ニチレキ（5011） – [Delayed]Consolidated Financial Results for the Fiscal Year Ended March 31, 2022[Japanese GAAP]

Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 [Japanese GAAP] May 10, 2022 Company name: Nichireki Co., Ltd. Stock exchange listing: Tokyo Stock Exchange Code number: 5011 URL: https://www.nichireki.co.jp/english/ Representative: Manabu Obata, President and Representative Director Contact: Takeshi Goto, Executive Officer and General Manager of Finance and Accounting Department Phone: +81-3-3265-1511 Scheduled date of Annual General Meeting of Shareholders: June 29, 2022 Scheduled date of commencing dividend payments: June 30, 2022 Scheduled date of filing annual securities report: June 30, 2022 Availability of supplementary briefing material on annual financial results: Available Schedule of annual financial results briefing session: Scheduled (for institutional investors and analysts) (Amounts of less than one million yen are rounded down.) 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 to March 31, 2022) (% indicates changes from the previous corresponding period.) (1) Consolidated Operating Results Profit attributable to owners of the parent company Operating profit Ordinary profit Net sales Fiscal year ended March 31, 2022 March 31, 2021 Million yen 78,001 71,471 % Million yen 8,566 – 9,140 7.1 (2.8) 53.8 (Note) Comprehensive income: Fiscal year ended March 31, 2022: ¥6,800 million [(12.7)%] Fiscal year ended March 31, 2021: ¥7,787 million [809.7%] (6.3) 52.1 % Million yen 9,311 9,574 % Million yen 6,811 6,357 % 7.1 249.0 Fiscal year ended March 31, 2022 March 31, 2021 Basic earnings per share Diluted earnings per share Rate of return on equity Ordinary profit to total assets Operating profit to net sales Yen 222.91 219.72 Yen – 219.47 % 10.5 11.1 % 10.9 12.4 % 11.0 12.8 (Reference) Share of profit of investments accounted for using equity method: Fiscal year ended March 31, 2022: ¥(18) million Fiscal year ended March 31, 2021: ¥26 million (Note) As the Company has implemented the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and such since the beginning of the consolidated fiscal year, the figures presented for the fiscal year ended March 31, 2022 are those after the implementation of the said standard and such. Accordingly, changes in net sales from the previous corresponding period are not presented. (2) Consolidated Financial Position As of March 31, 2022 As of March 31, 2021 Total assets Net assets Equity ratio Million yen 88,425 82,732 Million yen 68,075 62,010 Net assets per share Yen 2,226.97 2,048.05 % 77.0 74.9 (Reference) Equity: As of March 31, 2022: ¥68,075 million As of March 31, 2021: ¥61,997 million (3) Consolidated Cash Flows Fiscal year ended March 31, 2022 March 31, 2021 2. Dividends Fiscal year ended March 31, 2021 March 31, 2022 Fiscal year ending March 31, 2023 (Forecast) 31, 2023) Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of fiscal year Million yen 7,737 9,098 Million yen (2,361) (5,694) Million yen (1,430) 2,512 Million yen 27,091 23,110 Annual dividends 1st quarter-end 2nd quarter-end 3rd quarter-end Year-end Total Total dividends Yen – – – Yen – – – Yen – – Yen 38.00 38.00 42.00 42.00 Yen Million yen 1,150 1,283 – 45.00 45.00 – Dividends payout ratio (consolidated) % 17.3 18.8 Dividends to net assets (consolidated) % 2.0 2.0 3. Forecasts of Consolidated Financial Results in the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March (% indicates changes from the previous corresponding period.) Net sales Operating profit Ordinary profit First half Full year Million yen 34,000 82,000 % Million yen 2,900 9,000 4.9 5.1 % Million yen 3,000 9,300 4.3 5.1 Profit attributable to owners of the parent company % (0.1) (11.9) % Million yen 2,000 6,000 1.8 (0.1) Basic earnings per share Yen 65.45 196.35 * Notes: (1) Changes in significant subsidiaries during the fiscal year ended March 31, 2022 (changes in specified subsidiaries resulting in changes in scope of consolidation): No (2) Changes in accounting policies, changes in accounting estimates, and restatement 1) Changes in accounting policies due to the revision of accounting standards: Yes 2) Changes in accounting policies other than 1) above: No 3) Changes in accounting estimates: No 4) Restatement: No (Note) For more details, please refer to “(5) Notes to the Consolidated Financial Statements (Changes in Accounting Policies)” in “3. Consolidated Financial Statements and Primary Notes” on page 14 of the Appendix. (3) Total number of issued shares (common shares) As of March 31, 2022: 31,685,955 shares As of March 31, 2021: 31,685,955 shares 1) Total number of issued shares at the end of the fiscal year (including treasury shares): 2) Total number of treasury shares at the end of the fiscal year: As of March 31, 2022: 1,117,337 shares As of March 31, 2021: 1,414,587 shares 3) Average number of shares during the fiscal year: Fiscal year ended March 31, 2022: 30,558,439 shares Fiscal year ended March 31, 2021: 28,935,248 shares (Reference) Summary of Non-consolidated Financial Results 1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 to March 31, 2022) (1) Non-consolidated Operating Results Net sales Operating profit Ordinary profit Profit (% indicates changes from the previous year.) Fiscal year ended March 31, 2022 March 31, 2021 Million yen 38,291 34,907 % Million yen 3,976 4,187 9.7 3.4 % Million yen 6,889 6,316 (5.0) 76.9 % Million yen 5,948 4,789 9.1 56.0 % 24.2 456.2 Fiscal year ended March 31, 2022 March 31, 2021 Basic earnings per share Diluted earnings per share Yen 194.65 165.52 Yen – 165.33 (2) Non-consolidated Financial Position As of March 31, 2022 As of March 31, 2021 Total assets Net assets Equity ratio Million yen 72,995 67,131 Million yen 49,140 44,111 Net assets per share Yen 1,607.55 1,456.79 % 67.3 65.7 (Reference) Equity: As of March 31, 2022: ¥49,140 million As of March 31, 2021: ¥44,098 million * These consolidated financial results are outside the scope of audit by certified public accountants or audit firms. * Explanation of the proper use of financial results forecast and other notes The earnings forecasts and other forward-looking statements herein are based on information currently available to the Company and certain assumptions deemed reasonable as of the date of publication of this document. Actual results may differ significantly from these forecasts due to a wide range of factors. For assumptions of the forecasts of the financial results and precautions in using the forecasts, please refer to “(4) Future Outlook” in “1. Overview of Business Results, etc.” on page 5 of these consolidated financial results (Appendix). (How to obtain the supplementary briefing material on annual financial results) The Company will hold the annual financial results briefing session for institutional investors and analysts on Tuesday, May 31, 2022. Materials for the briefing session will be posted on the Company’s website after the briefing session. Table of Contents 1. Overview of Business Results, etc. …………………………………………………………………………………………………. 