Consolidated Balance Sheet
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
31 March 2020

Millions of Yen
2020

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 8, 9 and 15)
Construction in progress
Other, net (Notes 9 and 15)
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 (Note 16)
Assets for retirement benefits (Note 12)
Other
Allowance for doubtful accounts
Total investments and other assets
TOTAL ASSETS (Note 25)¥

414,91821,947
2,178
123,881
1,836
12,617(364)
177,016¥2019
21,38531,189809
112,710
1,813
12,440(267)
180,080

Thousands of
U.S. Dollars(Note 1)
2020$

137,082
201,671
20,0191,138,300
16,875
115,940(3,353)
1,626,537

222,247
17,412
223,746
5,477
10,166
479,049

207,375
17,686
218,789
19,272
10,397473,5222,042,151
159,994
2,055,927
50,32893,4164,401,818

8,576

9,210

78,804

44,680411
10,163598
12,614(286)
68,182732,824

45,362
539
9,904
1,072
12,331(272)
68,937
731,750

410,552
3,783
93,3885,501
115,908(2,635)626,500
6,733,661¥$

Consolidated Balance Sheet (continued)
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
31 March 2020

Millions of Yen
2020

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)
Short-term bonds (Notes 10 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 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

9,450

¥

2019

Thousands of
U.S. Dollars(Note 1)
2020

11,544$

86,83875,224

96,076691,209

7,999
20,039
4,187
6,293
2,971
702
40,827
167,695－
10,045
5,505
8,439
2,867
634
43,196
178,31073,501
184,136
38,47457,82627,301
6,457
375,152
1,540,898

80,000143,869369
8,825
33,04690,059138,164442
9,110
33,047735,091
1,321,964
3,393
81,092
303,653

228

297

2,103

19,09325,636
311,069
478,765

18,36025,262
314,744
493,055

175,445
235,5622,858,305
4,399,204

51,466

51,466472,906

28,792150,926

28,789134,559

264,561
1,386,812(21,640)(21,626)(198,845)

209,545

193,189

1,925,434

6,648
36,37571(2,904)40,191
110
4,212
254,058
732,824

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

61,093
334,239660(26,690)369,302
1,015
38,703
2,334,457
6,733,661

COMMITMENTS AND CONTINGENT LIABILITIES (Note 23)
NET ASSETS (Note 13) :Common stock:
Authorised, 319,177,200 shares as at 31 March 2020 and 2019;
Issued, 113,182,703 shares as at 31 March 2020 and 2019
Capital surplus
Retained earnings
Treasury stock, at cost, 5,997,108 shares as at 31 March 2020,
and 5,994,904 shares as at 31 March 2019
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.

5

¥

$

Consolidated Statement of Income
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Year Ended 31 March 2020

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)
Share of loss of affiliates accounted for using equity method, 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
Loss on deduction of contributions received for construction fromacquisition costs of property, plant and equipment
Loss on valuation of shares of unconsolidated subsidiaries
Insurance income related to disaster
Loss on disaster
Other, net
Other income (expenses), 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.

6

Millions of Yen
2019
2020
¥ 326,159
317,103

Thousands of
U.S. Dollars(Note 1)2020$
2,913,746

241,547
44,432285,979
31,123249,885
42,558292,443
33,7152,219,490
408,2712,627,762
285,984

1,000(2,189)
(505)
(99)
658
1,183
1,093
827
(613)

937
(2,401)(1,333)
(85)
318
1,366
132
1,922
(869)

9,189
(20,114)(4,641)(911)
6,051
10,874
10,044
7,606(5,635)(1,312)(862)(12,060)

(9)
－
－
57
91

－
210
(936)
(64)
(1,666)

(91)
－
－
527
838

31,21432,048286,822

10,602
221
10,824
20,39011,322(1,160)10,162
21,88697,4202,039
99,460187,362269
20,121¥405
21,480$2,473
184,888

Consolidated Statement of Comprehensive Income
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Year Ended 31 March 2020

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

See accompanying notes to consolidated financial statements.

7

Millions of Yen
2019
2020
21,886
20,390¥Thousands of
U.S. Dollars(Note 1)2020
$ 187,362(1,543)(307)(2,627)(56)(14,179)(2,823)

92

(27)

853

(1,757)
18,63318,364268¥¥(2,710)19,17518,801
374$$(16,149)
171,213
168,7442,468

Consolidated Statement of Changes in Net Assets
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Year Ended 31 March 2020
Millions of Yen

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 1 APRIL 2019
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 2020

CommonStock51,466－

CapitalSurplus28,787－Retained
Earnings
117,384(4,019)

－

－

－
－

－
－

－
－
－

Revaluation
Reserve forLand
36,088－Retirement
BenefitLiability
Adjustment(2,540)－Total
Accumulated
Other
Comprehensive
Income, Net
44,341－Stock
Acquisition
Rights44－

Noncontrolling
Interests
3,139
－

Total
Net Assets
223,559(4,019)－－21,480

－
－

－
－

(285)
(0)

－

－

2

－
－

－
－

－
－

(23)
0

TreasuryStock(21,603)－

Total Shareholders'Equity176,033(4,019)21,480－21,480

－

－

－

－

－

(285)
(0)

－
－

(285)
(0)

－
－

－
－

－
－

－
－

－
－

2

－

－

2

－

－

－

－

－

－
0

－
－

(23)
0

(23)
0

－
－

－
－

－
－

－
－

－

－

－

－

－

(2,596)

285

(27)

(56)

(2,394)30

344(2,019)51,466－28,789－134,559(3,751)(21,626)－

193,189(3,751)

8,191－

36,373－(20)－(2,597)－

41,946
－

75
－

3,484
－

238,695(3,751)－－

20,121－

20,121

－

－

－

－

－

－

－

20,121

－
－

－
－

(1)
(0)

－
－

(1)
(0)

－
－

－
－

－
－

－
－

－
－

－
－

－
－

(1)
(0)

－

2

－

－

2

－

－

－

－

－

－

－

2

－
－

－
(0)

－
－

(22)
8

(22)
8

－
－

－
－

－
－

－
－

－
－

－
－

－
－

(22)
8

－
¥

Net Unrealised
Holding Gain on
Securities
10,787－

Foreigncurrencytranslation
adjustments
6－

51,466－¥

28,792－¥150,926－¥(21,640)－¥(1,542)

