Consolidated Financial Statements
TOA CORPORATION
and its consolidated subsidiraries
Year ended March 31, 2018
with Independent Auditor’s Report
Millions of Japanese Yen
Thousands of
U.S. Dollars
(Note 1)
ASSETS 2018 2017 2018
Current assets:
Cash and bank deposits (Note 10) ¥ 36,682 ¥ 28,217 $ 346,063
Notes and accounts receivable, trade (Notes 4 and 10) 79,344 78,288 748,534
Allowance for doubtful accounts (296 ) (550) (2,793)
Securities (Notes 10 and 11) 15 — 141
Real estate for sale 3,963 3,812 37,394
Cost on construction contracts in progress and other (Note 4) 6,466 7,703 61,001
Advanced money (Note 10) 7,524 10,965 70,987
Deferred tax assets (Note 14) 6,048 7,407 57,061
Other current assets (Note 4) 5,930 3,250 55,948
Total current assets 145,680 139,094 1,374,340
Investments and other assets:
Investments in securities (Notes 4,10 and 11) 14,609 13,988 137,821
Long-term loans (Note 4) 309 337 2,916
Deferred tax assets (Note 14) 1,197 773 11,298
Other (Note 4) 1,833 1,921 17,298
Allowance for doubtful accounts (567) (576) (5,357)
Total investments and other assets 17,381 16,445 163,977
Property, plant and equipment:
Land (Note 4) 17,913 18,398 168,995
Buildings and structures 15,442 15,985 145,683
Machinery, vehicles and equipment 20,430 20,017 192,740
Leased assets 596 151 5,624
Construction in progress 10 22 97
Total property, plant and equipment 54,393 54,575 513,141
Less accumulated depreciation (27,719) (26,924) (261,507)
Property, plant and equipment—net 26,673 27,651 251,634
Intangible fixed assets: 562 544 5,304
Total assets ¥ 190,297 ¥ 183,735 $ 1,795,257
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET
TOA CORPORATION and its consolidated subsidiaries
As of March 31, 2018 and 2017
Millions of Japanese Yen
Thousands of
U.S. Dollars
(Note 1)
LIABILITIES AND NET ASSETS 2018 2017 2018
Current liabilities:
Short-term borrowings (Notes 4 and 10) ¥ 8,516 ¥ 8,463 $ 80,339
Current portion of long-term debt (Notes 4 and 10) 5,412 5,535 51,058
Notes and accounts payable, trade (Notes 4 and 10) 34,351 31,012 324,067
Electoronically recorded obligations, operating (Note 10) 13,556 8,429 127,890
Accrued income taxes 353 482 3,334
Advances received on construction contracts in progress 8,554 7,622 80,698
Reserve for indemnity on completed contracts 587 483 5,545
Reserve for loss on construction works (Note 4) 1,072 2,266 10,121
Deposits received (Note 10) 14,019 11,937 132,256
Reserve for loss on construction defects 10,776 14,100 101,665
Other current liabilities (Notes 4 and 10) 3,740 5,117 35,288
Total current liabilities 100,940 95,452 952,265
Long-term liabilities:
Long-term debt (Notes 4 and 10) 14,703 15,196 138,716
Liability for retirement benefits (Note 13) 2,889 4,436 27,261
Deferred tax liabilities on revaluation of land (Notes 4 and 14) 2,348 2,358 22,156
Other long-term liabilities (Note 10) 1,667 1,333 15,733
Total long-term liabilities 21,610 23,324 203,868
Total liabilities 122,550 118,776 1,156,133
Net assets (Note 8) :
Shareholders' equity:
Common stock,
Authorized—60,000,000 shares
Issued—22,494,629 shares at March 31, 2018 and 2017 18,976 18,976 179,025
Capital surplus 18,115 18,115 170,898
Retained earnings 24,791 23,020 233,879
Treasury stock, at cost 1,593 thousand shares and
1,592 thousand shares at March 31, 2018 and 2017, respectively (2,058) (2,056) (19,418)
Total shareholders' equity 59,824 58,055 564,385
Accumulated other comprehensive income:
Net unrealized gains (losses) on securities (Note 11) 4,634 4,193 43,721
Net deferred gains (losses) on hedges (Notes 10 and 12) (17) — (165)
Revaluation reserve for land (Note 4) 3,606 3,629 34,027
Retirement benefits liability adjustments (Note 13) (857) (1,452) (8,085)
Total accumulated other comprehensive income 7,366 6,370 69,497
Non-controlling interests 555 532 5,241
Total net assets 67,747 64,958 639,124
Commitments and contingent liabilities (Note 4) :
Total liabilities and net assets ¥ 190,297 ¥ 183,735 $ 1,795,257
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF OPERATIONS
TOA CORPORATION and its consolidated subsidiaries
For the years ended March 31, 2018 and 2017
Millions of Japanese Yen
Thousands of
U.S. Dollars
(Note 1)
2018 2017 2018
Net sales (Note 5) ¥ 161,045 ¥ 167,200 $ 1,519,294
Cost of sales (Note 5) 148,029 150,990 1,396,504
Gross profit 13,015 16,210 122,789
Selling, general and administrative expenses (Note 5) 10,135 10,013 95,620
Operating income 2,879 6,196 27,168
Other income (expenses):
Interest and dividend income 314 283 2,962
Interest expense (342) (388) (3,228)
Provision for doubtful accounts, non-trade (16) 33 (158)
Loss on impairment of fixed assets (Note 5) (59) (332) (565)
Additional severance payment (Note 3) (46) (78) (439)
Gain on sale of fixed assets (Note 5) 81 79 766
Compensation for damage (72) — (679)
Commission fee (Note 3) (110) (42) (1,047)
Guarantee fee (62) (72) (591)
Loss on sale of fixed assets (Note 5) (5) (184) (53)
Loss on disposal of fixed assets (Note 5) (37) (13) (355)
Loss on construction defects (Note 5) — (15,374) —
Other, net (Note 3) 36 (125) 344
(322) (16,215) (3,045)
Profit (loss) before income taxes 2,557 (10,018) 24,123
Income taxes (Note 14) :
Current 307 884 2,900
Deferred 476 (3,539) 4,493
784 (2,654) 7,393
Profit (loss) 1,773 (7,364) 16,729
Profit (loss) attributable to :
Non-controlling interests ¥ 23 ¥ 74 $ 218
Owners of parent ¥ 1,750 ¥ (7,438) $ 16,511
The accompanying notes are an integral part of these financial statements.
