current liabilities
Acquisition cost of shares
Cash and cash equivalents
Proceeds from purchase of shares of a subsidiary
resulting in change in scope of consolidation¥

490

The Company sold all shares in Keihan Life Support Co., Ltd., which was excluded from the scope of
consolidation. Major components of assets and liabilities excluded from consolidation due to sales of shares,
selling price of its shares, and proceeds from the sales of shares during the year ended 31 March 2018 are as
follows:
Millions of Yen
2018
¥
684
3,885
(1,613)(3,242)
3,164
50
2,929
(50)
(52)

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Gain on sale of shares of a subsidiary
Incidental costs related to sales of shares
Selling price of shares
Incidental costs related to sales of shares
Cash and cash equivalents
Proceeds from sales of shares of a subsidiary
resulting in change in scope of consolidation

¥

34

2,826

21. FINANCIAL INSTRUMENTS(1) Overview
a. Group policy for financial instruments
The Group restricts its investment activities of surplus cash to short-term deposits and others. In
terms of financing activities, the Group mainly raises funds by loans from banks and otherfinancial institutions and the issuance of bonds. Derivative transactions are utilised, not for
speculative purposes, but to avoid the risks described below.
b. Nature of financial instruments, their related risk and risk management for financial instruments
Trade receivables, such as notes and accounts receivable, are exposed to the credit risk ofcustomers. The Group mitigates the credit risk mainly by managing due dates and outstandingbalances by individual customers.
Short-term investments and investment securities mainly consist of held-to-maturity debt
securities and equity securities issued by companies with which the Group has business
relationships. Since these securities are exposed to the risk of market price fluctuations, the Groupregularly monitors the fair value of the securities and financial conditions of the issuers.
Trade payables, such as notes and accounts payable, are mostly due in one year or less.
Proceeds from short-term loans are mainly used for working capital, and proceeds from bonds andlong-term loans are mainly used for capital investments. Among them, those to which variableinterest rates apply are exposed to the risk of interest rate fluctuations. However, for certain longterm loans, the derivative transactions (such as interest rate swaps) by individual contracts areused as hedging instruments to hedge the risk of fluctuations of interest rates and stabilise interest
payments.
Hedge effectiveness is not assessed as the interest rate swaps meet the criteria for application of
the special accounting treatment.
Derivative transactions are executed and managed by the treasury department of the Company andthree consolidated subsidiaries which utilise derivative instruments upon the approval of thedecision-making authority. In addition, the counterparties of the derivative transactions arelimited to highly-rated financial institutions in order to mitigate credit risk.
In addition, trade payables and loans are exposed to liquidity risk. However, the Group manages
liquidity risk mainly by preparing monthly cash flow management plans.
c. Supplementary explanation on fair value of financial instruments and related matters
The fair value of financial instruments is based on quoted market prices, if available. If a quoted
market price is not available, fair value is reasonably estimated. Since various assumptions andfactors are reflected in estimating the fair value, different assumptions and factors could result indifferent fair value. In addition, the notional amounts of derivatives in Note 22 “DERIVATIVEFINANCIAL INSTRUMENTS” are not necessarily indicative of the actual market risk involvedin the derivative transactions.

35

21. FINANCIAL INSTRUMENTS (continued)(2) Fair value of financial instruments and related matters
Carrying value, fair value and the difference between them are as follows:
Millions of Yen
2019(1) Cash and deposits(2) Notes and accounts receivable(3) Short-term investments andinvestment securities:
Held-to-maturity debt securities
Other securities
Total assets(4) Notes and accounts payable(5) Short-term loans(6) Bonds (including current portion)(7) Long-term loans (including current
portion)Total liabilities

Carrying
value¥
21,38531,189Fair value¥
21,38531,189Difference
¥
–
–

1,577
18,771
72,922

1,623
18,771
72,968

45
–
45

¥

¥

¥

¥

11,544
48,493
100,105

11,544
48,493103,111––
3,006

185,747
345,891

188,612351,762

2,864
5,870

¥

¥

Millions of Yen
2018(1) Cash and deposits(2) Notes and accounts receivable(3) Short-term investments andinvestment securities:
Held-to-maturity debt securities
Other securities
Total assets(4) Notes and accounts payable(5) Short-term loans(6) Bonds (including current portion)(7) Long-term loans (including current
portion)Total liabilities

