2015

FINANCIALSTATEMENTS
MARCH 31, 2014-2015

KITANO CONSTRUCTION CORP.

Contents

Financial Statements

Consolidated Balance Sheets................................................................................................. 2

Consolidated Statements of Income..................................................................................... 4

Consolidated Statements of Comprehensive Income......................................................... 5

Consolidated Statements of Changes in Net Assets........................................................... 6

Consolidated Statements of Cash Flows.............................................................................. 7

Notes to Consolidated Financial Statements....................................................................... 8

Board of Directors, Statutory Auditors and Executive Officers........................... 181

K I TA N O C O N S T R U C T I O N C O R P.

Consolidated Balance Sheets
As of March 31, 2014 and 2015
Millions of yen
March 31,
2014

2015

Current Assets:
Cash in hand and in banks.................................................................
Notes and accounts receivable..........................................................
Real estate for sale..............................................................................
Cost of construction in progress.......................................................
Cost of uncompleted development projects....................................
Inventories - materials and supplies.................................................
Deferred income taxes........................................................................
Other current assets............................................................................
Less: allowance for doubtful accounts.............................................
Total current assets......................................................................

¥7,815
15,721
8,256
959
2,496
81
1,164
728
(75)
37,145¥11,199
11,781
3,743
2,360
41
83
818
1,157
(74)
31,108Non-current Assets:
Tangible Fixed Assets:
Buildings and structures..............................................................
Machinery and equipment...........................................................
Tools, furniture and fixtures.......................................................
Golf course....................................................................................
Land................................................................................................
Construction in progress.............................................................
Other non-current assets.............................................................
Less: accumulated depreciation.................................................
Total tangible fixed assets....................................................

10,858
2,504
2,670
771
6,786
—
47
(9,144)
14,493

11,164
2,780
2,862
771
6,401
77
38
(9,737)
14,357

Intangible fixed assets........................................................................

239

242

Investments:
Investments in securities.............................................................
Long-term loans............................................................................
Deferred income taxes.................................................................
Other investments........................................................................
Less: allowance for doubtful accounts......................................
Total investments..................................................................
Total noncurrent assets........................................................
Total assets.............................................................................

4,830
26
589
1,390
(33)
6,801
21,533¥58,679

6,096
29
430
1,368
(33)
7,891
22,489¥53,598

ASSETS

The accompanying notes are an integral part of these statements.
K I TA N O C O N S T R U C T I O N C O R P.

2

Consolidated Balance Sheets
As of March 31, 2014 and 2015
Millions of yen
March 31,
2014

2015

¥ 16,775
1,000
4,097
478
4,952
60
391
36
33
89
1,535
29,447¥ 10,941
1,000
—
1,071
5,435
6
247
46
22
306
1,545
20,619

51
878
2,762
1,239
200
5,130
34,577

—
371
2,643
1,666
259
4,939
25,558LIABILITIESCurrent Liabilities:
Notes and accounts payable..............................................................
Short-term loans payable....................................................................
Current portion of long-term loans payable.....................................
Income taxes payable.........................................................................
Advances received on construction in progress.............................
Advances received on development business.................................
Accrued bonuses to employees.........................................................
Accrued bonuses to directors and statutory auditors....................
Accrued warranty................................................................................
Allowance for losses on construction contracts.............................
Other current liabilities......................................................................
Total current liabilities................................................................
Non-current Liabilities:
Long-term debt.....................................................................................
Net defined benefit liability................................................................
Membership deposit............................................................................
Deferred income taxes........................................................................
Other long-term debt...........................................................................
Total non-current liabilities.........................................................
Total liabilities..............................................................................
NET ASSETS
Shareholders’ Equity
Common stock.....................................................................................
Authorized — 200,000,000 shares
Issued — 68,368,532 shares as of March 31, 2014 and 2015
Capital surplus.....................................................................................
Retained earnings................................................................................
Treasury shares...................................................................................
Total shareholders’ equity...........................................................

9,116

9,116

5,066
9,161
(1,269)22,075

5,066
11,563(1,276)24,470

Accumulated Other Comprehensive Income
Unrealized gain (loss) on other securities.......................................
Unrealized gain (loss) on hedging derivatives.................................
Foreign currency translation adjustments.......................................
Remeasurements of defined benefit plans.......................................
Total accumulated other comprehensive income....................

828
3
6
(296)
542

1,725
19
271
(116)
1,899

Minority interests..........................................................................................

1,485

1,670

Total net assets.............................................................................................

24,102¥ 58,679

28,040¥ 53,598

Debt net assets sum total.............................................................................

The accompanying notes are an integral part of these statements.
3

K I TA N O C O N S T R U C T I O N C O R P.

Consolidated Statements of Income
For the years ended March 31, 2014 and 2015
Millions of yen
March 31,
2014

2015

¥ 66,103
4,582
70,685¥ 55,373
15,67971,052Gross profit..................................................................................

61,323
3,252
64,575
6,109

50,54911,37861,927
9,125

Selling, General and Administrative Expenses.......................................
Operating income.......................................................................

