Fujita Corporation
Nonconsolidated Financial Statements for the
Year Ended March 31, 2019, and
Independent Auditor's Report
- 2 -
Fujita Corporation
Nonconsolidated Balance Sheet
March 31, 2019
ASSETS
Millions of
Yen
Thousands of
U.S. Dollars
(Note 1)
CURRENT ASSETS:
Cash and deposits ¥ 35,441 $ 319,313
Notes receivable – trade 800 7,205
Electronically-recorded monetary claims – operating 5,143 46,335
Accounts receivable from completed construction contracts 137,216 1,236,292
Accounts receivable from development and other 453 4,079
Real estate for sale 34,563 311,405
Construction projects in progress 32,205 290,157
Development projects in progress and other 26,780 241,280
Raw materials and supplies 311 2,802
Short-term loans receivable 2,850 25,681
Deposits paid to subsidiaries and associates 10,006 90,157
Accounts receivable – other 16,802 151,379
Other 4,962 44,725
Allowance for doubtful accounts (819 ) (7,381 )
Total current assets 306,713 2,763,429
NON-CURRENT ASSETS:
Property, plant and equipment:
Buildings and structures 5,049 45,491
Machinery and equipment 854 7,696
Tools, furniture and fixtures 739 6,660
Land 21,510 193,801
Other 69 614
Total property, plant and equipment 28,221 254,262
Intangible assets:
Leasehold interests in land 2,392 21,551
Software 2,073 18,677
Software in progress 559 5,041
Other 81 729
Total intangible assets 5,105 45,998
Investments and other assets:
Investment securities 15,118 136,213
Shares of subsidiaries and associated companies 14,098 127,021
Investments in other securities of subsidiaries and associated companies 12,585 113,389
Investments in capital 74 668
Long-term loans receivable 332 2,989
Long-term loans receivable from employees 23 208
Claims provable in bankruptcy, claims provable in rehabilitation and other 554 4,993
Deferred tax assets 8,306 74,835
Leasehold and guarantee deposits 2,228 20,072
Other 1,057 9,521
Allowance for doubtful accounts (574 ) (5,171 )
Total investments and other assets 53,801 484,738
Total non-current assets 87,127 784,998
TOTAL ¥ 393,840 $ 3,548,427
See notes to nonconsolidated financial statements.
LIABILITIES
Millions of
Yen
Thousands of
U.S. Dollars
(Note 1)
CURRENT LIABILITIES:
Notes payable – trade ¥ 12,466 $ 112,320
Electronically-recorded obligations – operating 60,040 540,946
Accounts payable for construction contracts 96,745 871,657
Accounts payable for development and other 684 6,159
Short-term loans 6,104 55,000
Lease obligations 36 324
Accounts payable – other 3,719 33,506
Accrued expenses 591 5,322
Income taxes payable 5,262 47,409
Accrued consumption taxes 15,617 140,709
Advances received on construction projects in progress 35,480 319,669
Advances received on development projects in progress and other 3,168 28,542
Deposits received 24,850 223,895
Provision for loss on construction contracts 1,179 10,620
Provision for warranties for completed construction 1,515 13,647
Provision for bonuses 4,799 43,234
Other 157 1,421
Total current liabilities 272,412 2,454,380
LONG-TERM LIABILITIES:
Long-term loans 9,750 87,846
Long-term lease obligations 33 296
Deferred tax liabilities for land revaluation 577 5,196
Liability for employees' retirement benefits 17,401 156,780
Other 1,817 16,373
Total long-term liabilities 29,578 266,491
Total liabilities 301,990 2,720,871
NET ASSETS:
Equity:
Capital stock:
Authorized common stock, 545,000,000 shares in 2019
Issued common stock, 18,888,889 shares in 2019 14,002 126,157
Capital surplus: 5,213 46,969
Legal capital surplus 1,525 13,740
Other capital surplus 3,688 33,229
Retained earnings: 68,036 612,983
Legal reserve 2,027 18,261
Reserve for reduction entry 2,661 23,977
General reserve 4,050 36,490
Unappropriated 59,298 534,255
Total equity 87,251 786,109
Valuation and translation adjustments:
Unrealized gain on available-for-sale securities 3,909 35,220
Deferred gains on hedges 28 259
Revaluation reserve for land 662 5,968
Total valuation and translation adjustments 4,599 41,447
Total net assets 91,850 827,556
TOTAL ¥ 393,840 $ 3,548,427
- 3 -
Fujita Corporation
Nonconsolidated Statement of Income
Year Ended March 31, 2019
Millions of
Yen
Thousands of
U.S. Dollars
(Note 1)
NET SALES:
Completed construction projects ¥ 480,382 $ 4,328,154
Development business and other 29,370 264,615
Total net sales 509,752 4,592,769
COST OF SALES:
Completed construction projects 433,504 3,905,790
Development business and other 20,257 182,512
Total cost of sales 453,761 4,088,302
GROSS PROFIT:
Completed construction projects 46,878 422,364
Development business and other 9,113 82,103
Total gross profit 55,991 504,467
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 34,092 307,165
Operating profit 21,899 197,302
OTHER INCOME:
Interest income 100 902
Dividends income 515 4,642
Gain on sales of property, plant and equipment 7 66
Reversal of provision for loss on guarantees 6 55
Other 42 378
Total other income 670 6,043
OTHER EXPENSES:
Interest expenses 316 2,851
Construction guarantee commission 111 996
Loss on disposal of property, plant and equipment 44 399
Other 131 1,182
Total other expenses 602 5,428
INCOME BEFORE INCOME TAXES 21,967 197,917
INCOME TAXES:
Current 7,423 66,876
Deferred (750 ) (6,754 )
NET INCOME ¥ 15,294 $ 137,795
See notes to nonconsolidated financial statements.