209,545

¥

6,648

1
¥

36,375

92
¥

71

(307)
¥

(2,904)(1,755)¥40,191

35
¥

110

728
¥

4,212

(992)
¥

254,058

Thousands of U.S. Dollars (Note 1)

BALANCE at 1 APRIL 2019
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 2020

CommonStock$ 472,906－

CapitalSurplus$ 264,538－

Retained
Earnings$ 1,236,417(34,471)

－

－

－
－

－
－

－
－
－
－
$

472,906$

Net Unrealised
Holding Gain on
Securities$
75,267－

Revaluation
Reserve forLand$ 334,226－

Foreigncurrencytranslation
adjustments
$
(192)
－

Retirement
BenefitLiability
Adjustment$ (23,866)－

Total
Accumulated
Other
Comprehensive
Income, Net$
385,434－

Stock
Acquisition
Rights$692－

Noncontrolling
Interests$
32,014－Total
Net Assets$
2,193,287(34,471)

TreasuryStock$ (198,716)－

Total Shareholders'Equity$ 1,775,145(34,471)

184,888－

184,888

－

－

－

－

－

－

－

184,888

(12)
(8)

－
－

(12)
(8)

－
－

－
－

－
－

－
－

－
－

－
－

－
－

(12)
(8)

22

－

－

22

－

－

－

－

－

－

－

22

－
0

－
－

(208)
79

(208)
79

－
－

－
－

－
－

－
－

－
－

－
－

－
－

(208)
79

－

－

－

－

264,561$ 1,386,812$ (198,845)$ 1,925,434(14,174)$

See accompanying notes to consolidated financial statements.

8

61,093

12$

334,239

853
$

660

(2,823)$(26,690)(16,132)$

369,302

323
$

1,015

6,689
$

38,703(9,118)$2,334,457

Consolidated Statement of Cash Flows
Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Year Ended 31 March 2020

Millions of Yen
2019
2020
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 investment securities, net
Share of loss of affiliates, net
Interest and dividend income
Interest expense
Increase in allowance for doubtful accounts
Increase in allowance for employees' bonuses
Increase in liability for retirement benefits
Decrease (increase) in assets for retirement benefits
Decrease in trade receivables
Increase in inventories(Decrease) increase in trade payables(Decrease) increase in other current liabilities
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities¥

31,214¥32,048

Thousands of
U.S. Dollars(Note 1)
2020$

286,822

21,228505
526

20,2281,333
358

195,057
4,641
4,839

1,312

862

12,060

(658)
9
(827)
99
(1,000)
2,189
111
100
606
128
9,208
(11,562)(2,217)(8,770)2,913
45,1171,000(2,188)(11,896)
32,033(318)－(1,916)
85
(937)
2,401
12
312
104
(975)
406
(7,042)97
3,730(2,561)
48,232939(2,394)(10,303)36,473(6,051)91(7,606)911(9,189)20,114
1,027
919
5,576
1,181
84,611(106,247)(20,371)(80,586)
26,770414,572
9,193(20,105)(109,312)
294,348

INVESTING ACTIVITIES:(Increase) 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
Purchase of shares of affiliates
Decrease in loans receivable, net
Other, net
Net cash used in investing activities(0)(24,953)275
588(3,202)
1,790(1,099)45
193(26,363)9(43,329)502
315(5,867)2,353(1,332)37(747)(48,059)(0)(229,292)
2,534
5,403
(29,426)
16,450(10,105)
414
1,776(242,244)

FINANCING ACTIVITIES:(Decrease) increase in short-term loans, net
Increase in short-term bonds, 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) provided by financing activities
Net (decrease) 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)(6,894)
7,999
38,670(46,922)
9,923(10,045)(3,748)(26)(22)(1,070)(12,138)(6,468)21,3772
14,911

2,400－
44,923(39,310)
19,862(10,045)(4,012)(26)(23)(1,112)
12,655
1,069
20,3007
21,377(63,349)
73,501
355,324(431,157)
91,180(92,308)(34,444)
(238)
(208)
(9,838)(111,540)(59,437)
196,432
20
137,014

See accompanying notes to consolidated financial statements.

9

¥

¥

$

Keihan Holdings Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year Ended 31 March 2020
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 ¥108.83
to $1, the approximate rate of exchange at 31 March 2020. 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.
Biostyle Co., Ltd. was newly included in the scope of consolidation from the year ended 31 March
2020 due to an increase in materiality.
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 March
2020 and 2019.

10

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)a.

Consolidation (continued)
Investments in unconsolidated subsidiaries and certain affiliates are not accounted for by the equity
method but stated at cost, because the effect of their profit or loss and retained earnings (each amountin proportion to the interest 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.

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.

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 isprovided at a reasonably estimated amount of future utilisation.
11

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)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 - 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.
(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 for the railway and tramway
business. Contributions received are deducted directly from the acquisition costs of the related assets
at the time of completion of construction.
12

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)o.

Contributions for Construction (continued)
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 31 March 2020, the Accounting Standards Board of Japan (hereinafter referred to as the“ASBJ”) issued “Accounting Standard for Revenue Recognition” (revised 2020) (ASBJ
Statement No.29), “Implementation Guidance on Accounting Standard for Revenue Recognition”(revised 2020) (ASBJ Guidance No.30), and “Implementation Guidance on Disclosures about
Fair Value of Financial Instruments” (revised 2020) (ASBJ Guidance No.19). The International
Accounting Standards Board (hereinafter referred to as the “IASB”) and the Financial AccountingStandards 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 Accounting Standard
Codification Topic 606 by the FASB) in May 2014. The ASBJ developed comprehensive
accounting standards on revenue recognition and issued them in conjunction with theimplementation guidance based on the fact that IFRS 15 is being applied from fiscal years startingon 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
developed the accounting standard starting with incorporating the basic principle of IFRS 15 froma standpoint of comparability between financial statements, which is one benefit of ensuringconsistency 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.
(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 consolidated financial statements.
13

3.