Carrying
value¥
20,31731,199Fair value¥
20,31731,199Difference
¥
–
–

1,828
22,93876,284

1,894
22,93876,350

65
–
65

¥

¥

¥

¥

11,58846,092
90,171

11,58846,092
92,196––2,025

180,135
327,988

183,883
333,761

3,747
5,772

36

¥

¥

21. FINANCIAL INSTRUMENTS (continued)(2) Fair value of financial instruments and related matters (continued)(1) Cash and deposits(2) Notes and accounts receivable(3) Short-term investments andinvestment securities:
Held-to-maturity debt securities
Other securities
Total assets(4) Notes and accounts payable(5) Short-term loans(6) Bonds (including current portion)(7) Long-term loans (including current
portion)Total liabilities

Thousands of U.S. Dollars
2019
Carrying
value
Fair value
Difference$ 192,675 $ 192,675 $–
281,009
281,009–$

14,210169,126
657,022$

14,623
169,126
657,434

$

412
–
412

104,014436,919
901,932

104,014436,919929,017––
27,084

1,673,553$ 3,116,420

1,699,364$ 3,169,316

25,811
52,895$

Notes:
1. Method to determine the estimated fair value of financial instruments and other matters related tosecurities and derivative transactions(1) Cash and deposits and (2) Notes and accounts receivable
As these items are settled in a short period of time, their carrying value approximates fair value.
(3) Short-term investments and investment securities
The fair value of equity securities is estimated based on the market price on stock exchanges,
and the fair value of debt securities is estimated based on the market price on stock exchanges
or the quoted price from the counterparty financial institutions.
(4) Notes and accounts payable and (5) Short-term loans
As these items are settled in a short period of time, their carrying value approximates the fairvalue.
(6) Bonds
The fair value of bonds issued by the Group is estimated mainly based on the quoted market
price.

37

21. FINANCIAL INSTRUMENTS (continued)(2) Fair value of financial instruments and related matters (continued)
Notes: (continued)(7) Long-term loans
As long-term loans with variable interest rates reflect market interest rates in a short period oftime, the carrying value approximates the fair value. The fair value of long-term loans with
fixed interest rates is estimated based on the present value of the total amounts of principal andinterest payments discounted at an interest rate to be applied if similar new loans are made. In
terms of long-term loans hedged by interest rate swaps accounted for by the special accounting
treatment (see Note 22 “DERIVATIVE FINANCIAL INSTRUMENTS”), the fair value isestimated based on the present value of the total amounts of principal and interest payments
which are accounted for by the special accounting treatment discounted by the interest rates tobe applied assuming that new loans under similar conditions to the existing loans are made.
2. Financial instruments for which it is extremely difficult to determine the fair value as at 31 March
2019 and 2018 are summarised as follows:

Category
Unlisted stocks¥

Millions of Yen
2018
2019
8,907
14,573 ¥Thousands of
U.S. Dollars
2019$131,302

Because a quoted market price is not available and the future cash flows cannot be reasonably
estimated for these instruments, it is extremely difficult to determine their fair value. Therefore,
the above financial instruments are not included in the tables above.
3. Investments in unconsolidated subsidiaries and affiliates are not included in the table above.

38

21. FINANCIAL INSTRUMENTS (continued)(2) Fair value of financial instruments and related matters (continued)
Notes: (continued)
4. The redemption schedules for cash and deposits, notes and accounts receivable and short-term
investments and investment securities with maturities as at 31 March 2019 are as follows:

Due in1 yearor less¥
19,62731,189Cash and deposits
Notes and accounts receivable
Short-term investments and investment
securities:
Held-to-maturity debt securities
National and municipal bonds
Other securities with maturities
Corporate bonds
Total

Millions of Yen
2019
Due after
Due after
1 year
5 years
throughthrough
5 years
10 years
¥
– ¥
–
–
–

Due after
10 years
¥
–
–

94

–

306
¥

–
51,123

Due in1 yearor less$ 176,842
281,009

Cash and deposits
Notes and accounts receivable
Short-term investments and investment
securities:
Held-to-maturity debt securities
National and municipal bonds
Other securities with maturities
Corporate bonds
Total

$

1,176
¥

–
1,176

¥

–
94

¥

Thousands of U.S. Dollars
2019
Due after
Due after
1 year
5 years
throughthroughDue after
5 years
10 years
10 years
$
– $
– $
–
–
–
–

2,762

10,595851––
460,614–
10,595

–
851

2,702
2,702

$

$

$

5. The redemption schedules for short-term loans, bonds and long-term loans as at 31 March 2019
Refer to Note 10. SHORT-TERM LOANS, BONDS AND LONG-TERM LOANS.