Millions of Japanese Yen
Thousands of
U.S. Dollars
(Note 1)
2018 2017 2018
Profit (loss) ¥ 1,773 ¥ (7,364) $ 16,729
Other comprehensive income:
Net unrealized gains on securities 441 1,227 4,160
Net deferred gains on hedges (17) (2) (165)
Revaluation reserve for land (Note 4) (1) — (14)
Retirement benefits liability adjustments (Note 13) 594 792 5,612
Total other comprehensive income (Note 6) 1,016 2,017 9,593
Comprehensive income (loss) ¥ 2,790 ¥ (5,346) $ 26,322
Total comprehensive income (loss) attributable to (Note 6) :
Owners of parent ¥ 2,767 ¥ (5,420) $ 26,104
Non-controlling interests ¥ 23 ¥ 74 $ 218
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
TOA CORPORATION and its consolidated subsidiaries
For the years ended March 31, 2018 and 2017
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
TOA CORPORATION and its consolidated subsidiaries
For the years ended March 31, 2018 and 2017
Millions of Japanese Yen
Shareholders' equity Accumulated other comprehensive income Non-controlling
interests
Total net
assets
Common
stock
Capital
surplus
Retained
earnings
Treasury
stock,
at cost
Net unrealized
gains (losses)
on securities
(Note 11)
Net deferred
gains
(losses) on
hedges
Revaluation
reserve
for land
(Note 4)
Retirement
benefits liability
adjustments
(Note 13)
Balance at March 31, 2016 ¥ 18,976 ¥ 18,113 ¥ 31,353 ¥ (2,053) ¥ 2,966 ¥ 2 ¥ 3,570 ¥ (2,244) ¥ 459 ¥ 71,143
Cash dividends (836) (836)
Profit (loss) attributable
to owners of parent
for the period (7,438) (7,438)
Acquisition of
treasury stock (2) (2)
Increase or decrease
of equity interests
due to acquisition of
shares of subsidiaries
1 1
Reversal of revaluation
reserve for land (58) (58)
Net changes in
items other than
shareholders' equity 1,227 (2) 58 792 72 2,148
Balance at March 31, 2017 ¥ 18,976 ¥ 18,115 ¥ 23,020 ¥ (2,056) ¥ 4,193 ¥ — ¥ 3,629 ¥ (1,452) ¥ 532 ¥ 64,958
Cash dividends —
Profit (loss) attributable
to owners of parent
for the period 1,750 1,750
Acquisition of
treasury stock (1) (1)
Reversal of revaluation
reserve for land 20 20
Net changes in
items other than
shareholders' equity 441 (17) (22) 594 23 1,019
Balance at March 31, 2018 ¥ 18,976 ¥ 18,115 ¥ 24,791 ¥ (2,058) ¥ 4,634 ¥ (17) ¥ 3,606 ¥ (857) ¥ 555 ¥ 67,747
Thousands of U.S. Dollars (Note 1)
Shareholders' equity Accumulated other comprehensive income Non-controlling
interests
Total net
assets
Common
stock
Capital
surplus
Retained
earnings
Treasury
stock,
at cost
Net unrealized
gains (losses)
on securities
(Note 11)
Net deferred
gains
(losses) on
hedges
Revaluation
reserve
for land
(Note 4)
Retirement
benefits liability
adjustments
(Note 13)
Balance at March 31, 2017 $179,025 $170,898 $217,173 $ (19,404) $ 39,560 $ — $ 34,236 $ (13,698) $ 5,022 $612,815
Cash dividends —
Proft (loss) attributable
to owners of parent
for the period 16,511 16,511
Acquisition of
treasury stock (14) (14)
Reversal of revaluation
reserve for land 194 194
Net changes in
items other than
shareholders' equity 4,160 (165) (209) 5,612 218 9,617
Balance at March 31, 2018 $179,025 $170,898 $233,877 $ (19,418) $ 43,720 $ (165) $ 34,028 $ (8,085) $ 5,240 $639,124
The accompanying notes are an integral part of these financial statements.
Millions of Japanese Yen
Thousands of
U.S. Dollars
(Note 1)
2018 2017 2018
Cash flows from operating activities:
Profit (loss) before income taxes ¥ 2,557 ¥ (10,018) $ 24,123
Adjustments to reconcile income before income taxes and
Non-controlling interests to net cash (used in) provided by operating activities:
Depreciation and amortization 1,771 2,010 16,712
Loss on impairment of fixed assets 59 332 565
Exchange (gain) loss, net 62 35 586
(Gain) loss on sale or disposal of fixed assets (64) 106 (610)
Increase (decrease) in liability for retirement benefits (988) (114) (9,325)
Increase (decrease) in allowance for doubtful accounts (262) (30) (2,480)
Increase (decrease) in provision for loss on construction defects (3,323) 14,100 (31,353)
Changes in:
Notes and accounts receivable, trade (1,056) (4,313) (9,966)
Real estate for sale 229 307 2,167
Cost on construction contracts in progress and other 1,236 4,747 11,668
Notes and accounts payable, trade 8,464 (11,664) 79,856
Advances received on construction contracts in progress 931 (1,134) 8,788
Other, net 787 1,090 7,429
Sub-total 10,405 (4,545) 98,162
Interest and dividend income received 328 297 3,094
Interest paid (378) (428) (3,573)
Income taxes paid (426) (4,093) (4,020)
Net cash (used in) provided by operating activities 9,928 (8,769) 93,663
Cash flows from investing activities:
Payments for acquisition of investment in securities (33) (23) (311)
Proceeds from sale of investment in securities 22 0 207
Payments for acquisition of property, plant and equipment (1,072) (1,693) (10,114)
Proceeds from sale of property, plant and equipment 483 478 4,561
Other, net (114) (24) (1,084)
Net cash (used in) provided by investing activities (714) (1,263) (6,740)
Cash flows from financing activities:
Net increase (decrease) in short-term borrowings 52 87 495
Proceeds from long-term debt 4,920 4,947 46,415
Repayment of long-term debt (5,535) (5,744) (52,226)
Acquisition of treasury stock (1) (2) (14)
Cash dividends paid 0 (832) (4)
Other, net (109) (94) (1,030)
Net cash (used in) provided by financing activities (674) (1,639) (6,365)
Effect of exchange rate changes on cash and cash equivalents (74) (37) (700)
Net increase (decrease) in cash and cash equivalents 8,464 (11,709) 79,856
Cash and cash equivalents at beginning of year 28,187 39,896 265,919
Cash and cash equivalents at end of year (Note 8) ¥ 36,652 ¥ 28,187 $ 345,776
CONSOLIDATED STATEMENT OF CASH FLOWS
TOA CORPORATION and its consolidated subsidiaries
For the years ended March 31, 2018 and 2017
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
1.Significant Respects for the
Basis of Preparing Consolidated
Financial Statements:
The accompanying consolidated financial
s t a t e m e n t s o f T O A C O R P O R A T I O N ( t h e
“Company”) and its consolidated subsidiaries
(the “Companies”) are prepared on the basis
of accounting principles generally accepted in
Japan, which are different in certain respects
as to 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
Law of Japan. Certain reclassifications and
rearrangements were made for the convenience of
readers outside of Japan.
As permitted by the Financial Instruments and
Exchange Law of Japan, amounts of less than one
million yen have been rounded down to the nearest
million Japanese yen.
Ⅰ . Basis of consolidation
T h e C o m p a n y h a s 1 7 m a j o r i t y - o w n e d
s u b s i d i a r i e s a s o f M a r c h 3 1 , 2 0 1 8 . T h e
consolidated financial statements for the year
ended March 31, 2018 include the accounts of
the Company and 11 majority-owned subsidiaries.
Principal consolidated subsidiaries were TOA
Agency Co., Ltd., Shinko Corporation, TOA Kikai
Kogyo Co., Ltd. Consolidated subsidiaries have the
same financial period as the Company that ends on
March 31.
Other 6 subsidiaries are not consolidated as
they are at small scale and not significant in terms
of total assets, net sales, retained earnings or net
income in aggregate.
Investments in unconsolidated subsidiaries
(Human Affair Co., Ltd. and others) and affiliates
(Sengenyama Developing Co., Ltd. and others) are
excluded from application of the equity method as
they are not significant in terms of net income or
retained earnings in aggregate.
Ⅱ . Basis of accounting treatment
(1) Basis of valuation for significant assets
a) Securities
Securities held by the Companies are
classified into two categories;
Held-to-maturity debt securities are carried
at amortized cost.
Other securities for which market quotations
are available are stated at fair value. Net
Unrealized gains or losses on these securities are
treated as directly charged or credited to the net
assets and cost of securities sold are computed
by the moving average method.
Other securities for which market quotation
are unavailable are stated at moving average
cost method.
b) Derivatives
With changes in fair value included in net
income or loss for the period in which they arise,
derivatives are stated at fair value.
c) Inventories
Cost on construction contracts in progress,
PFI projects and real estate for sale are stated
at specific cost method for each contract.
Materials and supplies are stated at moving
average cost method.
However, in the case that net selling value
falls below the acquisition cost at the end
of the period, inventories except for cost on
construction contracts in progress are carried
at the net selling value on the balance sheet,
regarded as decreased profitability of assets.
(2) Depreciation for property, plant and
equipment and other
Except for leased assets, depreciation is
principally computed by the declining-balance
method at rates based on the estimated useful
lives. However, depreciation of buildings which
the Companies acquired on or after April 1, 1998,
and facilities attached to buildings and other non-
building structures acquired on or after April 1,
2016 are computed on a straight-line basis over
the estimated period. Useful lives and residual
value are in conformity with the provisions of the
Corporation Tax Law of Japan.
As for intangible fixed assets excluding
leased assets and long-term prepaid expenses,
amortization is computed by the straight-line
method and the useful lives are in conformity with
the provisions of the Corporation Tax Law of Japan.