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE (continued)

・ Accounting Standard for Fair Value Measurement and Related Implementation Guidance(1) Summary
On 4 July 2019, the ASBJ issued “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30), and “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31), along with related updates to “Accounting Standard for
Measurement of Inventories” (ASBJ Statement No. 9), “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10), and “Implementation Guidance on Disclosures about Fair
Value of Financial Instruments.” (ASBJ Guidance No. 19). The ASBJ promoted an initiative toenhance comparability of the requirements between the Japanese Standards and International
Standards, primarily with regard to guidance on the fair values of financial instruments and theirdisclosures, and issued “Accounting Standard for Fair Value Measurement,” etc., based on thefact that the IASB and the FASB have issued almost the identical detailed guidance (IFRS 13“Fair Value Measurement” issued by IASB and Accounting Standard Codification Topic 820“Fair Value Measurement” issued by FASB).
The ASBJ’s fundamental policies adopted for developing “Accounting Standard for Fair Value
Measurement,” etc. are, in principle, to implement all the requirements of IFRS 13 from theviewpoint of enhancing the comparability of the financial statements of domestic and overseas
companies by prescribing unified measurement methods, but also to prescribe exceptional
treatments for individual matters so that comparability would not be impaired in consideration of
accounting practices that have conventionally been adopted in Japan.
(2) Scheduled date of adoption
The Company expects to adopt the accounting standards from the beginning of the fiscal year
ending 31 March 2022.
(3) Effect of the adoption of accounting standard and implementation guidance
The effect of the adoption of the accounting standard and the implementation guidance on the
Company’s consolidated financial statements is currently undetermined.
・ Accounting Standard for Disclosure of Accounting Estimates(1) Summary
On 31 March 2020, the ASBJ issued “Accounting Standard for Disclosure of Accounting
Estimates” (ASBJ Statement No.31). The IASB issued International Accounting Standard 1,“Presentation of Financial Statements,” (“IAS 1”) in 2003, and Paragraph 125 of this accounting
standard requires disclosures of “sources of estimation uncertainty.” As such information would
provide useful information to users of financial statements in Japan, the ASBJ issued “AccountingStandard for Disclosure of Accounting Estimates.” The ASBJ outlined the guiding principles andthe purposes of disclosure of “sources of estimation uncertainty” and the items to be disclosed
should be determined by management in a way that helps users of the financial statements
understand the judgements applied. The nature and extent of the information to be disclosed willvary according to the nature of the assumptions and the other circumstances. This accounting
standard was developed based on Paragraph 125 of IAS 1.

14

3.

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE (continued)(2) Scheduled date of adoption
The Company expects to adopt the accounting standard from the end of the fiscal year ending 31
March 2021.

・ Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections(1) Summary
The ASBJ issued the revised “Accounting Standard for Accounting Policy Disclosures,
Accounting Changes and Error Corrections” (ASBJ Statement No.24). The ASBJ has amended
the standard to reflect recommendations for enhancing footnote information related to accounting
policies and methods which have been adopted in the cases where the relevant accounting
standards are not available.
In considering the notes on “accounting policies and methods which have been adopted in thecases where the relevant accounting standards are not available”, Notes 1-2 of Annotations on
Corporate Accounting Principles should be referred to in order not to effect accounting practices
in the cases where the relevant accounting standards are clear.
(2) Scheduled date of adoption
The Company expects to adopt the accounting standard from the end of the fiscal year ending 31
March 2021.
4.

ADDITIONAL INFORMATION

Operating revenue decreased mainly in the transportation business, retail distribution business, and leisureand service business due to the spread of the COVID-19 pandemic causing restrictions on outings during
the year ended 31 March 2020. In addition, despite the lifting of the state of emergency that was declaredby the Japanese government on 7 April 2020, there seem to be significant impacts on the Group’s businessperformance for the year ending 31 March 2021 due to the sharp decline in transportation volume in thetransportation business, suspension of operations or shortening of business hours at some facilities, andevent cancellations.
In the process of making accounting estimates, although the Group’s businesses have varying degrees ofimpacts caused by the spread of the pandemic, the Group made judgements such as loss on impairment ofproperty, plant and equipment based on certain assumptions, including that domestic demand gradually
recovers by around September 2020 and so does inbound demand by around the end of 2020. However,there are many uncertain factors in rationally estimating the impact caused by the pandemic. Therefore, if
the pandemic is prolonged or the impact on the business environment changes, the forecast based on theabove estimates may be different than actual results, which may affect significantly the Group’s businessperformance for the year ending 31 March 2021.

15

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 2020 and 2019.
Millions of Yen
2020
Carrying
value
Securities with fair value exceeding
carrying value:
National and municipal bonds
Corporate bonds
Total

¥
¥

170
1,100
1,270

Fair value
¥
¥

175
1,115
1,291

Difference
¥
¥

5
15
20

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

Thousands of U.S. Dollars
2020
Carrying
value
Fair value
Difference
Securities with fair value exceeding
carrying value:
National and municipal bonds
Corporate bonds
Total

$
$

1,563
10,108
11,671

16

$
$

1,611
10,251
11,863

$
$

48
143
191

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 2020 and 2019.

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

¥

¥

13,8191,446
15,266179
300
479
15,745Carrying
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

17Millions of Yen
2020
Acquisition
cost
¥

¥

4,515
1,209
5,724
220
300
520
6,245

Difference¥¥

Millions of Yen
2019
Acquisition
cost
¥

¥

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

9,304
236
9,541
(41)
–
(41)
9,500

Difference¥¥

11,229346
11,575(9)–(9)
11,566

5.

SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIES (continued)(2) Marketable securities classified as other securities (continued)
Thousands of U.S. Dollars
2020
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

$

$

126,985
13,293140,279
1,646
2,756
4,403
144,682$$

41,487
11,11652,604
2,028
2,756
4,785
57,390$$85,497
2,176
87,674
(381)
–
(381)
87,292Unlisted equity securities with a carrying value of ¥17,527 million ($161,056 thousand) and ¥14,573
million as at 31 March 2020 and 2019, 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 2020 and 2019.
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
2020
Proceeds
Gain on sale Loss on sale¥
1,790 ¥
827 ¥–Equity securities

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

Equity securities

Thousands of U.S. Dollars
2020
Proceeds
Gain on sale Loss on sale$
16,450 $7,606 $–

18

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 2020 and 2019 consisted of
the following:

Investments in unconsolidated
subsidiaries and affiliates
6.