39

300
300

22. DERIVATIVE FINANCIAL INSTRUMENTS
The notional amounts and the estimated fair value of the derivative positions outstanding qualifying forhedge accounting as at 31 March 2019 and 2018 are as follows:
Millions of Yen
2019
Contractual valueHedge
accounting
methodSpecialaccounting
treatment ofinterest rate
swaps

Transaction typeInterest rate swap
Receive-floating/pay-fixed

Major hedged
items

Notional
amountDue after
1 yearFair value

Long-termloans¥ 2,194¥ 1,955(Note)

Millions of Yen
2018
Contractual valueHedge
accounting
methodSpecialaccounting
treatment ofinterest rate
swaps

Transaction typeInterest rate swap
Receive-floating/pay-fixed

Major hedged
items

Notional
amountDue after
1 yearFair value

Long-termloans¥ 2,482¥ 2,212(Note)

Thousands of U.S. Dollars
2019
Contractual valueHedge
accounting
methodSpecialaccounting
treatment ofinterest rate
swaps

Transaction typeInterest rate swap
Receive-floating/pay-fixed

Major hedged
items

Notional
amountDue after
1 yearFair value

Long-termloans$ 19,767$ 17,614(Note)

Note: Because interest rate swaps are accounted for as if the interest rates applied to the swaps had beenoriginally applied to the long-term loans, their fair value was included in long-term loans.

4023. CONTINGENT LIABILITIESThe Company provides guarantees for the borrowings of the following company, which is other thanconsolidated subsidiaries, as at 31 March 2019 as follows:

Nakanoshima Rapid Railway Co., Ltd.

Millions of Yen
2019¥
21,511Thousands of
U.S. Dollars
2019$
193,810

24. ASSET RETIREMENT OBLIGATIONS(1) General information about asset retirement obligations
Asset retirement obligations included in the “Other” of noncurrent liabilities are mainly legal
obligations for the removal of asbestos under the Ordinance on Prevention of Asbestos Hazards andthe restoration under certain real estate lease agreements.
(2) Basis of measurement for asset retirement obligations
Asset retirement obligations are calculated individually based on individual estimates of the usage
period depending on the situation of each asset retirement obligation, and the discount rates ofJapanese government bonds at the time of application of the relevant accounting standards or at thetime of acquisition of the assets.
(3) Changes in the balance of asset retirement obligations for the years ended 31 March 2019 and 2018
are as follows:

Balance at the beginning of year
Increase due to acquisition of property,
plant and equipment
Adjustment with passing of time
Decrease due to settlement
Decrease due to changes in estimate (Note)
Other
Balance at the end of year

Millions of yen
2018
2019
¥
497
¥
503

Thousands of
U.S. Dollars
2019$ 4,537

41
4
(2)
(23)
(13)
503

5,851
49
(32)
–
–
$ 10,405

¥

649
5
(3)
–
–
1,154

¥

Note: As a result of obtaining new information, the amount of asset retirement obligations decreasedby ¥23 million for the year ended 31 March 2018, due to a change in the estimated restoration
costs to be incurred under real estate lease agreements at the time of vacating stores. There
have been no significant changes in the estimation during the year ended 31 March 2019.

41

25. SEGMENT INFORMATION(1) Outline of reportable segments
The Group’s reportable segments are divisions of the Group for which separate financial information
is available, and whose operating results are regularly reviewed by the Board of Directors of theCompany in order to allocate management resources and assess performance of operations.
The Group is engaged in transportation and various other businesses and has five business segments:“Transportation,” “Real Estate,” “Retail Distribution,” “Leisure and Service” and “Others.”“Transportation” involves mainly railway and bus services. “Real Estate” mainly involves sales orleasing of real estate, wholesale of construction materials, and surveying and designing of real estate.
“Retail Distribution” involves mainly operations of department stores, other stores, and malls.
“Leisure and Service” involves mainly hotel and sightseeing cruise businesses. “Others” involves
credit card business.
(2) Calculation method used for operating revenues, income or loss, assets, and other items of eachreportable segment
The accounting policies of the reportable segments are substantially the same as those described in
Note 2 “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.”
The segment income or loss is based on the operating income of each reportable segment.
Inter-segment operating revenues or transfers are determined based on market prices.

