Consolidated Financial Statements
Asanuma Corporation
Year ended March 31, 2020
with Independent Auditor’s ReportAsanuma Corporation
Consolidated Financial Statements
Year ended March 31, 2020

Contents

Consolidated Financial Statements
Independent Auditor’s Report ............................................................................................. 1
Consolidated Balance Sheet ................................................................................................ 4
Consolidated Statement of Income...................................................................................... 6
Consolidated Statement of Comprehensive Income............................................................ 7
Consolidated Statement of Changes in Net Assets .............................................................. 8
Consolidated Statement of Cash Flows ........................................................................... 10
Notes to Consolidated Financial Statements ..................................................................... 12

Independent Auditor’s Report
The Board of Directors
Asanuma Corporation.

OpinionWe have audited the accompanying consolidated financial statements of Asanuma
Corporation and its subsidiaries (the Group), which comprise the consolidated balance sheet
as at March 31, 2020, 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 allmaterial respects, the consolidated financial position of the Group as at March 31, 2020, andits consolidated financial performance and its consolidated cash flows for the year then endedin accordance 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 the consolidated financial statements in Japan, and we have fulfilled our otherethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 for such internal control as management determines is necessary to enable the preparationof consolidated financial statements that are free from material misstatement, whether due tofraud or error.
In preparing the consolidated financial statements, management is responsible for assessing
the Group’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 Auditors are 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, andto issue 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
the Group’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting 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 ourauditor’s report. However, future events or conditions may cause the Group to cease tocontinue 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 presentationin accordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performanceof the group audit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Board of Corporate Auditors regarding,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 statementthat 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 and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
Conflicts of Interest
We have no interest in the Group which should be disclosed in accordance with the Certified
Public Accountants Act.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect
to the year ended March 31, 2020 are presented solely for convenience. Our audit also
included the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion,such translation has been made on the basis described in Note 2 to the consolidated financial
statements.

Ernst & Young ShinNihon LLC
Osaka, Japan
June 29, 2020

Yuka Hayashi
Designated Engagement Partner
Certified Public Accountant

Masashi Kobayashi
Designated Engagement Partner
Certified Public Accountant

Asanuma Corporation
Consolidated Balance SheetYear ended March 31, 2020

Millions of yen
2020
2019
AssetsCurrent assets:
Cash and cash deposits (Notes 6, 10 and 18)
Receivables:
Notes receivable (Notes 7 and 18)
Accounts receivable on completed construction
contracts (Note 18)
Other accounts receivable
Allowance for doubtful accounts

Thousands of
U.S. dollars(Note 2)2020

¥ 29,778¥ 23,545$ 273,619

3,128

4,484

28,742

48,964
3,111(60)
55,14349,7884,878(21)
59,129449,91328,586(551)
506,690

2,067
55
15
2,137

1,942
34
15
1,991

18,993505
138
19,636

Other current assets
Total current assets

252
87,310260
84,9252,315
802,260

Property and equipment, at cost:
Land (Notes 8 and 10)
Buildings and structures (Notes 8 and 10)
Machinery, equipment and vehicles (Notes 8)
Tools, furniture and fixtures
Lease assets
Less accumulated depreciation
Property and equipment, net

1,694
6,313
617
1,464
7
(5,198)
4,897

1,808
6,701
617
1,426
4
(5,222)
5,334

15,56658,0085,669
13,452
64(47,762)
44,997

7,616

9,301

69,981

120
105
1,175
1,070
1,404
(653)
10,837

142
113
886
567
1,413
(681)
11,741

1,102
965
10,796
9,832
12,901(6,000)99,577¥ 103,044¥ 102,000$ 946,834

Inventories:
Cost of uncompleted construction contracts
Real estate held for sale
Raw materials and supplies

Investments and other assets:
Investments in securities (Notes 9, 10 and 18)
Investments in an unconsolidated subsidiary
and affiliates (Note 9 and 18)
Long-term loans receivable (Note 10)
Intangible assets (Notes20)
Deferred income taxes (Note 11)
Other assets
Allowance for doubtful accounts
Total investments and other assets

Total assets

4Millions of yen
2020
2019
Liabilities
Current liabilities:
Short-term bank loans (Notes 10 and 18)
Current portion of long-term debt (Notes 10 and 18)
Payables:Notes payable (Note 18)
Accounts payable on construction contracts(Note 18)
Other accounts payable (Note 18)
Advances received on uncompleted construction
contracts
Deposits received
Income taxes payable (Note 11)
Provision for compensation for completed
construction
Provision for loss on construction contracts (Note 15)
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 10 and 18)
Liability for retirement benefits (Note 12)
Deferred income taxes (Note 11)
Other long-term liabilities
Total long-term liabilities
Total liabilities

Net assets
Shareholders’ equity (Note 14):
Common stock:
Authorized – 29,356,500 shares
Issued– 8,078,629 and 8,508,629 shares in2020 and 2019
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 12)
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

¥

1,470
338

2,460
331

$ 13,507
3,106

195
26,793893
29,232

1,792
246,191548
27,536

2,029
32,154

5,035
253,018

9,139
2,001
1,525

6,904
1,280
1,790

83,975
18,387
14,013

590
214
7,127
49,940501
55,722
51,147

5,421
1,966
65,488458,881

9,556
4,125
7
102
13,79063,730

8,904
4,343
13
126
13,38664,53387,80737,90364
937
126,711585,592

9,615
2,166
25,577(60)
37,2989,615
2,167
23,616(1,149)34,24988,34919,902
235,018(551)
342,718

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

3,334
(8)
(293)
3,033
185
37,467¥ 102,000

20,178(64)(3,317)
16,7971,727
361,242$ 946,834

See accompanying notes to consolidated financial statements.

