Consolidated Financial Results
for the Three Months Ended September 30, 2018
[Japanese GAAP]
November 12, 2018
Company name: Nippon Koei Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange
Code number: 1954
URL: https://www.n-koei.co.jp/english/
Representative: Ryuichi Arimoto, Representative Director and President
Contact: Tetsumi Aoki, General Manager, Accounting Department
Phone: +81-3-3238-8040
Scheduled date of filing quarterly securities report: November 13, 2018
Scheduled date of commencing dividend payments: Availability of supplementary briefing material on quarterly financial results: Yes
Schedule of quarterly financial results briefing session: None
(Amounts of less than one million yen are rounded down.)
1. Consolidated Financial Results for the Three Months Ended September 30, 2018 (July 1, 2018 to September 30, 2018)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net income attributable
Net sales
Operating income
Ordinary income
to owners of parent
Three months ended
Million yen%
Million yen% Million yen% Million yen%
September 30, 2018
17,72925.1(1,962)(2,061)(1,654)September 30, 2017
14,16815.4(1,557)(1,189)8(Note) Comprehensive income: Three months ended September 30, 2018 : ¥(1,107) million [ - %]Three months ended September 30, 2017 : ¥849 million [ - %]Net income per share
Three months ended
September 30, 2018
September 30, 2017

Yen
(106.33)
0.55

Diluted net income
per shareYen-(2) Consolidated Financial Position
Total assets
Net assets
Equity ratio
As ofMillion yen
Million yen%
September 30, 2018
116,122
57,245
48.4
June 30, 2018
113,890
59,44951.2(Reference) Equity: As of September 30, 2018 : ¥56,173 million
As of June 30, 2018
: ¥58,363 million(Note) From the beginning of the first quarter of the fiscal year ending June 30, 2019, the Company has adopted “Partial
Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No.28, February 16, 2018), etc.
The accounting standard is retrospectively applied to the amount as of June 30, 2018.
2. Dividends
Annual dividends
2nd
3rd
Year-endquarter-end
quarter-end
Yen
Yen
Yen
75.00

1st
quarter-end
Yen-

Fiscal year ended June 30, 2018
Fiscal year ending June 30, 2019
Fiscal year ending June 30, 2019 (Forecast)(Note) Revision to the forecast for dividends announced most recently: None

1

-

75.00

Total
Yen
75.00
75.00

3. Consolidated Financial Results Forecast for the Fiscal Year Ending June 30, 2019 (July 1, 2018 to June 30, 2019)(% indicates changes from the previous corresponding period.)
Net income attributable
Net income
Net sales
Operating income
Ordinary income
to owners of parent
per share
Million yen% Million yen% Million yen%
Million yen%
Yen
Full year
115,000
8.5
6,200
(5.5)
6,100
(9.2)
4,100
(10.0)
263.54(Note) Revision to the financial results forecast announced most recently: None
* Notes:(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes
in scope of consolidation): None
(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: Yes(3) Changes in accounting policies, changes in accounting estimates and retrospective restatement
1) Changes in accounting policies due to the revision of accounting standards: None
2) Changes in accounting policies other than 1) above: Yes
3) Changes in accounting estimates: Yes
4) Retrospective restatement: None
(4) Total number of issued shares (common stock)1) Total number of issued shares at the end of the period (including treasury stock)
As of September 30, 2018
: 15,905,049 shares
As of June 30, 2018
: 15,905,049 shares2) Total number of treasury stock at the end of the period
As of September 30, 2018:332,704 shares
As of June 30, 2018:364,422 shares
3) Average number of shares during the period
Three months ended September 30, 2018 : 15,557,162 shares
Three months ended September 30, 2017 : 15,451,565 shares* These consolidated financial results are not subject to quarterly audit procedures by certified public accountants or audit
firms.
* Explanation of the proper use of financial results forecast and other notes(Caution regarding forward-looking statements)
The earnings forecasts and other forward-looking statements disclosed herein are based on information available to theCompany as of the date of publication of this document and certain assumptions deemed reasonable. Actual results, etc.
may differ significantly due to a wide range of factors.