As for leased assets related to finance lease,
other than those which are deemed to transfer
ownership of the leased assets to the lessee,
depreciation is principally computed by the straight-
line method over the useful lives equivalent to lease
term and residual value is equal to zero.
(3) Reserve and allowance
a) Allowance for doubtful accounts
Allowance for general receivables are
established in amounts considered to be
appropriate based upon credit loss experience.
For specific receivables such as doubtful
accounts, allowance for these are established in
amounts considered to be uncollectible based
upon an evaluation of possibility of collection in
each outstanding receivable.
b) Reserve for indemnity on completed
contracts
Reserve for indemnity on completed
contracts is provided for the future defect
expenses based upon the estimated indemnity
amount for net sales for the year.
c) Reserve for loss on construction works
Reserve for loss on construction works is
provided for the amount equivalent to cover
future loss by evaluating individual construction
form which loss is assumed and estimated.
d) Reserve for loss on construction
defects
Reserve for loss on construction defects
is provided for the amount equivalent to
cover future defect expenses based upon the
estimated repair costs for construction defects
for soil investment projects.
(4) Retirement benefits
Liabilities for retirement benefits has been
provided on an accrual basis as of the balance sheet
date based on an estimate of the projected benefit
obligation and the employees' pension plan assets.
To calculate projected benefit obligation, the
benefit formula method is used to allocate expected
retirement benefit payments to the each period
through current fiscal year-end.
Actuarial gain or loss is amortized by the
straight-line method over a defined period (13
years), not exceeding t h e a v e r a g e r e m a i n i n g
service period of the employees from the next fiscal
year after the incurrence.
Certain consolidated subsidiaries apply the
simplified method which assumes retirement benefit
obligation to be equal to the benefits payable
assuming voluntary retirement of all employees at
fiscal year-end.
(5) Recognition of contract revenue and cost
The Companies adopt the percentage-of-
completion method for revenue recognition for the
construction-type contracts where the outcome of
the construction activities by the end of this year
can be reliably estimated.
Completion method is adopted otherwise. The
percentage of completion is measured by the ratio
of the costs incurred to the estimated total costs for
each contract.
(6) Hedge accounting
Gains or losses arising from changes in fair
value of the derivatives designated as “hedging
instruments” are deferred as a component of net
assets and included in net income or loss in the
same period during which the gains and losses on
the hedged items or transactions are recognized.
For interest rate swaps, if certain hedging
criteria are met, interest rate swaps are not
recognized at their fair values but an alternative
(short-cut) method under Japanese accounting
standards in applied by which the amounts received
or paid for such interest swap arrangements are
recognized as interest over the life of each of the
arrangements.
The derivatives designated as hedging
instruments by the Companies are principally
interest swaps and forward exchange contracts.
The related hedged item is bank loans and foreign
currency monetary liabilities and forecasted
transactions.
The Companies have a policy to utilize the
above hedging instruments in order to reduce
the Company's exposure to the risk of interest
rate fluctuation and foreign exchange fluctuation.
Thus, the Company's purchases of the hedging
instruments are limited to, at maximum, the
amounts of the hedged items.
The Companies evaluate effectiveness of its
hedging activities by reference to the accumulated
gains or losses on the hedging instruments and the
related hedged items from the commencement of
the hedges.
(7) Scope of cash and cash equivalents
Cash and cash equivalents in the consolidated
statement of cash flows and composed of cash
on hand, bank deposits which are able to be
withdrawn on demand and short-term investment
with an original maturity of three months or less and
which represent a minor risk of fluctuation in value.
(8) Consumption taxes
Transactions subject to consumption taxes are
recorded at amounts exclusive of consumption taxes.
(9) U.S. Dollar amounts
The dollar amounts included in the financial
statements and notes thereto represent the
arithmetical results of translating yen to dollars
at rate of ¥106=US$1, the approximated rate of
exchange prevailing on March 31, 2018. The
inclusion of such dollar amounts is solely for the
convenience of readers outside of Japan and is not
intended to imply that yen and assets and liabilities
originating in Yen have been or could be readily
converted, realized or settled in dollars at this or
any other rates.
Amounts less than one thousand have been
rounded down to the nearest thousand dollars.
2.Issued but not yet adopted
accounting standard and others
Accounting Standard and Implementation
Guidance on Revenue Recognition.
O n M a r c h 3 0 , 2 0 1 8 , t h e A S B J i s s u e d
"Accounting Standard for Revenue Recognition"
(ASBJ Statement No. 29) and "Implementation
Guidance on Accounting Standard for Revenue
Recognition" (ASBJ Guidance No. 30).
(1) Overview
This is a comprehensive accounting standard
for revenue recognition. Specifically, the accounting
standard establishes the 'following five-step model
that will apply to revenue from customers:
1. Identify the contract(s) with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance
obligations in the contract
5. Recognize revenue when (or as) the entity satisfies a
performance obligation
(2) Scheduled date of adoption
The Company expects to adopt the accounting
standard and implementation guidance from the
beginning of the fiscal year ending March 31, 2022.
(3) Impact of the adoption of accounting
standard and implementation guidance
The Company is currently evaluating the effect
of the adoption of this accounting standard and
implementation guidance on its 'consolidated
financial statements.
3.Changes in Presentation
The Companies have changed the presentation
of items in the consolidated statement of operations
as follows:
Exchange gain (loss), net presented separately
in the previous year, is included in Other, net of
Other income (expenses) in the current year.
Additional severance payment and Comission
fee included in Other, net of Other income
(expenses) in the previous year, is presented
separately in the current year.
To reflect this change in presentation, the
Companies reclassified items of previous year in
the consolidated statement of operations for the
current year.
Consequently, Exchange gain (loss), net in the
amount of ¥(88) million was included in Other, net
and Additional severance payment and Comission
fee were newly shown in the amount of ¥(78) million
and ¥(42) million. Also Other, net of Other income
(expenses) in the previous year was shown in the
amount of ¥(125) million, compared with ¥(158)
million previously presented.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
4.Notes to Consolidated Balance Sheet
Ⅰ .Cost on construction contracts in progress and other
Cost on construction contracts in progress and other as of March 31, 2018 and 2017 consisted of:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Cost on construction contracts in progress ¥4,702 ¥5,605 $44,367
PFI projects 1,152 1,353 10,868
Other inventories 611 744 5,766
Cost on construction contracts in progress and other ¥6,466 ¥7,703 $61,001
Ⅱ .Reserve for loss on construction works
Cost on construction contracts in progress and reserve account in relation to the construction works, which loss is assumed, are
represented in current assets and liabilities, respectively without setoff.
Among cost on construction contracts in progress, amount in aggregate corresponding to reserve for loss on construction works as of March
31, 2018 and 2017 are as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
¥249 ¥625 $2,353
Ⅲ .Investments in securities
Among investments in securities, amount in aggregate corresponding to unconsolidated subsidiaries and affiliates as of March 31, 2018 and
2017 are as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Investments in affiliates ¥252 ¥247 $2,381
Ⅳ .Revaluation of land
In accordance with the "Act on Revaluation of Land" (Act No.34 promulgated on March 31, 1998) and the "Act on Partial Revision of the Act on
Revaluation of Land" (Act No.19 promulgated on March 31, 2001), the Company revalued its land held for the business purpose and accounted
for the amount equivalent to tax related to this differences on revaluation as "deferred tax liabilities on revaluation of land" in liabilities and accounted
for the amount that tax amount were deducted from the differences on revaluation as "revaluation reserve for land" in net assets.
Furthermore, reviewing a collectability of "deferred tax assets for land revaluation" individually, among the amount equivalent to tax related to the
differences on revaluation of land, the amount that were difficult to anticipate collectability were reduced from "revaluation reserve for land".
Revalued method
The Company revalued its land held for business purposes based on the value appraised by an appraiser, as regulated by Article No.2-4 of the
"Enforcement Ordinance of the Law Concerning Land Revaluation (Article No.119 issued on March 31, 1998) with certain necessary adjustments.
