Consolidated Financial Statements
Asanuma Corporation
Year ended March 31, 2021
with Independent Auditor’s ReportAsanuma Corporation
Consolidated Financial Statements
Year ended March 31, 2021

Contents

Consolidated Financial Statements
Independent Auditor’s Report ............................................................................................. 1
Consolidated Balance Sheet ................................................................................................ 7
Consolidated Statement of Income...................................................................................... 9
Consolidated Statement of Comprehensive Income.......................................................... 10
Consolidated Statement of Changes in Net Assets ............................................................ 11
Consolidated Statement of Cash Flows ........................................................................... 13
Notes to Consolidated Financial Statements ..................................................................... 15

Independent Auditor’s Report

The Board of Directors
Asanuma Corporation.
OpinionWe have audited the accompanying consolidated financial statements of Asanuma Corporationand its consolidated subsidiaries (the Group), which comprise the consolidated balance sheet as
at March 31, 2021, and the consolidated statements of income, comprehensive income, changes
in net assets, and cash flows for the year then ended, and notes to the consolidated financial
statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2021, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on these matters.
Estimates of total cost to complete construction projects when applying percentage-ofcompletion method
Description of Key Audit Matter

Auditor’s Response

As described in Note 4 (o) and 5 to theconsolidated
financialstatements,
inrecognizing net sales involving completed
construction contracts and cost of sales ofcompleted construction contracts, theWe mainly performed the following audit
procedures to evaluate the adequacy of
estimates of total cost to complete construction
projects when applying percentage-ofcompletion method.

Company
appliesthepercentage-ofcompletion method for construction projects
for which the outcome of the construction
activity is deemed certain at the end of thecurrent fiscal year (the cost-to-cost method
applied in estimating progress toward
completion of construction). The Company's
net sales involving construction contracts
accounted for by the percentage-ofcompletion method represented 97%, or¥134,651 million, of total net sales of¥138,935 million for the year ended March 31,
2021.

(1) Evaluation of internal control
We evaluated the design and operating
effectiveness of the following internal control
related to estimates of total cost to complete
construction projects.

・ With regard to working budgets for
estimates of
total cost to complete
construction projects, there is anappropriate control in place requiring thatsuch working budgets be prepared by thebudgeting department that has specialized
knowledge and be approved by thedepartment managers who have necessary
In applying the percentage-of-completion
expertise.
method, revenue is recognized based on the
progress toward completion of construction, ・ A system is in place for making revisions
to estimates of total cost to complete
and progress toward completion of
construction projects in a timely manner as
construction is calculated based on thea result of factors such as changes in thepercentage of completion by comparing costs
status of construction and costs incurred,
incurred to financial closing date with the mostor changes in specifications as instructed
recent estimates of total cost to completeby customers.
construction project.
Each construction
contract is unique since conditions such as ・ A system is in place in which the Building
project specifications, construction period,
Construction Headquarter and Civil
raw materials and workers vary byEngineering Headquarter, which areconstruction projects and, furthermore,
responsible for ensuring the reliability of
estimates of total cost to complete construction
construction costs, monitor, in a timely andproject is subject to change at any time due toappropriate manner, both profit or loss onchanges in the environment surrounding eachconstruction and progress toward
construction contract, including fluctuations incompletion of construction.
raw material prices or necessary modifications
in construction design. Large-scale or long- (2) Evaluation of the reasonableness of
estimates of total cost to complete
term construction contracts have complexity
construction projects.
not only in making estimates of total cost tocomplete construction projects, but also We identified construction contracts with highmaking revisions them in a timely and uncertainty relatively over estimates of total
appropriate manner due to, for example, cost to complete construction projects in lightcontract
modificationsforongoing of factors such as the contract amount, profit
construction projects, construction delays or loss on construction, construction
arising from poor weather, fluctuations in specifications, and the status of construction,building material prices or labor cost.
and performed the following procedures.
We have determined that estimates of total ・ We reconciled estimates of total cost to
cost to complete construction projects is a key
complete construction projects to working
audit matter since, given the nature of thebudgets, and evaluated whether estimatedconstruction contracts, it is necessary tocosts are consistent with the scopeconsider and incorporate various estimation
construction set forth in construction

factors corresponding to the specificcontracts and whether any unusual work or
environment of each construction project,amounts are included in aggregate costs
there is uncertainty in estimates due to changes
for each type of work.
in the environment, and management Regarding the potential for changes in the
judgment is necessary in considering status of construction progress and in total cost
assumptions used in making estimates.
to complete construction projects, we
inspected working budgets report tounderstand the cost trends and made inquiriesof the officer in charge of both the Building
Construction Headquarters and the Civil
Construction Headquarters.
・ We compared initial estimates of total
costs to complete construction projects
with both costs already incurred andestimates of construction costs to be
incurred in the future, and, for changes incosts above a certain threshold, we
evaluated whether the specific details ofsuch changes reflect the current status of
the construction by making inquiries ofadministrative managers and construction
division managers in both the Building
Construction Headquarter and Civil
Engineering
Headquarter
andbyreconciling such changes to subcontractor
quotes relating to any modifications inconstruction designs and specifications
and updated work schedules and the like.
・ We conducted on-site visits ofconstruction projects and evaluatedwhether the status of construction isconsistent with estimates of total cost tocomplete construction projects andprogresstowardcompletionof
construction.
・ For construction projects completed
during the year ended March 31, 2021, we
evaluated the Company’s process for
estimating total cost of construction bycomparing initial estimates of total cost tocomplete construction projects to total
costs actually incurred.

Responsibilities of Management, the Corporate Auditor and the Board of Corporate
Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Corporate Auditor and the Board of Corporate Auditorsare responsible for overseeing theGroup’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going
concern.

・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation inaccordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Board of Corporate Auditorsregarding,among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Board of Corporate Auditors with a statement that
we have complied with the ethical requirements regarding independence that are relevant to our
audit of the financial statements in Japan, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the Corporate Auditor and the Board of Corporate Auditors,
we determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe thesematters in our auditor’s report unless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2021 are presented solely for convenience. Our audit also included
the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 2 to the consolidated financial statements.

Ernst & Young ShinNihon LLC
Osaka, Japan
June 28, 2021

Yuka Hayashi
Designated Engagement Partner
Certified Public Accountant

Masashi Kobayashi
Designated Engagement Partner
Certified Public Accountant

Asanuma Corporation
Consolidated Balance Sheet
March 31, 2021

Millions of yen
2021
2020
AssetsCurrent assets:
Cash and cash deposits (Notes 9 and 20)
Receivables:
Notes receivable (Note 20)
Accounts receivable on completed construction
contracts (Note 20)
Other accounts receivable (Note 20)
Allowance for doubtful accounts
Inventories:
Cost of uncompleted construction contracts
Real estate held for sale
Raw materials and supplies
Other current assets
Total current assets
Property and equipment, at cost:
Land (Notes 10 and 12)
Buildings and structures (Note 12)
Machinery, equipment and vehicles (Note 10)
Tools, furniture and fixtures
Lease assets
Less accumulated depreciation

Construction in progress

Property and equipment, net
Investments and other assets:
Investments in securities (Notes 11,12 and 20)
Investments in an unconsolidated subsidiary
and affiliates (Notes 11 and 20)
Long-term loans receivable (Note 12)
Retirement benefit asset (Note 14)
Intangible assets
Deferred income taxes (Note 13)
Other assets
Allowance for doubtful accounts
Total investments and other assets