¥

Thousands of
U.S. dollars(Note 2)2020

5

Asanuma Corporation
Consolidated Statement of Income
Year ended March 31, 2020

Millions of yen
2020
2019
Net sales (Note 20):
Construction contracts
Other¥ 140,034
1,438
141,472¥ 134,195
1,518
135,713$ 1,286,722
13,214
1,299,936

125,742
1,111
126,853

121,090
1,298
122,388

1,155,398
10,2091,165,607

14,292327
14,61913,105220
13,325

131,324
3,005
134,329

8,018
6,601

7,624
5,701

73,67560,654

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

217
29
(190)
(42)
(127)
469

1,727
(386)
(1,084)
(551)
1,452
836

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

(57)
–
–
25
6,025

(119)
772
(662)
(0)
59,735

2,173
17
2,190
4,311

1,797
60
1,857
4,168

19,967
156
20,12339,612

11
4,300

(10)
4,178

101
39,511

Cost of sales (Note 15):
Construction contracts
Other
Gross profit:
Construction contracts
Other

Selling, general and administrative expenses (Note 16)
Operating income (Note 20)
Other income (expenses):
Interest and dividends income
Foreign exchange (losses) gains, net
Interest expenses
Guarantee fees
Commission fees
Gain on sales of investments in securities (Note 8)
Loss on impairment of property and equipment(Notes 8 and 20)
Outsourcing service income
Loss on valuation of other investments
Other, net (Note 9)
Profit before income taxes
Income taxes (Note 11):
Current
DeferredProfitProfit attributable to:Non-controlling interests
Owners of parent

Thousands of
U.S. dollars(Note 2)2020¥

See accompanying notes to consolidated financial statements.

¥

$

6

Asanuma Corporation
Consolidated Statement of Comprehensive Income
Year ended March 31, 2020

ProfitOther comprehensive income (Note 16)
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
2019
2020
¥ 4,311¥ 4,168

Thousands of
U.S. dollars(Note 2)2020
$ 39,612(1,138)1(68)(1,205)¥ 3,106

264
(8)
83
339
¥ 4,507(10,457)10(625)(11,072)$ 28,540¥ 3,095
11¥ 4,517(10)$ 28,439
101

See accompanying notes to consolidated financial statements.

7

Asanuma Corporation
Consolidated Statement of Changes in Net Assets
Year ended March 31, 2020

Millions of yen

Balance at April 1, 2018
Profit attributable to owners ofparentCash dividends
Purchases of treasury stock
Sales of treasury stock
Net change in items other thanshareholders’ equity
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 March 31, 2020

Commonstock¥ 9,615

Capitalsurplus¥ 2,167

Retainedearnings¥ 20,778

Treasurystock,
at cost¥ (146)

Total
shareholders’equity¥ 32,414

–
–
–
–

–
–
–
0

4,178
(1,340)––––(1,003)0

4,178(1,340)(1,003)
0

–
9,615

–
2,167

–
23,616–(1,149)–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¥

Millions of yen

Balance at April 1, 2018
Profit attributable to owners ofparentCash dividends
Purchases of treasury stock
Sales of treasury stock
Net change in items other thanshareholders’ equity
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 March 31, 2020

Net
unrealized
holding
gain oninvestments
in securities¥ 3,070

Foreigncurrencytranslation
adjustments¥ –Retirement
benefits
liability
adjustments¥ (376)

Total
accumulated
othercomprehensive
income¥ 2,694

Noncontrollinginterests¥ 116

Total net
assets¥ 35,224

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

4,178
(1,340)(1,003)
0

264
3,334

(8)
(8)

83
(293)

339
3,033

69
185

408
37,467

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

4,300
(1,233)(18)
0–(1,138)¥ 2,196

1
¥ (7)

(68)
¥ (361)(1,205)¥ 1,8283¥ 188(1,202)¥ 39,314

8

Asanuma Corporation
Consolidated Statement of Changes in Net Assets (continued)
Year ended March 31, 2020

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 March 31, 2020

Commonstock$ 88,349

Thousands of U.S. dollars (Note 2)
Treasury
CapitalRetainedstock,
surplusearnings
at cost$ 19,911$ 216,999$ (10,558)

–
–
–
–
–

–
–
–
0
(9)

39,511(11,329)––(10,163)–$ 88,349–$ 19,902–$ 235,018

Total
shareholders’equity$ 314,701

–
–
(165)
0
10,17239,511(11,329)
(165)
0
–

–
(551)

–
$ 342,718$

Thousands of U.S. dollars (Note 2)

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 March 31, 2020

Net
unrealized
holding
gain oninvestments
in securities$ 30,635

Foreigncurrencytranslation
adjustments$ (74)

Retirement
benefits
liability
adjustments$ (2,692)

Total
accumulated
othercomprehensive
income$ 27,869

Noncontrollinginterests$ 1,700

Total net
assets$ 344,270

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

39,511(11,329)(165)
0–(10,457)$ 20,178

10$ (64)(625)$ (3,317)(11,072)$ 16,79727$ 1,727(11,045)$ 361,242

See accompanying notes to consolidated financial statements.