2 (1) Overview of Business Results for FY2021 …………………………………………………………………………………… 2 (2) Overview of Financial Position for FY2021 …………………………………………………………………………………. 3 (3) Overview of Cash Flows for FY2021 ………………………………………………………………………………………….. 3 (4) Future Outlook …………………………………………………………………………………………………………………………. 5 2. Basic Approach to the Selection of Accounting Standards …………………………………………………………………. 5 3. Consolidated Financial Statements and Primary Notes ………………………………………………………………………. 6 (1) Consolidated Balance Sheets ……………………………………………………………………………………………………… 6 (2) Consolidated Statements of Income and Comprehensive Income ……………………………………………………. 8 (3) Consolidated Statements of Changes in Equity …………………………………………………………………………… 10 (4) Consolidated Statements of Cash Flows …………………………………………………………………………………….. 12 (5) Notes to the Consolidated Financial Statements ………………………………………………………………………….. 14 (Notes on Going Concern Assumption) …………………………………………………………………………………………… 14 (Changes in Accounting Policies) …………………………………………………………………………………………………….. 14 (Revenue Recognition) …………………………………………………………………………………………………………………… 15 (Segment Information, etc.) …………………………………………………………………………………………………………… 16 (Per Share Information) ………………………………………………………………………………………………………………… 19 (Significant Subsequent Events) …………………………………………………………………………………………………….. 19 4. Non-consolidated Financial Statements 20 (1) Non-consolidated Balance Sheets ……………………………………………………………………………………………… 20 (2) Non-consolidated Statements of Income ………………………………………………………………………………………. 22 (3) Non-consolidated Statements of Changes in Equity ………………………………………………………………………. 23 5. Other Information …………………………………………………………………………………………………………………………. 25 (1) Change of Representative Director ………………………………………………………………………………………………… 25 (2) Newly appointed Director ……………………………………………………………………………………………………………. 25 1 1. Overview of Business Results, etc. (1) Overview of Business Results for FY2021 Category Fiscal year ended Fiscal year ended March 31, 2021 March 31, 2022 Change Amount (Million yen) Ratio (%) Amount (Million yen) Ratio (%) Amount Growth rate (Million yen) (%) Net sales 71,471 100.0 78,001 100.0 Applied and Processed Asphalt Products Business Road Paving Business Other Business Gross profit Operating profit Ordinary profit Profit attributable to owners of the parent company 20,583 50,585 302 18,436 9,140 9,574 6,357 28.8 70.8 0.4 25.8 12.8 13.4 8.9 25,796 51,901 303 18,320 8,566 9,311 6,811 33.1 66.5 0.4 23.5 11.0 11.9 8.7 6,530 5,213 1,315 1 (115) (574) (263) 454 9.1 25.3 2.6 0.4 (0.6) (6.3) (2.8) 7.1 In the fiscal year ended March 31, 2022, the Japanese economy remained severe due to the spread of the novel coronavirus disease (COVID-19); however, with an easing of this severity in line with the uptake of vaccinations and against a backdrop of increasing global demand for digital products, there was an upswing in terms of corporate earnings, as well as signs of a recovery trend in terms of personal consumption and capital expenditures. Nevertheless, the sense of caution regarding a renewed spread of COVID-19 remains, and this, along with the depreciation of the yen and rising prices due to the growing tensions surrounding the situation in Ukraine, means the economic outlook remains extremely uncertain. The business environment surrounding the Nichireki Group (hereinafter referred to as “Group”) remained harsh with it being necessary to keep a close watch on negative factors for business results, including soaring crude oil prices and the continuing depreciation of the yen despite steady high levels of public investment against the backdrop of growing construction demand for preventing and mitigating disasters, national resilience measures, etc. In such a business environment, the Group established its new Medium-term Management Plan “Resilience 2025 (Shinayaka 2025),” which commenced in this fiscal year, and has implemented various measures aimed at growing as a sustainable corporate group with the entire organization working as one under quick and accurate decision making. In the fiscal year ended March 31, 2022, the Group posted net sales of ¥78,001 million (net sales of ¥71,471 million in previous fiscal year), operating profit of ¥8,566 million (down 6.3% year on year), ordinary profit of ¥9,311 million (down 2.8% year on year), and profit attributable to owners of the parent company of ¥6,811 million (up 7.1% year on year). With the application of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) etc., net sales decreased by ¥507 million. Results by business segment were as follows. Applied and Processed Asphalt Products Business In the Applied and Processed Asphalt Products Business, in addition to coping with hikes in the prices of raw materials, we worked on increasing sales by promoting design and marketing activities for high value-added products contributing to “longer life and higher performance of paved roads” and “reduction of environmental load.” Net sales for the segment were ¥25,796 million (net sales of ¥20,583 million in previous fiscal year), and segment profit (operating profit) was ¥6,598 million (up 3.2% year on year). 