Revalued date March 31, 2002
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Differences of the land after revaluation exceeded its fair value ¥4,066 ¥4,230 $38,363
Ⅴ .Assets pledged as collateral and secured liabilities
Assets pledged as collateral and secured liabilities as of March 31, 2018 and 2017 were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
Assets pledged as collateral: 2018 2017 2018
Current assets
Other current assets ¥28 ¥27 $264
Investment and other assets
Investment in securities 1,900 1,996 17,925
Long-term loans 194 221 1,835
Total ¥2,122 ¥2,245 $20,024
As of March 31, 2018, the assets listed above are pledged as collateral to secure contingent liabilities amounting to ¥1,707million
(US$16,109 thousand) and liabilities based on the loan agreements with credit line between 12 PFI companies and financial institutions.
As of March 31, 2017, secured liabilities were in the amount of ¥1,686 million and liabilities were for 12 PFI companies.
Ⅵ .Securities lent
Among investment in securities, securities were lent to financial institution under the security lending agreement at March 31, 2018 and 2017 were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
¥174 ¥157 $1,642
Ⅶ .Commitments and contingent liabilities
(a)The Companies are contingently liable for the following as of March 31, 2018 and 2017:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Employees (Loan guarantee to bank) ¥22 ¥18 $211
National Federation of Promotion for Fishing Ports and Villages 86 109 816
Fisheries Cooperative Association (Loan guarantee)
Others 53 299 500
Total ¥161 ¥427 $1,528
(b) A lawsuit has been brought against the Company seeking damages (totaling ¥1,206 million (US$11,378 thousand)) for alleged defects
in building construction work (construction completed in 1997) by a client, and the case is currently pending in the Tokyo District Court.
However, it is the Company's position that it bears no liability for any defect, and the Company has filed a counterclaim. This litigation is
ongoing. It is not possible to predict the outcome of the litigation at this time.
(c) In relation to an overseas construction project completed in 2015, a subcontractor filed a Request for Arbitration and Statement of Claim
seeking additional payment in the amount of approximately ¥1,018 million with an International Arbitration Center. The Company then filed
a Statement of Defence and Counterclaim seeking contra charges in the amount of approximately ¥443 million. It is not possible to predict
the outcome of the arbitration at this time.
Ⅷ .Short-term borrowings
The Company had commitment lines for efficient financial arrangement from 7 banks at March 31, 2018 and 2017 as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Total amount of contracts of commitment lines ¥20,000 ¥20,000 $188,679
Outstanding borrowings — — —
Balance ¥20,000 ¥20,000 $188,679
Ⅸ .Non-recourse debt
The following non-recourse debts are included in current portion of long-term debt and long-term debt with PFI business pledged as
collateral. The amount of non-recourse debts as of March 31, 2018 and 2017 are as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Non-recourse debt included in current portion of long term debt ¥567 ¥606 $5,358
Non-recourse debt included in long-term debt 1,746 2,314 16,474
Total ¥2,314 ¥2,920 $21,832
The amount of PFI assets pledged as collateral for non-recourse debt as of March 31, 2018 and 2017 are as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
¥4,570 ¥5,129 $43,117
X .Notes receivable and notes payables
On March 31, 2018, financial institutions were on a holiday in Japan, and therefore the following notes receivable and payable maturing on
that date were included in the balance sheet and were settled on the next business day.
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Notes receivable ¥26 — $245
Notes payable 103 — 980
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
5.Notes to Consolidated Statement of Operations
Ⅰ .Net sales
The amounts of contract revenue which are accounted for by the percentage-of-completion method were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
¥148,177 ¥154,130 $1,397,898
Ⅱ .Loss on valuation of inventory
The ending inventory was the carrying value after writing down due to the decreased profitability. Among the cost of sales, amount in
aggregate corresponding to loss on valuation of inventory were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
¥123 ¥25 $1,163
Ⅲ .Reserve for loss on construction works
Among the cost of sales, amount in aggregate corresponding to reserve for loss on construction works were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
¥438 ¥1,771 $4,140
Ⅳ .Selling, general and administrative expenses
The significant items of selling, general and administrative expenses were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Salaries to employees ¥4,271 ¥4,285 $40,298
Expenses for retirement benefits for employees 271 219 2,557
Research expenses 891 763 8,414
Provision for doubtful accounts, trade (0) 2 (0)
Ⅴ .Research and development expenses
Among the general and administrative expenses and the cost on contract, amount in aggregate corresponding to research and
development expenses were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
¥960 ¥896 $9,063
Ⅵ .Gain on sale of fixed assets
The breakdown of the gain on sale of fixed assets were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Land ¥51 ¥ — $489
Vessels 24 14 234
Buildings 3 — 37
Others 0 65 4
Total ¥81 ¥79 $766
Ⅶ .Loss on sale of fixed assets
The breakdown of the loss on disposition of fixed assets were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Tools and fixture ¥5 ¥— $50
Land 0 70 2
Buildings — 113 —
Total ¥5 ¥184 $53
Ⅷ .Loss on disposal of fixed assets
The breakdown of the loss on retirement of fixed assets were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Buildings and structures ¥37 ¥12 $351
Others 0 0 3
Total ¥37 ¥13 $355
Ⅸ .Impairment of fixed assets
For the year ended March 31, 2018, the Companies recognized losses on impairment of the following assets:
Use Type of assets Location Number of groups
Idle properties Land and building Hiroshima and others 5
The construction business assets were grouped by each branch unit, the real estate leasing assets and the idle properties were grouped
by each individual objective.
The carrying amount of the relevant assets was written down to the recoverable value due to the drop in fair value and ¥59 million (US$565
thousand) was accounted for as loss on impairment of fixed assets, which consisted of ¥58 million (US$551 thousand) for Land, ¥1 million
(US$14 thousand) for buildings.
Meanwhile, the recoverable value of the relevant assets was based on the anticipated net sale value. Furthermore, the anticipated net
sale value of land whose carrying amount was significant was applied to the appraisal value by the licensed real-estate appraiser.
For the year ended March 31, 2017, the Companies recognized losses on impairment of the following assets:
Use Type of assets Location Number of groups
Idle properties Machinery and equipment and others Tokyo and others 4
The construction business assets were grouped by each branch unit, the real estate leasing assets and the idle properties were grouped
by each individual objective.
The carrying amount of the relevant assets was written down to the recoverable value due to the drop in fair value and ¥332 million was
accounted for as loss on impairment of fixed assets, which consisted of ¥191 million for machinery and equipment, ¥103 million for Tools
and Fixtures, ¥23 million for land and ¥13 million for others.
Meanwhile, the recoverable value of the relevant assets was based on the anticipated net sale value. Furthermore, the anticipated net
sale value of land whose carrying amount was significant was applied to the appraisal value by the licensed real-estate appraiser.
X .Loss on construction defects
The Company recognized a loss for repair costs and other incurred for a construction defect for a soil improvement project.
6.Notes to Consolidated Statement of Comprehensive Income (Loss)
Reclassifications adjustments and tax effects in relation to the other comprehensive income were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Unrealized gains (losses) on securities:
Amount arising during the year ¥635 ¥1,738 $5,996
Amount of reclassification adjustments (0) 0 (0)
Amount before tax effect 635 1,738 5,996
Tax effect (194) (511) (1,836)
Unrealized gains (losses) on securities 441 1,227 4,160
Deferred gains (losses) on hedges:
Amount arising during the year (25) — (238)
Amount of reclassification adjustments — (3) —
Amount before tax effect (25) (3) (238)
Tax effect 7 1 73
Deferred gains (losses) on hedges (17) (2) (165)
Revaluation reserve for land:
Tax effect (1) — (14)
Revaluation reserve for land (1) — (14)
Retirement benefits liability adjustments:
Amount arising during the year 557 1,035 5,263
Amount of reclassification adjustments 299 106 2,820
Amount before tax effect 856 1,142 8,084
Tax effect (261) (349) (2,471)
Retirement benefits liability adjustments 594 792 5,612
Total other comprehensive income ¥1,016 ¥2,017 $9,593
7.Notes to Consolidated Statement of Changes in Net Assets
Ⅰ. Type and number of shares
For the year ended March 31, 2018
Thousands of shares
Type of shares Number of shares
at beginning of year Increase Decrease Number of shares
at end of year
Issued stock
Common stock 22,494 — — 22,494
Treasury stock
Common stock 1,593 0 — 1,594
Notes: The principal details for increase and decrease in treasury stock were as follows:
Increase due to purchase of odd stock 0 thousand shares
For the year ended March 31, 2017
Thousands of shares
Type of shares Number of shares
at beginning of year Increase Decrease Number of shares
at end of year
Issued stock
Common stock 224,946 — 202,451 22,494
Treasury stock
Common stock 15,923 3 14,332 1,593
Notes: The Company completed a reverse stock split of its common stock, at ratio of 1 share for 10 shares on October 1, 2016.