9Asanuma Corporation
Consolidated Statement of Cash Flows
Year ended March 31, 2020

Cash flows from operating activities:
Profit before income taxes
Adjustments for:
Depreciation and amortization
Loss on impairment of property and equipment
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for loss on
construction contracts
Decrease (increase) in liability for retirement benefits
Interest and dividends income
Interest expenses
Foreign exchange losses (gains), net
Gain on sales of investments in securities
Loss on valuation of investments in securities
Loss on sales of property, plant and equipment
Decrease (increase) in notes receivable and accounts
receivable on completed construction contracts
Increase in inventories
Decrease (increase) in other accounts receivable
Decrease in notes payable and accounts payable on
construction contracts
Decrease in other accounts payable
Increase (decrease) in advances received on
uncompleted construction contracts
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided (used in) by operating activities
Cash flows from investing activities:
Purchases of property and equipment
Payments for purchase of shares of subsidiary resulting inchange in scope of consolidation (Note 6)
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
Collection of loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Other, net
Net cash used in investing activities

Millions of yen
2020
2019

Thousands of
U.S. dollars(Note 2)2020

¥ 6,501¥ 6,025$ 59,735

524
13
10

464
57
(17)

4,815
119
92

210
(315)
(188)
118
42
(91)
15
(3)

(52)
142
(217)
190
(29)
(469)
–
(0)

1,930
(2,894)(1,727)
1,084
386
(836)
138
(28)

2,179
(145)
1,766

(11,248)(1,019)(1,380)20,022(1,332)
16,227(3,137)(1,465)(224)(1,113)(28,825)(13,461)

2,235
2,349
10,618185(118)(2,457)8,228(1,561)
178(10,273)214(202)(1,159)(11,420)

20,537
21,58397,5651,700(1,084)(22,577)
75,604

(216)

(848)

(1,985)

–

(499)

–

194
(447)
(9)

0
(342)
(419)

1,783
(4,107)
(83)

167
11
(110)
20
5
¥ (385)

1,078
11
(22)
9
(5)
¥ (1,037)

1,534
101
(1,011)
184
46$ (3,538)10

Asanuma Corporation
Consolidated Statement of Cash Flows (continued)
Year ended March 31, 2020

Cash flows from financing activities:
Decrease in short-term bank loans, net
Proceeds from long-term debt
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 increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 6)

Millions of yen
2020
2019

Thousands of
U.S. dollars(Note 2)
2020

(990)
–
(331)
938
(1,160)(8)(18)(1,569)¥ (1,368)
700(1,694)634(1,209)–(1,004)(3,941)$ (9,097)–(3,041)
8,619(10,659)(74)（165）(14,417)

（41）
6,233
23,545¥ 29,778

29(16,369)
39,914¥ 23,545（376）
57,273
216,346$ 273,619¥

See accompanying notes to consolidated financial statements.

11

Asanuma Corporation
Notes to Consolidated Financial Statements
March 31, 2020

1.

Basis of Preparation of Consolidated Financial Statements

The accompanying consolidated financial statements of Asanuma Corporation (the“Company”) and consolidated subsidiaries are prepared on the basis of accounting
principles generally accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards,
and have been compiled from the consolidated financial statements prepared by theCompany 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, 2019 to the2020 presentation. Such reclassifications had no effect on consolidated cash flow.

2.

U.S. Dollar Amounts

The accompanying consolidated financial statements are stated in yen, the currency of thecountry in which the Company and its consolidated subsidiaries are incorporated andoperate. The translation of yen amounts into U.S. dollar amounts is included solely forthe convenience of readers outside Japan and has been made at ¥108.83 = U.S.$1.00, theexchange rate prevailing on March 31, 2020. This translation should not be construed asa representation that yen can be converted into U.S. dollars at the above or any other rate.

3.

Principles of Consolidation

At March 31, 2020 and 2019, the Company had 6 and 7 subsidiaries, respectively. The
consolidated financial statements for the years ended March 31, 2020 and 2019 include theaccounts of the Company and its 5 and 6 subsidiaries, respectively.
The Company applied the equity method to its investments in 2 and 3 affiliates, at March
31, 2020 and 2019 for the purpose of consolidated financial statements for the years thenended.
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.

12

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

3.

Principles of Consolidation

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
to an insignificant risk of any changes in their value and which were purchased withan 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.
Non-marketable securities classified as other securities are carried at cost determinedby the moving average method.
(c) Allowance for doubtful accounts
The Company and its a consolidated subsidiary provide an allowance for doubtful
accounts at an amount calculated based on 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
and supplies are stated at the lower of cost or net selling value, cost being determinedby the period average method.

13

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 theamount can be made at the fiscal year end.

14

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

4.

Summary of Significant Accounting Policies (continued)(k) Retirement benefits
Liability for retirement benefits for employees has been provided at an amountcalculated based on the retirement benefit obligation after the fair value of the pension
plan assets are deducted. The retirement benefit obligation for employees is
attributed to each period by the benefit formula method.
Actuarial gain or loss is amortized commencing in the year following the year inwhich 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 theeligible 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
bases of the assets and liabilities, and were measured using the enacted tax rates andlaws 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 seven years.
(o) Revenue recognition
The Company and its a 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 aconsolidated subsidiary measure the percentage of completion by comparing costs
incurred to date with the most recent estimate of total costs required to complete theproject (cost to cost basis). For other construction projects, the completed-contract
15

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

method is applied.