3,808
2,301

4,328
4,797

149
(107)
78
16
126
2,563

112
(67)
324
—
82
5,247

Special Items:
Gain on sales of fixed assets............................................................
Gain on step acquisitions.................................................................
Gain on bargain purchases...............................................................
Loss on disposal of fixed assets......................................................
Loss on sales of investment securities...........................................
Loss on valuation of investment securities....................................
Loss on valuation of shares of subsidiaries and associates
Impairment loss.................................................................................
Other, net............................................................................................
Income before income taxes and minority interests.............

3
20
1,171
(12)
—
(8)
(14)
—
—
3,722

30
—
48
(3)
(5)
—
(4)
(601)
(55)
4,656

Income Taxes
Current................................................................................................
Deferred..............................................................................................
Income Before Minority Interests............................................................
Minority Interests in Earnings of Consolidated Subsidiaries...............

690
597
2,435
32

1,414
298
2,944
92

Net income..................................................................................

¥2,403¥2,853

Net Sales:
Construction contracts.....................................................................
Real estate development and other.................................................
Cost of Sales:
Construction contracts.....................................................................
Real estate development and other.................................................

Non-Operating Income (Losses):
Interest and dividend income..........................................................
Interest expenses...............................................................................
Foreign exchange gains ...................................................................
Equity in gains of affiliates...............................................................
Other, net............................................................................................

The accompanying notes are an integral part of these statements.
K I TA N O C O N S T R U C T I O N C O R P.

4

Consolidated Statements of Comprehensive Income
For the years ended March 31, 2014 and 2015
Millions of yen
March 31,2014
Income Before Minority Interests............................................................
Other Comprehensive Income:Unrealized gain (loss) on other securities.....................................
Unrealized gain (loss) on hedging derivatives...............................
Foreign currency translation adjustment.......................................
Remeasurements of defined benefit plans.....................................
Share of other comprehensive income of associates
accounted for using the equity method........................................
Total other comprehensive income................................................
Comprehensive Income.............................................................................
Comprehensive income attributable to:Shareholders of the Corporation.....................................................
Minority Interests..............................................................................

¥

2,435

K I TA N O C O N S T R U C T I O N C O R P.

¥

2,944

45
(5)
120
—

897
16
416
180

(97)
63
2,498

—
1,509
4,453

2,443
55

4,210
243

The accompanying notes are an integral part of these statements.
52015

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2014 and 2015
Millions of yen
Accumulated other comprehensive income

Shareholder’s equity

Adjustments

Number of

on foreign

shares of

Unrealized Unrealized gain currency Remeasurements

common Common Capital Retained Treasury gain on other on hedging statements
stock surplus earnings shares securities derivatives translation
stock

Minority Total net
benefits plans interests assets
of defined(thousands)
Balance at March 31, 2013...... 62,240

9,116

5,066

7,255

(1,264)

784

8

6

—

424 21,396

Net Gain for the year
ended March 31, 2014....

—

—

—

2,403

—

—

—

—

—

—

2,403

Cash dividends.................

—

—

—

(497)

—

—

—

—

—

—

(497)

(24)

—

—

—

(6)

—

—

—

—

—

(6)

Purchase of treasury
shares...............................
Disposal of treasury
shares...............................

(0)

—

(0)

—

0

—

—

—

—

—

0

Adjustment for the year....

—

—

(0)

1,906

(5)

45

(5)

1

(296)

1,061

2,706

Balance at March 31, 2014...... 62,216

9,116

5,066

9,161

(1,269)

828

3

6

(296)

1,485 24,102

Cumulative effects ofchanges in accounting
policies............................

—

—

—

108

—

—

—

—

—

—

108

Restated balance..............

—

9,116

5,066

9,269

(1,269)

828

3

6

(296)

ended March 31, 2014....

—

—

—

2,853

—

—

—

—

—

—

2,853

Cash dividends.................

—

—

—

(559)

—

—

—

—

—

—

(559)

(21)

—

—

—

(7)

—

—

—

—

—

(7)

shares...............................

(0)

—

(0)

—

0

—

—

—

—

—

0

Adjustment for the year....

—

—

(0)

2,294

(7)

896

16

265

180

185

1,542

Balance at March 31, 2015...... 62,195

9,116

5,066 11,563(1,276)

1,725

19

271

(116)

1,670 28,040

1,485 24,210

Net Gain for the year

Purchase of treasury
shares...............................
Disposal of treasury

The accompanying notes are an integral part of these statements.
K I TA N O C O N S T R U C T I O N C O R P.

6

Consolidated Statements of Cash Flows
For the year ended March 31, 2014 and 2015
Millions of yen
Cash flows from operating activities:
Income before income taxes................................................................................
Adjustments for:
Depreciation...........................................................................................................
Impairment loss.....................................................................................................
Amortization of negative goodwill.......................................................................
Equity in (gains) losses of affiliates.....................................................................
Interest and dividend income...............................................................................
Interest expenses...................................................................................................
Increase (decrease) in net defined benefit liability...........................................
(Gain) loss on sales of non-current assets..........................................................
Loss on disposal of non-current assets...............................................................
Foreign exchange (gains) losses..........................................................................
(Gain) loss on sales of investment securiries....................................................
(Gain) Loss on evaluation of investment securities..........................................
Increase (decrease) in provision for directors’ bonuses..................................
Increase (Decrease) in accrued warranty.................................................................
Increase (Decrease) in allowance for losses on construction contracts..............
Increase (Decrease) in accrued bonuses...................................................................
Increase (Decrease) in allowance for doubtful accounts........................................
Loss on valuation of shares of subsidiaries and associates....................................
Gain on step acquisitions.............................................................................................
Gain on bargain purchases..........................................................................................
(Increase) Decrease in notes and accounts receivable...........................................
(Increase) Decrease in cost of construction in progress and cost of
uncompleted development projects....................................................................
(Increase) Decrease in real estate for sale and inventories....................................
Increase (Decrease) in notes and accounts payable................................................
Increase (Decrease) in advances received on construction in progress...............
Other...............................................................................................................................
Sub-total...........................................................................................................
Interest and dividend income received......................................................................
Interest expenses paid.................................................................................................
Income taxes paid.........................................................................................................
Net cash provided by (used in) operating activities...................................