¥

Millions of Yen
2020
2019

Thousands of
U.S. Dollars
2020

12,315$¥

11,249113,161

PROPERTY, PLANT AND EQUIPMENT

Accumulated depreciation included in property, plant and equipment as at 31 March 2020 and 2019
amounted to ¥467,875 million ($4,299,142 thousand) and ¥454,172 million, respectively.
Accumulated contributions deducted from the acquisition costs of property, plant and equipment as at 31
March 2020 and 2019 amounted to ¥181,362 million ($1,666,477 thousand) and ¥180,953 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 2020, rental income, net of related expenses, relevant to these properties
amounted to ¥10,371 million ($95,304 thousand).
For the year ended 31 March 2019, rental income, net of related expenses, relevant to these properties
amounted to ¥10,640 million and loss on impairment of these properties was recognised in the amount of¥1,171 million.
Rental income is included in operating revenues and expenses are mainly included in operating expenses in
the consolidated statements of income. Net loss on impairment of these properties is included in loss on
impairment of property, plant and equipment in other income (expenses) in the consolidated statement ofincome.

19

7.

RENTAL PROPERTIES (continued)

Movements in the carrying value during the years ended 31 March 2020 and 2019, and the fair value of therental properties as at 31 March 2020 and 2019 are as follows:

1 April 2019¥
152,046

Millions of Yen
2020
Carrying value
Net change
31 March 2020¥
10,671¥
162,717

Fair value
31 March 2020¥
243,302

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 2019$
1,397,096

Thousands of U.S. Dollars
2020
Carrying value
Net Change
31 March 2020$
98,053$
1,495,150

Fair value
31 March 2020$
2,235,624

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 2020
and 2019 are the increase due to the acquisition of an office building of ¥12,570 million ($115,502
thousand) and the decrease due to changes of holding purpose of properties of ¥4,857 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 revaluationdifference, 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” inliabilities.
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
20

9.

PLEDGED ASSETS

Assets pledged as collateral and the corresponding liabilities as at 31 March 2020 are summarised as follows:
Thousands of
U.S. Dollars
2020
The Group’s
Railwayfoundation
Total
mortgage

Millions of Yen
2020
The Group’s
Railwayfoundation
Total
mortgage
Assets pledged as collateral:
Buildings and structures
Machinery, equipment andvehiclesLand
Other property, plant andequipment
Investment securities
Total

¥

¥

64,572¥(64,357 )

13,63153,676

(
(

868
800
133,548((¥($593,331$(591,358 )

13,631 )
53,626 )125,251493,214((125,251 )
492,756 )

868 )
– )
132,483 )

7,976
7,350
1,227,124$Thousands of
U.S. Dollars
2020
The Group’s
Railwayfoundation
Total
mortgage

Millions of Yen
2020
The Group’s
Railwayfoundation
Total
mortgage
Corresponding liabilities:
Accounts payables
Long-term loans(including current portionof long-term loans)
Total

¥

35

¥(

– )

¥

58,03158,067(¥(

57,911 )
57,911 )(
7,976 )(–)
$ ( 1,217,343 )

$

323

$(

– )

$

533,234
533,558($(

532,130 )532,130 )Figures in parentheses in the above table represent the amounts of assets pledged as the Group’s railway
foundation mortgage and the corresponding liabilities.

21

10. SHORT-TERM DEBT AND LONG-TERM DEBT
The average interest rates applicable to the short-term bank loans of ¥41,598 million ($382,237 thousand)and ¥48,493 million, which are calculated as the weighted-average rates to the year end balances, were0.517% and 0.526% for the years ended 31 March 2020 and 2019, respectively.
Long-term loans and bonds as at 31 March 2020 and 2019 are summarised as follows:
Long-term loans

Millions of Yen
2020
2019
Loans from banks and other financial
institutions, due serially from 2019
to 2040 at weighted-average rates
ranging from 0.455% to 0.669%
Less current portionLong-term loans, less current portion¥¥

177,494(33,625)
143,869¥¥

Thousands of
U.S. Dollars
2020

185,747 $ 1,630,936(47,583)(308,972)
138,164 $ 1,321,964

The aggregate annual maturities of long-term loans subsequent to 31 March 2020 are summarised as follows:Year ending 31 March,
2021
2022
2023
2024
2025
2026 and thereafter
Total

Thousands ofMillions of Yen U.S. Dollars
33,625¥$308,972
30,030275,940
22,013202,273
10,273
94,401
17,082
156,965
64,469592,383¥ 177,494$ 1,630,936

22

10. SHORT-TERM DEBT AND LONG-TERM DEBT (continued)
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 2019
through 2039
Unsecured Keifuku Electric Railroad
bonds, payable in yen at rate of
0.210%, due 30 September 2020
Unsecured Keihan Holdings shortterm bonds, payable in yen at rate of
0.033%, due 30 September 2020
Total
Less current portion
Bonds, less current portion¥

Millions of Yen
2020
2019

Thousands of
U.S. Dollars
2020

20,019$¥20,039183,955

80,00080,000735,091

19

65

180

7,999
108,038(28,038)
80,000¥–100,105(10,045)
90,059 $73,501
992,728(257,637)
735,091

The aggregate annual maturities of bonds subsequent to 31 March 2020 are summarised as follows:Year ending 31 March,
2021
2022
2023
2024
2025
2026 and thereafter
Total

Thousands ofMillions of Yen U.S. Dollars
28,019¥$257,462
10,00091,886
10,00091,886
10,00091,886––50,000459,432¥ 108,019$
992,554

Euro-yen zero coupon unsecured convertible bonds in the nominal amount of ¥20,000 million ($183,772
thousand) with stock acquisition rights issued on 30 March 2016 are convertible at ¥5,301.2 ($48.71) per
share in the period from 13 April 2016 to 16 March 2021 subject to adjustment in certain circumstances.
From 1 April 2020, these bonds are convertible at ¥5,295.5 ($48.65). The price was adjusted pursuant to theclauses on price adjustment of the bonds because the proposal on dividend per share of ¥17.5 ($0.16) wasapproved at the 98th Ordinary General Meeting of Shareholders held on 19 June 2020.