4225. SEGMENT INFORMATION (continued)(3) Information about operating revenues, income or loss, assets and other items by reportable segment
for the years ended 31 March 2019 and 2018
Millions of Yen
2019
Reportable Segments
RetailLeisure andTransportation Real Estate Distribution
Service

Others¥

91,715¥ 1,145

2,211

13,685

479

Total

¥

93,926¥ 118,607

Segment income (loss)
Segment assets
Other items:
Depreciation
Increase in property,
plant and equipment,
and intangible assets¥

11,221
244,887¥

Operating revenues:
External customers
Inter-segment
operating revenues
or transfers¥ 104,921

17,468396,874¥ 98,248

Total

Adjustments Consolidated(Note 1)
(Note 2)¥

326,155¥

17,570(17,570)¥

343,726(57) ¥
7,802

33,373
718,795¥

30,124496

698¥ 98,727¥

30,621¥ 1,843

¥

¥

1,817
37,446¥2,923
31,783

3¥

326,159¥ (17,567)¥

326,159¥¥

33,715
731,750342
12,954–

11,898

5,197

1,306

1,116

37

19,556262

19,81914,60926,080

1,428

3,364

9

45,492(1,860)43,631

Notes: 1. Details of adjustments are as follows:(1) “Adjustments” to “Segment income (loss)” represented elimination of inter-segment
transactions and operating income or loss of the Company not allocated to eachreportable segment.
(2) “Adjustments” to “Segment assets” represented elimination of inter-segment
transactions and the Company assets not allocated to each reportable segment. The
Company assets amounted to ¥31,637 million ($285,043 thousand) and principallyconsist of the Company’s surplus funds (cash and deposits), long-term investment
assets (investment securities).
(3) “Adjustments” to “Increase in property, plant and equipment, and intangible assets”
represented elimination of inter-segment transactions amounted to ¥2,132 million($19,600 thousand) and the Company assets not allocated to each reportable segment
amounted to ¥271 million ($2,497 thousand).
2. Segment income (loss) was adjusted to operating income in the consolidated statement ofincome.

43

25. SEGMENT INFORMATION (continued)(3) Information about operating revenues, income or loss, assets and other items by reportable segment
for the years ended 31 March 2019 and 2018 (continued)
Millions of Yen
2018
Reportable Segments
RetailLeisure andTransportation Real Estate Distribution
Service

Others¥90,040¥ 1,140

2,222

13,139

492

Total

¥

92,262¥ 113,132

Segment income
Segment assets
Other items:
Depreciation
Increase in property,
plant and equipment,
and intangible assets

¥

9,180
243,758¥

Operating revenues:
External customers
Inter-segment
operating revenues
or transfers¥

99,993

15,316366,165¥ 100,216

Total

Adjustments Consolidated(Note 1)
(Note 2)¥322,273¥¥

30,882416

684

16,954(16,954)¥ 100,709¥

31,298¥ 1,824¥

339,228

¥

¥

4,877
35,430¥¥32,254
684,0842,845
31,049

34
7,680

3

¥

322,276¥ (16,951)¥

322,276¥¥

31,458
698,786(795)
14,701–

11,289

5,017

1,326

1,163

37

18,833279

19,113

14,952

21,345

1,187

1,958

7

39,452

293

39,745

Notes: 1. Details of adjustments are as follows:(1) “Adjustments” to “Segment income” represented elimination of inter-segment
transactions and operating income or loss of the Company not allocated to eachreportable segment.
(2) “Adjustments” to “Segment assets” represented elimination of inter-segment
transactions and the Company assets not allocated to each reportable segment. The
Company assets amounted to ¥31,700 million and principally consist of the Company’s
surplus funds (cash and deposits), long-term investment assets (investment securities).
(3) “Adjustments” to “Increase in property, plant and equipment, and intangible assets”
represented the Company assets not allocated to each reportable segment.
2. Segment income (loss) was adjusted to operating income in the consolidated statement ofincome.

