A N N U A L R E P O R T 2015

Transcription

1 ANNUAL REPORT 2015

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4 Outline 3

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6 Outline TAISEI CORPORATION and Consolidated Subsidiaries Years ended March 31, 2005 through 2015 Millions of yen (except for per share gures) Revenue: Net sales: Construction contracts... 1,477,387 1,543,289 1,673,576 1,517,770 1,467,070 1,289,809 Real estate development and other 230, , , , , ,166 Total... 1,707,953 1,743,994 1,873,325 1,711,714 1,641,182 1,441,975 % change from previous year 6.8% 2.1% 7.4% (8.6)% (4.1)% (12.1)% Costs and expenses Cost of sales... 1,541,694 1,576,103 1,708,751 1,567,091 1,545,918 1,318,593 Selling, general and administrative expenses 117, , ,901 95,767 95,920 87,755 Total... 1,658,997 1,688,820 1,815,652 1,662,858 1,641,838 1,406,348 Operating income (loss)... 48,956 55,174 57,673 48,856 (656) 35,627 Income (loss) before income taxes 41,987 50,098 48,698 42,172 (38,449) 35,516 Income taxes... 20,495 19,064 20,248 13,878 (9,404) 14,462 Net income (loss)... 19,098 28,363 26,222 24,447 (24,401) 21,222 Per share data of common stock (in yen and dollars): Net assets Net income (loss) (22.93) Cash dividends Financial ratios: Net income (loss) as a percentage of total % 1.6% 1.4% 1.4% (1.5)% 1.5% revenue Total costs and expenses as a percentage of total 97.1% 96.8% 96.9% 97.1% 100.0% 97.5% revenue Dividends paid as a percentage of net income 25.3% 22.6% 24.4% 26.1% (21.8)% 25.3% Financial position data: Current assets... 1,100,443 1,078,787 1,200,945 1,120,798 1,082, ,895 Current liabilities... 1,130,483 1,084,333 1,161,870 1,003,741 1,074, ,026 Net property and... equipment 307, , , , , ,534 Long-term liabilities , , , , , ,083 Shareholders equity , , , , , ,779 Net assets , , , ,179 Other data: New orders received... during the year 1,805,425 1,773,996 1,875,127 1,753,692 1,524,578 1,244,439 Contract backlog at the... end of the year 1,811,772 1,841,774 1,843,576 1,885,554 1,768,950 1,571,414 Shares issued... (thousands) 1,064,803 1,064,803 1,064,803 1,064,803 1,064,803 1,090,622 U.S. dollar amounts were translated from yen, for convenience only, at the rate of US $ 1 =

7 Millions of yen (except for per share gures) Thousands of U.S. Dollars (except for per share gures) ,079,139 1,171,927 1,254,291 1,321,289 1,404,530 $ 11,687, , , , , ,740 1,404,177 1,218,119 1,323,504 1,416,496 1,533,473 1,573,270 13,092,036 (15.5)% 8.7% 7.0% 8.3% 2.6% 1,100,022 1,206,014 1,304,677 1,402,446 1,425,295 11,860,655 81,803 81,004 76,213 77,254 77, ,403 1,181,825 1,287,018 1,380,890 1,479,700 1,502,853 12,506,058 36,294 36,486 35,606 53,773 70, ,978 19,374 16,673 32,828 46,593 66, ,377 8,514 15,480 12,399 14,120 28, ,286 10,883 1,181 20,051 32,089 38,177 $ 317, $ % 0.1% 1.4% 2.1% 2.4% 97.0% 97.2% 97.5% 96.5% 95.5% 52.4% 482.5% 28.4% 21.3% 25.8% 847, ,931 1,012,639 1,076,213 1,136,497 $ 9,457, , , , , ,762 8,194, , , , , ,973 1,414, , , , , ,373 2,150, , , , , ,140 3,080, , , , , ,114 4,095,149 1,254,095 1,379,572 1,404,407 1,645,896 1,765,743 $ 14,693,709 1,607,390 1,663,459 1,651,370 1,763,793 1,956,266 16,279,155 1,140,269 1,140,269 1,140,269 1,140,269 1,171,269 6

8 Management Strategy 7

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10 Management Strategy 9

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12 Episode Episode 11 Management Strategy