23

11. OVERDRAFT AND LOAN COMMITMENTS
The Company and 18 consolidated subsidiaries entered into overdraft and loan commitment agreements with19 banks for efficient funding of working capital as at 31 March 2020.
The unused portions of the credit line under these agreements as at 31 March 2020 are as follows:
Millions of Yen
2020

Thousands of
U.S. Dollars
2020

¥

$

Total overdraft limits and loan
commitments
Loan executions
Unused credit line¥

91,092(37,589)
53,503$

837,016(345,391)
491,624

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 2020 and 2019 (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 gain
Retirement benefits paid
Balance at the end of year¥¥

Thousands ofMillions of Yen
U.S. Dollars
2020
2019
2020
31,979 ¥33,548 $ 293,848
1,211
1,280
11,132
78
86
719
(313)
(563)
(2,879)(1,278)(2,371)(11,745)
31,677 ¥
31,979 $ 291,075(2) The changes in plan assets for the years ended 31 March 2020 and 2019 (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 loss
Contributions by the Group
Retirement benefits paid
Balance at the end of year¥¥

Thousands ofMillions of Yen
U.S. Dollars
2020
2019
2020
16,930 ¥17,690 $ 155,567
263
295
2,420
(1,242)(605)(11,418)
326
705
3,001
(815)
(1,155)(7,496)
15,461 ¥16,930 $ 142,074

24

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 2020 and 2019 are as follows:

Balance at the beginning of year
Retirement benefit expenses
Retirement benefits paid
Contributions to pension plans
Balance at the end of year¥¥

Thousands ofMillions of Yen
U.S. Dollars
2020
2019
2020
2,238 ¥
2,228 $
20,570
264
253
2,426
(160)
(178)
(1,477)
(62)
(64)
(576)
2,279 ¥
2,238 $
20,942

Under 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 2020
and 2019 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
Note:

¥

¥

Thousands ofMillions of Yen
U.S. Dollars
2020
2019
2020
14,833 ¥15,099 $ 136,301(16,076)(17,523)(147,719)(1,242)(2,423)(11,417)
19,737
19,711
181,361
18,494
17,287
169,943
19,09318,360175,445(598)(1,072)(5,501)
18,494 ¥17,287 $ 169,943

The above table includes the retirement benefit obligation calculated by the simplified method.

25

12. RETIREMENT BENEFITS (continued)(5) The components of retirement benefit expenses for the years ended 31 March 2020 and 2019 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¥

Thousands ofMillions of Yen
U.S. Dollars
2020
2019
2020
1,211 ¥
1,280 $
11,132
78
86
719
(263)
(295)
(2,420)
680
234
6,256
(223)
(266)
(2,052)
264
1,747

253
¥

1,293

2,426
$

16,061(6) The components of retirement benefit liability adjustment (before tax effects) in other comprehensive
income for the years ended 31 March 2020 and 2019 are as follows:

Prior service costs
Actuarial loss (gain)
Total

¥
¥

Thousands ofMillions of Yen
U.S. Dollars
2020
2019
2020
223 ¥
266 $
2,052
248
(193)
2,282
471 ¥
73 $
4,334

(7) The components of retirement benefit liability adjustment (before tax effects) in accumulated othercomprehensive income as at 31 March 2020 and 2019 are as follows:

Unrecognised prior service costs
Unrecognised actuarial loss
Total

¥
¥

Thousands ofMillions of Yen
U.S. Dollars
2020
2019
2020
(1,563) ¥(1,786) $ (14,362)
5,989
5,741
55,0394,426 ¥
3,955 $
40,67726

12. RETIREMENT BENEFITS (continued)(8) Plan assets
a. The components of plan assets by major category as at 31 March 2020 and 2019 are as follows:
2020
50%
27
14
4
5
100%

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

2019
45%
33
13
4
5
100%

14% and 18% of the total plan assets were in the retirement benefit trust as at 31 March
2020 and 2019, 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 2020 and2019 are set forth as follows:

Discount rates
Long-term expected rates of return onplan assets

2020
0.0-0.7%

2019
0.0-0.7%

1.5-2.5%

1.5-3.0%(10) Defined contribution plans for the years ended 31 March 2020 and 2019
The total contributions to be paid by the Company and its consolidated subsidiaries to defined
contribution plans were ¥574 million ($5,276 thousand) and ¥562 million for the years ended 31
March 2020 and 2019, respectively.
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.

2713. SHAREHOLDERS’ EQUITY (continued)
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 2020 and 2019 amounted to ¥43 million($402 thousand) and ¥30 million, respectively.
The stock option plans of the Company as of 31 March 2020 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

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

The 2019 Plan
6 Directors (excluding
Audit and Supervisory
Committee Members andoutside directors)
7 Executive officers
Common stock 9,600 shares
8 July 2019
None
No vesting period forservices received has been
stipulated.
From 9 July 2019 to 8 July
2049

28

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 2019
GrantedForfeited
VestedOutstanding at 31 March 2020
Number of stock options already vested:
Outstanding at 31 March 2019
VestedExercised
Forfeited
Outstanding at 31 March 2020

The 2017 plan

The 2018 plan

The 2019 plan

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
9,600
–
9,600
–

5,000
–
800
–
4,200

8,000
–
800
–
7,200

8,000
–
800
–
7,200

–
9,600
–
–
9,600

The fair value of stock options for the stock option plan of the Company during the year ended 31 March
2020 is summarised as follows:

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

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
4,750

43

4,750

43

4,750

43

3,485

32

3,425

31

3,811

35

Yen
U.S. dollars
The 2019 plan The 2019 plan
¥
1
$
0
–

–

4,563

41

The number of existing stock options as of 31 March 2020 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)

29

The 2019 plan
20.842%
4.1 years¥35 per share($0 per share)(0.246%)

13. SHAREHOLDERS’ EQUITY (continued)(a) Expected volatility was computed by the weekly historical volatility of the Company’s stock during theperiod from 2 June 2015 to 8 July 2019.
(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 2019.
(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
2020 and 2019 are as follows:
Number of shares
2020
Increase
Decrease

1 April 2019
Issued shares:
Common stock
Treasury stock(Notes 1 and 2)

31 March 2020

113,182,703––

113,182,703

5,994,904

4,611

2,407

5,997,108

Notes: 1. The increase in the number of shares of treasury stock of 4,611 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 2,407 shares was due to disposalof treasury stock of 2,400 shares as a result of exercise of stock options, and sales offractional shares of less than one voting unit of 7 shares.
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.