Notes: The principal details for decrease in issued stock were as follows:
Decrease due to reverse stock split 202,451 thousand shares
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
Notes: The principal details for increase and decrease in treasury stock were as follows:
Increase due to purchase of odd stock 3 thousand shares
Detail) before reverse stock split 2 thousand shares
after reverse stock split 1 thousand shares
Decrease due to reverse stock split 14,332 thousand shares
Ⅱ. Dividend payment
For the year ended March 31, 2017
Millions of
Japanese Yen
Resolution Type of share Dividend
resource
Total amount
of dividends
Cash dividends
per share (Yen) Record date Effective date
Annual Shareholders'
Meeting held on
June 29, 2016
Common
stock
Retained
earnings ¥850 ¥4 March 31,
2016
June 30,
2016
Notes: Cash dividends per share is based on the dividend before reverse stock split effective from October 1, 2016.
Ⅲ. Among dividends whose record date belong in the current fiscal year, dividends which become effective in the following fiscal
year was as follows:
For the year ended March 31, 2018
Millions of
Japanese Yen Thousands of
U.S. Dollars
Resolution Type of share Dividend
resource
Total amount
of dividends
Cash dividends
per share (Yen)
Total amount
of dividends
Cash dividends
per share (Dollars) Record date Effective date
Annual Shareholders'
Meeting held on
June 28, 2018
Common
stock
Retained
earnings ¥425 ¥20 $4,009 $0.18 March 31,
2018
June 29,
2018
8.Notes to Consolidated Statement of Cash Flows
Cash and cash equivalents consisted of:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Cash and bank deposits ¥36,682 ¥28,217 $346,063
Time deposits due over three months (30) (30) (286)
Cash and cash equivalents ¥36,652 ¥28,187 $345,776
9.Leases
Operating lease
The scheduled maturities of future operating lease payments, including an interest portion on such lease contracts as of March 31, 2018
and 2017, are as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Due within one year ¥139 ¥144 $1,314
Due over one year 372 509 3,517
Total ¥512 ¥654 $4,832
10.Financial Instruments
Ⅰ. Summary of financial instruments
a) Policy for financial instruments
The Companies limit its fund management to low-risk financial instruments, such as bank deposits in a short period and have a
policy to raise low-interest funds through bank borrowings flexibly. The Companies utilize derivatives in order to reduce the risk of
fluctuation in interest rates and foreign exchange rates for debts and credits in foreign currencies. The Companies, furthermore, utilize
the hedging instruments for the purpose of stabilizing the cost on contracts and do not enter into derivatives for speculative purpose.
b) Contents of financial instruments, related risk and risk management
Notes and accounts receivable which categorized into operating receivables are exposed to client's credit risk.
These risks are reviewed at entering into contract and the concerned counterparts are managed by the administration headquarters
in each case.
Investments in securities are exposed to fluctuation risks of market price.
Those securities are mainly shares of other companies with which the Company has business relationships and the Company
monitors the monthly fair value.
Among the debt, short-term borrowings are principally applicable to funds for business activities and long-term debt (maturities are
within five years in principle) are funds for capital investments. Long-term debt with variable interest rates are exposed to the risk of
interest rate fluctuation. The Company utilizes derivatives which are the interest swaps in each contracts in order to avoid fluctuation
risk of interest expenses and stabilize interest cost. In addition, the Company utilizes foreign currency exchange contracts to hedge
foreign currency exposure of certain transactions related to construction work denominated in foreign currency.
Conducting of derivative transactions is managed by gaining approval by directors and derivatives provided by the highly-rated
financial institutions are utilized in order to avoid credit risk.
c) Supplemental explanation for fair value of financial instruments
Notional amounts of derivatives are not indicative of the actual market risk involved in derivative transactions.
Ⅱ. Fair value of financial instruments
As of March 31, 2018, carrying amount, fair value and unrealized gain (loss) are as follows:
Carrying
amount Fair value Unrealized
gain (loss)
Carrying
amount Fair value Unrealized
gain (loss)
Millions of Japanese Yen Thousands of U.S. Dollars
Cash and bank deposits ¥36,682 ¥36,682 ¥— $346,063 $346,063 $—
Notes and accounts receivable, trade 79,344 79,344 — 748,534 748,534 —
Advanced money 7,524 7,524 — 70,987 70,987 —
Investments in securities
Held-to-maturity debt securities 15 15 0 141 141 0
Other securities 12,724 12,724 — 120,045 120,045 —
Total assets 136,291 136,291 0 1,285,772 1,285,773 0
Notes and accounts payable, trade 34,351 34,351 — 324,067 324,067 —
Electronically recorded obligations, operating 13,556 13,556 — 127,890 127,890 —
Short-term borrowings 8,516 8,516 — 80,339 80,339 —
Deposits received 14,019 14,019 — 132,256 132,256 —
Long-term debt (*1) 20,116 20,235 119 189,774 190,898 1,123
Total liabilities 90,558 90,677 119 854,328 855,452 1,123
Derivative transactions (*2) ¥25 ¥25 ¥— $238.0 $238.0 $—
(*1) Current portion of long-term debt of ¥5,412 million (US$51,058 thousand) is included in long-term debts and carrying amount and fair
value are represented.
(*2) The assets and liabilities are reported as net amount.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
As of March 31, 2017, carrying amount, fair value and unrealized gain (loss) are as follows:
Carrying
amount Fair value Unrealized
gain (loss)
Millions of Japanese Yen
Cash and bank deposits ¥28,217 ¥28,217 ¥—
Notes and accounts receivable, trade 78,287 78,287 —
Advanced money 10,965 10,965 —
Investments in securities
Held-to-maturity debt securities 15 15 0
Other securities 12,061 12,061 —
Total assets 129,548 129,548 0
Notes and accounts payable, trade 31,012 31,012 —
Electronically recorded obligations, operating 8,429 8,429 —
Short-term borrowings 8,463 8,463 —
Deposits received 11,937 11,937 —
Long-term debt ( * ) 20,732 20,927 195
Total liabilities 80,575 80,771 195
Derivative transactions ¥— ¥— ¥—
( * ) Current portion of long-term debt of ¥5,535 million is included in long-term debts and carrying amount and fair value are represented.
a) Computation of fair value for financial instruments, investment in securities and derivative transactions
Assets
Cash and bank deposits, and advanced money in other current assets
Those accounts are carrying value, since those are settled in a short period and their fair value is equivalent to carrying amount
approximately.
Notes and accounts receivable, trade
The most of its account are carrying value, since those are settled in a short period and their fair value is equivalent to carrying
amount approximately.
Investments in securities
Fair value of investments in securities is based on market price at Stock Exchange or asking price from correspondent financial institution.
Liabilities
Notes and accounts payable, trade, electronically recorded obligations, operating, short-term borrowings, and deposits received
in other current liabilities.
Those accounts are carrying value, since those are settled in a short period and their fair value is equivalent to carrying amount
approximately.
Long-term debt
Fair value of long-term debt with variable interest rates is approximately equal to the book value because it reflects market interest
rates in the short term.
Fair value of long-term debt with fixed rates is based on the present value of the total of principal and interest discounted by the
interest rate to be applied in the event that similar new loans were entered into.
In addition, certain long-term debt with variable interest rates is hedged by interest rate swaps subject to the special treatment.
The total amount of the principal and interest together with the corresponding interest rate swap is discounted using the interest rate
to be applied, in the event that similar new loans were entered into.
Derivative Transactions
Please refer to Note 12, Derivative Transactions, of the notes the consolidated financial statement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
b) Financial instruments for which it is extremely difficult to determine fair value
Unlisted stocks are not included in Investments in securities, since those have no market price and it is extremely difficult to determine fair value.