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Table of Contents of Attachment
1. Qualitative Information on Quarterly Financial Results ............................................................................................. 2(1) Explanation of Operating Results .......................................................................................................................... 2(2) Explanation of Financial Position .......................................................................................................................... 4(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Statements ....................... 4
2. Quarterly Consolidated Financial Statements and Primary Notes .............................................................................. 5(1) Quarterly Consolidated Balance Sheet .................................................................................................................. 5(2) Quarterly Consolidated Statement of Income and Comprehensive Income .......................................................... 7(3) Quarterly Consolidated Statement of Cash Flows ................................................................................................. 8(4) Notes to Quarterly Consolidated Financial Statements ......................................................................................... 9(Notes on Going Concern Assumption) ................................................................................................................ 9(Notes on Significant Changes in Shareholders’ Equity) ...................................................................................... 9(Accounting Policies Adopted Specially for the Preparation of Quarterly Consolidated Financial Statements) .. 9
(Changes in Accounting Policies that are difficult to distinguish from Changes in Accounting Estimates, andChanges in Accounting Estimates) ........................................................................................................................ 9(Segment Information) ........................................................................................................................................ 10(Significant Subsequent Events).......................................................................................................................... 12
3. Other Information ...................................................................................................................................................... 13(1) Status of Orders and Sales ................................................................................................................................... 131

1.

Qualitative Information on Quarterly Financial Results(1) Explanation of Operating Results
During the three months ended September 30, 2018 (from July 1, 2018 to September 30, 2018), Japan’s economy
continued on a moderate recovery path with signs of private consumption picking up against the background ofsteady improvements in employment conditions and income. Also, despite the need to bear in mind the global
uncertainty about economic policies, beginning with those of the United States and Europe, and the outlook for
Asian countries, overseas economies showed a moderate trend of recovery.
The business environment of Nippon Koei Co., Ltd. (the “Company”) and its subsidiaries (together, the “Group”)
experienced firm demand in each business segment. In the Domestic Consulting Operations, the Group undertook
measures to prevent and mitigate disaster, and also to prevent deterioration of infrastructure for public works
projects. In the International Consulting Operations, we promoted the Japanese government's infrastructure andsystems export strategy, while the Power Engineering Operations saw demand in a replacement of power
distribution equipment. In the Urban & Spatial Development Operations, BDP Holdings Limited and its subsidiaries(hereinafter referred to under the general label “BDP”) were involved in the construction and renovation of public
facilities in the United Kingdom, its main market, and the Energy Business Operations experienced rising demand
for renewable energy as a result of the shift towards low-carbon societies and distributed power sources.
Under these circumstances, based on the Medium-Term Management Plan “NK-Innovation 2021” (from July
2018 to June 2021), with the fundamental principles of “Continue evolution into global consulting and engineering
firm,” the Group tackled the five business strategies of “Enhancement of operating system for Railways Business,”“Overseas expansion of Urban & Spatial Development Business,” “Establishment of Energy Business,” “Creationof businesses and overseas expansion of Consulting Business,” and “Product development and overseas expansionof Power Engineering Business.” Moreover, as group-wide measures to realize these goals, the Group actively
advanced “Establishment of one-stop marketing system,” “Investment in technologies and human resources,” and“Enhancement of group governance.”
In terms of Group performance, as a result of the above, orders received increased 8.2% year on year to ¥28,891
million for the three months ended September 30, 2018. Net sales increased 25.1% year on year to ¥17,729 million
due to an application of the percentage-of-completion method to contracts started during the previous fiscal year.
Operating loss increased 26.0% year on year to ¥1,962 million, ordinary loss increased 73.3% year on year to¥2,061 million, and loss attributable to owners of parent was ¥1,654 million (net income attributable to owners ofparent for the three months ended September 30, 2017: ¥8 million).
Net sales for the three months ended September 30, 2018 were ¥17,729 million, an achievement rate of 15.4%
against the net sales forecast of ¥115,000 million for the fiscal year ending June 30, 2019 (three months ended
September 30, 2017: 13.4%). This is attributable to seasonal fluctuations in the Group’s net sales where a significant
percentage of its business commonly tends to increase its percentage of achievement in the second half of the fiscal
year. In addition, because expenses such as selling, general and administrative expenses were generated fairly
evenly throughout the year, the Group recorded an operating loss, an ordinary loss and loss attributable to ownersof parent for the three months ended September 30, 2018.
Business results for each segment are as follows:[Domestic Consulting Operations]
The Domestic Consulting Operations worked to further reinforce the management base, by reconstructing orderreceiving and production systems, securing and improving quality, while also pursuing more effective business
management. In addition, we worked to support the actions under the global strategy cooperating with theInternational Consulting Operations and the R&D Center, as well as to develop new businesses by utilizing themanagement know-hows, as its core, to improve the value of infrastructure.