30

13. SHAREHOLDERS’ EQUITY (continued)(2) Information regarding dividend payments during the years ended 31 March 2020 and 2019 is asfollows:
For the year ended 31 March 2020a. Dividend payment:
2020
Resolutions
General shareholders’meeting held on
19 June 2019
Board meeting held on
6 November 2019

Type ofsharesDividends paid

Dividend
per share

Record dates

Effective
dates

Commonstock¥1,875 million($17,235 thousand)¥17.5($0.16)31 March
2019

20 June2019

Commonstock¥1,875 million($17,236 thousand)¥17.5($0.16)30 September
2019

2 December
2019

b. Dividend payment with an effective date in the following fiscal year:
2020
Resolution
General shareholders’meeting held on
19 June 2020

Type ofsharesDividends paid

Commonstock¥1,875 million($17,235 thousand)Source of Dividend
dividend per share

Recorddate

Effective
date

¥17.5
($0.16)31 March
2020

22 June2020

Retainedearnings

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¥20.0

31 March
2018

20 June2018

Commonstock¥1,875 million¥17.5

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

Source of Dividend
dividend per share

Recorddate

Effective
date

Commonstock¥1,875 million

Retainedearnings

31 March
2019

20 June
2019

¥17.5

14. COST OF SALES
Cost of sales included loss on devaluation of inventories of ¥338 million ($3,106 thousand) and ¥903 million
for the years ended 31 March 2020 and 2019, respectively.

31

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 ¥505 million($4,641 thousand) and ¥1,333 million for the years ended 31 March 2020 and 2019, respectively. The details
are summarised as follows:
For the year ended 31 March 2020
2020
Usage
Hotel facilities

Location
Sakai, Fukui andotherCommercial stores

Hirakata, Osaka

Rental properties

Sakyo-ku, Kyoto

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

Millions of Yen
¥

¥

265
35
301
113
46
159
44
505

For the year ended 31 March 2019
2019
Usage
Rental properties

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

32

¥

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

Thousands of
U.S. Dollars
$

$

2,439
329
2,769
1,038
423
1,461
410
4,641

15. LOSS ON IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT (continued)
For some groups of assets, as a decline in profitability was expected, the Group wrote down the carrying
value of the assets to the recoverable amount and loss on impairment of property, plant and equipment wasrecorded as other expenses for the year ended 31 March 2020.
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.
The recoverable amounts of hotel facilities were determined using value in use or net realisable value for theyear ended 31 March 2020. When using value in use, the recoverable amounts of hotel facilities were
measured based on the present value of the future cash flow with a discount rate of 1.5%, and when using
net realisable value, the recoverable amounts of hotel facilities were determined basically based on theappraisal value assessed by an external appraiser.
The recoverable amounts of hotel facilities were determined using net realisable value basically based on theappraisal value assessed by an external appraiser 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 negative for the year ended 31 March 2020, andas future cash flow was not expected due to a decision to withdraw from the business for the year ended 31
March 2019.
The recoverable amounts of rental properties were determined using net realisable value basically based on
the appraisal value assessed by an external appraiser for the year ended 31 March 2020.
The recoverable amounts of rental properties were determined using value in use or net realisable value forthe year ended 31 March 2019. 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 determinedbasically based on the valuation used for property tax purposes.
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.

33

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 a normal statutory tax rate of approximately
30.6% for the years ended 31 March 2020 and 2019.
The tax effects of significant temporary differences and tax loss carry forwards which resulted in net deferred
tax assets and liabilities at 31 March 2020 and 2019 are as follows:
Millions of Yen
2020
2019
Deferred tax assets:
Liability for retirement benefits
Difference arising from company
split
Loss on devaluation of land,buildings and structures for sale
Loss on impairment of property,
plant and equipment
Tax 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
Gain on securities contributed to
employee retirement benefit trust
Net unrealised holding gain on
securities
Reserve for deduction in costs ofproperty, plant and equipment
OthersTotal deferred tax liabilities
Offset by deferred tax assets
Net deferred tax liabilities

¥

9,790

¥

9,455

Thousands of
U.S. Dollars
2020$

89,958

4,248

4,248

39,039

2,047

2,026

18,809

¥

1,658
1,401
1,152
1,009
795
3,671
25,774(9,876)
15,897(5,734)
10,163

¥

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

15,242
12,87910,5859,275
7,307
33,734
236,833(90,754)
146,078(52,690)
93,388¥(8,335)¥(8,312)(76,592)¥$(2,774)(2,774)(25,496)(2,628)(3,231)(24,150)

(141)
(678)
(14,559)
5,734(8,825)

(150)
(786)
(15,255)
6,144(9,110) $(1,304)(6,238)(133,782)
52,690(81,092)34¥

16. INCOME TAXES (continued)
A reconciliation between the statutory tax rate and the effective tax rate reflected in the accompanying
consolidated statement of income for the year ended 31 March 2020 is as follows:
2020
30.6%

Statutory tax rate
Effect of:Permanent non-deductible expenses
Permanent non-taxable income
Per capita portion of inhabitants’ tax
Valuation allowance
Different tax rates applied at subsidiaries
Others
Effective tax rate

0.3
(0.5)
0.4
2.5
2.0
(0.6)
34.7

A reconciliation between the statutory tax rate and the effective tax rate for the year ended 31 March 2019 isomitted as the effective tax rate in the accompanying consolidated statement of income for the year ended
31 March 2019 differs from the statutory tax rate by less than 5%.
17. OTHER COMPREHENSIVE LOSS
Reclassification adjustments and related income tax effects on components of other comprehensive loss forthe years ended 31 March 2020 and 2019 are as follows:
Millions of Yen
2020
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 loss (gain)
included in profit
Before tax effectTax effect
Total
Share of comprehensive income (loss) ofaffiliates accounted for using equity method
Amount arising during the year
Other comprehensive loss, net¥¥

Thousands of
U.S. Dollars
2020(1,848) $(12,215)(816)(2,145)602(1,543)(1,900)(3,749)1,122(2,627)(7,503)(19,718)
5,539(14,179)

(929)

(41)

(8,538)

457
(471)
164
(307)

(32)
(73)
17
(56)

