SEIKITOKYU KOGYO CO., LTD
Non Consolidated Balance Sheetfor the year ended March 31, 2019
U.S. dollars

Yen(millions)
2019

Assets(thousands)(Note 3)2019

(thousands)(Note 3)2019

Current liabilities:¥

15,399$138,746

Trade receivables（Note 6)
Notes
Accounts
Net trade receivables

2,438
21,40823,846

21,968
192,884
214,852

Inventories
Cost on uncompleted construction contracts
Raw materials and supplies
Total inventories

4,774
351
5,124

43,0093,160
46,169

138

1,246

2,656
47,16523,934424,947

18,759169,014

175

1,577

1,295

11,668

Short-term loans receivable
Other current assets
Total current assets
Property, plant and equipment (Notes 4 and 5):
Intangible assets:
Deferred tax assets-non-current (Note 10):

Short-term loans payable
Trade payables
Notes
Accounts
Total trade payables

Investment securities
Subsidiaries and affiliates
Other securities
Long-term loans receivable
Guarantee deposits and other investments
Allowance for doubtful accounts
Total investments and long-term loans

307
246
12
1,476
(11)
2,029
¥

69,4233,400$

30,631

8,562
12,22020,782

77,139110,099
187,238

3,628
25
13
1,023
4,347
2,460
35,67732,683
224
118
9,215
39,16322,167
321,440

665
2,686
83
3,434

5,992
24,204744
30,940Shareholders’ equity (Note 7)
Common stock
Capital surplus
Retained earnings
Treasury stock - 11,648 shares
Total shareholders’ equity

2,000
509
27,794(6)
30,29718,0204,585
250,422(54)
272,973

Unrealized gain on investment securities
Total net assets

15
30,312

134
273,107

Long-term liabilities:
Long-term loans payable
Provision for retirement benefits
Other long-term liabilities
Total long-term liabilities

Net assets:

2,762
2,217
111
13,295(104)
18,282$¥

Advances received on uncompleted construction contracts
Provision for warranties for completed construction
Provision for loss on construction contracts
Provision for bonuses
Allowance for losses on Anti-Monopoly Act
Other current liabilities
Total current liabilities

Investments and long-term loans:

Total assets

Yen(millions)
2019

Liabilities and Net assets

Current assets:
Cash and deposits

U.S. dollars

625,487

Total liabilities and net assets

See accompanying notes to non consolidated financial statements.

1¥

69,423$

625,487SEIKITOKYU KOGYO CO., LTD
Non Consolidated Statement of Income
for the year ended March 31, 2019

U.S. dollars(thousands)(Note 3)2019

Yen(millions)2019
Completed construction contracts:
Net sales
Cost of sales
Gross profit¥

53,91248,016
5,897$

485,740
432,613
53,127

Finished goods:
Net sales
Cost of sales
Gross profit

16,046
12,887
3,159

144,571
116,108
28,463

Total:Net sales
Cost of sales
Gross profit

69,95860,903
9,056

630,311548,721
81,590

Selling, general and administrative expenses:
Operating income

4,154
4,901

37,431
44,159Other income (Note 8):
Interest and dividends
Other
Subtotal

7
218
225

60
1,968
2,028

Other expenses (Note 9):
Interest
Other
Subtotal

37
1,362
1,399

333
12,27012,602

3,728

33,584

654
(43)

5,893
(392)

Income before income taxes
Income taxes:
Current
Deferred
Net income

¥

2

3,117

$

28,084SEIKITOKYU KOGYO CO., LTD.
Non Consolidated Statement of Changes in Net Assets
for the year ended March 31, 2019

Shareholders' equity (Notes 3,7)
Capital stock

Capital surplus

Retained earnings

Total shareholders'equityTreasury stock(Millions of yen)
Balance at April 1, 2018

¥

2,000

¥

500

¥

25,081¥(24)¥

27,557

Changes during the year
Dividend of surplus

(404)