- 4 -
Fujita Corporation
Nonconsolidated Statement of Changes in Equity
Year Ended March 31, 2019
Millions of Yen
Capital Surplus Retained Earnings Valuation and Translation Adjustments
Capital
Stock
Legal
Capital
Surplus
Other
Capital
Surplus
Legal
Reserve
Reserve
for
Reduction
Entry
General
Reserve Unappropriated
Total
Equity
Unrealized Gain
on Available-for-
sale Securities
Deferred
Gains on
Hedges
Revaluation
Reserve for
Land
Total Valuation
and Translation
Adjustments
Total Net
Assets
BALANCE, APRIL 1, 2018 ¥ 14,002 ¥ 1,525 ¥ 3,688 ¥ 1,562 ¥ 3,908 ¥ 4,050 ¥ 47,866 ¥ 76,601 ¥ 2,733 ¥ 26 ¥ 662 ¥ 3,421 ¥ 80,022
Provision for legal reserve 465 (465 ) - -
Cash dividends, ¥245.87 per share (4,644 ) (4,644 ) (4,644 )
Reversal of reserve for reduction entry (1,247 ) 1,247 - -
Net income 15,294 15,294 15,294
Net change in the year 1,176 2 - 1,178 1,178
BALANCE, MARCH 31, 2019 ¥ 14,002 ¥ 1,525 ¥ 3,688 ¥ 2,027 ¥ 2,661 ¥ 4,050 ¥ 59,298 ¥ 87,251 ¥ 3,909 ¥ 28 ¥ 662 ¥ 4,599 ¥ 91,850
Thousands of U.S. Dollars (Note 1)
Capital Surplus Retained Earnings Valuation and Translation Adjustments
Capital
Stock
Legal
Capital
Surplus
Other
Capital
Surplus
Legal
Reserve
Reserve
for
Reduction
Entry
General
Reserve Unappropriated
Total
Equity
Unrealized Gain
on Available-for-
sale Securities
Deferred
Gains on
Hedges
Revaluation
Reserve for
Land
Total Valuation
and Translation
Adjustments
Total Net
Assets
BALANCE, APRIL 1, 2018 $ 126,157 $ 13,740 $ 33,229 $ 14,076 $ 35,214 $ 36,490 $ 431,251 $ 690,157 $ 24,619 $ 234 $ 5,968 $ 30,821 $ 720,978
Provision for legal reserve 4,185 (4,185 ) - -
Cash dividends, $2.22 per share (41,843 ) (41,843 ) (41,843 )
Reversal of reserve for reduction entry (11,237 ) 11,237 - -
Net income 137,795 137,795 137,795
Net change in the year 10,601 25 - 10,626 10,626
BALANCE, MARCH 31, 2019 $ 126,157 $ 13,740 $ 33,229 $ 18,261 $ 23,977 $ 36,490 $ 534,255 $ 786,109 $ 35,220 $ 259 $ 5,968 $ 41,447 $ 827,556
See notes to nonconsolidated financial statements.