4,203
(4,334)
1,511(2,823)(27)(2,710) $853(16,149)(1,329)92(1,757)35¥¥

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.
(2) Operating Leases
Future minimum lease payments under non-cancelable operating leases as at 31 March 2020 and 2019are as follows:
Millions of Yen
2020
2019
Future minimum lease payments:
Due within one year
Due after one year
Total

¥
¥

2,975
42,63645,612

36

¥
¥

1,983
45,26847,251Thousands of
U.S. Dollars
2020
$
$

27,338391,776
419,11419. AMOUNTS PER SHARE
Amounts per share at 31 March 2020 and 2019 are as follows:Yen
Net assets
Profit attributable to owners of parent:
Basic
Diluted2020¥ 2,329.94

2019¥ 2,193.68

U.S. Dollars
2020
$
21.40

¥
¥

¥
¥

$
$

187.72
187.68200.40200.36

1.72
1.72

The financial data used in the computation of basic and diluted profit attributable to owners of parent for theyears ended 31 March 2020 and 2019 in the table above is summarised as follows:

Profit attributable to owners of parent¥

Millions of Yen
2020
2019
20,121¥ 21,480

Thousands of
U.S. Dollars
2020$ 184,888

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

2020

2019

107,187

107,190

26

18

Potential shares which do not have dilutive effect for the years ended 31 March 2020 and 2019 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 ($183,772 thousand).
20. CASH AND CASH EQUIVALENTS
The balances of cash and deposits reflected in the accompanying consolidated balance sheet as at 31 March
2020 and 2019 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
2020
2019
21,385
14,918 ¥¥(7)
14,911

37¥

Thousands of
U.S. Dollars
2020$ 137,082(7)
21,377 $(67)
137,014

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 and short-term bonds are mainly used for working capital, andproceeds from bonds and long-term loans are mainly used for capital investments. Among them,those to which variable interest rates apply are exposed to the risk of interest rate fluctuations.
However, for certain long-term loans, the derivative transactions (such as interest rate swaps) byindividual contracts are used 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 three
consolidated subsidiaries which utilise derivative instruments upon the approval of the decisionmaking authority. In addition, the counterparties of the derivative transactions are limited tohighly-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.

38

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
2020(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) Short-term bonds(7) Bonds (including current portion)(8) Long-term loans (including current
portion)Total liabilities

Carrying
value¥
14,91821,947

Fair value¥
14,91821,947

Difference
¥
–
–

1,270
15,74553,882

1,291
15,74553,903

20
–
20

¥

¥

9,450
41,598
7,999
100,039¥

177,494
336,582¥

9,450
41,598
7,999
101,593¥

180,626
341,268

–
–
–
1,554
¥

3,131
4,686

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¥
21,38531,189¥1,577
18,771
72,922¥¥

11,544
48,493
100,105¥

185,747
345,891

39

Fair value
21,38531,1891,623
18,771
72,968¥¥

11,544
48,493103,111¥

188,612351,762

Difference
–
–

45
–
45
–
–
3,006

¥

2,864
5,870

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) Short-term bonds(7) Bonds (including current portion)(8) Long-term loans (including current
portion)Total liabilities

Thousands of U.S. Dollars
2020
Carrying
value
Fair value
Difference$ 137,082 $ 137,082 $–
201,671
201,671–$

11,671
144,682
495,109$

11,863
144,682
495,301

$

191
–
191

86,838382,237
73,501
919,227

86,838382,237
73,501
933,508–––
14,2801,630,936$ 3,092,740

1,659,714$ 3,135,798

28,77743,058$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, (5) Short-term loans, and (6) Short-term bonds
As these items are settled in a short period of time, their carrying value approximates the fairvalue.
(7) Bonds
The fair value of bonds issued by the Group is estimated mainly based on the quoted market
price.

40

21. FINANCIAL INSTRUMENTS (continued)(2) Fair value of financial instruments and related matters (continued)
Notes (continued):(8) 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
2020 and 2019 are summarised as follows:

Category
Unlisted stocks¥

Millions of Yen
2020
2019
17,527 ¥
14,573Thousands of
U.S. Dollars
2020$
161,056

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.

41

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 2020 are as follows:

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

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

Due in1 yearor less¥
13,57421,947

Millions of Yen
2020
Due after
Due after
1 year
5 years
throughthrough
5 years
10 years
¥
– ¥
–
–
–

Due after
10 years
¥
–
–

–

–

800
¥

–
36,321

Due in1 yearor less$ 124,726
201,671

$

470
¥

–
470

¥

–
–

¥

Thousands of U.S. Dollars
2020
Due after
Due after
1 year
5 years
throughthroughDue after
5 years
10 years
10 years
$
– $
– $
–
–
–
–

7,350

4,323

–

–

–
333,749

–
4,323

–
–

2,756
2,756

$

$

$

5. The redemption schedules for short-term loans, bonds and long-term loans as at 31 March 2020
Refer to Note 10. SHORT-TERM DEBT AND LONG-TERM DEBT.

42

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 2020 and 2019 are as follows:
Millions of Yen
2020
Contractual value

Hedge accounting
methodSpecial accounting
treatment of interest
rate swaps

Transaction typeInterest rate swap
Receive-floating/pay-fixed

Major hedged
items

Notional
amountDue after
1 yearFair value

Long-termloans¥ 1,834¥(Note)

643

Millions of Yen
2019
Contractual value

Hedge accounting
methodSpecial accounting
treatment of interest
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)

Thousands of U.S. Dollars
2020
Contractual value

Hedge accounting
methodSpecial accounting
treatment of interest
rate swaps

Transaction typeInterest rate swap
Receive-floating/pay-fixed

Major hedged
items

Notional
amountDue after
1 yearFair value

Long-termloans$ 16,856$ 5,909(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.

4323. CONTINGENT LIABILITIESThe Company provides guarantees for the borrowings of the following company, which is other thanconsolidated subsidiaries, as at 31 March 2020 as follows:

Nakanoshima Rapid Railway Co., Ltd.

Millions of Yen
2020¥
20,259Thousands of
U.S. Dollars
2020$
186,160

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 2020 and 2019are as follows:
Millions of yen
2020
2019
¥ 1,154¥
503

Balance at the beginning of year
Increase due to acquisition of property,
plant and equipment
Adjustment with passing of time
Decrease due to settlement
Other

¥

Balance at the end of year

44

–
8
–
(2)
1,160

¥

649
5
(3)
–
1,154

Thousands of
U.S. Dollars
2020$ 10,612
–
75
–
(24)
$ 10,662

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.