2014

2015

¥3,722¥4,656

280
—
(2)
(16)
(149)
107
(80)
(3)
12
18
—
8
7
(13)
(166)
151
(3)
14
(20)
(1,171)(2,034)

593
601
—
—
(112)
67
(53)
(30)
3
(272)
5
—
10
(11)
217
(144)
(2)
4
—
(48)
3,951

1,483
(2,130)(2,858)
1,933
250
(662)
139
(107)
(697)
(1,326)847
4,922(5,839)
483
(516)
9,332
111
(67)
(831)
8,545

Cash flows from investing activities:
Payment into time deposit...........................................................................................
Proceeds from withdrawal of time deposit...............................................................
Payments for purchase of fixed assets......................................................................
Proceeds from sale of fixed assets.............................................................................
Payments for purchase of investments in securities................................................
Proceeds from sales of investments in securities....................................................
Payments for loans.......................................................................................................
Proceeds from recovery of loans................................................................................
Purchase of shares of subsidiaries and associates...................................................
Proceeds from purchase of shares of subsidiaries resulting
in change in scope of consolidation....................................................................
Other...............................................................................................................................
Net cash provided by (used in) investing activities....................................

(522)
420
(915)
1,320
(15)
—
(33)
38
—

(920)
521
(791)
50
(24)
10
(38)
35
(8)

1,712
(74)
1,933

—
26
(1,139)Cash flows from financing activities:
Increase (decrease) in short-term loans, net............................................................
Payments of long-term loans payable........................................................................
Purchase of treasury shares........................................................................................
Cash dividends paid......................................................................................................
Other...............................................................................................................................
Net cash provided by (used in) financing activities...................................

1,000
—
(5)
(500)
(11)
484

—
(4,148)
(7)
(561)
(12)
(4,728)

Effect of exchange rate changes on cash and cash equivalents....................................
Net increase (decrease) in cash and cash equivalents...................................................
Cash and cash equivalents of beginning of year..............................................................
Cash and cash equivalents of end of year........................................................................

(1)
1,089
6,404
¥7,493

307
2,986
7,493
¥10,479

The accompanying notes are an integral part of these statements.
7

K I TA N O C O N S T R U C T I O N C O R P.

Notes to Consolidated
Financial Statements
1. Basis of Presenting Consolidated Financial Statements(a) Accounting Principles
The accompanying consolidated financial statements have been prepared based on the accounts maintainedby Kitano Construction Corp.(the “Company”) and its subsidiaries prepared in accordance with accounting
principles generally accepted in Japan, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan.
(b) Scope of Consolidation
The Company had 4 subsidiaries (majority-owned companies) as at March 31, 2015 (4 for 2014). The
consolidated financial statements in fiscal years ended March 31, 2015 include the accounts of the Company and 4(4 for 2014) of its subsidiaries "the Companies", which are listed below:•Kawanakajima Tochi Kaihatsu Co., Ltd.......................................... 69.2% owned•Solomon Kitano Mendana Hotel Limited........................................ 100.0% owned•Sakura Hanoi Plaza Investment Co., Ltd. ....................................... 59.0% owned•Asahi Agency Inc. .............................................................................. 59.5% owned
The above consolidated subsidiaries, except for Solomon Kitano Mendana Hotel Limited and Sakura Hanoi
Plaza Investment Co., Ltd., which have a fiscal year ending at December 31 of each year, have a fiscal year endingat March 31 of each year, which is the same as the fiscal year of the Company.
Kitano Lanka (Private) Limited is not consolidated, as it is not significant in terms of total assets, net sales,
net income or retained earnings.
2. Summary of Significant Accounting Policies(a) Principles of Consolidation
All significant intercompany balances, intercompany transactions and unrealized profits among theCompanies have been eliminated in consolidation and the portion thereof attributable to minority interests is
charged to minority interests.
Goodwill is principally amortized over a five year period on a straight-line basis from the year of acquisition.
(b) Investment in Unconsolidated Subsidiaries and Affiliates
Investments in unconsolidated subsidiaries and affiliates are stated at cost.
The equity method of accounting for such investments is applied to Sakura Hanoi Plaza Investment Company
Limited, which is affiliates of the Company, since the application of this method has significant effect on the net
income and retained earnings of the Companies.
Kitano Lanka (Private) Limited is excluded from the scope of the equity method of accounting because it has
little influence and little importance.
(c) Recognizing Revenues and Costs of Construction Contracts
Revenues and costs of construction contracts that commenced on or after April 1, 2009, of which thepercentage of completion can be reliably estimated, are recognized by the percentage-of-completion method. The
percentage of completion is calculated based on the cost incurred to date as a percentage of the estimated total
cost. The completed-contract method is applied to all other construction contracts.
(d) Inventory Valuation
The cost of construction in progress, real estate for sale and the cost of uncompleted development projects
are stated at cost, as determined on a specific project basis.
Materials and supplies are stated at cost, as determined based on an average method.
The net book value of inventories in the balance sheet is written down if the net realizable value declines.
(e) Depreciation
Depreciation is computed by the straight-line method for buildings (excluding leasehold improvements andauxiliary facilities attached to buildings) and by the declining-balance method for other assets, at rates based on
the estimated useful lives of the assets, as prescribed by Japanese income tax laws. Depreciation for real estate
for leasing is computed by the straight-line method. The range of useful lives is principally from 2 to 50 years forbuildings and structures and from 2 to 17 years for store fixtures and equipment.
( f ) Allowance for Doubtful Accounts
The balance of allowance for doubtful accounts represents the amount deemed necessary to cover possible
losses estimated on an individual doubtful account basis. The amount is calculated using a certain percentage
based on past experience for other accounts.
(g) Accrued Warranty
Accrued warranty is provided for against the future costs of warranty from completed construction.
(h) Accrued Bonuses to Employees
Accrued bonuses are computed by estimating the payment required in order to provide for the payment ofbonuses to employees.
( i ) Accrued Bonuses to Directors and Statutory Auditors
Accrued bonuses are computed by estimating the payment required in order to provide for the payment ofbonuses to directors and statutory auditors.
( j ) Reserve for Retirement Benefits to Employees
The Company recognize accrued pension and severance costs to employees based on the actual valuation ofprojected benefit obligation and plan assets at fair value.
Actuarial gains and losses were recognized using mainly the straight-line method over a period of 10 years.
K I TA N O C O N S T R U C T I O N C O R P.