- 5 -
Fujita Corporation
Notes to Nonconsolidated Financial Statements
Year Ended March 31, 2019
1. BASIS OF PRESENTING NONCONSOLIDATED FINANCIAL STATEMENTS
The accompanying nonconsolidated financial statements have been prepared from the accounts
maintained by Fujita Corporation (the "Company"), in accordance with the provisions set forth in the
Companies Act of Japan and applicable regulations and in accordance with the accounting
principles generally accepted in Japan. The information provided in the notes to the nonconsolidated
financial statements is limited to that required by the Companies Act of Japan and applicable
regulations. Statements of comprehensive income and cash flows are not required as a part of the
basic financial statements under the Companies Act of Japan and applicable regulations and,
accordingly, are not presented herein.
The nonconsolidated financial statements are stated in Japanese yen, the currency of the country in
which the Company is incorporated and operates. The translations of Japanese yen amounts into
U.S. dollar amounts are included solely for the convenience of readers outside Japan and have
been made at the rate of ¥110.99 to $1, the rate of exchange at March 31, 2019. Such translations
should not be construed as representations that the Japanese yen amounts could be converted into
U.S. dollars at that or any other rate.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Valuation methods of certain assets
Marketable and investment securities – Shares of subsidiaries and associated companies
and investments in other securities of subsidiaries and associated companies are stated at cost,
determined by the moving-average method.
Marketable available-for-sale securities are reported at fair value, with unrealized gains and
losses, net of applicable taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost, determined by the moving-
average method. For other-than-temporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.
Derivatives – Derivatives are recognized as either assets or liabilities and measured at fair
value, and gains or losses on derivative transactions are recognized in the nonconsolidated
statement of income.
Inventory – Real estate for sale is stated at the lower of cost, determined by the specific
identified cost method, or net selling value.
Construction projects in progress are stated at the specific identified cost method.
Development projects in progress and other are stated at the lower of cost, determined by the
specific identified cost method, or net selling value.
Raw materials and supplies are stated at the lower of cost, determined by the moving-average
method, or net selling value.
(b) Depreciation and amortization
Property, plant and equipment (except for leased assets) – Depreciation of property, plant
and equipment is computed by the declining-balance method, while the straight-line method is
applied to buildings acquired after April 1, 1998 and building improvements and structures
acquired after April 1, 2016.
- 6 -
Estimated useful lives are as follows:
Years
Buildings and structures 2 to 50
Machinery and equipment 2 to 50
Tools, furniture and fixtures 2 to 20
Intangible assets (except for leased assets) – Amortization of intangible assets is computed
by the straight-line method. In addition, amortization of software for internal use is computed by
the straight-line method based on the estimated useful lives (five years).
Leased assets – Leased assets under finance lease contracts without ownership transfer of the
leased property to the lessee are depreciated by the straight-line method over the term of the
lease and using a residual value of zero.
(c) Accounting policies for provisions
Allowance for doubtful accounts – The allowance for doubtful accounts is stated in amounts
considered to be appropriate based on the Company's past credit loss experience and an
evaluation of potential losses in the receivables outstanding.
Provision for loss on construction contracts – Provision for losses on construction contracts
is provided with respect to construction projects for which eventual losses are reasonably
expected and estimated.
Provision for warranties for completed construction – The provision for warranty cost for
completed work is provided at the amount of warranty costs based on past loss experience.
Provision for bonuses – Provisions for bonuses are provided at the estimated amount of
bonuses to be paid.
Liability for employees' retirement benefits – Liability for employees' retirement benefits and
plan assets are provided for the retirement benefits payable to the employees as of the balance
sheet date based on the projected benefit obligation.
Actuarial gains or losses are charged to profit or loss as incurred.
Provision for loss on guarantees – Provision for loss on guarantees is determined based on
estimated losses by considering the financial position of the guaranteed party.
(d) Recognition of revenue and costs of construction contracts
Construction revenue and construction costs are recognized by the percentage-of-completion
method if the outcome of a construction contract can be estimated reliably. When total
construction revenue, total construction costs and the stage of completion of the contract at the
balance sheet date can be reliably measured, the outcome of a construction contract is deemed
to be estimated reliably. If the outcome of a construction contract cannot be reliably estimated,
the completed-contract method is applied. When it is probable that the total construction costs
will exceed total construction revenue, an estimated loss on the contract is immediately
recognized by providing for a loss on construction contracts.
- 7 -
(e) Other significant accounting policies as the basis of preparing the nonconsolidated
financial statements
Method of hedge accounting – The Company enters into foreign currency forward contracts
and foreign currency loan agreements to hedge exchange rate risk associated with assets and
liabilities denominated in foreign currencies or investments and lending in foreign currencies.
The assets and liabilities denominated in foreign currencies are translated at the contracted
rates, if the forward contracts qualify for hedge accounting for the year ended March 31, 2019.
Accounting for consumption taxes – Consumption taxes withheld and paid are not included
in any amounts in the accompanying nonconsolidated statement of income.