Total assets

Thousands of
U.S. dollars(Note 2)2021

¥ 15,761¥ 29,778$ 142,363

2,388

3,128

21,57048,9737,113(22)
58,452

48,964
3,111(60)
55,143442,354
64,249(199)
527,974

2,047
34
14
2,095

2,067
55
15
2,137

18,490307
12618,923

253
76,561

252
87,3102,285
691,545

1,609
6,187
458
1,505
81
(5,227)
406
5,019

1,694
6,313
617
1,464
7
(5,198)–4,897

14,53355,885
4,137
13,594732(47,213)
3,667
45,335

6,276
120

7,616
120

51,486
6,287

105
1,022
1,353
966
1,446
(691)
10,597

105
–
1,175
1,070
1,404
(653)
10,837948
9,231
12,221
8,726
13,061(6,241)
95,719¥ 92,177¥ 103,044$ 832,599

7

Millions of yen
2021
2020
Liabilities
Current liabilities:
Short-term bank loans (Notes 12 and 20)
Current portion of long-term debt (Notes 12 and 20)
Payables:Notes payable (Note 20)
Accounts payable on construction contracts(Note 20)
Other accounts payable (Note 20)
Advances received on uncompleted construction
contracts
Deposits received
Suspense receipt of consumption taxes
Income taxes payable (Note 13)
Provision for compensation for completed
construction
Provision for loss on construction contracts (Note 17)
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 12 and 20)
Liability for retirement benefits (Note 14)
Deferred income taxes (Note 13)
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity (Note 16):
Common stock:
Authorized – 29,356,500 shares
Issued– 8,078,629 shares in 2021
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized holding gain on investments insecurities
Foreign currency translation adjustments
Retirement benefits liability adjustments (Note 14)
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets¥ 1,470
337¥

Thousands of
U.S. dollars(Note 2)
2021

1,470
338

$ 13,278
3,044

–

195

–

15,423634
16,057

26,793548
27,536

139,3105,727
145,037

7,783
1,977
5,115
1,860

9,139
2,001
3,589
1,525

70,301
17,857
46,202
16,800

543
119
1,384
36,645

590
214
3,538
49,9404,905
1,075
12,501331,000

9,219
4,505
2
95
13,82150,466

9,556
4,125
7
102
13,79063,73083,272
40,69218858
124,840
455,840

9,615
2,166
27,974(67)
39,688

9,615
2,166
25,577(60)
37,29886,84919,564
252,678(605)
358,486

1,959
(26)
(112)
1,821
202
41,711¥ 92,177

2,196
(7)
(361)
1,828
188
39,314¥ 103,044

17,695(235)(1,012)
16,448
1,825
376,759$ 832,599

See accompanying notes to consolidated financial statements.
8

Asanuma Corporation
Consolidated Statement of Income
Year ended March 31, 2021

Millions of yen
2021
2020
Net sales (Note 22):
Construction contracts
Other¥ 137,847
1,088
138,935¥ 140,034
1,438
141,472$ 1,245,118
9,827
1,254,945

124,266
724
124,990

125,742
1,111
126,853

1,122,446
6,540
1,128,986

13,581364
13,945

14,292327
14,619122,672
3,287
125,959

8,654
5,291

8,018
6,601

78,16847,791

154
26
(106)
(46)
(107)
998

188
(42)
(118)
(60)
(158)
91

1,391
235
(957)
(415)
(966)
9,014

(88)
58
–
(81)
6,099

(13)
84
(72)
(0)
6,501

(795)
524
–
(732)
55,090

1,880
64
1,944
4,155

2,173
17
2,190
4,311

16,981
578
17,55937,530

17
4,138

11
4,300

154
37,377

Cost of sales (Note 17):
Construction contracts
Other
Gross profit:
Construction contracts
Other

Selling, general and administrative expenses (Note 18)
Operating income (Note 22)
Other income (expenses):
Interest and dividends income
Foreign exchange gain loss, net
Interest expenses
Guarantee fees
Commission fees
Gain on sales of investments in securities (Note 11)
Loss on impairment of property and equipment(Notes 10 and 22)
Outsourcing service income
Loss on valuation of other investments
Other, net (Note 11)
Profit before income taxes
Income taxes (Note 13):
Current
DeferredProfitProfit attributable to:Non-controlling interests
Owners of parent

Thousands of
U.S. dollars(Note 2)
2021

¥

¥

$

See accompanying notes to consolidated financial statements.
9Asanuma Corporation
Consolidated Statement of Comprehensive Income
Year ended March 31, 2021

ProfitOther comprehensive income (Note 19)
Net unrealized holding (loss) gain on
investments in securities
Foreign currency translation adjustments
Retirement benefits liability adjustments
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

Millions of yen
2020
2021
¥ 4,155¥ 4,311

Thousands of
U.S. dollars(Note 2)2021
$ 37,530

(237)
(19)
249
(7)
¥ 4,148(1,138)1(68)(1,205)¥ 3,106(2,141)
(172)
2,249
(64)
$ 37,466¥ 4,134
14¥ 3,095
11$ 37,340
126

See accompanying notes to consolidated financial statements.
10Asanuma Corporation
Consolidated Statement of Changes in Net Assets
Year ended March 31, 2021

Millions of yen

Balance at April 1, 2019
Profit attributable to owners ofparentCash dividends
Purchases of treasury stock
Sales of treasury stock
Retirement of treasury stock
Net change in items other thanshareholders’ equity
Balance at April 1, 2020
Profit attributable to owners ofparentCash dividends
Purchases of treasury stock
Sales of treasury stock
Retirement of treasury stock
Net change in items other thanshareholders’ equity
Balance at March 31, 2021

Commonstock¥ 9,615

Capitalsurplus¥ 2,167

Retainedearnings¥ 23,616

Treasurystock,
at cost¥ (1,149)

Total
shareholders’equity¥ 34,249

–
–
–
–
–

–
–
–
0
(1)

4,300
(1,233)––(1,106)

–
–
(18)
0
1,107

4,300
(1,233)
(18)
0
–

–
9,615

–
2,166

–
25,577–(60)–
37,298

–
–
–
–
–

–
–
–
–
–

4,138
(1,741)
–
–
–

–
–
(7)
–
–

4,138
(1,741)(7)–––¥ 9,615–¥ 2,166–¥ 27,974–(67)–¥ 39,688¥

Millions of yen

Balance at April 1, 2019
Profit attributable to owners ofparentCash dividends
Purchases of treasury stock
Sales of treasury stock
Retirement of treasury stock
Net change in items other thanshareholders’ equity
Balance at April 1, 2020
Profit attributable to owners ofparentCash dividends
Purchases of treasury stock
Sales of treasury stock
Retirement of treasury stock
Net change in items other thanshareholders’ equity
Balance at March 31, 2021

Net
unrealized
holding
gain oninvestments
in securities¥ 3,334

Foreigncurrencytranslation
adjustments¥ (8)Retirement
benefits
liability
adjustments¥ (293)

Total
accumulated
othercomprehensive
income¥ 3,033

Noncontrollinginterests¥ 185

Total net
assets¥ 37,467

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

4,300
(1,233)(18)
0–(1,138)
2,196

1
(7)

(68)
(361)

(1,205)
1,828

3
188

(1,202)39,314

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

4,138
(1,741)
(7)
–
–

(237)
¥ 1,959(19)¥ (26)

249¥ (112)(7)¥ 1,821

14
¥ 202

7
¥ 41,711

11

Asanuma Corporation
Consolidated Statement of Changes in Net Assets (Continued)
Year ended March 31, 2021

Balance at April 1, 2020
Profit attributable to owners ofparentCash dividends
Purchases of treasury stock
Sales of treasury stock
Retirement of treasury stock
Net change in items other thanshareholders’ equity
Balance at March 31, 2021

Commonstock$ 86,849

Thousands of U.S. dollars (Note 2)
Treasury
CapitalRetainedstock,
surplusearnings
at cost$ 19,564$ 231,027$ (542)