8

Prior service costs were amortized using mainly the straight-line method over a period of 10 years, the period
within the estimated average remaining service life of the employees.
(k) Allowance for losses on construction contracts
The Company prepares reasonable estimated amount for future losses from construction works outstanding
at fiscal year-end.
( l ) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statements of cash flows are composed of cash in hand, bankdeposits able to be withdrawn on demand and short-term investments with an original maturity of three months
or less and which represent a minor risk of fluctuations in value.
(m) Income Taxes
The income taxes of the Company and its domestic subsidiaries consist of corporate income taxes, local
inhabitants’ taxes and enterprise taxes.
The Company and its subsidiaries account for deferred taxes in accordance with the regulations for
preparation of consolidated financial statements in Japan. Deferred income taxes are determined using the asset
and liability approach, whereby deferred tax assets and liabilities are recognized in respect of temporary
differences between the tax basis of assets and liabilities and those as reported in the financial statements.
(n) Securities Valuation
Held-to-maturity debt securities are carried at amortized cost.
Available-for-sale securities are classified into two categories where: (a) the fair value is available and (b) the
fair value is not available.
(a)	‌Securities whose fair value is available are valued at the quoted market price prevailing at the fiscal yearend. Net unrealized gains or losses on these securities are reported as a separate component of net
assets at a net-of-tax amount. Cost of sales is determined by the moving-average method.
(b)	‌Securities whose fair value is not available are valued at cost, determined by the moving-average method.
(o) Hedge Accounting
Gains or losses arising from changes in the fair value of the derivatives designated as “hedging instruments”
are deferred as an asset or liability and included in net profit or loss in the same period during which the gains
and losses on the hedged items or transactions are recognized.
The derivatives designated as hedging instruments by the Company are principally forward exchange
contracts. The related hedged items are finance for the overseas construction business. The Company is able tofix future cash flows and mitigate the deterioration of income from the construction business due to yen
depreciation. The Company obtains management approval before making forward exchange contracts, andsubsequently the accounting department executes and controls the contract.
(p) Consumption Tax
Consumption Tax payable or receivable is excluded from each account in the consolidated statements of income.
(q) Reclassification of Accounts
Certain prior year amounts have been reclassified to conform with the current year’s presentation.
Changes in accounting policies(Application of the accounting standard, etc. for retirement benefits)
Effective from the current fiscal year, the Company has adopted “Accounting Standard for Retirement
Benefits” (ASBJ Statement No. 26, May 17, 2012, hereinafter referred to as the “Retirement Benefits AccountingStandard”) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, March 26, 2015,
hereinafter referred to as the “Retirement Benefits Guidance”), in respect of the provisions in the main clause of
Paragraph 35 of the Retirement Benefits Accounting Standard and the main clause of Paragraph 67 of the
Retirement Benefits Guidance, whereby the method of calculating retirement benefit obligations and service costs
has been reviewed. Based on this review, the method of attributing expected retirement benefits to periods has beenchanged from a straight-line basis to a benefit formula basis, while the method of determining discount rates has
been changed from the method based on the number of years approximate to the average remaining service periodof employees to the method using a single weighted average discount rate reflecting the period up to the expected
timing of retirement benefits payment, as well as the amount of retirement benefits payment for each such period.
In adopting the Retirement Benefits Accounting Standard etc., the amount of impact associated with thechanges in the methods of calculating retirement benefit obligations and service costs has been reflected inretained earnings at the beginning of the current fiscal year, in accordance with the tentative treatment provided
in Paragraph 37 of the Retirement Benefits Accounting Standard.
As a result, as of the beginning of the current fiscal year, a net defined benefit liability decreased by 168 million
yen and retained earnings increased by 108 million yen. The effect of this change on profit and loss is immaterial.
The effects on net assets per share and net income per share are immaterial.
(Unapplied accounting standards, etc.)-Accounting Standard for Business Combinations (ASBJ Statement No. 21, September 13, 2013)-Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22, September 13, 2013)-Accounting Standard for Business Divestitures (ASBJ Statement No. 7, September 13, 2013)-Accounting Standard for Earnings Per Share (ASBJ Statement No. 2, September 13, 2013)-‌Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures(ASBJ Guidance No. 10, September 13, 2013)-Guidance on Accounting Standard for Earnings Per Share (ASBJ Guidance No. 4, September 13, 2013)(1) Outline
The revisions mainly consist of: (1) difference arising from a change in the Company’s ownership interest ina subsidiary over which the Company continues to have control, (2) treatment of purchase related costs, (3)presentation method of net income and minority interests to non-controlling interest, and transitional provision
for accounting treatment were revised.
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K I TA N O C O N S T R U C T I O N C O R P.