(404)

Net income for the period

3,117

3,117

Purchase of treasury stock

9

Disposal of treasury stock

(1)

(1)

19

28

18
(6)

2,740
30,297

Net changes of items other thanshareholders' equity
Total changes during period
Balance as of March 31, 2019

¥

2,000

Accumulated othercomprehensive
Unrealized gain on
investment securities

9
¥

509

Total net assets(Millions of yen)
Balance at April 1, 2018

¥

24

¥

27,581

Changes during the year
Dividend of surplus(404)

Net income for the period

3,117

Purchase of treasury stock(1)

Disposal of treasury stock28

Net changes of items other thanshareholders' equity
Total changes during period
Balance as of March 31, 2019

¥

(9)

(9)

(9)
15

2,731
30,312

¥

3

¥

2,713
27,794¥¥SEIKITOKYU KOGYO CO., LTD.
Non Consolidated Statement of Changes in Net Assets
for the year ended March 31, 2019

Shareholders' equity (Notes 3,7)
Capital stock

Capital surplus

Retained earnings

Total shareholders'equityTreasury stock(Thousands of U.S. dollars)
Balance at April 1, 2018$

18,020

$

4,505

$

225,975

$

(217)

$

248,283

Changes during the year
Dividend of surplus(3,637)(3,637)

Net income for the period

28,08428,084Purchase of treasury stock
Disposal of treasury stock

80

(5)

(5)

169

248

164

24,690Net changes of items other thanshareholders' equity
Total changes during period
Balance as of March 31, 2019$18,020

Accumulated othercomprehensive
Unrealized gain on
investment securities

80
$

4,585

Total net assets(Thousands of U.S. dollars)
Balance at April 1, 2018

$

218

$

248,502

Changes during the year
Dividend of surplus(3,637)

Net income for the period

28,084Purchase of treasury stock(5)

Disposal of treasury stock248

Net changes of items other thanshareholders' equity

(85)

(85)

Total changes during period(85)

24,605

Balance as of March 31, 2019

$

134

$

273,1074

24,447$

250,422

$

(54)

$

272,973

Notes to Non Consolidated Financial Statements
1.

Summary of Significant Accounting Policies(a) Basis of Presenting Non Consolidated Financial Statements
The accompanying non consolidated financial statements have been prepared from the accounts
maintained by the SEIKITOKYU KOGYO CO., LTD. (the “Company”) in accordance with theprovisions set forth in the Financial Instruments and Exchange Act of Japan and the Companies Act ofJapan and in conformity with accounting principles generally accepted in Japan, which may differ insome material respects from accounting principles generally accepted and applied in countries andjurisdictions other than Japan.
Certain items presented in the Japanese non consolidated financial statements have been reclassified
for presentation solely for the convenience of readers outside Japan.
In addition, the notes to the non consolidated financial statements include certain information which is
not required under accounting principles generally accepted in Japan but is presented herein as
additional information.
(b) Method of Accounting for Construction Contracts
The Company recognizes revenue and cost by applying the percentage of completion method for theconstruction projects for which the percentage of completion can be reliably estimated at the end of
the reporting period. To estimate the progress of such construction project, method to calculate thepercentage of the cost incurred to the estimated total project cost (i.e. cost to cost method) is applied.
For other construction projects, the completed-contract method is applied.
Revenue recognized by applying the percentage of completion method was ¥19,117 million(U.S.$172,246 thousand) for the year ended March 31, 2019.
(c) Inventories
Inventories are stated at cost, cost being determined by the identified cost method for real estate forsale and cost on uncompleted construction contracts or by the moving average method for raw
materials and supplies, and adjusted for any substantial permanent decline in value.
Each item of inventory is initially recorded at acquisition cost, and when net realizable value is lessthan the cost (i.e., profitability of inventory has declined), the amount of cost is reduced to net
realizable value.
(d) Investments
Investments in subsidiaries and affiliates are carried at cost. The cost of subsidiaries and affiliates soldis computed based on the moving average method.
Other securities (securities which are neither trading, held-to-maturity securities nor investments in
subsidiaries and affiliates) with market value are carried at the market value on the balance sheet date.
The difference between the acquisition cost and the market value of other securities is recognized as
unrealized gain on investment securities in the balance sheet, net of tax effect. Non-marketablesecurities classified as other securities are carried at cost. The cost of other securities sold is computed
based on the moving average method.
5