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As a result, orders received increased 6.6% year on year to ¥14,266 million. Net sales increased 191.1% year on
year to ¥5,749 million, operating loss decreased 23.7% year on year to ¥1,511 million and ordinary loss decreased
22.9% year on year to ¥1,511 million.
[International Consulting Operations]
In the International Consulting Operations, we worked to acquire and develop human resources, mainly in therailways business, as well as strengthening the production system by enhancing project management capabilities,
and practicing strict management of profit, risks and safety. In addition, we were actively involved in theconcessions business, which leverage public sector facility concessions in the Public Private Partnership (PPP),
Private Finance Initiative (PFI) businesses and the private sector business.
As a result, orders received increased 12.7% year on year to ¥7,431 million. Net sales decreased 12.4% year on
year to ¥5,111 million, operating loss was ¥33 million (operating income of ¥ 678million for the three months ended
September 30, 2017) and ordinary income decreased 99.1% year on year to ¥6 million.
[Power Engineering Operations]
In the Power Engineering Operations, we strove to expand the mechanical and electrical consulting business byextending into new areas such as traffic, transport and maintenance-management, with a focus on global expansion.
In addition to reinforcing cooperation with the Group companies in the energy-related business and themaintenance-management business, we promoted technology development and the development of products built
to global standard specifications. While we continued to implement strict cost reduction programs to improve pricecompetitiveness, and worked to strengthen sales capabilities, competition in the power market as a whole intensified,and also had an impact on the Group.
As a result, orders received decreased 53.3% year on year to ¥1,902 million. Net sales decreased 0.5% year on
year to ¥3,088 million, operating income decreased 42.5% year on year to ¥138 million and ordinary income
decreased 68.2% year on year to ¥124 million.
[Urban & Spatial Development Operations]
In the Urban & Spatial Development Operations, as well as responding to changes in the UK market, we expanded
our business in the Asian market through collaboration with another Group member located in Singapore, also
aiming to break into the markets of British Commonwealth of Nations countries.
As a result, orders received increased 92.7% year on year to ¥5,126 million. Net sales increased 6.0% year on yearto ¥3,291 million, operating loss was ¥21 million (operating income of ¥ 41million for the three months ended
September 30, 2017) and ordinary income decreased 54.7% year on year to ¥31 million.
[Energy Business Operations]
The Energy Business Operations promoted improved profitability in the power generation business such as
through renewable energy and worked to form new projects including PFI business. In addition, we accumulated a
track record in the renewable energy and storage battery EPC (engineering, procurement & construction) businessin the energy management business, further sought to promote the resource aggregator (an operator that plays acentral role in control and management in relation to both energy operators and sources of demand) and VPP (virtual
powerplant) businesses.
As a result, we saw orders received of ¥134 million, net sales of ¥213 million, operating loss of ¥36 million andordinary loss of ¥59 million.
[Real Estate Leasing Operations]
In the Real Estate Leasing Operations, net sales decreased 3.3% year on year to ¥109 million, operating income
increased 1.5% year on year to ¥106 million and ordinary income decreased 20.9% year on year to ¥83 million.