Total
shareholders’equity$ 336,898

–
–
–
–

–
–
–
–
–

37,377(15,726)
–
–
–

–
–
(63)
–
–

37,377(15,726)
(63)
–
–

–
$ 86,849–$ 19,564–$ 252,678–$ (605)–$ 358,486

Thousands of U.S. dollars (Note 2)

Balance at April 1, 2020
Profit attributable to owners ofparentCash dividends
Purchases of treasury stock
Sales of treasury stock
Retirement of treasury stock
Net change in items other thanshareholders’ equity
Balance at March 31, 2021

Net
unrealized
holding
gain oninvestments
in securities$ 19,836

Foreigncurrencytranslation
adjustments$ (63)

Retirement
benefits
liability
adjustments$ (3,261)

Total
accumulated
othercomprehensive
income$ 16,512

Noncontrollinginterests$ 1,698

Total net
assets$ 355,108

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

37,377(15,726)(63)––(2,141)$ 17,695(172)$ (235)2,249$ (1,012)(64)$ 16,448

127$ 1,82563$ 376,759

See accompanying notes to consolidated financial statements.
12

Asanuma Corporation
Consolidated Statement of Cash Flows
Year ended March 31, 2021

Cash flows from operating activities:
Profit before income taxes
Adjustments for:
Depreciation and amortization
Loss on impairment of property and equipment
Increase in allowance for doubtful accounts(Decrease) increase in provision for loss on
construction contracts
Increase (decrease) in net defined benefit asset andliability
Interest and dividends income
Interest expenses
Foreign exchange (gain) loss, net
Gain on sales of investments in securities
Loss on valuation of investments in securities
Loss (gain) on sales of property, plant and equipment
Decrease in notes receivable and accounts receivable
on completed construction contracts
Decrease (increase) in inventories(Increase) decrease in other accounts receivable
Decrease in notes payable and accounts payable on
construction contracts
Increase (decrease) in other accounts payable(Decrease) increase in advances received on
uncompleted construction contracts
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash (used in) provided by operating activities
Cash flows from investing activities:
Purchases of property and equipment
Proceeds from sales of property, plant and equipment andintangible assets
Purchases of intangible assets
Purchases of investments in securities
Proceeds from sales and redemption of investments insecurities
Proceeds from collection of loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Other, net
Net cash provided by (used in) investing activities¥

Millions of yen
2021
2020

Thousands of
U.S. dollars(Note 2)
2021

6,099

¥ 6,501$ 55,090

598
88
1

524
13
10

5,401
795
9

(95)

210
(315)

(858)
(2,574)

(154)
106
(25)
(978)
58
5

(188)
118
42
(91)
15
(3)

(1,391)957(225)(8,834)
524
45

705
41
(4,040)

2,179
(145)
1,766

6,368
370
(36,492)(11,547)
3(3,137)(1,465)(104,299)
27(1,355)
(638)
152
(106)
(1,535)(12,902)

2,235
2,349
10,618185(118)(2,457)8,228(12,239)(5,763)(103,089)
1,372
(957)
(13,865)(116,539)

(627)

(216)

(5,663)

0
(462)
(9)

194
(447)
(9)

0
(4,173)
(81)

1,965
3
(71)
60
(44)
815

167
11
(110)
20
5
(385)

17,749
27
(641)
542
(398)
$ 7,362(285)(11,413)¥¥13

Asanuma Corporation
Consolidated Statement of Cash Flows (Continued)
Year ended March 31, 2021

Millions of yen
2021
2020
Cash flows from financing activities:
Decrease in short-term bank loans, net
Repayment of long-term debt
Proceeds from issuance of bonds
Cash dividends paid
Cash dividends paid to non-controlling interests
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 9)

¥

–
(337)
–
(1,605)–(7)(1,949)19(14,017)
29,778¥ 15,761

¥

(990)
(331)
938
(1,160)(8)(18)(1,569)（41）
6,233
23,545¥ 29,778

Thousands of
U.S. dollars(Note 2)2021$–
(3,044)–(14,497)–（63）(17,604)

171(126,610)
268,973$ 142,363

14

Asanuma Corporation
Notes to Consolidated Financial Statements
March 31, 2021
1.

Basis of Preparation of Consolidated Financial Statements

The accompanying consolidated financial statements of Asanuma Corporation (the“Company”) and its consolidated subsidiaries (the “Group”) are prepared on the basis ofaccounting principles generally accepted in Japan, which are different in certain respects as
to the application and disclosure requirements of International Financial ReportingStandards, and have been compiled from the consolidated financial statements prepared by
the Company as required by the Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications
and rearrangements have been made to the consolidated financial statements issued
domestically in order to present them in a format which is more familiar to readers outside
Japan.
Certain reclassifications of previously reported amounts have been made to conform theaccompanying consolidated financial statements for the year ended March 31, 2020 to the2021 presentation. Such reclassifications had no effect on consolidated net assets.
2.

U.S. Dollar Amounts

The accompanying consolidated financial statements are stated in yen, the currency of thecountry in which the company is incorporated and operate. The translation of yen amounts
into U.S. dollar amounts is included solely for the convenience of readers outside Japan andhas been made at ¥110.71 = U.S.$1.00, the exchange rate prevailing on March 31, 2021.
This translation should not be construed as a representation that yen can be converted into
U.S. dollars at the above or any other rate.
3.

Principles of Consolidation

At March 31, 2021 and 2020, the Company had 6 subsidiaries. The consolidated financial
statements for the years ended March 31, 2021 and 2020 include the accounts of theCompany and its 5 subsidiaries.
The Company applied the equity method to its investments in 2 affiliates, at March 31, 2021
and 2020 for the purpose of consolidated financial statements for the years then ended.
The accounts of the remaining subsidiary were not consolidated nor the equity method
applied because its total assets, net sales, profit or loss and retained earnings were notmaterial to the consolidated financial statements.

15

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

3.

Principles of Consolidation (continued)

The balance sheet date of SINGAPORE PAINTS & CONTRACTOR PTE. LTD. isDecember 31. Necessary adjustments were made to the subsidiary’s balance sheet toreflect any significant intercompany transactions during the period from January 1 throughMarch 31.
4.

Summary of Significant Accounting Policies(a) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks withdrawable
on demand, and short-term investments which are readily convertible to cash subject toan insignificant risk of any changes in their value and which were purchased with an
original maturity of three months or less.
(b) Investments in securities
Investments in securities are classified into two categories: held-to-maturity debt
securities or other securities. Held-to-maturity debt securities are stated at amortizedcost. Marketable securities classified as other securities are carried at fair value withany changes in unrealized holding gain or loss, net of the applicable income taxes,
reported as a separate component of accumulated other comprehensive income. Nonmarketable securities classified as other securities are carried at cost determined by themoving average method.
(c) Allowance for doubtful accounts
The Group provide an allowance for doubtful accounts at an amount calculated basedon their historical experience of bad debts on ordinary receivables plus an additional
estimate of probable specific bad debts from customers experiencing financial
difficulties.
(d) Inventories
Cost of uncompleted construction contracts are stated at cost determined on an
individual project basis. Real estate held for sale is stated at the lower of cost or net
selling value, cost being determined on an individual project basis. Raw materials andsupplies are stated at the lower of cost or net selling value, cost being determined by
the period average method.