(e) Property, Plant and Equipment (Excluding leased assets)
The Company computes depreciation of Property, plant and equipment by the declining balancemethod, however, buildings (excluding structures attached to the buildings) and building facilities andstructures acquired on or after April 1, 1998 are depreciated by the straight-line method. Rates fordepreciation are based on the estimated useful lives of the assets according to their general class, typeof construction, and use.
The estimated useful lives are principally as follows:
Buildings and structures ...................................................... 7 to 50 years
Machinery, equipment and vehicles .................................... 5 to 7 years(f)Intangible Assets (Excluding leased assets)
Computer software for internal use is amortized by the straight-line method over the estimated useful
lives (5 years).

(g) Leases
Depreciation of leased assets under finance leases that do not transfer ownership of the leased assets tothe lessee is calculated by the straight-line method over the lease period with a residual value of zero.
(h) Income Taxes
Deferred tax assets have been recognized in the non consolidated financial statements for the year
ended March 31, 2019 with respect to the differences between the financial reporting and tax bases ofassets and liabilities, and were measured using the enacted tax rates and laws which will be in effectwhen the differences are expected to be reversed. Valuation allowances are provided for the deferred
tax assets that are not considered to be recoverable.
(i)

Allowance for Doubtful Accounts
General provision for doubtful accounts is recorded by applying a certain reserve percentage of thereceivables based on the experience from past transactions. When considered necessary, specificreserves are provided based on the assessment of individual receivables.

(j)

Provision for Warranties for Completed Construction
Provision for warranties for completed construction is recorded at an estimated amount, based on theactual level of defects and related warranty costs stipulated in completed construction contracts.

(k) Provision for Loss on Construction Contracts
Provision for loss on construction contracts is recorded for estimated future losses related to theconstruction contracts in progress.
(l)Provision for Bonuses
Provision for bonuses is stated at an estimated amount of bonuses which the Company is obliged to
pay to its employees.

6(m) Allowance for losses on Anti-Monopoly Act
Allowance for losses on Anti-Monopoly Act is provided based on an estimated amount of payment forsurcharges under the Anti-Monopoly Act.
(n) Provision for Retirement Benefits
Provision for retirement benefits for employees has been recorded mainly at an amount calculated
based on the retirement benefit obligations and the fair values of the pension plan assets as of thebalance sheet date, as adjusted for unrecognized actuarial gain or loss. The retirement benefit
obligations are allocated to each period by the straight-line method over the estimated years of serviceof the eligible employees.
Prior service cost is amortized by the straight-line method over a period of 13 years, which is shorter
than the average remaining years of service of the employees.
Actuarial gains and losses are amortized from the following year in which the gains or losses arerecognized. Amortization is primarily calculated by the straight-line method over 10 years, which isshorter than the average remaining years of service of the employees.
(o) Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(p) Consolidated Taxes
Consolidated tax return filing system.
2. Changes in Presentation
Changes due to the application of “Partial Revision of Accounting Standard for Tax EffectAccounting” (ASBJ Statement No. 28, February 16, 2018 (“Statement No. 28"))
The Companies applied Statement No.28 from the beginning of this fiscal year. Accordingly, theCompanies changed the presentation, such that Deferred tax assets-current is classified as part ofDeferred tax assets-non-current.
3.