(2) Effective date
The revised accounting standards and guidances shall be applied effective from the beginning of the fiscal
year ending March 31, 2016.
Regarding tentative treatments, it will be applied for business combinations conducted after the beginning of
the fiscal year ending March 31, 2016.
(3) Impact of the application of the revised accounting standards and guidances
Amounts of the effects of these applications are under evaluation at the time of preparing this report
3.

Notes to the Consolidated Balance Sheets(1) Investments in unconsolidated subsidiaries and affiliates................
(2) Assets pledged as collateral
Buildings..................................................................................................
Land..........................................................................................................
Real estate for sale..................................................................................
(3) The guarantee of housing construction flaw security
Investment in securities.........................................................................
4.

300
1,161
4,380

282
1,161
—

154

180

Notes to Consolidated Statements of Operations(1) Allowance for loss on construction contract
included in cost of sales of construction contracts.....................
(2) Write-down of inventories included in cost of
sales on real estate development and other.................................
(3) The major components of “Selling, general andadministrative expenses”
Depreciation............................................................................................
Payroll......................................................................................................
Retirement benefit expenses.................................................................
Allowance for accrued bonuses............................................................
5.

Millions of yen
March 31,
2014
2015
¥4
¥0

Millions of yen
for the year ended March 31,
2014
2015
¥89

¥217

102

200

238
1,267
64
173

340
1,469
73
130

Notes to Consolidated Statement of Comprehensive Income
Reclassification adjustments and tax effects related to other comprehensive income were as follows:
Millions of yen
for the year ended March 31,
Net unrealized gain (loss) on other securities, net of taxes
2014
2015
Gains (losses) arising during the year..............................................
¥29¥1,260
8—
Reclassification adjustments..............................................................
		 Total before tax effect.................................................................
37
1,260
8
(363)
		 Tax effect......................................................................................
		 Net unrealized gain (loss) on other securities, net of taxes...
45
897
Deferred gain (loss) on hedging, net of taxes
Gains (losses) arising during the year..............................................
		 Tax effect......................................................................................
		 Deferred gain (loss) on hedging, net of taxes..........................

¥(9)
3
(5)

24
(8)
16

Foreign currency translation adjustments
Gains (losses) arising during the year..............................................

¥120

¥416

Share of other comprehensive income of associates accounted forusing equity method
Gains (losses) arising during the year..............................................

¥(97)¥—

Remeasurements of defined benefit plans, net of tax
Gains (losses) arising during the year..............................................
Reclassification adjustments.............................................................
		
Amount before income tax effect..............................................
		
Income tax effect.........................................................................
		 Remeasurements of defined benefit plans, net of tax.............

¥—
—
—
—
—

¥240
47
287
(107)
180

		

¥63

¥1,509

Total other comprehensive income...........................................

K I TA N O C O N S T R U C T I O N C O R P.

10

6.

Notes to the Consolidated Statement of Changes in Net Assets(a) Type and number of outstanding shares
March 31, 2014
Number of shares
Increase in shares Decrease in shares
Type of shares
Balance at
Beginning of year
during the year
during the year
Issued stock
Common stock
68,368,532
—
—
Total
68,368,532——
Treasury shares
Common stock
Total

6,128,879
6,128,879

24,561
24,561

Balance at
end of year
68,368,532
68,368,532

774
774

6,152,666
6,152,666

The summary of the main change reason
Increase by the repurchase of shares less than one unit........................................................
Decrease by the sale of shares less than one unit.....................................................................

Type of shares

Balance at
Beginning of year

March 31, 2015
Number of shares
Increase in shares
during the year

Decrease in shares
during the year

24,561 shares
774 shares

Balance at
end of year

Issued stock
Common stockTotal

68,368,532
68,368,532

—
—

—
—

68,368,532
68,368,532

Treasury shares
Common stockTotal

6,152,666
6,152,666

20,89020,89097
97

6,173,459
6,173,459

The summary of the main change reason
Increase by the repurchase of shares less than one unit........................................................
Decrease by the sale of shares less than one unit.....................................................................
(b) Dividends		(1) Dividends paid to shareholders
Resolution
AmountDate of
Approved
Type of(Thousands
approvalbysharesof Yen)June 20,2014		Commonstock

561,309

Retainedearnings

Annualgeneralmeeting ofshareholders

Commonstock

748,1629

Retainedearnings

12

Notes to the Consolidated Statements of Cash Flows

Cash in hand and in banks.....................................................................
Time deposits with a deposit term of over 3 months.........................
Cash and cash equivalents.....................................................................