4425. SEGMENT INFORMATION (continued)(3) Information about operating revenues, income or loss, assets and other items by reportable segment
for the years ended 31 March 2019 and 2018 (continued)
Thousands of U.S. Dollars
2019
Reportable Segments
RetailLeisure andTransportation Real Estate Distribution
Service

OthersTotal$

826,342$ 10,316$ 2,938,604

19,922

123,302

4,319

4,477

6,289

158,311

Total$

846,264$ 1,068,629$ 889,521$ 275,894$ 16,606$ 3,096,916

Segment income (loss)
Segment assets
Other items:
Depreciation
Increase in property,
plant and equipment,
and intangible assets$

101,1022,206,396$ 157,389
3,575,770$ 26,338
286,363$$

107,200

46,83011,775

10,058336

176,200

2,367

179,567

131,628

234,981

12,86630,315

85409,877(16,764)

393,113

Operating revenues:
External customers
Inter-segment
operating revenues
or transfers$ 945,327$ 885,201$ 271,417

16,376337,387(522) $ 300,685
70,302
6,476,220

Adjustments Consolidated(Note 1)
(Note 2)$31

$ 2,938,636(158,311)–$ (158,279) $ 2,938,636$

3,089
116,720$

303,774
6,592,941(4) Related informationa. Information by product and service
Information by product and service was omitted because it was the same as that of reportablesegment information.
b. Geographical information
Operating revenues
As revenue located in Japan accounted for more than 90% of revenue recognised in the
consolidated statement of income for the years ended 31 March 2019 and 2018, information onrevenue by geographical segment was omitted.
Property, plant and equipment
As the balance of property, plant and equipment located in Japan accounted for more than 90% of
the balance of property, plant and equipment recognised in the consolidated balance sheet as at 31
March 2019 and 2018, information on property, plant and equipment by geographical segment
was omitted.
c. Information by major customer
As operating revenues to any single external customer do not exceed 10% of operating revenues
in the consolidated statement of income, information by major customer was omitted.

4525. SEGMENT INFORMATION (continued)(5) Information about loss on impairment of property, plant and equipment by reportable segment
Millions of Yen
2019
Reportable Segments
RetailLeisure andTransportation Real Estate Distribution
Service
Impairment loss

¥

15

¥

1,264

¥

1

¥

97

Others
¥

–

Total
¥

1,378

Adjustments Consolidated
¥

(45)

¥

1,333

Millions of Yen
2018
Reportable Segments
RetailLeisure andTransportation Real Estate Distribution
Service
Impairment loss

¥

12

¥

–

¥

44

¥

5

Others
¥

–

Total
¥

61

Adjustments Consolidated
¥

–

¥

61

Thousands of U.S. Dollars
2019
Reportable Segments
RetailLeisure andTransportation Real Estate Distribution
Service
Impairment loss

$

136

$

11,390

$

16

$

877

Others$–Total$ 12,422

Adjustments Consolidated
$

(408)

$

12,013(6) Information on amortisation of goodwill and remaining unamortised balance by reportable segment
Information on amortisation of goodwill and remaining unamortised balance by reportable segment
as at 31 March 2019 and 2018 and for the years then ended was omitted because the amounts wereimmaterial.
(7) Information on negative goodwill by reportable segment
There was no gain on negative goodwill recognised for the years ended 31 March 2019 and 2018.

46

26. RELATED PARTY TRANSACTIONSTransactions of the Company with related parties as at and for the years ended 31 March 2019 and 2018
are as follows:
Company’s unconsolidated subsidiaries and affiliates
2019
Category
Affiliates

Company
nameNakanoshima Rapid
RailwayCo., Ltd.

Location
Chuo-ku,
Osaka

Capital¥26,135
million($253,477
thousand)Business
Railway
operations

Percentage
of votingrights(Direct
votingrights)RelationshipReservationofguarantees
on loans

Transaction
Guarantees(Note 1)

Transaction
amount¥21,511
million($193,810
thousand)Account–

Year-endbalance–

Account–

Year-endbalance–33.50%
Holding
concurrent
position of
directors

2018
Category
Affiliates

Company
nameNakanoshima Rapid
RailwayCo., Ltd.

Location
Chuo-ku,
Osaka

Capital¥26,135
millionBusiness
Railway
operations

Percentage
of votingrights(Direct
votingrights)RelationshipReservationofguarantees
on loans

Transaction
Guarantees(Note 1)

Transaction
amount¥22,644
million33.50%
Holding
concurrent
position of
directors

Note: 1. Guarantees are provided for the loans of the affiliate obtained from the Development Bank of Japanand other banks in the amounts of ¥21,511 million ($193,810 thousand) and ¥22,644 million forthe years ended 31 March 2019 and 2018, respectively.

47