3. CHANGES IN PRESENTATION
On February 16, 2018, the Accounting Standards Board of Japan ("ASBJ") issued ASBJ Statement
No. 28, "Partial Amendments to Accounting Standard for Tax Effect Accounting," which requires
deferred tax assets and deferred tax liabilities to be classified as investments and other assets and
long-term liabilities, respectively. Deferred tax assets were previously classified as current assets
and investments and other assets, and deferred tax liabilities were previously classified as current
liabilities and long-term liabilities under the previous accounting standard. The revised accounting
standard is effective for annual periods beginning on or after April 1, 2018.
4. NOTES TO NONCONSOLIDATED BALANCE SHEET
(a) Accumulated depreciation of property, plant and equipment
Millions of
Yen
Thousands of
U.S. Dollars
2019 2019
Accumulated depreciation of property, plant and
equipment ¥15,301 $137,864
(b) Assets pledged as collateral and the collateralized liabilities
(1) Assets pledged as collateral
The following assets were pledged as collateral for bank guarantees:
Millions of
Yen
Thousands of
U.S. Dollars
2019 2019
Short-term loans receivable ¥ 2 $ 16
Investment securities 10 92
Shares of subsidiaries and associated companies 51 455
Investments in capital 59 543
Long-term loans receivable 13 113
Leasehold and guarantee deposits 2 14
Other 1 10
Total assets pledged as collateral ¥ 138 $ 1,243
(2) Collateralized liabilities
Not applicable.
- 8 -
(c) Contingent liabilities
The Company had the following contingent liabilities:
Millions of
Yen
Thousands of
U.S. Dollars
2019 2019
Guarantees of loans; for subsidiaries and associated
companies:
F.T.C. Ohita Inc. ¥ 712 $ 6,421
Fujita Corporation (Thailand) Ltd. 36 321
Fujita Americas, Inc. 33 300
Fujita (China) Construction Co., Ltd. 26 230
KOKANKYO Engineering Corporation 5 47
Total contingent liabilities ¥ 812 $ 7,319
(d) Receivables and payables due from and to affiliated companies
Millions of
Yen
Thousands of
U.S. Dollars
2019 2019
Short-term receivables from affiliated companies ¥ 15,556 $ 140,159
Long-term receivables from affiliated companies 8 68
Short-term payables to affiliated companies 14,354 129,326
Long-term payables to affiliated companies 9,750 87,846
(e) Land revaluation
Under the "Law of Land Revaluation," the Company elected a one-time revaluation of its own-
use land to a value based on real estate appraisal information as of March 31, 2002. The
resulting revaluation reserve for land represents unrealized appreciation of land and is stated,
net of income taxes, as a component of net assets. There was no effect on the nonconsolidated
statement of income. Continuous readjustment is not permitted, unless the land value
subsequently declines significantly such that the amount of the decline in value should be
removed from the revaluation reserve for land account and related deferred tax liabilities.
(f) Presentation of construction projects in progress and provision for loss on construction
contracts
Construction projects in progress expected to incur a loss and provision for loss on construction
contracts were presented on a gross basis in the nonconsolidated balance sheet without
offsetting either amount. The amount of construction projects in progress expected to incur a
loss related to the provision for loss on construction contracts was ¥351 million ($3,165
thousand).