3(2) Explanation of Financial Position
Total assets as of the end of the first quarter of the fiscal year, amounted to ¥116,122 million, an increase of ¥2,232
million from the end of the previous fiscal year.
In the Assets section, current assets were ¥56,054 million, an increase of ¥1,791 million from the end of theprevious fiscal year. This was mainly due to a ¥1,942 million decrease in cash and deposits, while a ¥1,479 million
increase in notes and accounts receivable-trade and a ¥2,197 million increase in work in process.
Non-current assets were ¥60,067 million, an increase of ¥441 million from the end of the previous fiscal year.
This was mainly due to a ¥416 million increase in construction in progress included in other items of property, plantand equipment.
In the Liabilities section, current liabilities were ¥33,271 million, an increase of ¥4,829 million from the end of
the previous fiscal year. This was mainly due to a ¥778 million decrease in other payables, a ¥521 million decreasein consumption tax payable and a ¥719 million decrease in deposit received included in other items of current
liabilities, while a ¥6,000 million increase in short-term loans payable and a ¥1,284 million increase in provision
for bonuses.
Non-current liabilities were ¥25,605 million, a decrease of ¥393 million from the end of the previous fiscal year.
This was mainly due to a ¥461 million decrease in deferred tax liabilities included in other items of non-current
liabilities.
Net assets were ¥57,245 million, a decrease of ¥2,203 million from the end of the previous fiscal year. The primaryfactors behind this were ¥1,654 million in net loss attributable to owners of parent, ¥1,192 million in cash dividends
paid, a ¥209 million increase in valuation difference on available-for-sale securities and a ¥368 million increase inforeign currency translation adjustments.
As a result, the shareholders’ equity ratio decreased 2.9 percentage points from the end of the previous fiscal year
to 48.4%.
Moreover, the Company has adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting”(ASBJ Statement No. 28, February 16, 2018) and relevant Guidances from the beginning of the first quarter ended
September 30, 2018. These accounting standards have been applied retrospectively for comparison and analysis
with financial position in the previous fiscal year.

(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Statements
The consolidated financial results forecast for the fiscal year ending June 30, 2019 have not changed from theforecast announced in the Consolidated Financial Results for the Fiscal Year Ended June 30, 2018 dated August
13, 2018.

42. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly Consolidated Balance Sheets56

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
For the Three months ended September 30, 2017 and 20187

(3) Quarterly Consolidated Statements of Cash Flows8(4) Notes to Quarterly Consolidated Financial Statements(Notes on Going Concern Assumption)
There is no relevant information.
(Notes on Significant Changes in Shareholders’ Equity)
There is no relevant information.
(Accounting Policies Adopted Specially for the Preparation of Quarterly Consolidated Financial Statements)(Deferral of cost variance)
Cost variance caused by seasonal changes in operation rates, etc. is expected to be almost completely
eliminated by the end of the cost accounting period, which is, therefore, deferred as other current liabilities.

(Changes in Accounting Policies that are difficult to distinguish from Changes in Accounting Estimates, andChanges in Accounting Estimates)(Change in depreciation method for property, plant and equipment)
We took the opportunity provided by drawing up the Medium-term Management Plan, whose first year is thecurrent fiscal year, to investigate the status of property, plant and equipment usage. As a result, because it isexpected that the economic benefit derived from property, plant and equipment will be consumed equally overits useful life at some of our domestic subsidiaries, from the first quarter ended September 30, 2018 thedepreciation method for property, plant and equipment has been changed from the declining-balance method
to the straight-line method, and costs have been allocated more appropriately.
Also, as a consequence of this change in the depreciation method, for certain property, plant and equipment
assets, upon consideration of the price at the time of disposal, the residual value has been changed to amemorandum of value.
As a result of this change, the depreciation expenses for the first quarter of the fiscal year decreased by ¥15
million, and each of operating loss, ordinary loss, and loss before income taxes decreased by ¥14 million fromthe amounts based on the previous method.

9

(Segment Information)
For the three months ended September 30, 2017 (from July 1, 2017 to September 30, 2017)1)

Net sales and segment income or loss by reportable segment(Millions of yen)
Reportable segment

Operations

Power
Engineering
Operations

1,974

5,837

3,103

113

3

2,088

5,840

Others(Note)

Real Estate
Leasing
Operations

Subtotal

3,104

-

113

14,13335

14,168

49

6

-

39

211

0

211

3,152

3,110

-

152

14,34436

14,380

Segment income (loss)(1,959)
667
390
69
105
(726)
(496)
(Note) “Others” refers to a group of operations from which no income is gained or that produce only incidental gains.