11

AmountPer share Shareholder’s(Yen)
cut-off date
March 31,2014

Effective
date
June 23,2014(2)	‌D ividends with a shareholders’ cut-off date during the current fiscal year but an effective date
subsequent to the current fiscal year
Resolution
AmountAmountDate of
Approved
Type of(Thousands
Per share Shareholder’s Effective
approvalbysharesof Yen)Paid from(Yen)
cut-off datedate
June 19,2015

7.

Annualgeneralmeeting ofshareholders

Paid from20,890 shares
97 shares

K I TA N O C O N S T R U C T I O N C O R P.

¥¥March 31,2015

June 22,
2015

Millions of yen
March 31,
2014
2015
7,815
¥
11,199
(322)
(720)
7,493
¥
10,479

8.

Fair Value of Financial Instruments(a)	‌The fair value and book value of financial instruments as of March 31, 2014 and March 31, 2015, otherthan items of which fair value are not practically available, are as follows:
Millions of yen
March 31, 2014
Book value
Fair value
Difference
Cash and deposits..............................................
7,815
¥—
¥7,815¥Notes and accounts receivable........................
15,721
15,721
—
3,784
3,784
—
Investments in securities..................................
Total.............................................................
¥27,320¥
27,320¥—
Notes and accounts payable.............................
Short-term loans.................................................
Long-term loans..................................................
Total.............................................................
Derivative transactions.....................................

¥16,775¥1,000
4,148¥21,923
¥4

¥
¥
¥
¥

16,7751,000
4,148
21,923
4

¥—
¥—
—
¥—
¥—

Difference
¥—
—
—
¥—
¥—
—
¥—
¥—

Cash and deposits..............................................
Notes and accounts receivable........................
Investments in securities..................................
Total.............................................................

Book value¥11,199
11,781
5,069
28,049Millions of yen
March 31, 2015
Fair value¥11,199
11,781
5,069
28,049Notes and accounts payable.............................
Short-term loans.................................................
Total.............................................................
Derivative transactions.....................................

¥10,941
1,000
11,941¥¥28¥10,941
1,000¥
11,941¥28(1) Financial instruments for which it is extremely difficult to determine the fair value
Millions of yen
March 31, 2014
March 31, 2015
Book value
Book value
Non-listed shares *......................................................................................... ¥
1,046
¥
1,027
Membership deposit *...................................................................................
2,762
2,643
* ‌It is extremely difficult to determine the fair values thereof because neither market quoted prices areavailable nor future Cash Flows can be estimated.
(2) Redemption schedule for money claims and securities with maturities
Millions of yen
March 31, 2014
Due in 1 year orDue after 1 year
lessthrough 5 years
7,770
¥2
Cash and deposits................. ¥
Notes and accounts
receivable.............................
15,721—
Investments in securities
Government bonds........
—
35——
Corporate bonds............
Millions of yen
March 31, 2015
Due in 1 year orDue after 1 year
lessthrough 5 years
11,189¥
1Cash and deposits................. ¥
Notes and accounts
receivable.............................
11,781—
Investments in securities
Government bonds........
—
35
Corporate bonds............
——

Due after 5 years
through 10 years¥—

Due after 10
years
¥—

—

—

123
100

—
—

Due after 5 years
through 10 years¥—

Due after 10
years
¥—

—

—

123
100

—
—

K I TA N O C O N S T R U C T I O N C O R P.

12

9.

Repayment schedule for long-term debt after the closing date of accounting period.
Millions of yen
March 31, 2014
Due in 1 year or Due after 1 year Due after 2 years Due after 3 years Due after 4 years
lessthrough 2 years through 3 years through 4 years through 5 years
Long-term debt ¥4,097
¥51
¥—
¥—
¥—

Long-term debt

Due in 1 year or
less
¥—

Millions of yen
March 31, 2015
Due after 1 year Due after 2 years Due after 3 years Due after 4 years
through 2 years through 3 years through 4 years through 5 years
¥—
¥—
¥—
¥—

10. Investments in Securities(a)	‌The following tables summarize the acquisition cost and book value of available-for-sale securities withmarket value as of March 31, 2014 and 2015:
Millions of yen
March 31, 2014
Book value
Acquisition cost
Difference
Securities with book value exceedingacquisition cost:
Equity securities.......................................................
¥3,501¥2,257¥1,245
Government bonds...................................................
154
148
6
101
100
1
Corporate bonds.......................................................
Sub-total................................................................
¥3,757¥2,505¥1,252
Securities with book value not exceedingacquisition cost:
Equity securities.......................................................
Sub-total................................................................
Total...............................................................................