2 Road Paving Business In the Road Paving Business, in addition to steady progress of construction works including those for preventing and mitigating disasters and national resilience measures, we worked on improving cost management. Net sales for the segment were ¥51,901 million (up 2.6% year on year), and segment profit (operating profit) was ¥4,996 million (down 4.1% year on year). Other Business (2) Overview of Financial Position for FY2021 In the Other Business, net sales for the segment were ¥303 million (up 0.4% year on year), and segment profit (operating profit) was ¥227 million (up 4.2% year on year) mainly due to real estate lease revenue. Change 4,484 1,207 515 (887) 6,065 5,692 8.6 3.9 2.7 9.8 6.9 (49.4) As of March 31, 2021 As of March 31, 2022 Category Amount (Million yen) Ratio (%) Amount (Million yen) Ratio (%) Amount Growth rate (Million yen) (%) Current assets Non-current assets Current liabilities Non-current liabilities Net assets Total assets 52,076 30,656 18,926 1,796 62,010 82,732 62.9 37.1 22.9 2.2 75.0 100.0 56,561 31,864 19,441 908 68,075 88,425 64.0 36.0 22.0 1.0 77.0 100.0 (i) Status of assets, liabilities and net assets Current assets Current assets increased by ¥4,484 million from the end of the previous fiscal year to ¥56,561 million. This is mainly attributable to increases in cash and deposits by ¥3,080 million, notes and accounts receivable – trade, and contract assets by ¥20,797 million, merchandise and finished goods by ¥319 million, and raw materials and supplies by ¥467 million as well as a decrease in notes and accounts receivable – trade by ¥20,305 million. Non-current assets Non-current assets increased by ¥1,207 million from the end of the previous fiscal year to ¥31,864 million. This is mainly attributable to increases in buildings and structures by ¥608 million, land by ¥305 million, construction in progress by ¥307 million, and long-term time deposits by ¥700 million, as well as a decrease in investment securities by ¥666 million. Current liabilities Non-current liabilities Net assets Current liabilities increased by ¥515 million from the end of the previous fiscal year to ¥19,441 million. This is mainly attributable to an increase in accounts payable – trade by ¥1,315 million as well as a decrease in short-term borrowings by ¥600 million. Non-current liabilities decreased by ¥887 million from the end of the previous fiscal year to ¥908 million. This is mainly attributable to decreases in retirement benefit liability by ¥553 million and provision for environmental measures by ¥287 million. Net assets increased by ¥6,065 million from the end of the previous fiscal year to ¥68,075 million. This is mainly attributable to increases in capital surplus by ¥251 million and retained earnings by ¥5,661 million. (3) Overview of Cash Flows for FY2021 Cash and cash equivalents (hereinafter referred to as “cash”) for the fiscal year under review increased by ¥3,980 million from the end of the previous fiscal year to ¥27,091 million. Status of cash flows and contributing factors were as follows. 3 Cash flows from operating activities Net cash provided by operating activities was ¥7,737 million (down 15.0% year on year). This is mainly attributable to profit before income taxes of ¥9,867 million and an increase in trade payables of ¥1,756 million. Cash flows from investing activities Net cash used in investing activities was ¥2,361 million (down 58.5% year on year). This is mainly attributable to purchase of property, plant and equipment of ¥3,226 million. As a result, free cash flow was ¥5,376 million (up ¥1,972 million year on year). Cash flows from financing activities Net cash used in financing activities was ¥1,430 million (proceeds of ¥2,512 million in the previous fiscal year). This is mainly attributable to a reduction in short-term borrowings of ¥600 million and payments of dividends of ¥1,147 million. (Reference) Changes in cash flow indicators Fiscal year ended March 31, 2018 Fiscal year ended March 31, 2019 Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Equity ratio (%) Equity ratio based on market value (%) Ratio of interest-bearing debt to cash flows (%) 72.8 50.5 21.3 75.2 44.7 19.3 Interest coverage ratio (times) Equity ratio = Equity / Total assets Equity ratio based on market value = Total market value of shares / Total assets Ratio of interest-bearing debt to cash flows = Interest-bearing debts / Cash flows Interest coverage ratio = Cash flows / Interest paid 820.36 930.96 73.9 52.1 32.1 74.9 57.8 24.4 77.0 42.7 20.7 589.41 523.17 732.43 (Note 1) The indicators were calculated using consolidated financial figures. (Note 2) The total market value of shares was calculated using the total number of shares outstanding, less treasury shares. (Note 3) Cash flows from operating activities are used as cash flows. (Note 4) Interest-bearing debt includes all debt recorded on the consolidated balance sheet for which interest is paid. 4 (4) Future Outlook Category Net sales Operating profit Ordinary profit parent company Profit attributable to owners of the Forecast of consolidated financial results in the fiscal year ending March 31, 2023 First half Full-year Amount Year-on-year change Amount Year-on-year change (Million yen) (%) (Million yen) (%) 34,000 2,900 3,000 2,000 4.9 4.3 1.8 (0.1) 82,000 9,000 9,300 6,000 5.1 5.1 (0.1) (11.9) In the fiscal year ending March 31, 2023, the Japanese economy is expected to enter into full-on recovery mode as measures put in place to curb the spread of COVID-19 continue and economic and social activities return to normal. However, with the risk of the renewed spread of COVID-19 as well as the invasion of Ukraine, the economic outlook remains uncertain, and, as such, we must remain vigilant regarding risks, including movements in the price of foods and raw materials, as well as fluctuations in the exchange rate. With regard to the business environment surrounding the Group, it is expected that there will be hikes in the prices of raw materials due to increases in crude oil prices and a weaker yen, as well as restrictions in terms of procurement of materials due to the shortage of semiconductors, despite a high level of public investment being continuously expected for preventing and mitigating disasters, national resilience measures, etc. In such a business environment, the Group remains fully committed to the Medium-term Management Plan “Resilience 2025 (Shinayaka 2025),” through which the aim is to become a sustainable corporate group that combines high growth potential with a focus on ESG, which will be achieved by exhibiting resilient responses to an ever-changing business environment under quick and accurate decision making. (Note) The earnings forecast and other forward-looking statements herein are based on information currently available to the Company and certain assumptions deemed reasonable as of the date of publication of this document. Actual results may differ significantly from the forecast due to a wide range of factors. 