13 Episode Episode 12

14 Management Strategy Form that TAISEI VISION 2020 Aims for... 13

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16 Management Strategy INPUT BUSINESS 15

17 TAISEI VISION 2020 MODEL OUTPUT OUTCOME 16

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21 Roadmap for Promoting ZEB 20

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24 Our Main Achievements 23 Business Overview

25 PICK UP 24

26 25 Business Overview

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28 27 Business Overview

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30 Our Main Achievements 29 Business Overview

31 PICK UP 30

32 31 Business Overview

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34 Business Overview 33

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36 Our Main Achievements 35 Business Overview

37 PICK UP 36

38 Business Overview 37

39 OUR STORY OUR STORY OUR STORY 38

40 Business Overview

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44 Social background Overall Management Perspective Response to environmental problems, social problems, and governance Stakeholder engagement Observing the Charter of Corporate Behavior of Keidanren P TAISEI VISION 2020 Mid-term Business Plan ( ) Overall Principles of Conduct P Self-check of the seven core subjects of ISO26000 P P Set important tasks to be tackled in the Mid-term Business Plan (P47) Main items to be undertaken by the Group of Companies P Corporate Action based on the Group Action Guidelines D Group Main items to be undertaken by the Group of Companies C A Identify the major KPIs for the Group (P6) 43

45 P D C A Degree of importance for stakeholders (ISO etc.) Changes in the external environment Reduction in CO2, energy efficiency Contributing to the community Human rights Labor safety Supply chain management Intellectual property, information Internal controls Dialog Compliance, etc. Important tasks to be tackled Effect on business (Business Plan) Materiality KPIs Contribution to the development of social infrastructure Improvement in productivity Strengthening cost competitiveness and supply power Ensuring stable profitability of overseas projects Improving the strength of the Group Governance 44

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47 D C A 46

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50 Environmental 49

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52 Environmental 51

53 CO2 emissions (10 3 t-co2) Calculated value based on 1990 criterion Emissions per unit floor area Predicted CO2 emissions (kg-co2 /year.m 2 ) FY Predicted CO2 Reduction Percentage %

54 Environmental 53

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56 Environmental 55

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58 Environmental 57

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60 Environmental 59

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62 Environmental 61

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64 Social 63

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66 Social 65

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68 Social 67

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70 Social 69

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72 Social 71

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74 Social Health and Safety Policy We systematically implement TAISEI OHSMS, our occupational health and safety management system, as the basis for managing the health and safety of our employees. We are committed to improving the working environment for our employees under the maxim Safety First, and aim to win the trust and understanding of society at large. 1. Eradicating occupational accidents and hazards 2. Preventing third-party hazards 3. Improving health and safety standards Specific causes of danger and harm and specific items to be addressed Accident information database Accident investigation and analytical information Head office Health and Safety Management policy President s Health and Safety Policy Central Safety Committee Targets Action priorities Management priorities, other (Guidance) Accident analysis Prevention of reoccurrence Branches Branch Health and Safety Management Plan Branch Safety Committee Branch targets Action priorities Head office plan Branch action plan (Warning) (Guidance) Accident analysis Prevention of reoccurrence Construction sites Construction Health and Safety Plan Construction Site Manager s Management Policy Implementation and operation Implementation and operation Implementation and operation (Warning) Accident response Internal audits/guidance Construction site patrols On-site inspections/remediation Records/storage System review Records/storage Health and Safety Management Policy Health and Safety Management Plan Emergency Response Plan Basic Construction Work Plan Records/storage 73

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76 Governance 75

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78 Governance Emergency Secretariat Emergency response system President CRO Normal situation Company-wide risk management system CRO Section Emergency Headquarters Review of the risk factors/classification Incorporation of recurrence prevention measures into risk management CRO: Chief Risk Management Officer Head office Risk Management Promotion Committee Risk Management Committee Risk Management Council Branches Risk Management Promotion Committee 77