¥27
¥27
¥3,784¥29¥29¥2,533

¥(2)
¥(2)
¥1,251

DifferenceBook value

Millions of yen
March 31, 2015
Acquisition cost

Securities with book value exceedingacquisition cost:
Equity securities.......................................................
Government bonds...................................................
Corporate bonds.......................................................
Sub-total................................................................

¥4,760180
101¥5,041¥2,257172
100¥2,530¥2,5037
1¥2,511

Securities with book value not exceedingacquisition cost:
Equity securities.......................................................
Sub-total................................................................
Total...............................................................................

¥28
¥28
¥5,069¥29¥29¥2,558

¥(1)
¥(1)
¥2,511(b)	‌Impairment loss of ¥8 million was recorded to write down book value of investments in securities for theyear ended March 31, 2014.
11. Derivative transactions(a) Derivative transactions for which hedge accounting is not applied			
Not applicable.
(b) Derivative transactions for which hedge accounting is applied.
			Currency-related transaction

Hedging
methodDeferredhedge
method13

Transaction
type
Foreignexchange
forwardcontract
Buy
U.S. dollar

K I TA N O C O N S T R U C T I O N C O R P.

Main hedged
item
Forecasted
foreigncurrencytransactions

Contract
amount¥
611

Millions of yen
March 31, 2015
Contract
over 1 year¥—Fair value¥28

12. Reserve for Retirement Benefits to Employees	‌Employees of the Company is covered by a defined-benefit corporate pension plan and defined-contribution
allowance plan. Employees of its domestic subsidiaries are covered by termination allowance plan ordefined-contribution pension plan.
Defined benefit plans(a) Movements in retirement benefit obligations (except (c) below)
Balance at April 1, 2014.......................................................................................................
Cumulative effects of changes in accounting policies..................................................
Restated balance................................................................................................................
Service cost.........................................................................................................................
Interest cost........................................................................................................................
Actuarial loss (gain)..........................................................................................................
Benefits paid.......................................................................................................................
Balance at March 31, 2015..................................................................................................

¥3,331
(168)
3,164
145
16
(88)
(436)
¥2,801(b) Movements in plan assets (except (c) below)
Balance at April 1, 2014.......................................................................................................
Expected return on plan assets.......................................................................................
Actuarial loss (gain)..........................................................................................................
Contributions paid by the employer................................................................................
Benefits paid.......................................................................................................................
Balance at March 31, 2015..................................................................................................

¥2,498
50
152
213
(436)
¥2,478(c) Movements in net liability for retirement benefits based on the simplified method
Balance at April 1, 2014.......................................................................................................
Retirement benefit costs...................................................................................................
Benefits paid.......................................................................................................................
Balance at March 31, 2015..................................................................................................

¥45
6
(3)
¥48

(d) Reconciliation from retirement benefit obligations and plan assets to liability for retirement benefits
Funded retirement benefit obligations.............................................................................
¥2,846(2,508)Plan assets............................................................................................................................
338
32
Unfunded retirement benefit obligations.........................................................................
Total net liability (asset) for retirement benefits at March 31, 2015.............................
371
Asset for retirement benefits.......................................................................................
Total net liability (asset) for retirement benefits at March 31, 2015......................

371
¥371

(e) Retirement benefit costs
Service cost...........................................................................................................................
Interest cost..........................................................................................................................
Expected return on plan assets.........................................................................................
Net actuarial loss amortizations........................................................................................
Past service cost amortization...........................................................................................
Retirement benefit costs calculated by simplified method............................................
Total retirement benefit costs for the year ended March 31, 2014................................

¥145
16
(50)
55
(8)
6
¥164

(f ) Remeasurements of defined benefit plans, before tax
Past service cost..................................................................................................................
Actuarial gains / losses........................................................................................................

¥(8)
295

(g) Breakdown of items recognized in accumulated other comprehensive income
Unrealized past service cost...............................................................................................
Unrecognized actuarial differences...................................................................................
Total................................................................................................................................

¥208
(38)
¥170

(h) Plan assets
Securities..............................................................................................................................
Bonds.....................................................................................................................................
General accounts.................................................................................................................
Other......................................................................................................................................
Total................................................................................................................................

23%
22%
45%
10%
100%

K I TA N O C O N S T R U C T I O N C O R P.

14

(i) Long-term expected rate of return
Current and target asset allocations, historical and expected returns on various categories of plan assets
have been considered in determining the long-term expected rate of return(j) Actuarial assumptions
Discount rate........................................................................................................................
Rate of expected return on plan assets.............................................................................

0.5%
2.0%

(k) Defined contribution plans
Amount of contributions to defined contribution plans by the Company and its subsidiaries was ¥49
million.
13. Income Taxes(a)	‌The tax effects of temporary differences that give rise to significant portions of the deferred tax assets
are presented below:
Millions of yen
March 31,2014
2015
Deferred tax assets:
Write-down of fixed assets.................................................................
¥
1,001
¥
737
820
740
Allowance for doubtful accounts......................................................
Write-down of marketable securities................................................
190
166
Intercompany profits...........................................................................
268
255
837
553
Loss on valuation of real estate for sale...........................................
Operating loss carry forwards...........................................................
143
111
Net defined benefit liability................................................................
311
64
586
703
Other.....................................................................................................
Total gross deferred tax assets .................................................
4,156
3,330
(2,233)(1,989)Valuation allowance.....................................................................
1,922
1,341
Deferred tax liabilities:
Reserve for special depreciation.......................................................
(195)
(152)
Reserve for advanced depreciation...................................................
(63)
(57)
(422)
(785)
Unrealized gain on other securities...................................................
Difference from fair value of subsidiaries........................................
(727)
(756)
Deferred gains or losses on hedges...................................................
(1)(9)(1,408)(1,759)Total gross deferred tax liabilities.............................................
Net deferred tax assets................................................................