2. Basic Approach to the Selection of Accounting Standards Taking into consideration the comparability of consolidated financial statements across periods and among companies, the Group prepares its consolidated financial statements using Japanese GAAP for the time being. With regard to the application of International Financial Reporting Standards (IFRS), the Group’s policy is to respond appropriately based on consideration of the situation in Japan and overseas. 5 3. Consolidated Financial Statements and Primary Notes (1) Consolidated Balance Sheets As of March 31, 2021 As of March 31, 2022 Assets Current assets Cash and deposits Notes and accounts receivable – trade, and contract assets Notes and accounts receivable – trade Electronically recorded monetary claims – operating Merchandise and finished goods Costs on construction contracts in progress Raw materials and supplies Current portion of long-term loans receivable from subsidiaries and associates Derivatives Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Land Leased assets Accumulated depreciation Leased assets, net Construction in progress Other Accumulated depreciation Other, net Total property, plant and equipment Intangible assets Other Total intangible assets Investments and other assets Investment securities Investments associates in capital of subsidiaries and Long-term loans receivable from subsidiaries and associates Deferred tax assets Long-term time deposits Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 6 25,920 – 20,305 2,922 1,101 328 730 67 458 320 (79) 52,076 14,282 (8,158) 6,123 24,540 (21,249) 3,291 10,541 604 (308) 295 293 2,832 (2,241) 591 21,136 728 728 5,148 671 490 408 1,920 588 (438) 8,791 30,656 82,732 (Million yen) 29,001 20,797 – 2,225 1,420 256 1,198 167 956 595 (59) 56,561 15,281 (8,549) 6,732 25,012 (21,674) 3,338 10,846 670 (396) 274 601 2,963 (2,372) 591 22,384 685 685 4,476 715 390 335 2,620 700 (444) 8,794 31,864 88,425 Liabilities Current liabilities Accounts payable – trade Electronically recorded obligations – operating Short-term borrowings Lease liabilities Accounts payable – other Income taxes payable Contract liabilities Provision for bonuses Provision for bonuses for directors (and other officers) Other provisions Other Total current liabilities Non-current liabilities Long-term accounts payable – other Lease liabilities Long-term deposits received Deferred tax liabilities Provision for environmental measures Retirement benefit liability Asset retirement obligations Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Share acquisition rights Total net assets Total liabilities and net assets As of March 31, 2021 As of March 31, 2022 (Million yen) 8,761 1,485 1,900 92 1,438 2,022 – 961 141 57 2,067 18,926 5 230 48 533 287 557 133 1,796 20,722 2,919 3,430 53,574 (835) 59,088 2,093 318 6 490 2,908 12 62,010 82,732 10,077 1,787 1,300 105 1,469 1,985 211 1,081 142 63 1,216 19,441 5 193 48 517 – 4 138 908 20,349 2,919 3,681 59,235 (659) 65,177 1,889 332 109 566 2,897 – 68,075 88,425 7 (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Million yen) Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Share of profit of entities accounted for using equity method Gain on valuation of derivatives Other Total non-operating income Non-operating expenses Interest expenses Share of loss of entities accounted for using equity method Other Total non-operating expenses Ordinary profit Extraordinary income Gain on sale of non-current assets Gain on sale of investment securities Insurance claim income Compensation income Other Total extraordinary income Extraordinary losses Loss on retirement of non-current assets Provision for environmental measures Special repairs expenses Other Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit attributable to owners of the parent company 71,471 53,035 18,436 9,296 9,140 28 374 26 – 39 469 17 – 17 35 9,574 41 64 14 111 – 231 12 287 89 66 455 9,350 3,023 (30) 2,992 6,357 6,357 78,001 59,681 18,320 9,754 8,566 11 152 – 477 145 786 10 18 13 41 9,311 14 407 135 119 47 724 17 – 119 32 168 9,867 2,964 90 3,055 6,811 6,811 8 Consolidated Statements of Comprehensive Income Profit Other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans, net of tax Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of the parent company For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Million yen) 6,357 582 418 1 418 8 1,429 7,787 7,787 6,811 (204) 14 19 76 83 (10) 6,800 6,800 9 (3) Consolidated Statements of Changes in Equity For the fiscal year ended March 31, 2021 Share capital Capital surplus Treasury shares Shareholders’ equity Retained earnings (Million yen) Total shareholders’ equity Balance at beginning of period 2,919 2,017 48,191 (1,779) 51,349 Changes during period Dividends of surplus Profit attributable to owners of the parent company Purchase of treasury shares Exercise of share acquisition rights Net changes in items other than shareholders’ equity Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of the parent company Purchase of treasury shares Exercise of share acquisition rights Net changes in items other than shareholders’ equity Total changes during period Balance at end of period 1,412 418 418 318 582 582 2,093 Total changes during period Balance at end of period – 2,919 1,412 3,430 5,382 53,574 Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Share acquisition rights Total net assets 1,511 (100) (4) 72 1,478 – 52,827 (0) 944 944 (835) 418 418 490 (974) 6,357 (0) 2,357 7,739 59,088 1,429 1,429 2,908 12 12 12 (974) 6,357 (0) 2,357 1,442 9,182 62,010 (974) 6,357 10 10 6 10 For the fiscal year ended March 31, 2022 Share capital Capital surplus Treasury shares Shareholders’ equity Retained earnings (Million yen) Total shareholders’ equity Balance at beginning of period 2,919 3,430 53,574 (835) 59,088 Changes during period Dividends of surplus Profit attributable to owners of the parent company Purchase of treasury shares Exercise of share acquisition rights Net changes in items other than shareholders’ equity Balance at beginning of period Changes during period Dividends of surplus Profit attributable to owners of the parent company Purchase of treasury shares Exercise of share acquisition rights Net changes in items other than shareholders’ equity Total changes during period Balance at end of period 251 (204) (204) 1,889 14 14 332 Total changes during period Balance at end of period – 2,919 251 3,681 5,661 59,235 Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Share acquisition rights Total net assets 2,093 318 6 490 2,908 12 62,010 (1,150) 6,811 (0) 427 6,088 65,177 (0) 175 175 (659) 76 76 566 (1,150) 6,811 (0) 427 (23) 6,065 (10) (10) (12) (12) 2,897 – 68,075 (1,150) 6,811 103 103 109 11 For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Million yen) (4) Consolidated Statements of Cash Flows Cash flows from operating activities Profit before income taxes Depreciation Increase (decrease) in allowance for doubtful accounts Increase (decrease) in retirement benefit liability Increase (decrease) in other provisions Interest and dividend income Loss (gain) on valuation of derivatives Interest expenses Insurance claim income Loss (gain) on sale of non-current assets Loss (gain) on sale of investment securities Compensation income Special repairs expenses Loss on retirement of non-current assets Subsidy income Decrease (increase) in trade receivables Decrease (increase) in other current assets Decrease (increase) in inventories Increase (decrease) in trade payables Increase (decrease) in other current liabilities Increase (decrease) in accrued consumption taxes Share of loss (profit) of entities accounted for using equity method Loss on disaster Other, net Subtotal Interest and dividends received Subsidies received Proceeds from insurance income Proceeds from compensation Interest paid Income taxes paid Payments provision for special repairs Payments associated with disaster loss Net cash provided by (used in) operating activities 9,350 1,899 60 (428) 270 (403) – 17 (14) (41) (63) (111) 89 12 (4) 313 58 (88) 271 271 (8) (26) 43 (69) 11,400 402 4 14 112 (17) (2,615) (138) (65) 9,098 9,867 2,070 (13) (439) (158) (164) (477) 10 (135) (11) (407) (119) 119 17 (6) 41 (640) (714) 1,756 80 (395) 18 15 270 10,582 159 6 135 137 (10) (3,134) (125) (13) 7,737 12 For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Million yen) Cash flows from investing activities Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Payments for retirement of property, plant and equipment Purchase of intangible assets Purchase of investment securities Proceeds from sale of investment securities Loan advances Proceeds from collection of loans receivable Purchase of shares of subsidiaries resulting in change in scope of consolidation Other, net Net cash provided by (used in) investing activities Cash flows from financing activities Proceeds from short-term borrowings Repayments of short-term borrowings Repayments of lease liabilities Purchase of treasury shares Proceeds from issuance of share acquisition rights Proceeds from disposal of treasury shares from exercise of share acquisition rights Dividends paid Other, net Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (1,910) 2,710 (6,738) 46 (3) (188) (1) 237 (3) 197 (47) 6 (5,694) 7,200 (6,000) (84) (0) 27 2,342 (972) – 2,512 12 5,929 17,181 23,110 (2,610) 2,810 (3,226) 11 (15) (134) (3) 772 (6) 8 – 32 (2,361) 3,500 (4,100) (97) (0) – 424 (1,147) (10) (1,430) 35 3,980 23,110 27,091 13 (5) Notes to the Consolidated Financial Statements (Notes on Going Concern Assumption) There is no relevant information. (Changes in Accounting Policies) 1. Application of the Accounting Standard for Revenue Recognition, etc. With the application of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020; hereinafter the “Revenue Recognition Accounting Standard”), etc., effective from the beginning of the fiscal year ended March 31, 2022, revenue is recognized when the control of promised goods or services is transferred to the customer in the amount expected to be received in exchange for the said promised goods or services. Major changes resulting from the application of the Revenue Recognition Accounting Standard, etc. are as follows. (1) Revenue recognition on transactions through agent Though revenue mainly from the domestic distribution business in the Applied and Processed Asphalt Products Business was previously recognized as the total amount of consideration received from customers, revenue from transactions, in which the role of the Company falls under an agent in providing merchandise to customers, is now recognized in the net value obtained by subtracting the amount to be paid to suppliers of the merchandise from the amount received from customers. (2) Revenue recognition on construction contracts Concerning construction contracts in the Road Paving Business, previously the percentage-of-completion method was applied to construction works whose outcome in the degree of completion is deemed certain, while the completed-contract method was applied to construction works whose construction periods were very short. Now, revenue is recognized over a certain period as performance obligations are being fulfilled. In addition, stage of completion regarding the fulfillment of performance obligations is estimated by the input method based on incurred cost. As for construction contracts under which the term from the transaction commencement date to the time when performance obligations are expected to be fulfilled completely is quite short, revenue is not recognized for a certain period but recognized at the time when performance obligations are completely fulfilled, by applying the alternative treatment. The Revenue Recognition Accounting Standard, etc. are applied according to the transitional treatment specified in the proviso in Paragraph 84 of the Revenue Recognition Accounting Standard. Accordingly, the accumulated amount in a case where the new accounting policy is retroactively applied before the beginning of the fiscal year ended March 31, 2022 is adjusted on retained earnings at the beginning of said fiscal year, with the new accounting policy being applied to the said balance at the beginning of said fiscal year. However, as a result of the application of the method specified in Paragraph 86 of the Revenue Recognition Accounting Standard, the new accounting policy is not retroactively applied to the contracts for which amounts of almost all revenues had been recognized under the previous treatment before the beginning of said fiscal year. In addition, concerning contract changes made before the beginning of said fiscal year, accounting treatment was conducted under the contract terms that reflected all contract changes, and the accumulated amount is adjusted on retained earnings at the beginning of said fiscal year, by applying the method specified