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Unlisted stocks ¥1,884 ¥1,911 $17,775
c) Projected redemption
The projected redemption of monetary claim as of March 31, 2018 were as follows:
within one
year
over
one year
within five
years
over
five years
within ten
years
over ten
years within one
year
over
one year
within five
years
over
five years
within ten
years
over ten
years
Millions of Japanese Yen Thousands of U.S.Dollars
Cash and bank deposits ¥36,682 ¥— ¥— ¥— $346,063 $— $— $—
Notes and accounts
receivable, trade 74,681 4,641 21 — 704,546 43,786 201 —
Investments in securities
Held-to-maturity debt securities
(Governmental bonds) 15 — — — 141 — — —
Other securities with maturities
(Governmental bonds) — 43 — — — 405 — —
Total ¥111,379 ¥4,684 ¥21 ¥— $1,050,751 $44,192 $201 $—
The projected redemption of monetary claim as of March 31, 2017 were as follows:
within one
year
over
one year
within five
years
over
five years
within ten
years
over ten
years
Millions of Japanese Yen
Cash and bank deposits ¥28,135 ¥— ¥— ¥—
Notes and accounts
receivable, trade 74,387 3,730 169 —
Investments in securities
Held-to-maturity debt securities
(Governmental bonds) — 15 — —
Other securities with maturities
(Governmental bonds) — — 43 —
Total ¥102,522 ¥3,745 ¥212 ¥—
d) The projected repayment of short-term borrowings, long-term debt and lease obligation as of March 31, 2018 were as follows:
within one
year
over
one year
within two
years
over
two years
within three
years
over
three years
within four
years
over
four years
within five
years
over five
years
Millions of Japanese Yen
Short-term borrowings ¥8,516 ¥— ¥— ¥— ¥— ¥—
Long-term debt 5,412 5,157 4,787 3,495 1,243 20
Lease obligation 139 124 122 99 — —
Total ¥14,067 ¥5,281 ¥4,909 ¥3,595 ¥1,243 ¥20
within one
year
over
one year
within two
years
over
two years
within three
years
over
three years
within four
years
over
four years
within five
years
over five
years
Thousands of U.S. Dollars
Short-term borrowings $80,339 $— $— $— $— $—
Long-term debt 51,058 48,651 45,163 32,977 11,734 189
Lease obligation 1,315 1,178 1,155 940 — —
Total $132,713 $49,830 $46,318 $33,918 $11,734 $189
The projected repayment of short-term borrowings, long-term debt and lease obligation as of March 31, 2017 were as follows:
within one
year
over
one year
within two
years
over
two years
within three
years
over
three years
within four
years
over
four years
within five
years
over five
years
Millions of Japanese Yen
Short-term borrowings ¥8,463 ¥— ¥— ¥— ¥— ¥—
Long-term debt 5,535 5,333 3,941 3,572 2,280 68
Lease obligation 19 17 2 — — —
Total ¥14,018 ¥5,350 ¥3,944 ¥3,572 ¥2,280 ¥68
11.Securities
(1) The following is certain information related to the aggregate acquisition costs, carrying amount and fair value of securities.
At March 31, 2018
Millions of Japanese Yen Thousands of U.S. Dollars
Acquisition
cost Fair value
(Carrying value) Unrealized
gain (loss) Acquisition
cost Fair value
(Carrying value) Unrealized
gain (loss)
Held-to-maturity debt securities whose consolidated
balance sheet amount exceeds its acquisition cost
Government bond ¥15 ¥15 ¥0 $141 $141 $0
Sub total 15 15 0 141 141 0
The securities whose consolidated balance sheet amount
does not exceed its acquisition cost
Government bond — — — — — —
Sub total — — — — — —
Total ¥15 ¥15 ¥0 $141 $141 $0
Millions of Japanese Yen Thousands of U.S. Dollars
Acquisition
cost Fair value
(Carrying value) Unrealized
gain (loss) Acquisition
cost Fair value
(Carrying value) Unrealized
gain (loss)
Other securities whose consolidated balance sheets
amount exceeds its acquisition cost
Stock ¥5,702 ¥12,392 ¥6,689 $53,801 $116,906 $63,105
Government bond 39 43 3 376 405 29
Sub total 5,742 12,435 6,692 54,177 117,312 63,134
The securities consolidated balance sheets amount does
not exceed its acquisition cost
Stock 406 289 (117) 3,838 2,733 (1,105)
Government bond — — — — — —
Sub total 406 289 (117) 3,838 2,733 (1,105)
Total ¥6,149 ¥12,724 ¥6,575 $58,016 $120,045 $62,029
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
At March 31, 2017
Millions of Japanese Yen
Acquisition
cost
Fair value
(Carrying value) Unrealized
gain (loss)
Held-to-maturity debt securities whose consolidated balance
sheet amount exceeds its acquisition cost
Government bond ¥15 ¥15 ¥0
Sub total 15 15 0
The securities whose consolidated balance sheet amount
does not exceed its acquisition cost
Government bond — — —
Sub total — — —
Total ¥15 ¥15 ¥0
Millions of Japanese Yen
Acquisition
cost
Fair value
(Carrying value) Unrealized
gain (loss)
Other securities whose consolidated balance sheets amount
exceeds its acquisition cost
Stock ¥5,617 ¥11,622 ¥6,005
Government bond 39 43 3
Sub total 5,656 11,665 6,008
The securities consolidated balance sheets amount does not
exceed its acquisition cost
Stock 464 396 (68)
Government bond — — —
Sub total 464 396 (68)
Total ¥6,121 ¥12,061 ¥5,940
(2) Other securities sold during the financial years ended March 31, 2018 and 2017 were as follows:
At March 31, 2018
Millions of Japanese Yen Thousands of U.S. Dollars
Sales Gain on
sales Loss from
sales Sales Gain on
sales Loss from
sales
Stock ¥0 ¥0 ¥— $0 $0 $—
Other — — — — — —
Total ¥0 ¥0 ¥— $0 $0 $—
At March 31, 2017
Millions of Japanese Yen
Sales Gain on
sales Loss from
sales
Stock ¥0 ¥— ¥0
Other — — —
Total ¥0 ¥— ¥0
12.Derivative Transactions
Derivative transactions for the year ended March 31, 2018 were classified into:
a) Hedge accounting unapplied
Not applicable
b) Hedge accounting applied
Notional amounts and fair value conditioned on contracts in each hedge accounting method are as follows:
Interest Rate related derivatives
Millions of Japanese Yen Thousands of U.S. Dollars
Hedge accounting
method Types of derivative Hedged item Notional
amount Maturing over
one year Fair value Notional
amount Maturing over
one year Fair value
Accounting in
principle
Interest rate swaps
Pay/fixed and receive/
floating
Long-term
debt ¥2,912 ¥2,576 ¥25
(*1) $27,476 $24,306 ¥238
(*1)
Short-cut Interest rate swaps
Pay/fixed and receive/
floating
Long-term
debt ¥4,162 ¥2,263 (*2) $39,264 $21,356 (*2)
(*1) Fair value is calculated based on presented price by correspondent financial institution.
(*2) Fair value based on the short-cut method is included in fair value of these long-term debt, since the derivative transactions are
treated with the hedged long-term debts collectively.
Derivative transactions for the year ended March 31, 2017 were classified into:
a) Hedge accounting unapplied
Not applicable
b) Hedge accounting applied
Notional amounts and fair value conditioned on contracts in each hedge accounting method are as follows:
Interest Rate related derivatives
Millions of Japanese Yen
Hedge accounting
method Types of derivative Hedged item Notional
amount Maturing over
one year Fair value
Short-cut Interest rate swaps
Pay/fixed and receive/
floating
Long-term
debt ¥8,580 ¥5,504 ( * )
( * ) Fair value based on the short-cut method is included in fair value of these long-term debt, since the derivative transactions are
treated with the hedged long-term debts collectively.
13.Reserve for Retirement Benefits and Pension Plan
The Company and some of its consolidated subsidiaries have the funded/unfunded defined benefit retirement plans.
The Company has the funded defined benefit plan, the cash balance plan and sets up the retirement benefit trust.
Some consolidated subsidiaries have the unfunded retirement lump sum plans.
Furthermore, additional severance payment covering substantially all employees.