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80 Governance President Administrative structure Head Office Business Administration Div. CP General Manager CP General Promoter (Chief of Business (General Manager of Administration Division) General Affairs Department) Implementation Structure Head Office Division CP Manager (Chief of Division) Division CP Promoter (General Manager In Charge of Administration) CP Implementers 3 (All Department General Managers) All Executives and Employees Secretariat CP 1 Committee CP Promotion Section 2 Branches Division CP Manager (Chief of Branch) Division CP Promoter (Administrative Manager) CP Implementers 3 (All Department General Managers) All Executives and Employees 79

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82 Governance 81

83 Group action guides Organizational basic rules Basic rules of Standard for establishing emergency information disclosure response headquarters, etc. Basic rules regarding business continuity during disasters 1st layer Basic rules regarding control of company information 2nd layer 3rd layer 4th layer Rules regarding control of customer information Regulations regarding handling company information Rules regarding protection of personal information Rules regarding management of intellectual property information Rules regarding storage of documents Guidelines, manuals, etc Rules regarding control of insider information, and prevention of insider trading Guidebooks (regulation guidelines) Standard for implementing information security for electronic information 82

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88 Financial and Corporate Data TAISEI CORPORATION and Consolidated Subsidiaries Years ended March 31, 2014 and 2015 Millions of Yen (except for per share gures) Thousands of U.S. Dollars (except for per share gures) Change (%) Contract backlog at the beginning of the year 1,651,370 1,763,793 $ 14,677, % New orders received during the year 1,645,896 1,765,743 14,693, Net sales 1,533,473 1,573,270 13,092, Contract backlog at the end of the year 1,763,793 1,956,266 $ 16,279, % Net income 32,089 38,177 $ 317, % Per share (in yen and dollars) Cash dividends applicable to the year 6,834 9,836 81, Per share (in yen and dollars) Net assets 384, ,114 4,095, Per share (in yen and dollars) Total assets 1,599,065 1,735,249 14,439, U.S. dollar amounts above and elsewhere in this Annual Report were translated from yen, for convenience only, at the rate of US $ 1 = , the approximate exchange rate at March 31,

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90 Financial and Corporate Data 89

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92 Financial and Corporate Data Basic Policy Deep cultivation of our primary business of construction [Corporate vision] Management Goals 1. Undertaking strategic approaches regarding focused projects 2. Actively contributing to improving infrastructures 3. Promoting the development of next-generation technologies 4. Establishing next-generation business models in the focused fields 5. Strengthening domestic construction projects 6. Developing the structure for healthy growth of overseas projects 7. Improving the total strength of the Taisei Group 8. Advancing the business foundation 91

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94 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Millions of Yen Thousands of U.S. Dollars (Note 1) Current assets: Cash and time deposits (Notes 3 and 4) , ,309 $ 2,815,253 Notes and accounts receivable, trade (Note 4) , ,712 4,083,482 Cost on uncompleted contracts... 74,167 77, ,513 Cost on development projects in progress ,149 95, ,197 Other inventories... 5,740 4,110 34,202 Deferred income tax assets (Note 8)... 37,698 32, ,563 Other current assets... 59,304 98, ,654 Allowance for doubtful accounts... (818) (415) (3,453) Total current assets... 1,076,213 1,136,497 9,457,411 Fixed assets: Property, plant and equipment: Buildings and structures (Notes 6 and 9) , ,391 1,018,482 Machinery, vehicles, tools, furniture and xtures... 58,995 53, ,004 Land , , ,609 Construction in progress... 1, , , ,836 2,428,526 Accumulated depreciation... (125,944) (121,863) (1,014,088) Net property and equipment , ,973 1,414,438 Intangibles:... 5,017 4,772 39,710 Investments and other assets: Investment securities (Notes 4, 5 and 6) , ,327 2,898,619 Net dened benet asset (Note 10)... 30,337 36, ,299 Deferred income tax assets (Note 8) ,569 Other assets (Note 6)... 44,902 42, ,854 Allowance for doubtful accounts... (5,216) (4,440) (36,948) Total investments and other assets , ,007 3,528,393 Total xed assets , ,752 4,982,541 Total assets... 1,599,065 1,735,249 $ 14,439,952 The accompanying notes are an integral part of these balance sheets. 93