16

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 ¥137,950 million ($1,267,573 thousand) and ¥131,810
million for the years ended March 31, 2020 and 2019, respectively.
(p) Additional information
Impact of COVID-19 outbreak on accounting estimates
The impact of COVID-19 on the financial position and operating results of theCompany and its consolidated subsidiaries as of and for the year ended March 31,
2020 was immaterial. However, considering the uncertainties in the future,
construction investments could potentially be reduced or postponed. As a result, theindustry as a whole may be affected.
The Company and its consolidated subsidiaries assess the recoverability of deferred
tax assets based on the estimated future taxable income using certain assumptions.
For the year ending March 31, 2021, the assumptions include the impacts of decreases
in new construction project to some extent and slow-downs in construction progress
due to COVID-19 outbreak. For the year ending March 31, 2022, the assumptions
include impacts of decreases in uncompleted construction project carryforwards fromthe year ending March 31, 2021.

5.

Accounting Standards Issued but Not Yet Effective

Accounting Standard for Revenue Recognition“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29; March 31,
2020)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ
Guidance No. 30; March 31, 2020)(1) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically, theaccounting standard establishes the following five-step model that will apply torevenue 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
17

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

Step 5: Recognize revenue when as the entity satisfies a performance obligation

18

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

5.

Accounting Standards Issued but Not Yet Effective (continued)(2) Scheduled date of application
The Company expects to adopt the accounting standards effective from the beginningof the year 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.
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 breakdownof the fair value of financial instruments by level in the notes to the consolidated
financial statements.
(2) Scheduled date of application
The Company expects to adopt the accounting standards effective from the beginning
19

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)of the year ending March 31, 2022.

20

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

5.

Accounting Standards Issued but Not Yet Effective (continued)(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.
Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error
Corrections“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error
Corrections” (ASBJ Statement No. 24; March 31, 2020)(1) Overview
The standard provides guidance for disclosing information regarding accounting
principles and procedures applied when provisions in related accounting standards
and the like are unclear.
(2) Scheduled date of application
The Company expects to adopt the accounting standard effective from the end of the
fiscal year ending March 31, 2021.
Accounting Standard for Disclosure of Accounting Estimates“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31;
March 31, 2020)(1) Overview
Under the standard, an entity identifies items which carry risk of significantly
affecting the financial statements for the following fiscal year among items whoseamounts were measured based on accounting estimates as presented in the financial
statements effective from the end of the fiscal year ending March 31, 2021.
The standard provides guidance for disclosing information that would contribute to
the understanding of users of the financial statements regarding the contents ofaccounting estimates of the identified items.
(2) Scheduled date of application
The Company expect to adopt the accounting standard effective from March 31, 2021.

21

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

6.

Cash and Cash Equivalents

A reconciliation of cash and deposits in the accompanying consolidated balance sheets at
March 31, 2020 and 2019 and cash and cash equivalents in the accompanying
consolidated statements of cash flows for the years then ended is as follows:

Cash and cash deposits
Cash and cash equivalents

Millions of yen
At March 31,
2020
2019
¥ 29,778¥ 23,545¥ 29,778¥ 23,545

Thousands of
U.S. dollars
2020$ 273,619$ 273,619

Assets acquired and liabilities assumed of SINGAPORE PAINTS & CONTRACTOR PTE.
LTD. as of deemed acquisition date, acquisition cost of shares and payment for acquisitionof shares are summarized as follows:

Current assets
Property and equipment, at cost
Investments and other assets
Goodwill
Current liabilities
Long-term liabilities
Translation adjustments
Non-controlling interests
Acquisition cost of shares
Cash and cash equivalents
Payment for acquisition of shares

7.

Millions of yen
2019
¥ 562
102
7
198
(235)
(36)
7
(79)
526
(27)
¥ 499

Notes Receivables

The balance sheet date for the year ended March 31, 2019 fell on a bank holiday.
Consequently, notes receivable of ¥1 million with a due date of March 31, 2019 were
included in the balance in the consolidated balance sheet at March 31, 2019 and weresettled on the next business day.

22

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

8.

Loss on Impairment of Property and Equipment

Loss on impairment of property and equipment for the years ended March 31, 2020 and2019 are as follows:

Location
Guam territory in
the United States

Location
Saitama Prefecture
Saitama Prefecture

Main use
Idle assets

Main use
Business assets
Business assets

Class
Machinery andequipment

Class
Buildings
Land

Thousands ofMillions of yen
U.S. dollars
2020
¥ 13

$ 119

Millions of yen
2019
¥ 34
23

The Company and consolidated subsidiaries principally group the assets in association
with the business operations at each regional office whereas leased properties and idle
assets are grouped individually and fixed assets of its consolidated subsidiaries andinvestments for which the equity method is applied are grouped per subsidiary or
investment.
For the year ended March 31, 2020, as a result of considering future use for the above
assets that 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, theCompany wrote down the carrying value of these assets to the memorandum value andrecognized losses on impairment of property and equipment of ¥13 million ($119
thousand).
For the year ended March 31, 2019, the Company decided to sell the above assets thathave been grouped as assets in association with the business operations at each regional
office. As a result, the Company wrote down the carrying values of these assets to therecoverable amounts and recognized losses on impairment of property and equipment of¥57 million.
The recoverable amounts were measured at net selling value based on estimated sales
value.