(1)The changes in the retirement benefit obligation during the year ended March 31, 2018 and 2017 are as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Retirement benefit obligation balance at the beginning of the year ¥21,596 ¥22,283 $203,742
Service cost 776 797 7,328
Interest cost 107 96 1,015
Actuarial gain 418 (466) 3,943
Retirement benefit paid (1,413) (1,113) (13,336)
Retirement benefit obligation balance at the end of the year ¥21,485 ¥21,596 $202,693
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
(2)The changes in plan assets during the year ended March 31, 2018 and 2017 are as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Plan assets balance at the beginning of the year ¥17,160 ¥16,697 $161,891
Expected return on plan assets 215 204 2,037
Actuarial loss 975 569 9,207
Contributions by the Company 1,640 799 15,478
Retirement benefits paid (1,397) (1,110) (13,182)
Plan assets balance at the end of the year ¥18,595 ¥17,160 $175,432
(3)The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as of March 31, 2018
and 2017 for the Company’s and the consolidated subsidiaries’ defined benefit plans:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Funded retirement benefit obligation ¥21,070 ¥21,210 $198,776
Plan assets at fair value (18,595) (17,160) (175,432)
2,474 4,049 23,344
Unfunded retirement benefit obligation 415 386 3,917
Net liability for retirement benefits in the balance sheet 2,889 4,436 27,261
Liability for retirement benefits 2,889 4,436 27,261
Net liability for retirement benefits in the balance sheet ¥2,889 ¥4,436 $27,261
(4)The components of retirement benefit expense for the year ended March 31, 2018 and 2017 are as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Service cost ¥776 ¥797 $7,328
Interest cost 107 96 1,015
Expected return on plan assets (215) (204) (2,037)
Amortization of actuarial loss 299 106 2,820
Other 46 78 439
Retirement benefit expense ¥1,014 ¥874 $9,566
Notes:
1. Service cost does not include the amounts contributed by employees with respect to welfare pension fund plans.
2. Retirement benefit expenses for consolidated subsidiaries adopting the simplified method which assumes retirement benefit obligation to be equal
to the benefits payable if all eligible employees voluntarily terminated their employment at fiscal year end are included in “Service cost.”
(5)Unrecognized actuarial gain included in other comprehensive income (before tax effect) as of March 31, 2018 and 2017 are as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Actuarial gain (loss) ¥856 ¥1,142 $8,084
(6)Unrecognized actuarial gain (loss) included in accumulated other comprehensive income (before tax effect) as of March 31, 2018 and 2017 are as
follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Unrecognized actuarial gain (loss) ¥1,235 ¥2,092 $11,653
(7)The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2018 and 2017 are as follows:
2018 2017
Stocks 43% 42%
Bonds 28% 38%
General account assets 16% 17%
Other 13% 3%
Total 100% 100%
The expected return on assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns
on assets held in each category.
(8)The assumptions used in accounting for the above plans as of March 31, 2018 and 2017 were as follows:
(Weighted average)
2018 2017
Discount rate 0.4% 0.5%
Expected rate of return on plan assets 2.0% 2.0%
Expected rate of future salary increase 2.6%~6.9% 2.3%~6.8%
14.Tax Effect Accounting
1.The significant components of deferred tax assets and liabilities at March 31, 2018 and 2017 were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Deferred Tax Assets:
Net liability for retirement benefits ¥1,874 ¥2,243 $17,681
Loss carried forward 1,106 — 10,442
Reserve for loss on construction works 330 689 3,114
Accrued bonus to employees 501 457 4,731
Unrealized losses on securities 201 175 1,902
Loss on valuation of utility rights 258 258 2,437
Loss on valuation of investment in securities 170 169 1,610
Loss on impairment of fixed assets 314 511 2,965
Loss on construction defects 3,299 4,334 31,129
Others 3,024 3,156 28,532
Deferred tax assets ¥11,082 ¥11,997 $104,550
Valuation allowance (¥1,686) (¥1,878) (15,914)
Deferred Tax Liabilities: ¥9,395 ¥10,119 88,635
Revaluation reserve for land (¥545) (¥545) (5,146)
Unrealized gains on securities (2,142) (1,921) (20,211)
Other (82) (90) (781)
Deferred tax liabilities (2,770) (2,557) ($26,139)
Net Deferred Tax Assets ¥6,628 ¥7,561 $62,495
(Note) Net deferred tax assets were included in the following items.
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Current assets - Deferred tax assets ¥6,048 ¥7,407 $57,061
Investments and other assets - Deferred tax assets 1,197 773 11,298
Current liabilities - Other current liabilities 61 67 582
Long-term liabilities - Other long-term liabilities 559 552 5,282
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
2. A reconciliation between the normal effective statutory tax rates for the years ended March 31, 2018 and 2017, and the actual effective tax
rates reflected in the accompanying consolidated statements of operations is as follows:
2018 2017
Normal effective statutory tax rate 30.9% —
Expenses not deductible for income tax purposes 7.2 —
Non-taxable income (1.0) —
Per capita levy of inhabitant taxes 4.4 —
Change in valuation allowance (11.3) —
Other-net 0.5 —
Actual effective tax rates 30.7% —
Information of a reconciliation between the normal effective statutory tax rate and the actual effective tax rate for the years ended March 31, 2017
have been omitted, because the Company reported loss before income taxes in Consolidated Financial Statements.
15.Asset Retirement Obligations
Because of insignificant amounts in asset retirement obligations, the Companies have omitted notation in the Notes to Consolidated
Financial Statements for the years ended March 31, 2018 and 2017.
16.Investment and Rental Property
Because of insignificant amounts in investment and rental property, the Companies have omitted notation in the Notes to Consolidated
Financial Statements for the year ended March 31, 2018 and 2017.
17.Information on Various Segments
Ⅰ. Outline of the reportable segments
The reportable segments of the Companies are components for which discrete financial information is available and prepared for the
regular review, so that the board of directors can make decisions on the distribution of management resources and evaluate the operating
performance. The Company comprises "Civil Engineering General Headquarters" and "Building Construction General Headquarters", which
control domestic construction businesses, and "International Division" for overseas businesses. Those Headquarters and International Division
develop strategies comprehensively in each line of business and expand business activities.
Accordingly, the Company's businesses consist of segments classified by products and services based on the headquarters.
The reportable segments are composed of "Domestic Civil Engineering Businesses", "Domestic Architectural Businesses", "Overseas
Businesses" and principal activities in each segment are the following:
1) Domestic Civil Engineering Businesses: domestic civil engineering contracts, contracts related to design and others
2) Domestic Architectural Building Businesses: domestic architectural contracts, contracts related to design and others
3) Overseas Businesses: general overseas contracts
Ⅱ .Computation for the amount of net sales, profits or losses and other items in each reportable segment
The accounting policies of the reportable segments are substantially equivalent to the description in Significant Respects for the Basis of
Preparing Consolidated Financial Statements. Intersegment net sales and transfers are based on the current market price. Meanwhile, assets
are not allocated to the business segments.
Ⅲ .Information on net sales, profits or losses and other items in the reportable segments
For the year ended March 31, 2018
Millions of Japanese Yen
Reportable Segments
Domestic
Civil
Engineering
Domestic
Architectural
Building Overseas Total Others
(Note 1) Total Adjustments
(Note 2) Consolidated
(Note 3)
Net sales:
External customers ¥74,939 ¥53,035 ¥23,217 ¥151,192 ¥9,852 ¥161,045 ¥ — ¥161,045
Inter-segment 159 67 — 226 19,841 20,067 (20,067) —
Total ¥75,098 ¥53,102 ¥23,217 ¥151,419 ¥29,693 ¥181,113 (¥20,067) ¥161,045
Segment profits or losses 2,223 2,206 961 5,390 807 6,198 (3,318) 2,879
Other items
Depreciation and amortization ¥437 ¥0 ¥570 ¥1,008 ¥460 ¥1,468 ¥302 ¥1,771
For the year ended March 31, 2018
Thousands of U.S. Dollars
Reportable Segments
Domestic
Civil
Engineering
Domestic
Architectural
Building Overseas Total Others
(Note 1) Total Adjustments
(Note 2) Consolidated
(Note 3)
Net sales:
External customers $706,980 $500,335 $219,033 $1,426,348 $92,944 $1,519,294 $ — $1,519,294
Inter-segment 1,500 633 — 2,133 187,187 189,320 (189,320) —
Total $708,480 $500,968 $219,033 $1,428,482 $280,131 $1,708,614 ($189,320) $1,519,294
Segment profits or losses 20,971 20,811 9,071 50,854 7,618 58,474 (31,305) 27,168
Other items
Depreciation and amortization $4,123 $8 $5,386 $9,517 $4,340 $13,858 $2,853 $16,712
Notes :
1. "Other" is excluded from the reportable segments and inclusive of Real Estate Business, Manufacture / Sale / Repairing of construction machineries.