16

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies (continued)(e) Property and equipment (Other than leased assets)
Property and equipment is stated on the basis of cost. Depreciation is calculated by
the declining-balance method over the estimated useful lives of the respective assets;
however, the straight-line method is applied to buildings (except for facilities attachedto the buildings) acquired on or after April 1, 1998 and facilities attached to buildings
and other non-building structures acquired on or after April 1, 2016.
(f) Intangible assets (Other than leased assets)
Amortization of intangible assets is calculated by the straight-line method over theestimated useful lives of the respective assets.
Expenditures related to computer software developed for internal use are charged toincome when incurred, except if they are deemed to contribute to the generation ofincome or to future cost savings. Such expenditures are capitalized as intangible
assets and amortized over an estimated useful life of 5 years.
(g) Leases
Leased assets held under finance leases that transfer ownership are depreciated by thesame methods used for owned fixed assets. For finance leases that do not transfer
ownership, depreciation expense is calculated based on the straight-line method overthe leased period of the lease with a residual value of zero.
(h) Bonds issuance expenses
Issuance expenses of bonds are charged to income as incurred.
(i) Provision for compensation for completed construction
A provision for compensation for completed construction is provided for anticipatedfuture costs arising from compensations on completed construction based on thehistorical data on the compensation cost.
(j) Provision for loss on construction contracts
A provision for loss on construction contracts is provided for uncompleted construction
projects when a future loss is expected and a reasonable estimate of the amount can bemade at the end of the current fiscal year.

17Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies (continued)(k) Retirement benefits
The retirement benefit obligation for employees is attributed to each period by thebenefit formula method.
Actuarial gain or loss is amortized commencing in the year following the year in which
the gain or loss is recognized by the straight-line method over a period of principally
10 years, which is within the average remaining years of service of the eligible
employees.
Prior service cost is charged to income when incurred.
(l) Income taxes
Deferred tax assets and liabilities have been recognized in the consolidated financial
statements with respect to the differences between the financial reporting and tax basesof the assets and liabilities, and were measured using the enacted tax rates and laws
which will be in effect when the differences are expected to reverse.
(m) Hedge accounting
Interest-rate swaps which meet certain conditions are accounted for as if the interest
rates applied to the swaps had originally applied to the underlying loans. Hedging
instruments and hedged items are interest-rate swaps and interest rates on loans fromfinancial institutions, respectively. The Company omit the evaluation of hedging
effectiveness due to meet certain conditions for interest-rate swaps.
(n) Goodwill
Goodwill is being amortized on a straight-line basis over the estimated period of benefit.
The goodwill resulting from the acquisition of SINGAPORE PAINTS &CONTRACTOR PTE. LTD. is being amortized over 7 years.
(o) Revenue recognition
The Company and its consolidated subsidiary recognize revenue by applying thepercentage-of-completion method for the construction projects for which the outcomeof the construction activity is deemed certain at the end of the reporting period. To
estimate the progress of such construction projects, the Company and its consolidated
subsidiary measure the percentage of completion by comparing costs incurred to datewith the most recent estimate of total costs required to complete the project (cost to costbasis). For other construction projects, the completed-contract method is applied.

18

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies (continued)(o) Revenue recognition (continued)
Net sales related to construction contracts accounted for by the percentage-ofcompletion method totaled ¥135,717 million ($1,225,879 thousand) and ¥137,950
million for the years ended March 31, 2021 and 2020, respectively.
(p) Consumption tax
Transactions subject to consumption taxes are recorded at amount exclusive ofconsumption taxes.
(q) Applicable accounting principles and procedures in cases where directly relevant
accounting standards are not available
Accounting for constructions involving joint venture, the Company recognize theirshare of the jointly controlled assets, the jointly responsible liabilities, the income andexpenses resulting from the joint venture.
5.

Significant Accounting Estimates

Estimates of total cost to complete construction projects when applying percentage-ofcompletion method(1) Amounts recorded in the consolidated financial statements for the year ended March
31, 2021.
Net sales involving construction contracts accounted for by the percentage-ofcompletion method totaled ¥135,717 million ($1,225,879 thousand).
(2) Information on the components of identified significant accounting estimate① Calculation method
For construction projects for which outcome of the construction activity is deemedcertain at the end of the reporting period, the Company and its subsidiary recognize
net sales involving completed construction contracts by reasonably estimating total
contraction revenue, total costs required to complete the project and the progressof the projects (The percentage of completion as of the end of reporting period ismeasured by applying cost to cost basis).

19

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

5.

Significant Accounting Estimates (continued)(2) Information on the components of identified significant accounting estimate(continued)② Key assumptions
Key assumptions of total cost to complete construction project are building
material prices or labor cost, which are calculated based on each project condition
such as scale, specification and construction period.
③ Effect on consolidated financial statements for the following fiscal year.
Key assumptions expect to have an effect on the amount of net sales involving
complete construction contracts for each reporting period due to uncertainty inestimates. The amount of net sales involving completed construction contracts inthe consolidated financial statements for the following fiscal year may fluctuate
when there are fluctuations in building material prices or labor cost, as key
assumptions of estimating total cost to complete construction project, which arecalculated based on each project condition such as scale specifications,construction period.
6.

Accounting Standards Issued but Not Yet Effective

Accounting Standard for Revenue Recognition“Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan(ASBJ) Statement No. 29, March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition”(ASBJ Guidance No. 30, March 26, 2021)(1) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically, theaccounting standard establishes the following five-step model that will apply to revenue
from customers:
Step 1: Identify the contracts with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when as the entity satisfies a performance obligation

20

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

6.

Accounting Standards Issued but Not Yet Effective (continued)(2) Scheduled date of application
The Group expect to adopt the accounting standards effective from the beginning of theyear ending March 31, 2022.
(3) Impact of the application of the accounting standards, etc.
Regarding the adoption of Accounting Standard for Revenue Recognition, in
accordance with the transitional treatment set forth in the proviso of Section 84 of the“Accounting Standard for Revenue Recognition,” the cumulative impact ofretroactively applying the new accounting policy to the fiscal years prior to the year
ending March 31, 2022 is reflected in retained earnings at the beginning of the year
ending March 31, 2022 and the new accounting policy is applied starting with thebalance at the beginning of the year ending in March 31, 2022
The effect on retained earnings at the beginning of the year ending in March 31, 2022
will be immaterial.
Accounting Standard for Fair Value Measurement and Related Implementation Guidance“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31, July 4, 2019)“Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4,
2019)“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020)(1) Overview
The ASBJ has developed an “Accounting Standard for Fair Value Measurement” and“Implementation Guidance on Accounting Standard for Fair Value Measurement”(hereinafter collectively, the “Fair Value Measurement Standard”), which provide
guidance for fair value measurement in order to improve comparability withinternational accounting standards. The Fair Value Measurement Standard is appliedwith respect to the fair value of the following items;••

Financial instruments defined in “Accounting Standard for Financial Instruments”
Inventories held for trading purposes defined in “Accounting Standard for
Measurement of Inventories”

In addition, the “Implementation Guidance on Disclosures about Fair Value of Financial
Instruments” has been revised, and it requires the disclosure of a breakdown of the fairvalue of financial instruments by level in the notes to the consolidated financial
statements.
21

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

6.

Accounting Standards Issued but Not Yet Effective (continued)(2) Scheduled date of application
The Group expect to adopt the accounting standards effective from the beginning of theyear ending March 31, 2022
(3) Impact of the application of the accounting standards, etc.
The impact was being evaluated at the time of preparation of these consolidated
financial statements.
7.

Changes in Presentation

Application of “Accounting Standard for Disclosure of Accounting Estimates”
The Group adopted the “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, March 31, 2020) from the year ended March 31, 2021 andsignificant accounting estimates are disclosed in Note 5 to the consolidated financial
statements. However, comparative information for the previous fiscal year has not been
disclosed in accordance with the transitional treatment set forth in the proviso of Section 11of the standard.
8.