45

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 2020 and 2019
Millions of Yen
2020
Reportable Segments
RetailLeisure andTransportation Real Estate

Distribution

Service

Others¥91,157¥ 97,633¥

31,425¥ 1,635

2,207

15,281

552

655

1,272

Total

¥

93,365¥ 110,228¥ 98,186¥

32,081

Segment income (loss)¥

10,862

¥

¥

¥

1,336

Adjustments Consolidated
Total(Note 1)

(Note 2)

Operating revenues:
External customers¥

94,947¥316,799¥303¥

317,103

19,970(19,970)¥ 2,908¥

336,770¥ (19,667)¥

317,103¥¥

31,443¥¥

Inter-segment
operating revenues
or transfers

Segment assets

16,906

3,258

(921)

(319)

–

31,123

242,585

408,379

30,06035,5698,908

725,503

7,320

732,824

11,735

5,986

1,255

1,438

113

20,529255

20,784

13,283

11,824

1,073

1,933

862

28,976348

29,324

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

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 ¥25,636 million ($235,562 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 ¥45 million ($413
thousand) and the Company assets not allocated to each reportable segment amounted
to ¥393 million ($3,615 thousand).
2.

Segment income (loss) was adjusted to operating income in the consolidated statement ofincome.

46

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 2020 and 2019 (continued)
Millions of Yen
2019
Reportable Segments
RetailLeisure andTransportation Real Estate

Distribution

Service

Others¥

91,715¥ 98,248¥

30,124¥ 1,145

2,211

13,685

479

496

698

Total

¥

93,926¥ 118,607¥ 98,727¥

30,621

Segment income (loss)¥

11,221

¥

¥

¥

1,817

Adjustments Consolidated
Total(Note 1)

(Note 2)

Operating revenues:
External customers¥ 104,921¥

326,155¥3¥

326,159

17,570(17,570)¥ 1,843¥

343,726¥ (17,567)¥

326,159¥¥

33,373¥¥

Inter-segment
operating revenues
or transfers

Segment assets

17,468

2,923

(57)

342

–

33,715244,887

396,874

31,78337,446

7,802

718,795

12,954

731,750

11,898

5,197

1,306

1,116

37

19,556262

19,81914,60926,080

1,428

3,364

9

45,492(1,860)43,631Other items:
Depreciation
Increase in property,
plant and equipment,
and intangible assets

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 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 elimination of inter-segment transactions amounted to ¥2,132 million and
the Company assets not allocated to each reportable segment amounted to ¥271 million.
2.

Segment income (loss) was adjusted to operating income in the consolidated statement ofincome.

47

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 2020 and 2019 (continued)
Thousands of U.S. Dollars
2020
Reportable Segments
RetailLeisure andTransportation Real Estate

Distribution

Service

OthersTotal$

837,612$ 897,122$ 288,761$ 15,028$ 2,910,960

20,288140,417

5,076

6,026

11,695

183,504

Total$

857,900$ 1,012,852$ 902,199$ 294,788$ 26,724$ 3,094,465$ (180,719) $ 2,913,746

Segment income (loss)

$

$

$

$

Adjustments Consolidated(Note 1)

(Note 2)

Operating revenues:
External customers$ 872,435

$

2,785

$ 2,913,746(183,504)–

Inter-segment
operating revenues
or transfers

Segment assets

99,812$ 155,347$ 29,941

12,280$ (8,463)

2,229,034

3,752,451

276,213

326,834

81,861

6,666,394

288,918

67,266(2,934) $6,733,661

285,984

107,83155,008

11,534

13,218

1,045

188,639

2,345

190,984

122,059

108,647

9,862

17,762

7,923

266,2543,202

269,456

Other items:
Depreciation
Increase in property,
plant and equipment,
and intangible assets(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 2020 and 2019, 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 2020 and 2019, 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.

48

25. SEGMENT INFORMATION (continued)(5) Information about loss on impairment of property, plant and equipment by reportable segment
Millions of Yen
2020
Reportable Segments
RetailTransportation Real Estate
Impairment loss

¥

272

¥

–

Leisure andDistribution

Service

Others

¥

¥

¥

159

73

–

Total
¥

505

Adjustments Consolidated
¥

–

¥

505

Millions of Yen
2019
Reportable Segments
RetailTransportation Real Estate
Impairment loss

¥

15

¥

1,264

Leisure andDistribution

Service

Others

¥

¥

¥

1

97

–

Total
¥

1,378

Adjustments Consolidated
¥

(45)

¥

1,333

Thousands of U.S. Dollars
2020
Reportable Segments
RetailTransportation Real Estate
Impairment loss

$

2,508

$

–

Leisure andDistribution

Service

Others

$

$

$

1,461

671

–

Total
$

4,641

Adjustments Consolidated
$

–

$

4,641

(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 2020 and 2019 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 2020 and 2019.

49

26. RELATED PARTY TRANSACTIONSTransactions of the Company with related parties as at and for the years ended 31 March 2020 and 2019 are
as follows:
2020
Category
Affiliates

Company
nameNakanoshima
Rapid
Railway Co.,Ltd.

Location
Chuo-ku,
Osaka

Capital¥26,135
million($240,151
thousand)Business
Railway
operations

Percentage ofvoting rights
Relationship(Direct voting Reservation ofrights)guarantees onloans
33.50%
Holding
concurrent
position of
directors

Transaction
Guarantees(Note 1)

Transaction
amount¥20,259
million($186,160
thousand)2019
Category
Affiliates

Company
nameNakanoshima
Rapid
Railway Co.,Ltd.

Location
Chuo-ku,
Osaka

Capital¥26,135
millionBusiness
Railway
operations

Percentage ofvoting rights
Relationship(Direct voting Reservation ofrights)guarantees onloans
33.50%
Holding
concurrent
position of
directors

Transaction
Guarantees(Note 1)

Transaction
amount¥21,511
millionNote: 1. Guarantees are provided for the loans of the affiliate obtained from the Development Bank of Japanand other banks in the amounts of ¥20,259 million ($186,160 thousand) and ¥21,511 million forthe years ended 31 March 2020 and 2019, respectively.

50