in (1) of Paragraph 86 of the Revenue Recognition Accounting Standard. As a result, net sales of the fiscal year ended March 31, 2022 decreased by ¥507 million and cost of sales decreased by ¥507 million. There was no impact on the balance of the retained earnings at the beginning of the period. Following the application of the Revenue Recognition Accounting Standard, etc. “notes and accounts receivable – trade” which was presented under “current assets” and “other” which was presented under “current liabilities” in the consolidated balance sheets in the previous fiscal year, are included in “notes and accounts receivable – trade, and contract assets” and “contract liabilities” or “other,” respectively, effective from the fiscal year ended March 31, 2022. According to the transitional treatment specified in Paragraph 89-2 of the Revenue Recognition Accounting Standard, rearrangement based on the new presentation method is not conducted for the previous fiscal year. Further, according to the transitional treatment specified in Paragraph 89-3 of the Revenue Recognition Accounting Standard, notes on Revenue Recognition for the previous fiscal year are not stated. 14 2. Application of the Accounting Standard for Fair Value Measurement, etc. With the application of the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019; hereinafter, the “Fair Value Measurement Accounting Standard”), etc., effective from the beginning of the fiscal year ended March 31, 2022, the new accounting policy specified in the Fair Value Measurement Accounting Standard, etc. will be applied throughout the future, according to the transitional treatment specified in Paragraph 19 of the Fair Value Measurement Accounting Standard and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). The change in accounting policies has no impact on the consolidated financial statements. (Revenue Recognition) Information on analyses of revenue that occurs from contracts with customers For the fiscal year ended March 31, 2022 (From April 1, 2021 to March 31, 2022) Reportable segment Applied and Processed Road Paving Asphalt Products Business Business (Million yen) Other (Note) Total Total – – – – – 51,901 – 282 282 Goods to be transferred at one point of 25,796 25,796 21 25,818 Goods to be transferred over a certain 51,901 51,901 Revenue from contracts with customers 25,796 51,901 77,698 21 77,719 Net sales to outside customers 25,796 51,901 77,698 303 78,001 (Note) The “Other” category incorporates business segments not included in reportable segments, such as the real estate lease business and the non-life insurance agency business. time period Other revenue 15 (Segment Information, etc.) 1. Overview of reportable segments Reportable segments of the Group are determined as segments whose separate financial information is accessible from among the constituent units of the Company and are regularly used by the Board of Directors to determine the allocation of management resources and to evaluate achievements. The Group formulates comprehensive strategies by product and service and develops business activities that offer a wide variety of products and works related to road paving. Therefore, the Group has two reportable segments: “Applied and Processed Asphalt Products Business” and “Road Paving Business.” The “Applied and Processed Asphalt Products Business” is engaged in manufacture and sale of asphalt emulsions, modified asphalt and other road paving materials, etc., and the “Road Paving Business” is engaged in paving, civil engineering, bridge waterproofing and other construction works. 2. Method of measurement for net sales, profit (loss), assets, liabilities and other items by reportable segment The accounting method used for reporting business segments is the same as the accounting method that forms the basis for preparing consolidated financial statements. Reportable segment profit figures are based on operating profit. Inter-segment sales and transfers are based on market prices. As stated in “Changes in Accounting Policies,” the Revenue Recognition Accounting Standard, etc., are applied from the consolidated statements of income for the fiscal year ended March 31, 2022, and the accounting treatment method concerning revenue recognition is changed. Accordingly, the calculation method of profit or loss of business segments is also changed. As a result of the change, net sales of the Applied and Processed Asphalt Products Business for the fiscal year ended March 31, 2022 decreased by ¥507 million compared with the net sales calculated under the previous method. 16 3. Information on net sales, profit (loss), assets, liabilities and other items by reportable segment For the fiscal year ended March 31, 2021 (Million yen) Reportable segment Applied and Processed Asphalt Products Business Road Paving Business Total Other (Note 1) Total Adjustment (Note 2) 20,583 50,585 71,169 302 71,471 – – 12,320 65 12,385 (12,385) 12,320 32,903 6,393 28,986 741 615 50,585 5,212 31,313 715 83,489 11,606 60,299 1,456 – 615 83,857 11,825 62,541 1,542 615 (12,385) (2,684) 20,191 356 – 367 218 2,241 85 – 0 Amount recorded in Consolidated Financial Statements (Note 3) 71,471 – 71,471 9,140 82,732 1,899 615 Net sales Net sales to outside customers Inter-segment net sales or transfers Total Segment profit Segment assets Other items Depreciation Investments in entities accounted for using equity method Increases in property, plant and equipment and intangible assets (Notes) 1. The “Other” category incorporates business segments not included in reportable segments, such as the real estate 6,245 910 7,156 7,156 383 7,539 leasing business and the non-life insurance agency business. 2. (1) Segment profit adjustment of ¥(2,684) million includes elimination of inter-segment transactions of ¥(19) million and corporate expenses of ¥(2,665) million that are not allocated to reportable segments. Corporate expenses are comprised primarily of expenses related to the administrative divisions not allocated to reportable segments, such as expenses related to the general affairs division of the Company’s head office. Segment assets adjustment of ¥20,191 million includes the Company’s surplus funds (cash and deposits, securities), long-term investments (investment securities) and assets related to the administrative divisions. (3) Adjustments to depreciation and increases in property, plant and equipment and intangible assets under other (2) items are those related to the Company’s head office that are not allocated to reportable segments. 