2. Adjustment of the segment profits amounting to ¥(3,318) million (US$(31,305) thousand) is inclusive of inter-segment elimination amounting
to ¥(23) million (US$(220) thousand) and Selling, General and Administrative Expenses amounting to ¥(3,295) million (US$(31,085) thousand)
which are not attributed to any reportable segments.
3. Segment profits or losses are adjusted to the operating income in the consolidated statements of operations.
4. Assets are not described due to no allocation to the business segments.
For the year ended March 31, 2017
Millions of Japanese Yen
Reportable Segments
Domestic
Civil
Engineering
Domestic
Architectural
Building Overseas Total Others
(Note 1) Total Adjustments
(Note 2) Consolidated
(Note 3)
Net sales:
External customers ¥85,437 ¥43,685 ¥28,927 ¥158,050 ¥9,150 ¥167,200 ¥ — ¥167,200
Inter-segment 28 76 — 104 22,130 22,234 (22,234) —
Total ¥85,465 ¥43,761 ¥28,927 ¥158,154 ¥31,281 ¥189,435 (¥22,234) ¥167,200
Segment profits or losses 4,898 709 3,080 8,688 663 9,351 (3,154) 6,196
Other items
Depreciation and amortization ¥432 ¥1 ¥655 ¥1,088 ¥540 ¥1,629 ¥381 ¥2,010
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries
Notes :
1. "Other" is excluded from the reportable segments and inclusive of Real Estate Business, Manufacture / Sale / Repairing of construction machineries.
2. Adjustment of the segment profits amounting to ¥(3,350) million is inclusive of inter-segment elimination amounting to ¥1 million and Selling,
General and Administrative Expenses amounting to ¥(3,351) million which are not attributed to any reportable segments.
3. Segment profits or losses are adjusted to the operating income in the consolidated statements of operations.
4. Assets are not described due to no allocation to the business segments.
18.Related Information
Ⅰ .Information on products and services
Description is excluded since the similar information is disclosed in the segment information.
Ⅱ .Geographical information
1) Net sales
For the year ended March 31, 2018
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2018
Japan ¥137,828 $1,300,270
South east asia 12,783 120,595
Other 10,433 98,427
Total ¥161,045 $1,519,294
For the year ended March 31, 2017
Millions of Japanese Yen
2017
Japan ¥138,273
South east asia 20,282
Other 8,644
Total ¥167,200
Note) Net sales are based on the customers' location and categorized into the countries or areas.
2) Tangible fixed assets
Description is excluded since the amounts of the tangible fixed assets registered at domestically exceed 90% of those amounts in the
consolidated balance sheets.
Ⅲ .Information on principal customer
For the year ended March 31, 2018
Net sales
Name of Customer Related segments
Millions of
Japanese Yen
2018
Thousands of
U.S. Dollars
2018
Japanese Ministry of Land, Infrastructure,
Transport and Tourism Domestic Civil Engineering Businesses,others ¥28,334 $267,307
For the year ended March 31, 2017
Net sales
Name of Customer Related segments
Millions of
Japanese Yen
2017
Japanese Ministry of Land, Infrastructure,
Transport and Tourism Domestic Civil Engineering Businesses,others ¥33,496
Ⅳ . Information on the loss on impairment of fixed assets in each reportable segment
The losses on impairment of fixed assets were not allocated to the each reportable segment of the Companies. Description of the amounts
and contents is excluded since the similar information is disclosed in the notes related to the consolidated statements of operations for the year
ended March 31, 2018 and 2017.
Ⅴ .Information on the amortization and the unamortized balance of goodwill in each reportable segment
The amortization was not applicable for the year ended March 31, 2018 and 2017.
Ⅵ .Information on gain on negative goodwill in each reportable segment
The Companies did not allocate the gain on negative goodwill to the each reportable segment.
The gain was not applicable for the year ended March 31, 2018 and 2017.
19.Per Share Data
Japanese Yen U.S. Dollars
2018 2017 2018
Net assets ¥3,214.86 ¥3,082.45 $30.328
Net income (loss) 83.74 (355.86) 0.790
Note 1 Diluted net income per share was not disclosed because a net loss per share was recorded although there were no dilutive shares
for the year ended March 31, 2017
Note 2 Diluted net income per share was not disclosed because there were no dilutive shares for the year ended March 31, 2018
Note 3 The Company completed a reverse stock split of its common stock, at ratio of 1 share for 10 shares on October 1, 2016. Net assets
per share and net income per share as of and for the year ended March 31, 2017 are calculated under the assumption that the
reverse stock split took place at the beginning of the year ended March 31, 2017.
Note) The basic information for calculation of per share data were as follows:
1.Per share data on net assets
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Net assets ¥67,747 ¥64,958 $639,124
Net assets amount for common stocks 67,191 64,426 633,882
Significant breakdown of differences
Non-controlling interests ¥555 ¥532 $5,241
Thousands of shares
2018 2017
Numbers of issued shares of common stocks 22,494 22,494
Numbers of treasury stocks of common stocks 1,594 1,593
Numbers of common stocks which were used for calculation for per share
data on net assets 20,900 20,900
2.Per share data on net income (loss)
Millions of Japanese Yen Thousands of U.S. Dollars
2018 2017 2018
Profit (loss) attributable to owners of parent ¥1,750 ¥(7,438) $16,511
Profit (loss) attributable to owners of parent which does not belong to
common stockholders — — —
Profit (loss) attributable to owners of parent for common stocks ¥1,750 ¥(7,438) $16,511
Thousands of Shares
2018 2017
Average number of shares of common stocks 20,900 20,901
20.Significant Subsequent Events
Not applicable
Consolidated table for detailed statements
Table for borrowing
Millions of Japanese Yen Thousands of U.S. Dollars Average rates
Beginning
balance
Closing
Balance
Beginning
balance
Closing
Balance % Repayment deadline
Short-term borrowings ¥8,463 ¥8,516 $79,844 $80,339 0.75%
Current portion of Long-term debt 4,929 4,844 46,505 45,700 1.29%
Current portion of Non-recourse debt 606 567 5,720 5,358 1.72%
Current portion of lease obligations 19 139 181 1,315 —
Long-term debt
(excluding current portion) 12,881 12,957 121,526 122,241 1.13% from 2019 to 2023
Non-recourse debt
(excluding current portion) 2,314 1,746 21,832 16,474 1.87% from 2019 to 2026
Lease obligation
(excluding current portion) 20 347 194 3,274 — from 2019 to 2022
Other debt — — — — —
Total ¥29,235 ¥29,118 $275,806 $274,704 —
Notes :
1.The "average rates" are balanced by the weighted average.
The average rates of lease obligations are not listed because interests are included in the lease obligation in the consolidated balance sheets.
2.The amount scheduled to be repayment of long-term debt, non-recourse debt and lease obligations (excluding current portions) within 5 years
after the consolidated closing date were as follows:
Millions of Japanese Yen Thousands of U.S. Dollars
over one
year within
two years
over two
years within
three years
over three
years within
four years
over four
years within
five years
over one
year within
two years
over two
years within
three years
over three
years within
four years
over four
years within
five years
Long-term debt ¥4,611 ¥4,731 ¥2,418 ¥1,195 $43,508 $44,641 $22,814 $11,277
Non-recourse debt 545 542 455 183 5,142 5,119 4,295 1,726
Lease obligations 124 122 99 — 1,178 1,155 940 —
Table for asset retirement obligation
The indication omitted due to the beginning balance and closing balance of asset retirement obligation were less than or equal to
hundredth part of the beginning balance and closing balance of the liabilities and net assets.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TOA CORPORATION and its consolidated subsidiaries