(1,222)

2)

International

Urban &

EnergyBusiness
Operations

Net sales
Net sales to externalcustomers
Intersegment sales ortransfers
Total

Domestic
Consulting
Operations

Consulting

SpatialDevelopment
Operations

Total

Differences between the total amount of income or loss of reportable segments and the amounts in quarterly
consolidated statement of income and comprehensive income, and major breakdown of such differences(reconciliation)(Millions of yen)
IncomeAmountReportable segment total(726)

Loss of “others” category(496)

Elimination of intersegment transactions

33

Ordinary Income (loss) in the quarterly consolidated
statement of income and comprehensive income(1,189)10

For the three months ended September 30, 2018 (from July 1, 2018 to September 30, 2018)1)

Net sales and segment income or loss by reportable segment(Millions of yen)
Reportable segment

Operations

Power
Engineering
Operations

5,749

5,111

3,088

147

6

5,897

5,118

Others(Note)

Real Estate
Leasing
Operations

Subtotal

3,291

213

109

17,565164

17,729

51

15

-

41

262

207

469

3,139

3,307

213

150

17,827371

18,199Segment income (loss)(1,511)
6
124
31
(59)
83
(1,325)(751)(Note) “Others” refers to a group of operations from which no income is gained or that produce only incidental gains.

(2,077)

2)

International

Urban &

EnergyBusiness
Operations

Net sales
Net sales to externalcustomers
Intersegment sales ortransfers
Total

Domestic
Consulting
Operations

Consulting

SpatialDevelopment
Operations

Total

Differences between the total amount of income or loss of reportable segments and the amounts in quarterly
consolidated statement of income and comprehensive income, and major breakdown of such differences(reconciliation)(Millions of yen)
IncomeAmountReportable segment total(1,325)

Loss of “others” category(751)

Elimination of intersegment transactions

16

Ordinary Income (loss) in the quarterly consolidated
statement of income and comprehensive income

3)(2,061)

Information regarding changes in reportable segments, etc.
In the previous fiscal year, we established the Energy Business Division with its business domains of electric
power generation and energy management using distributed energy, and therefore added “Energy Business
Operations” to the reportable segments.
The segment information for the three months ended September 30, 2017 disclosed as comparative information
to the three months ended September 30, 2018 is stated according to the revised designation of the reportablesegment.

11

(Significant Subsequent Events)(Issuance of new shares as restricted stock compensation)
The Company decided to issue new stocks as restricted stock compensation at the extraordinary Board of
Directors’ meeting held on September 27, 2018, and the procedure for payment was completed on October 26,
2018.
1. Purpose and reason for issuance
We aim to have the directors (not including outside directors; “Eligible Directors”) share benefits and risksof stock price fluctuations with shareholders and further enhance their willingness to contribute to improving
stock prices and enhancing corporate value. Therefore, the Company decided, at the Board of Directors heldon August 14, 2017, to introduce a restricted stock compensation system (the “System”) which will issue
restricted stock to Eligible Directors.
Furthermore, the 73rd Annual General Meeting of Shareholders held on September 28, 2017, approved, under
the System, setting the total amount of monetary compensation claims payable to the Eligible Directors ascompensation related to restricted stock at a level where it does “not exceed an annual amount of ¥60 million.”
In addition, the total number of 50,000 shares which are restricted stock to be allotted to Eligible Directors
will be the upper limit of the number of restricted shares to be allotted in each fiscal year, and the transfer
restriction period of restricted stock will be between one to five years, determined by the Board of Directors.
2. Outline of the Issuance(1) Payment date(2) Class and number of shares to be issued(3) Issue price(4) Total issue price of shares to be issued(5) Capitalization amount(6) Total capitalization amount(7) Method of offer or allotment(8) Method of contribution(9) Allottees, number thereof andnumber of shares to be allotted

October 26, 2018
14,495 shares of common stock of the Company¥3,095 per share¥44,862,025¥1,548 per share¥22,438,260
Allotment of specified restricted stocks
In-kind contribution of monetary compensation claims
14,495 shares to nine directors of the Company(excluding outside directors)(10) Transfer restriction period

October 26, 2018, to October 25, 2021

(11) Other

Issue of new shares to be allotted is conditioned on the
securities registration statement taking effect in accordancewith the Financial Instruments and Exchange Act.

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3. Other Information(1) Status of Orders and Sales

Notes: 1. This includes the outstanding orders at the beginning of consolidation for Myanmar Koei International Ltd. and DSI Inc.,
which were consolidated from the previous fiscal year.
2. The above amounts are exclusive of consumption taxes.
3. The above amounts are for external customers, and do not include intersegment transactions or transfers.
4. Net sales 1 is by segment which received orders. Net sales 2 is by segment which provided services.

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