23

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

9.

Investments in Securities

At March 31, 2020 and 2019, marketable securities classified as held-to-maturity debt
securities were as follows:
Millions of yen
Carryingvalue
Held-to-maturity debt
securities whose
estimated fair value
exceeds their carrying
value:
Government andmunicipal bonds

¥ 16
¥ 16

2020
Estimated Unrealized
fair value
gain

¥ 16
¥ 16

¥0
¥0

Carrying
value

2019
Estimated
fair value

Unrealized
gain

¥ 15
¥ 15

¥ 16
¥ 16

¥1
¥1

Thousands of U.S. dollars
2020
Carrying Estimated Unrealizedvalue
fair value
gain
Held-to-maturity debt
securities whose
estimated fair value
exceeds their carrying
value:
Government andmunicipal bonds

$ 146
$ 146

$ 146
$ 146

$0
$0

24

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

9.

Investments in Securities (continued)

At March 31, 2020 and 2019, marketable securities classified as other securities were 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

2020
Acquisition
costs

Difference

Carrying
value

2019
Acquisition
costs

Difference¥ 5,747¥ 2,436¥ 3,311¥ 8,379¥ 3,574¥ 4,805

1,153¥ 6,900

1,357¥ 3,793(204)¥ 3,107206¥ 8,585274¥ 3,848(68)¥ 4,737

Thousands of U.S. dollars
2020
Carrying Acquisition
value
costs
Difference
Other securities whosecarrying value exceeds
their acquisition costs:
Equity securities
Other securities whosecarrying value does notexceed their acquisition
costs:
Equity securities$ 52,807$ 22,384$ 30,423

10,595$ 63,402

12,469$ 34,853(1,874)$ 28,549

The proceeds from sales of, and gross realized gain on investments in securities for theyear ended March 31, 2020 and 2019 are summarized as follows:

Proceeds from sales
Gross realized gain

Millions of yen
2020
2019
¥ 139
¥ 1,07891
469

Thousands of
U.S. dollars
2020$ 1,277
836

Refer to Note 18 “Financial Instruments” for the redemption schedule at March 31, 2020
for held-to-maturity debt securities.

25

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

9.

Investments in Securities (continued)

For the year ended March 31, 2020, the Company has recognized loss on impairment ofequity securities classified as other securities of ¥15 million ($138 thousand).
The Company recognizes loss on impairment of marketable securities classified as othersecurities if the market value of a security at year end declines by more than 30%
compared with its carrying value.

10. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans had average interest rates of 1.00% and 1.66% at March 31, 2020
and 2019, respectively.
Long-term debt at March 31, 2020 and 2019 is summarized as follows:

Millions of yen
2019
2020
Unsecured loans due through 2034 at rates ranging
from 1.51% 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

¥

39

8,215
650
600
390
9,894
（338）
¥ 9,556

¥

42

8,543
650
–
–
9,235
(331)
¥ 8,904

Thousands of
U.S. dollars
2020
$

358

75,485
5,973
5,513
3,584
90,913(3,106)$ 87,807

The aggregate annual maturities of long-term debt subsequent to March 31, 2020 are
summarized as follows:

Years ending March 31,
2021
2022
2023
2024
2025 and thereafter

Millions of yen
¥ 338
337
347
1,048
7,824
¥ 9,894

Thousands of
U.S. dollars$ 3,106
3,097
3,188
9,630
71,892$ 90,913

26

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

10. Short-Term Bank Loans and Long-Term Debt (continued)
Assets pledged at March 31, 2020 and 2019 as collateral for lines of credit of theCompany and bank overdraft are summarized as follows:

Cash and cash deposits
Buildings and structures
Land
Investments in securities

Millions of yen
2019
2020
¥
4
¥
–
648
620
957
957
7,345
4,883
¥ 8,954¥ 6,460

Thousands of
U.S. dollars
2020
$
–
5,697
8,794
44,868$ 59,359

All assets of the consolidated subsidiaries engaged in the Private Finance Initiative
business were pledged as collateral for their loans under the project finance agreements.
Assets pledged at March 31, 2020 and 2019 amounted to ¥3,701 million ($34,007
thousand) and ¥4,091 million as collateral for loans of ¥3,215 million ($29,541 thousand)and ¥3,543 million, respectively.
Assets of the Company pledged at March 31, 2020 and 2019 as collateral for loans ofaffiliates engaged in the PFI business are summarized as follows:

Investments in securities
Long-term loans receivable

Millions of yen
2019
2020
¥ 118
¥ 96
105
102
¥
223
¥ 198

Thousands of
U.S. dollars
2020
$ 882
937
$ 1,819

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, 2020 and 2019 is as follows:

Lines of credit
Credit utilized
Available credit

Millions of yen
2019
2020
¥ 10,000¥ 10,000––¥ 10,000¥ 10,000Thousands of
U.S. dollars
2020$ 91,886–$ 91,88627