Additional Information(Accounting estimates following the COVID-19 pandemic)
There are no significant changes from the previous fiscal year regarding the impact of
COVID-19 on the consolidated financial statements for the year ended March 31, 2021.
However, the sales order plan for construction projects has been prepared based on theassumptions that domestic and overseas economic activities will recover from the impact of
COVID-19 outbreak around the second half of the year ending March 31, 2022 because
there are indications of improvements regarding concerns about capital investment due todomestic and overseas economic slowdown. The Group assess the recoverability ofdeferred tax assets at the end of reporting period based on the assumptions that impacts of
COVID-19 outbreak still remain on new construction projects in the plan to some extent.
(Adoption of Accounting Standard for Accounting Policy Disclosures, Accounting Changes
and Error Corrections)
The Company adopted the revised accounting standard “Accounting Standard for
Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ
Statement No.24, March 31, 2020) from the end of the fiscal year ended March 31, 2021
and disclosed the applicable accounting principles and procedures in cases where directly
relevant accounting standards are not available.
22

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

9.

Cash and Cash Equivalents

A reconciliation of cash and deposits in the accompanying consolidated balance sheets at
March 31, 2021 and 2020 and cash and cash equivalents in the accompanying consolidated
statements of cash flows for the years then ended are as follows:

Cash and cash deposits
Cash and cash equivalents

Millions of yen
At March 31,
2021
2020
¥ 15,761¥ 29,778¥ 15,761¥ 29,778

Thousands of
U.S. dollars
2021$ 142,363$ 142,363

10. Loss on Impairment of Property and Equipment
Loss on impairment of property and equipment for the years ended March 31, 2021 and2020 are as follows:

Location
Saitama Prefecture

Location
Guam territory in
the United States

Main use
Leasedproperties

Main use
Idle assets

Class
Land

Class
Machinery andequipment

Thousands ofMillions of yen
U.S. dollars
2021
¥ 88

$795

Millions of yen
2020
¥ 13

The Group principally group the assets in association with the business operations at eachregional office whereas leased properties and idle assets are grouped individually and fixed
assets of its consolidated subsidiaries and investments for which the equity method isapplied are grouped per subsidiary or investment
Carrying value of land for leased properties were written down to recoverable amounts andthe write down amounts were recognized ¥88 million ($795 thousand) in impairment loss
because investment amounts were no longer expected to be recovered due to a decrease inprofitability for the year ended March 31, 2021. The recoverable amount is measured at
net selling value which was reasonably estimated based on the appraisal vale calculated byroad price rating method under the Japanese inheritance tax law

23

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

10. Loss on Impairment of Property and Equipment (continued)
For the year ended March 31, 2020, as a result of considering future use for the above assetsthat have been grouped as idle assets, it was determined that they were unlikely to be used
and it would be difficult to sell or divert them to other uses. Therefore, the Company wrote
down the carrying value of these assets to the memorandum value and recognized losses on
impairment of property and equipment of ¥13 million. The recoverable amounts were
measured at net selling value based on estimated sales value.
11. Investments in Securities
At March 31, 2021 and 2020, marketable securities classified as held-to-maturity debt
securities are as follows:

Carryingvalue
Held-to-maturity debt
securities whose
estimated fair value
exceeds their carrying
value:
Government andmunicipal bonds

¥ 15
¥ 15

Millions of yen
2021
Estimated Unrealized Carrying
fair value
Gain
value

¥ 15
¥ 15

¥0
¥0

¥ 16
¥ 16

2020
Estimated
fair value

Unrealized
gain

¥ 16
¥ 16

¥0
¥0

Thousands of U.S. dollars
2021
Carrying Estimated Unrealizedvalue
fair value
Gain
Held-to-maturity debt
securities whose
estimated fair value
exceeds their carrying
value:
Government andmunicipal bonds

$ 135
$ 135

$ 135
$ 135

$0
$0

24

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

11. Investments in Securities (continued)
At March 31, 2021 and 2020, marketable securities classified as other securities are as
follows:
Millions of yen

Other securities whosecarrying value exceeds
their acquisition costs:
Equity securities
Other securities whosecarrying value does notexceed their acquisition
costs:
Equity securities

Carrying
value

2021
Acquisition
costs

Unrealized
gain

Carrying
value

2020
Acquisition
costs

Unrealized
gain (loss)¥5,431¥ 2,631¥ 2,800¥ 5,747¥ 2,436¥ 3,311126¥ 5,557

126¥ 2,757–¥ 2,800

1,153¥ 6,900

1,357¥ 3,793(204)¥ 3,107

Thousands of U.S. dollars
2021
Carrying Acquisition Unrealized
value
costs
gain
Other securities whosecarrying value exceeds
their acquisition costs:
Equity securities
Other securities whosecarrying value does notexceed their acquisition
costs:
Equity securities$ 49,056$ 23,765$ 25,291

1,138$ 50,195

1,138$ 24,903–$ 25,291

The proceeds from sales of, and gross realized gain on investments in securities for the year
ended March 31, 2021 and 2020 are summarized as follows:

Proceeds from sales
Gross realized gain

Millions of yen
2021
2020
¥ 1,962
¥ 139
998
91

Thousands of
U.S. dollars
2021$ 17,722
9,014

Refer to Note 20 “Financial Instruments” for the redemption schedule at March 31, 2021
for held-to-maturity debt securities.

25

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

11. Investments in Securities (continued)
For the year ended March 31, 2021, the Company has recognized loss on impairment ofequity securities classified as other securities of ¥58 million ($524 thousand).
The Group recognize loss on impairment of marketable securities classified as othersecurities if the market value of a security at year end declines by more than 30% comparedwith its carrying value.
12. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans had average interest rates of 0.99% and 1.00% at March 31, 2021
and 2020, respectively.
Long-term debt at March 31, 2021 and 2020 are summarized as follows:

Millions of yen
2020
2021
Unsecured loans due through 2034 at rates ranging
from 1.12% to 1.58%
Secured loans due through 2034 at rates ranging
from 0.33% to 1.40%
1.37% unsecured bond due March 31, 2025
0.84% unsecured bond due July 25, 2025
0.81% unsecured bond due September 10, 2024
Total
Less current portion included in current liabilities

Thousands of
U.S. dollars
2021¥ 5,034¥39$ 45,470

2,882
650
600
390
9,556
（337）
¥ 9,219

8,215
650
600
390
9,894
（338）
¥ 9,556

26,032
5,871
5,420
3,523
86,316(3,044)$ 83,272

The aggregate annual maturities of long-term debt subsequent to March 31, 2021 aresummarized as follows:
Years ending March 31,
2022
2023
2024
2025
2026 and thereafter

Millions of yen¥ 337

Thousands of
U.S. dollars$ 3,044¥ 9,556$ 86,316

1,047
348
5,666
2,158

9,457
3,143
51,17919,49326

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

12. Short-Term Bank Loans and Long-Term Debt (continued)
Assets pledged at March 31, 2021 and 2020 as collateral for lines of credit of the Company
are summarized as follows:

Buildings and structures
Land
Investments in securities

Millions of yen
2021
2020
¥ 598
¥ 620
890
957
–
4,883
¥ 1,488¥ 6,460

Thousands of
U.S. dollars
2021$ 5,4028,039–$ 13,441

All assets of the consolidated subsidiaries engaged in the Private Finance Initiative businesswere pledged as collateral for their loans under the project finance agreements. Assets
pledged at March 31, 2021 and 2020 amounted to ¥3,357 million ($30,322 thousand) and¥3,701 million as collateral for loans of ¥2,882 million ($26,032 thousand) and ¥3,215
million, respectively.
Assets of the Company pledged at March 31, 2021 and 2020 as collateral for loans ofaffiliates engaged in the PFI business are summarized as follows:

Investments in securities
Long-term loans receivable

Millions of yen
2021
2020
¥ 103
¥ 96
102
102
¥ 205
¥ 198

Thousands of
U.S. dollars
2021
$ 930
921
$ 1,851

In order to achieve more efficient financing, the Company has concluded line-of-credit
agreements with certain financial institutions. The status of these lines of credit at March
31, 2021 and 2020 are as follows:

Lines of credit
Credit utilized
Available credit

Millions of yen
2020
2021
¥ 10,000¥ 10,000––¥ 10,000¥ 10,000Thousands of
U.S. dollars
2021$ 90,326–$ 90,326

27

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

13. Income Taxes
Income taxes applicable to the Company and its consolidated subsidiaries comprise
corporation, inhabitants’ and enterprise taxes which, in the aggregate, resulted in a statutory
tax rate of approximately 30.4% for the years ended March 31, 2021 and 2020.
A reconciliation of the statutory tax rate and the effective tax rates for the years ended March
31, 2021 and 2020 as a percentage of profit before income taxes are summarized as follows:

Statutory tax rate
Permanently non-tax-deductible expenses
Permanently non-taxable income
Per capita portion of inhabitants’ taxes
Tax credit for corporation tax
Valuation allowance
Other
Effective tax rates

2021
30.4%
0.8
(0.1)
2.0
(1.1)
(0.2)
0.1
31.9%

2020
30.4%
1.5
(0.1)
1.8
(0.8)
0.3
0.5
33.6%

28

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

13. Income Taxes (continued)
The significant components of deferred tax assets and liabilities of the Company and its
consolidated subsidiaries at March 31, 2021 and 2020 are summarized as follows:
Millions of yen
2021
2020
Deferred tax assets:
Allowance for doubtful accounts
Provision for compensation forcompleted construction
Loss on devaluation of inventories
Provision for loss on construction
contracts
Liability for retirement benefits
Loss on impairment of property andequipment
Loss on valuation of investments insecurities
Tax loss carryforwards
Other
Gross deferred tax assets
Less valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized holding gain on investments
in securities
Deferred capital gains on property
Other
Total deferred tax liabilities
Net deferred tax assets

¥

217

¥

Thousands of
U.S. dollars
2021

215

$ 1,960

165
23

179
22

1,490
208

36
1,059

65
1,255

325
9,566

481

459

4,345

35
–
816
2,832
(898)
1,934

45
7
772
3,019
(911)
2,108

316
–
7,370
25,580(8,111)
17,469

(841)
(127)
(2)
(970)
¥ 964

(914)
(129)
(2)
(1,045)¥ 1,063(7,597)(1,147)(18)(8,762)$ 8,70729

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

14. Retirement Benefits
1.

Outline of retirement benefits for employees
The Company has funded or unfunded defined benefit pension plans and defined
contribution plans in order to allocate for employees’ retirement benefits. In addition
to these retirement benefit plans, the Company may pay additional retirement benefits
when employees retire. All employees of Asanuma Tatemono K.K., a consolidated
subsidiary of the Company, have been composed of secondees from the Company,
consequently, the retirement benefit plan of Asanuma Tatemono K.K. is incorporated
in those of the Company. The other consolidated subsidiaries do not have any retirement
pension plans.
Under the defined benefit plans, the Company pays lump-sum or pension payments, theamounts of which are determined by reference to employees’ ranks and length ofservice.

2.

Defined benefit plans(1) The changes in retirement benefit obligation for the years ended March 31, 2021
and 2020 are as follows:

Balance at the beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefit paid
Balance at the end of the year

Millions of yen
2020
2021
¥ 10,453¥ 10,708
377
384
106
105
101
(164)
(554)
(580)
¥ 10,483¥ 10,453

Thousands of
U.S. dollars
2021$ 94,418
3,405
958
912
(5,004)$ 94,689(2) The changes in plan assets for the years ended March 31, 2021 and 2020 are as
follows:

Balance at the beginning of the year
Expected return on plan assets
Actuarial gain (loss)
Contributions by the employer
Benefit paid
Balance at the end of the year

Millions of yen
2020
2021
¥ 6,328¥ 6,365
126
127
258
(235)
675
459
(387)
(88)
¥ 7,000¥ 6,328

Thousands of
U.S. dollars
2021$ 57,158
1,138
2,330
6,097
(3,495)$ 63,22830

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

14. Retirement Benefits (continued)
2.

Defined benefit plans (continued)(3) The following table sets forth the funded status of the plans and the amounts
recognized in the consolidated balance sheets as of March 31, 2021 and 2020 for
the Company’s and the consolidated subsidiary’s defined benefit plans:

Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net assets and liabilities recognized on
the consolidated balance sheet

Millions of yen
2020
2021
¥ 6,047¥ 5,978(6,328)(7,000)(281)(1,022)
4,406
4,505¥ 3,483¥ 4,125

Thousands of
U.S. dollars
2021$ 53,997(63,228)(9,231)
40,692$ 31,461(4) The components of retirement benefit expense for the years ended March 31, 2021
and 2020 are as follows:

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain (loss)
Retirement benefit expense

Millions of yen
2020
2021
¥ 384
¥ 377
105
106
(127)
(127)
(26)
201
¥ 336
¥ 557

Thousands of
U.S. dollars
2021$ 3,405957(1,147)
1,816$ 5,031(5) The components of retirement benefits liability and asset adjustments included inother comprehensive income (before tax effect) for the years ended March 31, 2021
and 2020 are as follows:

Actuarial gain (loss)

Millions of yen
2020
2021
¥ (97)¥ 357

Thousands of
U.S. dollars
2021$ 3,225

31

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

14. Retirement Benefits (continued)
2.

Defined benefit plans (continued)(6) The components of retirement benefits liability and asset adjustments included inaccumulated other comprehensive income (before tax effect) as of March 31, 2021
and 2020 are as follows:

Unrecognized actuarial gain

Millions of yen
2021
2020
¥ 162
¥ 519

Thousands of
U.S. dollars
2021$ 1,463(7) The fair value of plan assets, by major category, as a percentage of total plan assets
as of March 31, 2021 and 2020 are as follows:

Debt securities
Equity securities
Cash and cash deposits
Total

2021
82%
17
1
100%

2020
86%
12
2
100%

The expected long-term rate of return on plan assets is determined as a result ofconsideration of both the portfolio allocation at present and in the future, and the
expected long-term rate of return from multiple plan assets at present and in the
future.
(8) The assumptions used in accounting for the defined benefit plans are as follows:

Discount rate
Expected long-term rate of return onplan assets
Estimated rate of salary increase

2021
1.0%

2020
1.0%

2.0%
9.1%

2.0%
9.1%

(Note) Estimated rate of salary increase is an expected rate of the increase of theretirement benefit points.

32

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

14. Retirement Benefits (continued)
3.

Defined contribution pension plan
Information on contributions to the defined contribution pension plan for the years
ended March 31, 2021 and 2020 are as follows:
Millions of yen
2021
2020
Contributions to the defined
contribution pension plan

¥ 162

¥ 165

Thousands of
U.S. dollars
2021$ 1,463

15. Asset Retirement Obligations
The Company estimates the cost of restoration obligations based on property leaseagreements of the headquarters in Osaka and Tokyo office. As the cost of the restoration
obligations is immaterial, the information on asset retirement obligations is omitted.
Regarding certain restoration obligations, the Company estimated non-recoverable amountsof deposits for those premises and charged the portion attributable to the years ended March
31, 2021 and 2020, instead of recording asset retirement obligations.
16. Shareholders’ Equity
The Companies Act (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 capital reserve 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 and sale of new shares of common stock, the entire amountof the proceeds is required 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 ofthe proceeds of the sale of new shares as additional paid-in capital included in capital surplus.

33

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

16. Shareholders’ Equity (continued)
Movements in shares of common stock in issue and treasury stock during the years ended
March 31, 2021 and 2020 are summarized as follows:

April 1, 2020
Shares ofcommon stockin issue
Treasury stock

8,078,629
20,321

Number of shares
2021
Increase
Decrease

–
1,572

–
–

March 31, 2021

8,078,629
21,893The increase in treasury stock of 1,572 was due to the acquisition of fractional shares of lessthan one unit.