Basis of Translation
The non consolidated financial statements as of and for the year ended March 31, 2019 presented herein
are denominated in Japanese yen, and solely for the convenience of the readers, have been translated
into U.S. dollars at the rate of ¥110.99 = U.S.$1, the approximate rate of exchange in effect on March
31, 2019. This translation should not be construed as a representation that any of the yen amounts could
be converted into U.S. dollar amounts at the above or any other rate.

4.

Property, Plant and Equipment
Property, plant and equipment at March 31, 2019 were as follows:

Buildings and structures
Machinery, equipment, vehicles, tools, furniture and7

Yen(millions)
2019

U.S. dollars(thousands)
2019¥ 2,730
2,683$ 24,600
24,176

fixturesLand
Construction in progress
Total

5.

13,043
303¥18,759

117,5112,727$169,014

Collateral Assets and Corresponding Liabilities
The following assets are provided as collateral for the borrowings at March 31, 2019:

Buildings
Land
Total

Yen
(millions)
2019

U.S. dollars(thousands)
2019

¥

433
9,921
¥10,354$ 3,899
89,387$93,286

Yen(millions)
2019

U.S. dollars(thousands)
2019¥1,731665¥2,396$15,596
5,992$21,588

Corresponding Liabilities at March 31, 2019

Short-term loans payable
Long-term loans payable
Total

6.

Receivables Fully Offset Against Allowance for Doubtful Accounts

Long-term trade receivables

7.

Yen(millions)
2019

U.S. dollars(thousands)
2019

¥498

$4,483

Shareholders’ Equity
In accordance with the Companies Act of Japan (the “Act”), the Company provides legal retained
earnings, which is included in retained earnings. The Act requires that an amount equal to at least 10%of the amounts to be disbursed as distribution of earnings be appropriated to the legal retained earnings
until the total of the legal retained earnings plus the legal capital surplus or either of them equals 25% of
the common stock account.
The Act further provides that neither legal capital surplus nor the legal retained earnings is available forthe payment of dividends, but either may be used to reduce or eliminate accumulated deficits by aresolution of the shareholders, or may be transferred to the common stock account by a resolution of theshareholders. The Act also provides that, if the total amount of legal capital surplus and the legal
retained earnings exceeds 25% of the amount of common stock, the excess may be distributed to theshareholders, either as a return of capital or as dividends, subject to the approval of the shareholders.
88.

Other Income
The composition of ”Other income-Other” for the year ended March 31, 2019 is as follows:

Interest income
Dividend income
Rent income
Fiduciary obligation fee
Gain on sales of non-current assets
Other
Total

9.

Yen
(millions)
2019

U.S. dollars(thousands)
2019

¥

$

0
6
27
138
39
15
¥ 225

3
57
242
1,242
347
138
$ 2,028

Other Expenses
The composition of ”Other expenses-Other” for the year ended March 31, 2019 is as follows:

Interest expenses
Guarantee commission
Bill fluidizing commission
Loss on sales of non-current assets
Loss on retirement of non-current assets
Provision of allowance for losses on Anti-Monopoly Act
Penalty
Other
Total

9

Yen
(millions)
2019

U.S. dollars(thousands)
2019

¥ 21
16
6
0
25
1,310
11
10
¥1,399

$

192
141
55
1
223
11,80496
91$12,602

10.

Income Taxes

The tax effects of temporary differences which gave rise to significant portions of deferred tax assets anddeferred tax liabilities as at March 31, 2019 are summarized as follows:Yen(millions)2019
Deferred tax assets:
Allowance for doubtful accounts
Provision for retirement benefits
Loss on valuation of golf club membership
Impairment loss
Provision for bonuses
Loss carried forward
Other
Gross deferred tax assets
Less: Valuation allowances
Total deferred tax assets¥

Deferred tax liabilities:
Asset retirement obligations
Total deferred tax liabilities
Net deferred tax assets

10

U.S. dollars(thousands)
2019

156
976
130
723
313
2,287
312
4,896
(3,597)
1,299$ 1,404
8,791
1,169
6,519
2,822
20,604
2,807
44,115(32,411)
11,7044
4