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

11. Income Taxes
Income taxes applicable to the Company and its consolidated subsidiaries comprise
corporation, inhabitants’ and enterprise taxes which, in the aggregate, resulted in astatutory tax rate of approximately 30.4% for the years ended March 31, 2020 and 2019.
A reconciliation of the statutory tax rate and the effective tax rates for the years ended
March 31, 2020 and 2019 as a percentage of profit before income taxes is summarized asfollows:

Statutory tax rates
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

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

2019
30.4%
1.4
(0.1)
1.8
(1.9)
(0.5)
(0.3)
30.8%

28

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

11. Income Taxes (continued)
The significant components of deferred tax assets and liabilities of the Company and its
consolidated subsidiaries at March 31, 2020 and 2019 are summarized as follows:

Millions of yen
2020
2019
Deferred tax assets:
Allowance for doubtful accounts
Provision for compensation forcompleted construction
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

¥

215

¥

Thousands of
U.S. dollars
2020

214

$ 1,976

179
22

152
23

1,645
202

65
1,255

1
1,321

597
11,532

459

484

4,218

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

45
15
793
3,048
(907)
2,141

413
64
7,094
27,741(8,371)
19,370

(914)
(129)
(2)
(1,045)¥ 1,063(1,406)(174)(7)(1,587)¥ 554(8,399)(1,185)(18)(9,602)$ 9,76829

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

12. 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., aconsolidated subsidiary of the Company, have been composed of secondees from theCompany, consequently, the retirement benefit plan of Asanuma Tatemono K.K. isincorporated in those of the Company. The other consolidated subsidiaries do nothave any retirement pension plans.
Under the defined benefit plans, the Company pays lump-sum or pension payments,
the amounts of which are determined through a point system based on employees’ranks and length of service.

2.

Defined benefit plans(1) The changes in retirement benefit obligation for the years ended March 31, 2020
and 2019 are as follows:

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

Millions of yen
2019
2020
¥ 10,708¥ 10,671
384
402
105
108
(164)
154
(580)
(627)
¥ 10,453¥ 10,708

Thousands of
U.S. dollars
2020$ 98,392
3,528
965(1,507)(5,329)$ 96,049(2) The changes in plan assets for the years ended March 31, 2020 and 2019 are as
follows:

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

Millions of yen
2019
2020
¥ 6,365¥ 6,351
127
127
(235)
(62)
459
342
(388)
(393)
¥ 6,328¥ 6,365

Thousands of
U.S. dollars
2020$ 58,486
1,167(2,159)4,217(3,565)$ 58,14630

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

12. 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, 2020 and 2019 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
Liability recognized in the consolidatedbalance sheet

Millions of yen
2019
2020
¥ 6,349¥ 6,047(6,365)(6,328)
(16)
(281)
4,359
4,406
¥ 4,125¥ 4,343

Thousands of
U.S. dollars
2020$ 55,564(58,146)(2,582)
40,485$ 37,903(4) The components of retirement benefit expense for the years ended March 31,
2020 and 2019 are as follows:

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

Millions of yen
2019
2020
¥ 402
¥ 384
108
105
(127)
(127)
335
(26)
¥ 718
¥ 336

Thousands of
U.S. dollars
2020$ 3,528965(1,167)(239)$ 3,087(5) The components of retirement benefits liability adjustments included in othercomprehensive income (before tax effect) for the years ended March 31, 2020
and 2019 are as follows:

Actuarial (loss) gain

Millions of yen
2019
2020
¥ 118
¥ (97)

Thousands of
U.S. dollars
2020$ (891)31

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

12. Retirement Benefits (continued)
2.

Defined benefit plans (continued)(6) The components of retirement benefits liability adjustments included inaccumulated other comprehensive income (before tax effect) as of March 31,
2020 and 2019 are as follows:

Unrecognized actuarial gain

Millions of yen
2020
2019
¥ 519
¥ 422

Thousands of
U.S. dollars
2020$ 4,769(7) The fair value of plan assets, by major category, as a percentage of total plan
assets as of March 31, 2020 and 2019 are as follows:

Debt securities
Equity securities
Cash and cash deposits
Total

2020
86%
12
2
100%

2019
84%
15
1
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

2020
1.0%

2019
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)

12. Retirement Benefits (continued)
3.

Defined contribution pension plan
Information on contributions to the defined contribution pension plan for the years
ended March 31, 2020 and 2019 is as follows:

Millions of yen
2020
2019
Contributions to the defined
contribution pension plan

¥ 165

¥ 167

Thousands of
U.S. dollars
2020$ 1,516

13. Asset Retirement Obligations
The Company estimated 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
amounts of deposits for those premises and charged the portion attributable to the years
ended March 31, 2020 and 2019, instead of recording asset retirement obligations.
14. 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
amount of 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 notexceeding one-half of the 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)

14. Shareholders’ Equity (continued)
Movements in shares of common stock in issue and treasury stock during the years ended
March 31, 2020 and 2019 are summarized as follows:

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 ofless than one unit. The decrease in treasury stock of 40 shares was due to the sales offractional shares of less than one unit. The decrease in treasury stock of 430,000 shares
was due to the cancellation of treasury stock on May 31, 2019.