- 9 -
5. NOTES TO NONCONSOLIDATED STATEMENT OF INCOME
(a) Amount of completed construction projects calculated based on the percentage of
completion method
Millions of
Yen
Thousands of
U.S. Dollars
2019 2019
Amount of completed construction projects calculated
based on the percentage of completion method ¥462,754 $4,169,333
(b) Amount of provision for loss on construction contracts
The amount of provision for loss on construction contracts included in the costs of the
completed construction contracts for the year ended March 31, 2019 was as follows:
Millions of
Yen
Thousands of
U.S. Dollars
Amount of provision for loss on construction contracts ¥641 $5,775
(c) Transactions with affiliated companies
Millions of
Yen
Thousands of
U.S. Dollars
2019 2019
Sales ¥ 20,996 $ 189,171
Purchases 40,243 362,585
Selling, general and administrative expenses 1,099 9,901
Non-operating transactions 303 2,729
(d) Research and development expenses
Millions of
Yen
Thousands of
U.S. Dollars
2019 2019
Research and development expenses ¥2,232 $20,109
- 10 -
6. NOTES TO NONCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(a) Number of issued shares
Number of Issued
Shares at the End of
the Period
Common stock 18,888,889
(b) Information regarding dividends
(1) Dividends paid to shareholders for the year ended March 31, 2019
Total Amount of Dividends Dividends per Share
Resolution Type of Stock
Millions
of Yen
Thousands of
U.S. Dollars Yen Dollars Record Date Effective Date Paid From
General shareholders' meeting held on
June 25, 2018
Common stock ¥4,644 $41,843 ¥245.87 $2.22 March 31, 2018 June 29, 2018 Retained earnings
(2) Dividends whose record date was included in the year ended March 31, 2019 and whose effective date came after March 31, 2019
Total Amount of Dividends Dividends per Share
Resolution Type of Stock
Millions
of Yen
Thousands of
U.S. Dollars Yen Dollars Record Date Effective Date Paid From
General shareholders' meeting held on
June 24, 2019
Common stock ¥4,797 $43,219 ¥253.95 $2.29 March 31, 2019 June 28, 2019 Retained earnings
7. NOTE TO DEFERRED INCOME TAXES
Significant components of net deferred tax assets
Millions of
Yen
Thousands of
U.S. Dollars
2019 2019
Deferred tax assets:
Allowance for doubtful accounts ¥ 427 $ 3,843
Impairment loss on property, plant and equipment 1,092 9,839
Write-down of investment securities 1,458 13,135
Provision for bonuses 1,469 13,238
Liability for employees' retirement benefits 5,328 48,006
Contribution of securities to retirement benefit trust 1,049 9,448
Provision for loss on construction contracts 361 3,252
Provision for warranties for completed construction 464 4,179
Other 2,720 24,511
Subtotal deferred tax assets 14,368 129,451
Valuation allowance (3,237 ) (29,167 )
Total deferred tax assets ¥ 11,131 $ 100,284
Deferred tax liabilities:
Reserve for reduction entry ¥ 1,174 $ 10,582
Unrealized gain on available-for-sale securities 1,462 13,169
Other 189 1,698
Total deferred tax liabilities ¥ 2,825 $ 25,449
Net deferred tax assets ¥ 8,306 $ 74,835
- 11 -
8. FINANCIAL INSTRUMENTS
(a) Overview
(1) Company policy for financial instruments
The Company uses financial instruments, mainly loans from the parent company and
banks. Cash surpluses, if any, are invested in low-risk financial assets. Derivatives are
used, not for speculative purposes, but to manage exposure to risks of exchange rate
fluctuation on foreign currency receivables, payables and other.
(2) Nature and extent of risks arising from financial instruments, and risk management
for financial instruments
Trade receivables, such as notes receivable – trade, electronically-recorded monetary
claims – operating and accounts receivable from completed construction contracts, are
exposed to customer credit risk. The Company manages its credit risk on the basis of
internal guidelines by conducting credit research to identify and reduce default risk in the
event of non-performance at the early stage.
Deposits paid to subsidiaries and associates are temporary deposits paid to the parent
company from Daiwa House Group Cash Management Service ("C М S"), which was
established for the purpose of improving the consolidated management system of Daiwa
House Group, controlling the funds of Daiwa House Group by centralizing its financial
functions.
Investment securities, mainly equity instruments of customers and suppliers of the
Company, are exposed to the risk of market price fluctuations. The Company manages its
risk by monitoring market values and the financial position of issuers on a regular basis and
reviewing its portfolio.
The payment terms of trade payables, such as notes payable – trade, electronically-
recorded obligations – operating, accounts payable for construction contracts and deposits
received, are mainly less than one year.
Short-term loans whose maturities are less than one year after the balance sheet date are
used for procurement of working capital.
Long-term loans whose maturities are less than five years at fixed interest rates are loans
from the parent company and mainly used for investment properties.
With respect to derivative transactions, the Company enters into foreign currency forward
contracts and foreign currencies loans to hedge exchange rate risk associated with assets
and liabilities denominated in foreign currencies for investment and lending in foreign
currencies. The Company utilizes derivative transactions in accordance with internal
policies that prescribe the authority. The counterparties to those derivatives are limited to
major international financial institutions to reduce the credit risk.
Trade payables and loans are exposed to liquidity risk. The Company manages its liquidity
risk by making cash flow management plans and by other means.
- 12 -
(b) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted
price is not available, another rational valuation technique is used instead.