3. Segment profit is adjusted to the operating profit in the consolidated statements of income. For the fiscal year ended March 31, 2022 Reportable segment Applied and Processed Asphalt Products Business Road Paving Business Total Other (Note 1) Total Adjustment (Note 2) 25,796 51,901 77,698 303 78,001 – – 11,066 72 11,139 (11,139) 11,066 36,863 6,598 31,029 828 681 51,901 4,996 32,281 760 88,765 11,594 63,310 1,589 – 681 89,141 11,822 65,515 1,680 681 (11,139) (3,256) 22,909 389 – 376 227 2,205 90 – – (Million yen) Amount recorded in Consolidated Financial Statements (Note 3) 78,001 – 78,001 8,566 88,425 2,070 681 Net sales Net sales to outside customers Inter-segment net sales or transfers Total Segment profit Segment assets Other items Depreciation Investments in entities accounted for using equity method Increases in property, plant and equipment and intangible assets (Notes) 1. The “Other” category incorporates business segments not included in reportable segments, such as the real estate 1,954 1,099 3,054 3,054 297 3,352 lease business and the non-life insurance agency business. 17 2. (1) Segment profit adjustment of ¥(3,256) million includes elimination of inter-segment transactions of ¥(198) million and corporate expenses of ¥(3,058) million that are not allocated to reportable segments. Corporate expenses are comprised primarily of expenses related to the administrative divisions not allocated to reportable segments, such as expenses related to the general affairs division of the Company’s head office. Segment assets adjustment of ¥22,909 million includes the Company’s surplus funds (cash and deposits, securities), long-term investments (investment securities) and assets related to the administrative divisions. (3) Adjustments to depreciation and increases in property, plant and equipment and intangible assets under other (2) items are those related to the Company’s head office that are not allocated to reportable segments. 3. Segment profit is adjusted to the operating profit in the consolidated statements of income. 18 (Per Share Information) For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 Net assets per share Basic earnings per share ¥2,048.05 ¥219.72 ¥2,226.97 ¥222.91 Diluted earnings per share ¥- (Notes) 1. Diluted earnings per share for the fiscal year ended March 31, 2022 is not stated because there are no ¥219.47 potentially dilutive shares. 2. The basis for the calculation of basic earnings per share and diluted earnings per share is as follows. For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 Basic earnings per share Profit attributable to owners of the parent company (Million yen) Amount not attributable to common shareholders (Million yen) Profit attributable to owners of the parent company relating to common shares (Million yen) Average number of shares of common shares outstanding during each fiscal year (Thousand shares) Diluted earnings per share Profit adjustment attributable to owners of the parent company (Million yen) (of which, interest expenses (net of applicable taxes) (Million yen)) Increase in number of common shares (Thousand shares) (of which, share acquisition rights (Thousand shares)) Overview of potentially dilutive shares excluded from the calculation of diluted earnings per share due to the absence of dilutive effects Total net assets (Million yen) Amount to be deducted from total net assets (Million yen) (of which, share acquisition rights (Million yen)) Net assets relating to common shares at end of period (Million yen) Number of common shares at end of period used in calculating net assets per share (Thousand shares) (Significant Subsequent Events) There is no relevant information. 19 6,357 – 6,357 28,935 – (-) 32 (32) 12 (12) 61,997 30,271 6,811 – 6,811 30,558 (-) – – (-) – – (-) 68,075 30,568 3. The basis for the calculation of net assets per share is as follows. As of March 31, 2021 As of March 31, 2022 62,010 68,075 As of March 31, 2021 As of March 31, 2022 4. Non-consolidated Financial Statements (1) Non-consolidated Balance Sheets Assets Current assets Cash and deposits Notes receivable – trade Electronically recorded monetary claims – operating Accounts receivable – trade Contract assets Accounts receivable from completed construction contracts Merchandise and finished goods Costs on construction contracts in progress Raw materials and supplies Short-term loans receivable Current portion of long-term loans receivable from subsidiaries and associates Derivatives Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings Structures Machinery and equipment Vehicles Tools, furniture and fixtures Land Leased assets Construction in progress Total property, plant and equipment Intangible assets Software Other Total intangible assets Investments and other assets Investment securities Shares of subsidiaries and associates Investments in capital Investments associates associates Long-term prepaid expenses Long-term time deposits Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets in capital of subsidiaries and Long-term loans receivable Long-term loans receivable from subsidiaries and 20 22,235 2,474 2,246 8,467 – 889 961 83 636 121 67 458 311 (2) 38,950 4,567 1,066 1,717 117 497 9,135 283 188 17,574 548 90 638 4,885 1,907 119 756 2 490 4 1,915 316 (430) 9,968 28,181 67,131 (Million yen) 25,496 2,573 1,524 9,208 42 781 1,252 65 1,036 1 167 956 463 (2) 43,568 4,739 1,340 1,727 102 497 9,440 267 601 18,716 527 83 610 4,325 1,907 137 735 2 390 97 2,615 317 (430) 10,098 29,426 72,995 As of March 31, 2021 As of March 31, 2022 (Million yen) Liabilities Current liabilities Accounts payable – trade Accounts payable for construction contracts Electronically recorded obligations – operating Short-term borrowings Lease liabilities Accounts payable – other Accrued expenses Income taxes payable Deposits received Contract liabilities Provision for bonuses Provision for bonuses for directors (and other officers) Provision for loss on construction contracts Other Total current liabilities Non-current liabilities Lease liabilities Deferred tax liabilities Provision for retirement benefits Provision for environmental measures Asset retirement obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Legal capital surplus Other capital surplus Total capital surplus Retained