Shares ofcommon stockin issue
Treasury stock

April 1, 2018

Number of shares
2019
Increase
Decrease

85,086,293
1,316,083–
318,045

76,577,664
1,187,746

March 31, 2019
8,508,629
446,382

The decrease in shares of common stock of 76,577,664 is due to the consolidation of ten
shares into one share on October 1, 2018.
The increase in treasury stock consists of 313,600 shares due to purchase of shares basedon the resolution of the Board of Directors’ meeting on November 9, 2018, 467 shares dueto the purchase of fractional shares of less than one voting unit resulting from theconsolidation of shares and 3,978 shares due to purchase of shareholders owning less than
one voting unit.
The decrease in treasury stock of 1,187,708.4 shares is due to the consolidation of shares,
0.6 shares due to disposal of fractional shares of less than one voting unit resulting fromthe consolidation of shares and 37 shares due to sales of shares at requests of shareholders
owning less than one voting unit.
As the Company resolved at the Board of Directors’ meeting held on May 10, 2019, toretire a portion of its treasury stock in the carrying amount of ¥1,107 million
corresponding to 430,000 shares of common stock pursuant to Article 178 of theCompanies Act of Japan, its
34

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

cancellation procedures have not yet been completed by the end of the fiscal year ended
March 31, 2019.

35

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

15. Provision for Loss on Construction Contracts
Provision for loss on construction contracts included in cost of sales for the years ended
March 31, 2020 and 2019 amounted to ¥214 million ($1,966 thousand) and ¥5 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
is anticipated, corresponding to “Provision for loss on construction contracts” were ¥51
million ($469 thousand) and nil for the years ended March 31, 2020 and 2019,respectively.
16. Research and Development Costs
Research and development costs included in selling, general and administrative expenses
for the years ended March 31, 2020 and 2019 amounted to ¥407 million ($3,740 thousand)and ¥320 million, respectively.

17. Other Comprehensive Income
The following table presents reclassification adjustments and tax effects allocated tocomponents of other comprehensive income for the years ended March 31, 2020 and2019:

Millions of yen
2019
2020
Net unrealized holding (loss) gain 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) gain on
investments in securities, net
Foreign currency translation adjustments, net
Retirement benefits liability adjustments:
Amount arising during the year
Reclassification adjustments for loss
realized in the statement of income
Before tax effectTax effect
Retirement benefits liability adjustments, net

Thousands of
U.S. dollars

2020¥ (1,555)¥ 925$ (14,289)(75)(1,630)
492

(468)
457
(193)

(689)
(14,978)
4,521(1,138)1

264(8)(10,457)
10

(88)

(201)

(809)

(9)
(97)
29
(68)

319
118
(35)
83

(82)
(891)
266
(625)
36

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

Total other comprehensive income¥ (1,205)¥ 339$ (11,072)

37

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

18. Financial Instruments(1) Policy for financial instruments
The Company and its consolidated subsidiaries (collectively, the “Group”) manage
their funds by investing only in short-term deposits, and primarily raise funds byborrowings from banks and issuing bonds. The purpose of entering into derivativetransactions is to mitigate fluctuation risk related to interest rates with respect toborrowings 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 monitors due
dates and outstanding balances by individual customer, and the credit worthiness of
their main customers regularly.
Investments in securities are mainly composed of equity securities and are exposed tofluctuation 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 loans 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 authorizedprocedures and processes governing derivatives within the actual demand.

38

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

18. 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, 2020 and 2019 are as follows. Financial instruments for which fair value isdeemed extremely difficult to determine are not included.
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
–

–

39

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

18. Financial Instruments (continued)(3) Supplementary explanation of fair value of financial instruments (continued)
Millions of yen
2019

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

Difference¥ 23,545¥ 23,545¥

54,2728,600¥ 86,417

54,6298,601¥ 86,775

357
1
¥ 358

¥ 30,125¥ 30,125

¥

2,791

2,791

–

650
8,254
¥ 41,820

650
8,265¥ 41,831

–
11
¥ 11

–

–

Thousands of U.S. dollars
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

$ 273,619$ 273,619$

478,655
63,549$ 815,823

480,015
63,549$ 817,183

1,360
0$ 1,360$ 247,983$ 247,983$

16,613

16,613–

15,07072,737$ 352,403

14,922
72,885$ 352,403

(148)
148
$
0

Difference
–

–

40

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

18. Financial Instruments (continued)(3) Supplementary explanation of fair value of financial instruments (continued)
Methods to determine the estimated fair value of financial instruments and othermatters related to securities and derivative transactions:
Cash and cash deposits
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
in considering 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 are based on prices provided by thefinancial 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.
Long-term debt
The estimated fair values of bonds are based on present value determined bydiscounting the principal and interest amount with the interest rate expected case of
new bond issuance. Floating interest rates for long-term loans were hedged byinterest-rate swap agreements and accounted for as loans with fixed interest rates.
The estimated fair value of those long-term loans is based on the present value of thetotal of principals, interests and net cash flows of swap agreements discounted by theinterest rates, estimated reasonably, applicable to loans made under similar
circumstances.