95 Millions of Yen Thousands of U.S. Dollars (Note 1) Current liabilities: Notes and accounts payable, trade (Note 4) , ,707 $ 4,075,119 Short-term borrowings (Notes 4 and 7) , , ,388 Straight bonds due within one year (Note 4)... 11,200 15, ,823 Lease obligations ,305 Advances received and progress billings on uncompleted contracts , ,858 1,147,191 Deposits received (Note 4) , ,016 1,181,792 Allowance for warranty on completed contracts... 3,059 3,232 26,895 Allowance for losses on construction contracts... 50,671 41, ,156 Allowance for losses on order received Other current liabilities... 32,454 50, ,631 Total current liabilities , ,762 8,194,741 Long- term liabilities: Straight bonds (Notes 4 and 7)... 55,000 40, ,862 Long-term borrowings (Notes 4 and 7) , , ,114 Lease obligations ,925 Deferred income tax liabilities (Note 8)... 4,345 26, ,601 Deferred income tax liabilities for revaluation of land (Notes 8 and 18)... 4,913 4,430 36,864 Retirement benets for directors and corporate auditors ,637 Allowance for losses on investments in subsidiaries and afliates ,272 Allowance for environmental spending ,215 Net dened benet liability (Note 10)... 54,279 56, ,231 Asset retirement obligations (Note 14) ,881 Other long-term liabilities... 16,179 15, ,460 Total long-term liabilities , ,373 2,150,062 Total liabilities... 1,214,899 1,243,135 10,344,803 Net assets (Notes 11 and 21): Shareholders equity: Common stock Authorized: 2,200,000,000 shares Issued: 1,171,268,860 shares , ,742 1,021,403 Capital surplus... 94, , ,302 Retained earnings , ,290 1,192,394 Less: Treasury stock, at cost... (329) (356) (2,962) Total shareholders' equity , ,140 3,080,137 Accumulated other comprehensive income: Unrealized holding gains on securities, net of taxes... 59, , ,347 Deferred gains (losses) on hedging derivatives, net of taxes... (181) (4) (33) Revaluation reserve for land (Note 18)... (2,338) (70) (583) Foreign currency translation adjustments... (2,285) (1,486) (12,366) Remeasurements of de ned bene t plans, net of taxes (Note 10) ,974 83,000 Total accumulated other comprehensive income... 54, , ,365 Minority interests:... 2,124 2,361 19,647 Total net assets , ,114 4,095,149 Total liabilities and net assets... 1,599,065 1,735,249 $ 14,439,952 TAISEI ANNUAL REPORT 94

96 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Revenue: Net sales (Note 16): Millions of Yen Thousands of U.S. Dollars (Note 1) Construction contracts... 1,321,289 1,404,530 $ 11,687,859 Real estate development (and other) , ,740 1,404,177 1,533,473 1,573,270 13,092,036 Costs and expenses (Note 16): Cost of sales (Note 19)... 1,402,446 1,425,295 11,860,655 Selling, general and administrative expenses (Note 19)... 77,254 77, ,403 1,479,700 1,502,853 12,506,058 Operating income... 53,773 70, ,978 Other income (expenses): Interest and dividends income... 3,264 3,196 26,596 Interest expenses... (5,071) (4,095) (34,077) Taxes and dues... (340) (592) (4,926) Foreign exchange gains... 3,568 3,767 31,347 Investment gain on equity method... 1,549 1,725 14,355 Gains on sales of investment securities... 1, ,405 Gains on sales of property and equipment ,435 Losses on sales of property and equipment... (6,337) - - Impairment losses on xed assets (Note 20)... (4,599) (6,688) (55,654) Other, net... (1,109) (1,572) (13,082) (7,180) (3,437) (28,601) Income before income taxes... 46,593 66, ,377 Income taxes (Note 8): Current... (10,773) (22,513) (187,343) Deferred... (3,347) (6,242) (51,943) (14,120) (28,755) (239,286) Income before minority interests... 32,473 38, ,091 Minority interest in consolidated subsidiaries... (384) (48) (399) Net income 32,089 38,177 $ 317,692 Yen U.S. Dollars Amounts per share of common stock: Net income (Note 21) $ Diluted net income (Note 21) Cash dividends applicable to the year The accompanying notes are an integral part of these statements. (Note 1) 95