As of March 31, 2019
Millions of Yen
Carrying
Amount Fair Value
Unrealized
Gain/Loss
Cash and deposits ¥ 35,441 ¥ 35,441 ¥ -
Notes receivable – trade 800
Allowance for doubtful accounts (*1) (3 )
797 797 -
Electronically-recorded monetary claims –
operating 5,143
Allowance for doubtful accounts (*1) (16 )
5,127 5,127 -
Accounts receivable from completed construction
contracts 137,216
Allowance for doubtful accounts (*1) (412 )
136,804 136,804 -
Deposits paid to subsidiaries and associates 10,006 10,006 -
Investment securities 13,276 13,276 -
Total assets ¥ 201,451 ¥ 201,451 ¥ -
Notes payable – trade ¥ 12,466 ¥ 12,466 ¥ -
Electronically-recorded obligations – operating 60,040 60,040 -
Accounts payable for construction contracts 96,745 96,745 -
Short-term loans 6,104 6,104 -
Deposits received 24,850 24,850 -
Long-term loans 9,750 9,746 (4 )
Total liabilities ¥ 209,955 ¥ 209,951 ¥ (4 )
Derivatives (*2) ¥ 28 ¥ 28 ¥ -
- 13 -
Thousands of U.S. Dollars
Carrying
Amount Fair Value
Unrealized
Gain/Loss
Cash and deposits $ 319,313 $ 319,313 $ -
Notes receivable – trade 7,205
Allowance for doubtful accounts (*1) (22 )
7,183 7,183 -
Electronically-recorded monetary claims –
operating 46,335
Allowance for doubtful accounts (*1) (139 )
46,196 46,196 -
Accounts receivable from completed construction
contracts 1,236,292
Allowance for doubtful accounts (*1) (3,708 )
1,232,584 1,232,584 -
Deposits paid to subsidiaries and associates 90,157 90,157 -
Investment securities 119,617 119,617 -
Total assets $ 1,815,050 $ 1,815,050 $ -
Notes payable – trade $ 112,320 $ 112,320 $ -
Electronically-recorded obligations – operating 540,946 540,946 -
Accounts payable for construction contracts 871,657 871,657 -
Short-term loans 55,000 55,000 -
Deposits received 223,895 223,895 -
Long-term loans 87,846 87,812 (34 )
Total liabilities $ 1,891,664 $ 1,891,630 $ (34 )
Derivatives (*2) $ 259 $ 259 $ -
Note (*1) The values of notes receivable – trade, electronically-recorded monetary claims –
operating and accounts receivable from completed construction contracts are
shown at net values, after deducting the allowance for doubtful accounts.
Note (*2) The value of assets and liabilities arising from derivatives is shown at net value,
and the amounts in parentheses represent a net liability position.
Notes:
1. Methods of measuring the fair value of financial instruments
(1) Assets
(a) Cash and deposits, notes receivable – trade, electronically-recorded monetary
claims – operating and deposits paid to subsidiaries and associates
The carrying values of cash and deposits, notes receivable – trade, electronically-
recorded monetary claims – operating and deposits paid to subsidiaries and
associates approximate fair value because of their short maturities.
(b) Accounts receivable from completed construction contracts
The fair values of accounts receivable from completed construction contracts are
measured at the amount to be received at maturity, discounted at the Company's
assumed corporate discount rate.
- 14 -
(c) Investment securities
The fair values of investment securities are measured at the quoted market price
of the stock exchange for the equity instruments.
(2) Liabilities
(a) Notes payable – trade, electronically-recorded obligations – operating, accounts
payable for construction contracts, short-term loans and deposits received
The carrying values of notes payable – trade, electronically-recorded obligations –
operating, accounts payable for construction contracts, short-term loans and
deposits received approximate fair value because of their short maturities.
(b) Long-term loans
The fair values of long-term loans are measured by discounting the total amount
of principal and interest at an interest rate applied for the introduction of similar
new debt.
(3) Derivatives
(a) The fair values of derivative transactions are measured at the quoted price
obtained from the financial institutions.
2. Financial instruments whose fair value cannot be reliably determined
Millions of
Yen
Thousands of
U.S. Dollars
2019 2019
Unlisted stocks (*1) ¥ 1,842 $ 16,596
Shares of subsidiaries and associated companies (*2) 14,098 127,021
Investments in other securities of subsidiaries and
associated companies (*2) 12,585 113,389
Note (*1) Unlisted stocks do not have a quoted market price, cannot be estimated by
future cash flow and cannot be reliably determined by fair value. Thus, these
stocks are not included in "Investment securities" above.
Note (*2) Shares of subsidiaries and associated companies and investments in other
securities of subsidiaries and associated companies do not have a quoted
market price, cannot be estimated by future cash flow and cannot be reliably
determined by fair value. Thus, these stocks are not included in the table
above.
- 15 -
9. INVESTMENT PROPERTIES
The Company owns rental properties such as rental apartments and commercial buildings, mainly located in Tokyo. The carrying amounts and market prices of such properties were as follows.