Shares ofcommon stockin issue
Treasury stock

April 1, 2019

Number of shares
2020
Increase
Decrease

8,508,629
446,382–3,979

430,000
430,040

March 31, 2020
8,078,629
20,321The decrease in shares of common stock of 430,000 resulted from the cancellation oftreasury stock on May 31, 2019
The increase in treasury stock of 3,979 was due to the acquisition of fractional shares of lessthan one unit. The decrease in treasury stock of 40 shares was due to the sales of fractional
shares of less than one unit. The decrease in treasury stock of 430,000 shares was due tothe cancellation of treasury stock on May 31, 2019.
17. Provision for Loss on Construction Contracts
Provision for loss on construction contracts included in cost of sales for the years ended
March 31, 2021 and 2020 amounted to ¥119 million ($1,075 thousand) and ¥214 million,
respectively.
Costs on uncompleted construction contracts” for which a construction loss is anticipatedand “Provision for loss on construction contracts” are presented without being offset. The
amounts of “Costs on uncompleted construction contracts,” for which a construction loss isanticipated, corresponding to provision for loss on construction contracts were nil and ¥51
million for the years ended March 31, 2021 and 2020, respectively.

34

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

18. Research and Development Costs
Research and development costs included in selling, general and administrative expenses
for the years ended March 31, 2021 and 2020 amounted to ¥489 million ($4,417 thousand)and ¥407 million, respectively.
19. Other Comprehensive Income
The following table presents reclassification adjustments and tax effects allocated tocomponents of other comprehensive income for the years ended March 31, 2021 and 2020:

Millions of yen
2020
2021
Net unrealized holding gain (loss) on
investments in securities:
Amount arising during the year
Reclassification adjustments for loss
realized in the statement of income
Before tax effectTax effectNet unrealized holding loss on investments insecurities, net
Foreign currency translation adjustments, net
Retirement benefits liability adjustments:
Amount arising during the year
Reclassification adjustments for gain (loss)
realized in the statement of income
Before tax effectTax effect
Retirement benefits liability adjustments, net
Total other comprehensive income

Thousands of
U.S. dollars

2021

¥ 612

¥ (1,555)$ 5,528

(921)
(309)
72

(75)
(1,630)492(8,319)(2,791)
650

(237)
(19)

(1,138)1(2,141)
(172)

157

(88)

1,418

201
358
(109)
249
¥ (7)

(9)
(97)
29
(68)
¥ (1,205)

1,816
3,234
(985)
2,249
$ (64)

35

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

20. Financial Instruments(1) Policy for financial instruments
The Group manage their funds by investing only in short-term deposits, and primarilyraise funds by borrowings from banks and issuing bonds. The purpose of entering into
derivative transactions is to mitigate fluctuation risk related to interest rates with respect
to borrowings from banks, and derivative transactions are not carried out for speculative
purposes.
(2) Types of financial instruments, related risk and risk management for financial
instruments
Notes receivable and accounts receivable on completed construction contracts are
subject to the credit risk of customers. Regarding this risk, the Group monitor due
dates and outstanding balances by individual customer, and the credit worthiness of
their main customers regularly.
Investments in securities are mainly composed of stocks and are exposed to fluctuation
risk of market prices and the Group review the fair values of such listed stocks every
quarter.
Notes payable, accounts payable on construction contracts and other accounts payable
are mostly due within one year.
Short-term bank loans, long-term debt and bonds are mainly utilized for business
operations. Certain long-term debt is hedged by derivative transactions (interest rate
swaps) as a hedging instrument per individual agreement in order to reduce fluctuation
risk of interest rate and fix interest expense.
In addition, the Company follows internal policies which include authorized proceduresand processes governing derivatives within the actual demand.

36

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

20. Financial Instruments (continued)(3) Supplementary explanation of fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available.
When there is no quoted market price available, fair value is reasonably estimated.
Since various assumption factors are reflected in estimating the fair value, different
premises and factors could result in a different fair value.
The carrying value, estimated fair value and the difference between them as of March
31, 2021 and 2020 are as follows. Financial instruments for which fair value isdeemed extremely difficult to determine are not included.

Cash and cash deposits
Notes receivable and accounts
receivable on completed
construction contracts
Accounts receivable-other
Investments in securities
Total assets
Notes payable and accounts
payable on construction contracts
Short-term bank loans and current
portion of long-term debt
Long-term debt:
Bonds
Long-term loans
Total liabilities

Carrying value

Millions of yen
2021
Estimated fairvalue

¥ 15,761¥ 15,761¥

51,361
7,113
5,572¥ 79,807

51,472
7,113
5,572¥ 79,918

111
–
0
¥ 111

¥ 15,423¥ 15,423

¥

1,807

1,807

–

1,640
7,579
¥ 26,449

1,617
7,591
¥ 26,438(23)12¥ (11)

Difference
–

–

37

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

20. Financial Instruments (continued)(3) Supplementary explanation of fair value of financial instruments (continued)
Millions of yen
2020

Cash and cash deposits
Notes receivable and accounts
receivable on completed
construction contracts
Investments in securities
Total assets
Notes payable and accounts
payable on construction contracts
Short-term bank loans and current
portion of long-term debt
Long-term debt:
Bonds
Long-term loans
Total liabilities

Carrying value

Estimated fairvalue

¥ 29,778¥ 29,778¥

52,092
6,916¥ 88,786

52,2406,916¥ 88,934

148
0
¥ 148

¥ 26,988¥ 26,988

¥

1,808

1,808

–

1,640
7,916
¥ 38,352

1,624
7,932
¥ 38,352

(16)
16
¥ 0

Difference––

Thousands of U.S. dollars
2021

Cash and cash deposits
Notes receivable and accounts
receivable on completed
construction contracts
Accounts receivable-other
Investments in securities
Total assets
Notes payable and accounts
payable on construction contracts
Short-term bank loans and current
portion of long-term debt
Long-term debt:
Bonds
Long-term loans
Total liabilities

Carrying value

Estimated fairvalue

$ 142,363$ 142,363$

463,924
64,24950,330$ 720,866

464,926
64,24950,330$ 721,868

1,002
–
0
$ 1,002$ 139,310$ 139,310$

16,322

16,322–

14,81468,458$ 238,904

14,606
68,567$ 238,805

(208)
109
$ (99)

Difference
–

–

38

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

20. Financial Instruments (continued)(3) Supplementary explanation of fair value of financial instruments (continued)
Methods to determine the estimated fair value of financial instruments and other mattersrelated to securities and derivative transactions:
Cash and cash deposits and Accounts receivable-other
Since these items are settled in a short period of time, their carrying values approximate
the fair value.
Notes receivable and accounts receivable on completed construction contracts
The estimated fair value of notes receivable and accounts receivable on completed
construction contracts are based on the present value discounted by the interest rates inconsidering the collection term of each receivable and each credit risk.
Investments in securities
The estimated fair values of equity securities are based on quoted market prices. The
estimated fair value of debt securities is based on prices provided by the financial
institutions.
Notes payable, accounts payable on construction contracts and short-term bank loans
Since these items are settled in a short period of time, their carrying values approximate
the fair value.
Bonds
The estimated fair value of bonds issued by the Company is based on present value
determined by discounting the principal and interest amount with the interest rate
expected in the case of a new bond issuance.
Long-term debt
The estimated fair values of long-term debt are based on present value determined bydiscounting the principal and interest amount with the interest rate expected case of
new bond issuance.