39
39¥1,295$11,66811. Related Party Transactions
Transactions with related party, for the year ended March 31, 2019 are as follows:(a) Name(b) Type(c) Relationship(d) Percentage of equity ownership held by
the Company

Yen(millions)
AmountAmount¥5,280$47,576

1,238

11,151

Completed construction
contracts

701

6,316

Advances received on
uncompleted construction
contracts

59

529

1,365

12,301

812

7,313

Description oftransaction or balance(a) TOKYU CONSTRUCTION CO., LTD Transactions: (Note 1)(b) Principal shareholder
Completed construction(c) Interlocking directors and undertaking
contracts-Net sales
construction (Note 2)
Balances: (Note 1)(d) (22.1%) (directly)
Accounts receivable from:electronically recordedmonetary claims-operating(a) SHINSEIKI KOGYO CO., LTD.
(b) Subsidiaries(c) Interlocking directors and distributing
paving materials (Note 3)(d) 100% (directly)

U.S. dollars(thousands)

Transactions: (Note 1)
Finished goods-Net sales
Balances: (Note 1)
Accounts receivable

Note 1: Consumption taxes are not included in the transaction amounts, however, balances areaccounted for with consumption taxes
Note 2: Construction services with related parties are carried out on an arm’s-length basis consistent
with third party transactions, presenting a quotation for each of constructions.
Note 3: Unit prices are determined taking market prices and total costs into account.
12. Monetary Receivables and Monetary Payables to Affiliated Companies

Short-term monetary receivables
Long-term monetary receivables
Short-term monetary liabilities

11

Yen(millions)
2019

U.S. dollars(thousands)
2019¥3,26896
2,029$29,448864
18,282

13. Transactions with Affiliated Companies

Operating transactions
Net sales
Cost of sales
Non–operating transactions

Yen(millions)
2019

U.S. dollars(thousands)
2019¥7,612
1,248
116$68,583
11,241
1,047

14. Amounts per Share
Amounts per share as of and for the year ended March 31, 2019 are as follows:
As of March 31

Net assets

Yen
2019

U.S. dollars
2019¥750.25

$6.76

Yen
2019

U.S. dollars
2019¥77.17$0.70

For the year ended March 31

Net Income
15. Other Notes

In December 2016, the Company executed a syndicate loan contract with The Bank of Mitsubishi UFJ,
Ltd. serving as the arranger (of which, the term loan as of the end of fiscal year is ¥2,396 million(U.S.$21,588 thousand)) .
The following financial covenants are attached to the syndicate loan mentioned above;(a) The amount of net assets recorded on the balance sheet and consolidated balance sheet on the final
day of each accounting period in and after the fiscal year ended March 31, 2017 must be
maintained to at least 75% of the amount of net assets recorded on the balance sheet andconsolidated balance sheet for the fiscal year immediately preceding said fiscal year or for the
fiscal year ended March 31, 2016, whichever is the higher amount.
(b) Ordinary losses must not be recorded in two consecutive periods on the statements of income orconsolidated statements of income in and after the fiscal year ended March 31, 2017.
(c) Net losses must not be recorded in two consecutive periods on the statements of income orconsolidated statements of income in and after the fiscal year ended March 31, 2017.
(d) The total coverage ratio for the consolidated balance sheets, consolidated statements of income,and consolidated cash flow statements in and after the fiscal year ended March 31, 2017 must be
maintained at 15.0 or lower.

12

It is stipulated under the loan that, in the event of changes in accounting standards, all concerned
parties shall consult on the abovementioned financial covenants to determine the impact of the saidchanges.

13

SEIKITOKYU KOGYO CO., LTD.
Related Supplementary Schedules
for the year ended March 31, 20191.