¥

514

¥

(418)

(b)	‌The reconciliation between the statutory tax rate and the effective tax rate as at March 31, 2014 and 2015is presented below:
As of March 31,
2014
2015
Statutory tax rate.....................................................................................
37.8%—
Permanent differences on expenses not deductible.......................
0.9—
Permanent differences on income not taxable................................
(0.4)—
Accrued bonuses to directors and statutory
auditors not deductible.....................................................................
0.3—
Inhabitant taxes per capita.................................................................
0.6—
Valuation allowance............................................................................
6.0—
Influence by effective tariff change...................................................
1.8—
Revision due to amortization of negative goodwill.........................
(11.9)—(0.5)—
Other......................................................................................................
34.6%—
Effective tax rate..................................................................................
In fiscal year 2015, since the difference between statutory effective tax rate and actual effective tax rate after
applying tax effect accounting is less than 5% of statutory effective tax rate, note is omitted.

15

K I TA N O C O N S T R U C T I O N C O R P.

14. Segment Information(1)	‌The segment information of the Company and its subsidiaries for the year ended March 31, 2014 and2015 is presented below:
		
The Company and its subsidiaries operate principally in the following four industrial segments:
		Construction............. Construction, engineering works, development and sale of real estate.
		Golf courses.............. Management of golf courses
Hotels......................... Management of hotels
		Advertising agent..... Management of advertising agent.
(2)	‌The segment information of the Company and its subsidiaries for the year ended March 31, 2014 and2015 is presented below:
Millions of Yen
March 31, 2014
Golf
Advertisingcourses
Hotelsagent
Total
Construction
Reconciliations Consolidated
Ⅰ. Net sales and Operating income
Net sales
Customers¥68,295¥243
Intersegment or
196
3transfer
Total
68,491
246
Operating income¥2,191¥9
Ⅱ. OtherDepreciation and190
22
amortization

Construction

Golf
coursesⅠ. Net sales and Operating income
Net sales
Customers¥67,572¥248
Intersegment or
74transfer
Total
67,578252
Operating income¥4,645¥1(loss)
Ⅱ. OtherDepreciation and259
38
amortization¥674¥1,473¥70,685¥—¥70,685

3

88

290

(290)

—

677
¥67

1,561
¥52

70,974¥2,319(290)¥(17)

70,685¥2,301

62

7

281

(1)

280

Millions of Yen
March 31, 2015
Advertising
Hotels
agent

Total

Reconciliations Consolidated¥1,781¥1,451¥71,052¥—¥71,052

7

94

111

(111)

—

1,789

1,545

71,164(111)

71,052¥81¥41¥4,768¥29¥4,797

319

6

622

(29)

593

K I TA N O C O N S T R U C T I O N C O R P.

16

15. Per Share Data
Net assets per share and net income per share as of and for the year ended March 31, 2014 and 2015 are as
follows:
Yen
2014
2015
Net assets per share................................................................................
¥363.52¥423.98
Net income per share – primary............................................................
38.62
45.86
1.

Basis of net income per share of common stock

Net income...............................................................................................
Net income pertaining to common stock.............................................
Average outstanding shares of common stock....................................
2.

Basis of net assets per share of common stock

Net assets..................................................................................................
Amounts deducted from net assets.......................................................
Minority interests.....................................................................................
Net assets applicable to common stock...............................................
Number of shares of common stock at end of year............................

17

K I TA N O C O N S T R U C T I O N C O R P.

Millions of yen
2014
2015
¥2,403¥2,853¥2,403¥2,853
62,229 thousand
62,205 thousand
sharessharesMillions of Yen
2014
2015
¥24,102¥28,040
1,485
1,670
1,485
1,670
22,61726,36962,216 thousand
62,195 thousand
sharessharesBOARD OF DIRECTORS, STATUTORY AUDITORSAND EXECUTIVE OFFICERS
Board of Directors
Chairman and President, Representative Director
		Takahiro Kitano
Directors
		Yoshikatsu Yamazaki

Executive Officers
President and Executive Officer
		Takahiro Kitano *Senior Executive Officer		Yoshikatsu Yamazaki *		Zentaro Ozawa
		Kimio Shiozawa

Managing Executive Officers
		Itsuo Takeuchi

Outside Director

		Zentaro Ozawa *		Yoshinori Uda

		Kiyoto Kitagawa

Statutory Auditors

Executive Officers

Permanent Auditor

		Shuichi Moriyasu

		Noboru Takizawa

		Yoshito Iwasaki
		Atsushi Gomyo

Outside Auditors

		Tsuneaki Yamada

		Yoshichika Owa

		Masakatsu Kobayashi

		Toshiyuki Nishimura

		Sadao Sugimura

		Nobuyoshi Sakai

		Kenichi Oguma
		Hironori Terashima		* : Member of Board of Directors

K I TA N O C O N S T R U C T I O N C O R P.

18