39

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

20. Financial Instruments (continued)(3) Supplementary explanation of fair value of financial instruments (continued)
Financial instruments for which it is extremely difficult to determine the fair value:
Unlisted equity securities of ¥824 million ($7,443 thousand) and ¥820 million included
in “Investments in securities” and “Investments in an unconsolidated subsidiary andaffiliates” in the consolidated balance sheets at March 31, 2021 and 2020, respectively,
are based neither on market value nor estimated future cash flow, and it is difficult todetermine the estimated fair value. Therefore, they are not included in the above table.
The redemption schedule for cash deposits, receivables and marketable securities withmaturity dates at March 31, 2021 are summarized as follows:

Cash deposits
Notes receivable and accounts
receivable on completed
construction contracts
Investments in securities:
Held-to-maturity debt securities
Total

Cash deposits
Notes receivable and accounts
receivable on completed
construction contracts
Investments in securities:
Held-to-maturity debt securities
Total

Within 1 year
¥ 15,756

Millions of yen
Over 1 year
within 5 years¥–

Over 5 years
within 10 years¥–

48,793

1,375

1,193

–
¥ 64,549

15¥ 1,390–¥ 1,193

Thousands of U.S. dollars
Over 1 year
Over 5 years
Within 1 year
within 5 years
within 10 years$ 142,318$–$–

440,727

12,421

10,776–$ 583,045

134$ 12,555–$ 10,776

40

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

21. Amounts per Share
Amounts per share at March 31, 2021 and 2020 and for the years then ended are as follows:Yen
Net assets
Profit attributable to owners of parent
Cash dividends

2021

2020

U.S. dollars
2021¥ 5,152.02
513.55216.00¥ 4,855.25
533.47153.00$ 46.54
4.64
1.95

Information used in the computation of profit attributable to owners of parent per share forthe years ended March 31, 2021 and 2020 are presented as follows:

2021

2020

Thousands of
U.S. dollars
2021¥ 4,138¥ 4,300$ 37,377–––¥ 4,138¥ 4,300$ 37,377

Millions of yen
Profit attributable to owners of parent
Profit not attributable to commonshareholders
Profit attributable to owners of parent
applicable to common shareholders

Thousands of shares
2021
2020
Weighted-average number of shares ofcommon stock used in the calculation

8,057

8,061

Net assets per share are computed based on the net assets and the number of shares ofcommon stock outstanding at the year end.
Profit attributable to owners of parent per share is computed based on the profit attributableto owners of parent available for distribution to shareholders of common stock and theweighted average number of shares of common stock outstanding during the year.
Cash dividends per share represent the cash dividends proposed by the Board of Directors
as applicable to the respective years.

41Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

22. Segment Informationa.

Segment Information(1) Overview of reporting segments
The reporting segments of the Group is components for which discrete financial
information is available and whose operating results are regularly reviewed by theCompany’s Board of Directors to make decisions about resource allocation and assess
their performance.
The Group mainly operate in the construction business and have two reporting
segments, which are the Building Construction Segment and the Civil Engineering
Segment.
(2) Method of calculating sales and income in reporting segments
The method of accounting for reporting segments is, in principle, the same as stated in
Note 4 “Summary of Significant Accounting Policies.” The income of reporting
segments is calculated on the basis of operating income. Intersegment sales are recorded
based on current market prices.
Millions of yen
2021
Reporting Segments
Building
Civil
Construction Engineering
Net sales and income:Sales to third parties
Intersegment sales
Net sales
Segment income

Total

Others

Sub total

Adjustments

Total¥ 110,146–
110,146¥ 27,701–
27,701¥ 137,847–
137,847¥ 1,088
5
1,093¥ 138,935
5
138,940

¥

–
(5)
(5)

¥138,935–
138,935¥ 10,967¥ 2,614¥ 13,581¥¥ 13,724¥ (8,433)¥ 5,291

Total

143

Millions of yen
2020
Reporting Segments
Building
Civil
Construction Engineering
Net sales and income:Sales to third parties
Intersegment sales
Net sales
Segment income

Total

Others

Sub total

Adjustments
–
(5)
(5)

¥ 116,575–
116,575¥ 23,459–
23,459¥ 140,034–
140,034¥ 1,4385
1,443¥ 141,472
5
141,477¥¥ 11,984¥ 2,308¥ 14,292¥¥ 14,451¥ (7,850)

159¥141,472–
141,472
¥

42

6,601

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

22. Segment Information (continued)a.

Segment Information (continued)(2) Method of calculating sales and income in reporting segments (continued)
Thousands of U.S. dollars
2021
Reporting Segments
Building
Construction

Civil
Engineering

Total

Others

Sub total

Adjustments$ 994,906–$ 250,212–$ 1,245,118–$ 9,82746$ 1,254,945
46$

Net sales

994,906

250,212

1,245,118

9,873

Segment income$ 99,061$ 23,611$ 122,672$ 1,292

Net sales and income:Sales to third parties
Intersegment sales–(46)$ 1,254,945–

1,254,991(46)

1,254,945$ 123,964$ (76,173)“Others” is a business segment which is not included in the reporting segments andincludes real estate and other businesses.
Adjustments for segment income in the amounts of ¥8,433 million ($76,173 thousand)and ¥7,850 million for the years ended March 31, 2021 and 2020 include eliminationsof intersegment transactions of ¥1 million ($9 thousand) and ¥2 million and corporate
expenses of ¥8,432 million ($76,164 thousand) and ¥7,848 million recorded as selling,
general and administrative expenses not attributable to any business segments,
respectively.
The total amount of segment income is adjusted to operating income on the
consolidated statement of income.
Assets, liabilities and others are not allocated to business segments.
b.

Total

Related information(1) Information by products and services
Disclosure of information by products and services for the years ended March 31, 2021
and 2020 has been omitted as the Company classifies such information in the same way
as it does its reporting segments.
(2) Information by geographical segment
Disclosure of sales and property and equipment by geographical area for the years
ended and as of March 31, 2021 and 2020 has been omitted as sales to domestic
customers were in excess of 90% of consolidated net sales, and the balance of property
and equipment in Japan was in excess of 90% of consolidated property and equipment.
43$

47,791Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

22. Segment Information (continued)b.

Related information (continued)(3) Information by major customers
Disclosure of information by major customers for years ended March 31, 2021 and2020 has been omitted as sales to each customer were less than 10% of consolidated
net sales.
c.

Loss on impairment of property and equipment by reporting segment
Millions of yen
2021
Reporting Segments

Loss on impairmentof property andequipment

Building
Construction

Civil
Engineering

Total

¥–

¥–

¥–

Other

Elimination
andcorporate

Total

¥ 88

¥–

¥ 88

Total

Millions of yen
2020
Reporting Segments

Loss on impairmentof property andequipment

Building
Construction

Civil
Engineering

Total

Other

Elimination
andcorporate

¥ 13

¥–

¥ 13

¥–

¥–

¥ 13

Total

$ 795

Thousands of U.S. dollars
2021
Reporting Segments

Loss on impairmentof property andequipmentd.

Building
Construction

Civil
Engineering

Total

Other

Elimination
andcorporate

$–

$–

$–

$ 795

$–

Information on amortization of goodwill and remaining unamortized balance
Goodwill is not allocated to reporting segments. Amortization of goodwill was ¥27
million ($244 thousand) and ¥28 million as at March 31, 2021 and 2020, respectively.
Remaining unamortized balance included in “Intangible assets” was ¥136 million($1,228 thousand) and ¥170 million as at March 31, 2021 and 2020, respectively.
44

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

23. Subsequent Events
1.

Appropriation of retained earnings
The following distribution of retained earnings of the Company, which has not beenreflected in the accompanying consolidated financial statements for the year ended
March 31, 2021, was approved at the annual general meeting of the shareholders of theCompany held on June 25, 2021.

Cash dividends of ¥257 ($2.32) per share

Millions of yen¥ 2,071

Thousands of
U.S. dollars$ 18,70745