As of March 31, 2019
Millions of Yen
Thousands of
U.S. Dollars
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Investment properties ¥14,494 ¥16,662 $130,586 $150,123
Notes:
1. The carrying amount recognized in the nonconsolidated balance sheet is net of accumulated depreciation and accumulated impairment losses, if any.
2. The fair values of properties for the year ended March 31, 2019 are primarily measured by the Company in accordance with its Real Estate Appraisal Standard, including the fair value adjusted by indices.
10. RELATED-PARTY TRANSACTIONS
Percentage of
Voting Rights
Held by the Company
(Held by Others)
Amount of
Transaction
Balance at the End of
the Period
Classification Related Party Relationship Nature of Transaction
Millions of
Yen
Thousands of
U.S. Dollars Account
Millions of
Yen
Thousands of
U.S. Dollars
Parent
company
Daiwa House Industry
Co., Ltd.
(Direct 100.0%) Borrowing of funds
Deposit of funds
Borrowing of funds (*1), (*2)
Repayment of funds (*1)
Payment of interest
Deposit of funds (*1), (*2)
Receipt of interest
¥ 27,988
3,250
50
924
0
$ 252,163
29,282
452
8,327
0
Short-term loans
Long-term loans
Deposits paid to subsidiaries and
associates
¥ -
9,750
-
10,006
-
$ -
87,846
-
90,157
-
Note (*1) Borrowings and deposits of funds are from Daiwa House Group C М S, and interest rates are rationally determined in consideration of market interest rates.
Note (*2) The above transaction amount is the average balance during the period.
Percentage of
Voting Rights
Held by the Company
(Held by Others)
Amount of
Transaction (*2)
Balance at the End of
the Period (*2)
Classification Related Party Relationship Nature of Transaction
Millions of
Yen
Thousands of
U.S. Dollars Account
Millions of
Yen
Thousands of
U.S. Dollars
Subsidiary Fujita Shoji Co., Ltd. Direct 100.0% Purchase of construction
materials
Purchase of materials (*1) ¥ 20,456 $ 184,301 Electronically-recorded obligations –
operating
Accounts payable for construction
contracts
¥ 5,826
2,072
$ 52,493
18,668
Note (*1) Purchase of materials was determined based on arm's length transaction.
Note (*2) The above transaction amount is exclusive of consumption taxes, while the above balance at the end of the period is inclusive of consumption taxes.
11. NOTE TO PER SHARE INFORMATION
Yen U.S. Dollars
2019 2019
Net assets per share ¥ 4,862.67 $ 43.81
Net income per share 809.68 7.30
12. SUBSEQUENT EVENT
Not applicable (except for appropriations of retained earnings).
- 16 -
13. DETAILS OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Millions of Yen
Account
Carrying Amount
at the Beginning
of the Period
Amount of
Increase for
the Period
Amount of
Decrease for
the Period
Depreciation/
Amortization
Carrying Amount
at the End
of the Period
Accumulated
Depreciation/
Amortization
Acquisition
Cost at the End
of the Period
Property, plant and equipment:
Buildings and structures ¥ 4,984 ¥ 405 ¥ 15 ¥ 325 ¥ 5,049 ¥ 6,987 ¥ 12,036
Machinery and equipment 708 362 11 205 854 5,308 6,162
Tools, furniture and fixtures 631 416 3 305 739 2,854 3,593
Land 21,459 51 - - 21,510 - 21,510
Other 103 18 15 37 69 152 221
Total property, plant and equipment ¥ 27,885 ¥ 1,252 ¥ 44 ¥ 872 ¥ 28,221 ¥ 15,301 ¥ 43,522
Intangible assets:
Leasehold interests in land ¥ 21 ¥ 2,376 ¥ - ¥ 5 ¥ 2,392
Software 300 2,133 27 333 2,073
Software in progress 801 1,377 1,619 - 559
Other 81 - - - 81
Total Intangible assets ¥ 1,203 ¥ 5,886 ¥ 1,646 ¥ 338 ¥ 5,105
Thousands of U.S. Dollars
Account
Carrying Amount
at the Beginning
of the Period
Amount of
Increase for
the Period
Amount of
Decrease for
the Period
Depreciation/
Amortization
Carrying Amount
at the End
of the Period
Accumulated
Depreciation/
Amortization
Acquisition
Cost at the End
of the Period
Property, plant and equipment:
Buildings and structures $ 44,904 $ 3,645 $ 133 $ 2,925 $ 45,491 $ 62,954 $ 108,445
Machinery and equipment 6,376 3,263 103 1,840 7,696 47,828 55,524
Tools, furniture and fixtures 5,685 3,749 30 2,744 6,660 25,713 32,373
Land 193,339 462 - - 193,801 - 193,801
Other 940 151 139 338 614 1,369 1,983
Total property, plant and equipment $ 251,244 $ 11,270 $ 405 $ 7,847 $ 254,262 $ 137,864 $ 392,126
Intangible assets:
Leasehold interests in land $ 191 $ 21,403 $ - $ 43 $ 21,551
Software 2,701 19,216 241 2,999 18,677
Software in progress 7,215 12,409 14,583 - 5,041
Other 729 - - - 729
Total Intangible assets $ 10,836 $ 53,028 $ 14,284 $ 3,042 $ 45,998
Notes:
1. Amount of increase for the period in buildings and structures is mainly due to an increase in renovations of research facilities amounting to ¥242 million ($2,181
thousand).