41

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

18. 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 ¥820 million ($7,535 thousand) and ¥843 million
included in “Investments in securities” and “Investments in an unconsolidated
subsidiary and affiliates” in the consolidated balance sheets at March 31, 2020 and
2019, respectively, are based neither on market value nor estimated future cash flow,
and it is difficult to determine the estimated fair value. Therefore, they are notincluded in the above table.
The redemption schedule for cash deposits, receivables and marketable securities withmaturity dates at March 31, 2020 is 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
¥ 29,773

Millions of yen
Over 1 year within
Over 5 years
5 years
within 10 years¥–¥–

Over 10 years¥ –49,160

1,361

1,571

–

–
¥ 78,933

15¥ 1,376–¥ 1,571–¥ –Within 1 year
$ 273,573

Thousands of U.S. dollars
Over 1 year
Over 5 years
within 5 years
within 10 years$–$–

Over 10 years$ –451,713

12,507

14,435––$ 725,286

137$ 12,644–$ 14,435

–
$ –

42

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

19. Amounts per Share
Amounts per share at March 31, 2020 and 2019 and for the years then ended were as
follows:
Yen
Net assets
Profit attributable to owners of parent
Cash dividends

2020

2019

U.S. dollars
2020¥ 4,855.25
533.47216.00¥ 4,624.16
504.87153.00$ 44.61
4.90
1.98

Information used in the computation of profit attributable to owners of parent per share forthe years ended March 31, 2020 and 2019 is presented as follows:

2020

2019

Thousands of
U.S. dollars
2020¥ 4,300¥ 4,178$ 39,511–––¥ 4,300¥ 4,178$ 39,511

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
2020
2019
Weighted-average number of shares ofcommon stock used in the calculation

8,061

8,276

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
attributable to owners of parent available for distribution to shareholders of common stockand the weighted 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.
Effective on October 1, 2018, the Company executed the consolidation of ten shares into
one share. Per share information was calculated under the assumption that the stock
consolidation had taken effect at the beginning of the previous fiscal year.

43Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

20. Segment Informationa.

Segment Information(1) Overview of reporting segments
The reporting segments of the Company and its consolidated subsidiaries arecomponents for which discrete financial information is available and whose
operating results are regularly reviewed by the Company’s Board of Directors tomake decisions about resource allocation and assess their performance.
The Company and its consolidated subsidiaries 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 asstated in Note 4 “Summary of Significant Accounting Policies.” The income ofreporting segments is calculated on the basis of operating income. Intersegment
sales are recorded based on current market prices.
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

Total
¥ 141,472–
141,472¥

6,601

Millions of yen
2019
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)

¥ 109,116–
109,116¥ 25,079–
25,079¥ 134,195–
134,195¥ 1,5185
1,523¥ 135,713
5
135,718¥¥ 10,436¥ 2,669¥ 13,105¥¥ 13,135¥ (7,434)

30

Total
¥ 135,713–
135,713
¥

44

5,701

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

20. Segment Information (continued)a.

Segment Information (continued)(2) Method of calculating sales and income in reporting segments (continued)
Thousands of U.S. dollars
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
–
(46)
(46)

$ 1,071,166–$ 1,071,166$ 215,556–$ 215,556$ 1,286,722–$ 1,286,722$ 13,21446$ 13,260$ 1,299,936
46$ 1,299,982$$ 110,117$ 21,207$$ 1,461$$ (72,131)

131,324

132,785$

Total$ 1,299,936–$ 1,299,936$“Others” is a business segment which is not included in the reporting segments,
and includes real estate and other businesses.
Adjustments for segment income in the amounts of ¥7,850 million ($72,131
thousand) and ¥7,434 million for the years ended March 31, 2020 and 2019
include eliminations of intersegment transactions of ¥2 million ($18 thousand)and ¥1 million and corporate expenses of ¥7,848 million ($72,112 thousand) and¥7,433 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.

Related information(1) Information by products and services
Disclosure of information by products and services for the years ended March 31,
2020 and 2019 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 theyears ended and as of March 31, 2020 and 2019 has been omitted as sales todomestic customers were in excess of 90% of consolidated net sales, and thebalance of property and equipment in Japan was in excess of 90% of consolidated
property and equipment.
45

60,654

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

20. Segment Information (continued)b.

Related information (continued)(3) Information by major customers
Disclosure of information by major customers for years ended March 31, 2020
and 2019 has been omitted as sales to each customer were less than 10% ofconsolidated net sales.

c.

Loss on impairment of property and equipment by reporting segment
Millions of yen
2020
Reporting Segments

Loss on impairmentof property andequipment

Building
Construction

Civil
Engineering

Total

¥ 13

¥–

¥ 13

Other

Elimination
andcorporate

Total

¥–

¥–

¥ 13

Total

Millions of yen
2019
Reporting Segments

Loss on impairmentof property andequipment

Building
Construction

Civil
Engineering

Total

Other

Elimination
andcorporate

¥–

¥–

¥–

¥–

¥ 57

¥ 57

Total

$ 119

Thousands of U.S. dollars
2020
Reporting Segments

Loss on impairmentof property andequipmentd.

Building
Construction

Civil
Engineering

Total

Other

Elimination
andcorporate

$ 119

$–

$ 119

$–

$–

Information on amortization of goodwill and remaining unamortized balance
Goodwill is not allocated to reporting segments. Amortization of goodwill was ¥28
million ($257 thousand) and nil as at March 31, 2020 and 2019, respectively.
Remaining unamortized balance included in “Intangible assets” was ¥170 million($1,562 thousand) and ¥198 million as at March 31, 2020 and 2019, respectively.
46

Asanuma Corporation
Notes to Consolidated Financial Statements (continued)

21. 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, 2020, was approved at the annual general meeting of the shareholders of
the Company held on June 26, 2020.

Cash dividends of ¥216 ($1.98) per share

Millions of yen¥ 1,740

Thousands of
U.S. dollars$ 15,98847