Details of Changes in Property, Plant and Equipment and Intangible assets
Changes in Property, plant and equipment at March 31, 2019 were as follows:

Type of Assets
Buildings and structures
Machinery, equipment andvehiclesTools, furniture and fixtures
Land
Construction in Progress
Total

Type of Assets
Buildings and structures
Machinery, equipment andvehiclesTools, furniture and fixtures
Land
Construction in progress
Total

OpeningbalanceYen(millions)
Increase

Decrease

EndingbalanceU.S. dollars(thousands)¥ 2,563

¥ 416

¥

17

¥ 7,932$ 71,470

2,599
104
13,98968¥19,322

707
66
341
303
¥1,833

10
1
1,287
68
¥1,382

15,735
97813,043303¥37,990

141,768
8,808
117,5112,727$342,284

Acquisition
cost

Yen
(millions)
Accumulated
depreciation Depreciation

Net book
value

U.S. dollars(thousands)¥ 7,932¥ 5,202¥232¥ 2,730$ 24,600

15,735
97813,043303¥37,990

13,185844－－¥19,231746
36－－¥1,0142,550
133
13,043
303¥18,759

22,975
1,201
117,5112,727$169,014

Changes in Intangible assets at March 31, 2019 were as follows:

Type of Assets
Intangible assets
Total

Type of Assets
Intangible assets
Total

Yen
(millions)

Openingbalance

Increase

Decrease

Endingbalance

¥179
¥179

¥33
¥33

¥1
¥1

¥236
¥236

Acquisition
cost
¥236
¥236

Yen
(millions)
Accumulated
depreciation Amortization
¥61
¥61

¥36
¥36

Net book
value
¥175
¥175

U.S. dollars(thousands)$2,127$2,127
U.S. dollars(thousands)$1,577$1,577(Note) The amount for Land in the current period decreases mainly due to selling the land at Myokenjima
material plant: ¥1,287 million (U.S.$11,597thousand).
14

2.

Details of Allowances and Provisions
Allowances and Provisions at March 31, 2019 were as follows:

Opening

Allowance for doubtful
accounts
Provision for warranties
for completed
construction
Provision for loss on
construction contracts
Provision for bonuses
Provision for retirement
benefitAllowance for losses on
Anti-Monopoly Act

Balance

Increase

¥

¥

14

16

Yen
(millions)
DecreaseAmountused asintended
Other
¥

15

¥

4

U.S. dollars(thousands)Endingbalance
¥

11

$

104

87

7

47

22

25

224

207
998

13
1,023

37
998

170
－

13
1,023

118
9,215

2,895

525

734

－

2,686

24,204

3,037

1,310

－

－

4,347

39,163(Note) 1. “Decrease (Other): \4 million (U.S.$33 thousand)” in Allowance for doubtful accounts is due toreversal based on collections.
2. “Decrease (Other)” in Provision for warranties for completed construction is due to decreases
of estimated amounts.
3“Decrease (Other)” in Provision for loss on construction contracts is due to decreases of
estimated amounts.

15

3.

Details of Selling, General and Administrative Expenses
Selling, general and administrative expenses for the year ended March 31, 2019 were as follows:

Selling, general and administrative expenses:
Directors' compensation
Employees' salaries and allowances
Retirement benefit expenses
Legal welfare expenses
Welfare expenses
Repair and maintenance
Stationery expenses
Transportation expenses
Construction utilities expenses
Research study expenses
Advertising expenses
Provision of allowance for doubtful accounts
Entertainment expenses
Contributions
Rents
Depreciation
Taxes and dues
Insurance expenses
Miscellaneous expenses
Total

16

Yen
(millions)
2019

U.S. dollars(thousands)
2019

¥ 169
1,917
179
332
140
24
108
311
15
226
51
7
55
1
95
45
289
16
175
¥4,154$ 1,523
17,273
1,612
2,990
1,257
221
970
2,800
139
2,035
461
59
496
13
854
402
2,604
145
1,574
$37,431