2. Amount of increase for the period in machinery and equipment is mainly due to an increase in purchases of machinery amounting to ¥310 million ($2,795
thousand).
3. Amount of increase for the period in tools, furniture and fixtures is mainly due to an increase in purchases of research instruments amounting to ¥233 million
($2,103 thousand) and purchases of hardware of ¥69 million ($624 thousand).
4. Amount of increase for the period in intangible assets is mainly due to transferring ¥2,371 million ($21,361 thousand) from real estate for sale to leasehold
interests in land and software development costs amounting to ¥1,892 million ($17,042 thousand). The amount of increase for the period in software is mainly
due to transferring ¥1,619 million ($14,583 thousand) from software in progress.
- 17 -
14. DETAILS OF ALLOWANCES
Millions of Yen
Amount of Decrease
for the Year
Account
Balance
at the
Beginning of
the Period
Amount of
Increase for
the Period
Intended
Use Other
Balance at
the End of
the Period
Allowance for doubtful accounts ¥ 1,574 ¥ 664 ¥ 83 ¥ 762 ¥ 1,393
Provision for loss on construction
contracts 1,860 641 1,065 257 1,179
Provision for warranties for
completed construction 1,391 1,497 1,195 178 1,515
Provision for bonuses 4,589 4,799 4,589 - 4,799
Liability for employees' retirement
benefits 17,814 1,288 1,701 - 17,401
Provision for loss on guarantees 6 - - 6 -
Thousands of U.S. Dollars
Amount of Decrease
for the Year
Account
Balance
at the
Beginning of
the Period
Amount of
Increase for
the Period
Intended
Use Other
Balance at
the End of
the Period
Allowance for doubtful accounts $ 14,175 $ 5,982 $ 748 $ 6,857 $ 12,552
Provision for loss on construction
contracts 16,762 5,775 9,600 2,317 10,620
Provision for warranties for
completed construction 12,535 13,488 10,769 1,607 13,647
Provision for bonuses 41,346 43,234 41,346 - 43,234
Liability for employees' retirement
benefits 160,503 11,604 15,327 - 156,780
Provision for loss on guarantees 55 - - 55 -
Notes:
1. "Other" under decrease in allowance for doubtful accounts represents reversals of the balance
at the beginning of the period calculated based on the Company's past credit loss experience
and from collections of receivables.
2. "Other" under decrease in provision for loss on construction contracts represents reversals of
the decrease in estimated loss.
3. "Other" under decrease in provision for warranties for completed construction represents
reversals of the partial amount of the balance at the beginning of the period.
4. "Other" under decrease in provision for loss on guarantees represents reversals of the decrease
in estimated debt loss.
- 18 -
15. DETAILS OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Amount
Account
Millions of
Yen
Thousands of
U.S. Dollars
Compensation to directors and audit & supervisory board
members ¥ 419 $ 3,778
Salaries 13,705 123,476
Bonuses 2,814 25,353
Retirement benefit expenses 941 8,482
Legal welfare expenses 2,254 20,305
Welfare expenses 413 3,725
Repair and maintenance 253 2,282
Stationery expenses 3,746 33,748
Correspondence and transportation expenses 2,305 20,768
Power utilities expenses 112 1,012
Research and development expenses 2,232 20,109
Advertising expenses 147 1,322
Provision of allowance for doubtful accounts 43 390
Entertainment expenses 298 2,687
Contribution 96 866
Rents 2,039 18,367
Depreciation 278 2,504
Taxes and dues 1,149 10,356
Insurance expenses 56 501
Miscellaneous expenses 792 7,134
Total ¥ 34,092 $ 307,165
* * * * * *