earnings Legal retained earnings Other retained earnings Reserve for tax purpose reduction entry of non-current assets Reserve for special account for tax purpose reduction entry of non-current assets General reserve Retained earnings brought forward Total retained earnings Treasury shares Total shareholders’ equity Valuation and translation adjustments Valuation difference on available-for-sale securities Deferred gains or losses on hedges Total valuation and translation adjustments Share acquisition rights Total net assets Total liabilities and net assets 21 3,726 268 1,485 1,900 86 1,356 404 851 10,389 – 458 98 3 329 21,356 221 415 584 287 106 47 1,663 23,020 2,919 2,017 1,680 3,698 729 270 9 17,100 17,568 35,678 (597) 41,698 2,082 318 2,400 12 44,111 67,131 4,600 186 1,787 1,300 100 1,415 357 921 11,365 61 517 108 3 28 22,753 190 389 364 – 109 47 1,101 23,854 2,919 2,017 1,982 3,999 729 268 9 17,100 22,368 40,476 (471) 46,923 1,884 332 2,216 – 49,140 72,995 For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Million yen) (2) Non-consolidated Statements of Income Net sales Net sales of finished goods Net sales of goods Net sales of completed construction contracts Sales in leasing business Total net sales Cost of sales Cost of finished goods sold Cost of goods sold Cost of sales of completed construction contracts Cost of sales in leasing business Total cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Gain on valuation of derivatives Other Total non-operating income Non-operating expenses Interest expenses Other Total non-operating expenses Ordinary profit Extraordinary income Gain on sale of non-current assets Gain on sale of investment securities Insurance claim income Compensation income Other Total extraordinary income Extraordinary losses Loss on retirement of non-current assets Provision for environmental measures Special repairs expenses Loss on valuation of investment securities Loss on disaster Other Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit 20,778 9,141 2,140 2,846 34,907 12,432 8,136 1,455 2,461 24,486 10,420 6,233 4,187 27 2,093 – 49 2,169 23 16 40 6,316 19 63 10 111 – 204 8 287 89 – 39 19 444 6,077 1,350 (61) 1,288 4,789 26,809 6,226 2,233 3,021 38,291 18,328 5,281 1,463 2,531 27,605 10,686 6,710 3,976 9 2,338 477 115 2,941 16 11 28 6,889 2 393 104 119 34 654 7 – 119 9 13 0 150 7,393 1,404 41 1,445 5,948 22 (3) Non-consolidated Statements of Changes in Equity For the fiscal year ended March 31, 2021 Shareholders’ equity Capital surplus Retained earnings Share capital Legal capital surplus Other capital surplus Total capital surplus Legal retained earnings (Million yen) Other retained earnings Reserve for tax purpose reduction entry of non-current assets Reserve for special account for tax purpose reduction entry of non-current assets 23 272 (2) (23) 9 991 991 2,400 12 12 12 (974) 4,789 – – (0) 2,357 1,004 7,175 44,111 2,919 2,017 Balance at beginning of period Changes during period Dividends of surplus Profit Provision of reserve for special account for tax purpose reduction entry of non-current assets Reversal of reserve for tax purpose reduction entry of non-current assets Purchase of treasury shares Exercise of share acquisition rights Net changes in items other than shareholders’ equity Total changes during period Balance at end of period – 2,919 – 2,017 1,680 1,680 1,680 3,698 – 729 (2) 270 (13) 9 1,680 1,680 Shareholders’ equity Valuation and translation adjustments Total retained earnings Treasury shares Total shareholders’ equity Deferred gains or losses on hedges Total valuation and translation adjustments Share acquisition rights Total net assets 17,100 13,738 31,863 (1,273) 35,527 1,509 (100) 1,409 – 36,936 Retained earnings Other retained earnings General reserve Retained earnings brought forward (974) 4,789 (974) 4,789 729 418 418 318 – – (9) 25 2,017 Valuation difference on available-for-sale securities (974) 4,789 – – (0) 676 (0) 2,357 572 – 23 Balance at beginning of period Changes during period Dividends of surplus Profit Provision of reserve for special account for tax purpose reduction entry of non-current assets Reversal of reserve for tax purpose reduction entry of non-current assets Purchase of treasury shares Exercise of share acquisition rights Net changes in items other than shareholders’ equity Total changes during period Balance at end of period – 17,100 3,830 17,568 3,814 35,678 676 (597) 6,171 41,698 572 2,082 For the fiscal year ended March 31, 2022 Shareholders’ equity Capital surplus Retained earnings Share capital Legal capital surplus Other capital surplus Total capital surplus Legal retained earnings (Million yen) Other retained earnings Reserve for tax purpose reduction entry of non-current assets Reserve for special account for tax purpose reduction entry of non-current assets Balance at beginning of period 2,919 2,017 1,680 3,698 729 270 9 Changes during period Dividends of surplus Profit Provision of reserve for special account for tax purpose reduction entry of non-current assets Reversal of reserve for tax purpose reduction entry of non-current assets Purchase of treasury shares Exercise of share acquisition rights Net changes in items other than shareholders’ equity Dividends of surplus (1,150) (1,150) 5,948 5,948 Balance at beginning of period Changes during period Profit Provision of reserve for special account for tax purpose reduction entry of non-current assets Reversal of reserve for tax purpose reduction entry of non-current assets Purchase of treasury shares Exercise of share acquisition rights Net changes in items other than shareholders’ equity – – 2 301 301 (1,150) 5,948 – – (0) 125 (0) 427 24 Total changes during period – – Balance at end of period 2,919 2,017 301 1,982 301 3,999 – 729 (2) 268 Shareholders’ equity Valuation and translation adjustments Retained earnings Other retained earnings General reserve Retained earnings brought forward Total retained earnings Treasury shares Total shareholders’ equity Deferred gains or losses on hedges Total valuation and translation adjustments Share acquisition rights Total net assets Valuation difference on available-for-sale securities 17,100 17,568 35,678 (597) 41,698 2,082 318 2,400 12 44,111 (2) – 9 (1,150) 5,948 – – (0) 427 Total changes during period – 4,799 4,797 125 5,225 (197) (183) (12) 5,028 Balance at end of period 17,100 22,368 40,476 (471) 46,923 1,884 2,216 – 49,140 14 332 (197) 14 (18