97 Years Ended March 31, 2014 and 2015 Millions of Yen Thousands of U.S. Dollars (Note 1) Income before minority interests 32,473 38,225 $ 318,091 Other comprehensive income (Note 22) Unrealized holding gains (losses) on securities, net of taxes... 13,718 51, ,976 Deferred gains (losses) on hedging derivatives, net of taxes ,473 Revaluation reserve for land ,770 Foreign currency translation adjustments ,268 Remeasurements of de ned bene t plans, net of taxes ,853 81,992 Share of other comprehensive income of associates accounted for by the equity method ,696 Total other comprehensive income... 14,140 62, ,175 Comprehensive income 46, ,215 $ 842,266 Comprehensive income attribute to: Owners of the parent... 46, , ,476 Minority interests ,790 The accompanying notes are an integral part of these statements. TAISEI ANNUAL REPORT 96

98 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Millions of Yen Common stock Capital Surplus Retained earnings Treasury stock Total shareholders equity Unrealized holding gains on securities, net of taxes Balance at March 31, ,448 94,170 93,020 (302) 299,336 45,931 Dividends (5,695) - (5,695) - Net income ,089-32,089 - Sale of treasury stock Acquisition of treasury stock (28) (28) - Reversal of revaluation reserve for land ,378-1,378 - Foreign currency translation adjustments on - - (14) - (14) - overseas afliate... Changes other than shareholders equity, net ,719 Balance at March 31, ,448 94, ,778 (329) 327,067 59,650 Cumulative effect of changes in accounting policies... Restated balance at beginning of year Issuance of new shares - - (6,447) - (6,447) - 112,448 94, ,331 (329) 320,620 59,650 10,294 10, ,588 - Dividends (7,403) - (7,403) - Net income ,177-38,177 - Sale of treasury stock Acquisition of treasury stock (27) (27) - Reversal of revaluation reserve for land (1,815) - (1,815) Changes other than shareholders equity, net ,549 Balance at March 31, , , ,290 (356) 370, ,199 Thousands of U.S. Dollars (Note 1) Common stock Capital Surplus Retained earnings Treasury stock Total shareholders equity Unrealized holding gains on securities, net of taxes Balance at March 31, 2014 $ 935,741 $ 783,640 $ 1,005,059 $ (2,738) $ 2,721,702 $ 496,380 Cumulative effect of changes in accounting policies (53,648) - (53,648) - Restated balance at beginning of year $ 935,741 $ 783,640 $ 951,411 $ (2,738) $ 2,668,054 $ 496,380 Issuance of new shares 85,662 85, ,324 - Dividends... - (61,606) - (61,606) Net income , ,692 - Sale of treasury stock Acquisition of treasury stock (224) (224) - Reversal of revaluation reserve for land (15,103) - (15,103) - Changes other than shareholders equity, net ,967 Balance at March 31, 2015 $ 1,021,403 $ 869,302 $ 1,192,394 $ (2,962) $ 3,080,137 $ 925,347 The accompanying notes are an integral part of these statements. 97

99 Millions of Yen Deffered gains (losses) on hedging derivatives, net of taxes Revaluation reserve for land Foreign currency translation adjustments Remeasure ments of defined benefit plans, net of taxes Total accumulated other comprehensive income Minority interests Total net assets (208) (960) (2,569) - 42,194 1, , (5,695) , (28) - (1,378) - - (1,378) , ,499 (181) (2,338) (2,285) ,975 2, , (6,447) (181) (2,338) (2,285) ,975 2, , , (7,403) , (27) - 1, , ,845 62, ,060 (4) (70) (1,486) 9, ,613 2, ,114 Thousands of U.S. Dollars (Note 1) Deffered gains (losses) on hedging derivatives, net of taxes Revaluation reserve for land Foreign currency translation adjustments Remeasure ments of defined benefit plans, net of taxes Total accumulated other comprehensive income Minority interests Total net assets $ (1,506) $ (19,456) $ (19,015) $ 1,073 $ 457,476 $ 17,675 $ 3,196, (53,648) $ (1,506) $ (19,456) $ (19,015) $ 1,073 $ 457,476 $ 17,675 $ 3,143, ,324 (61,606) , (224) - 15, , ,473 3,770 6,649 81, ,786 1, ,758 $ (33) $ (583) $ (12,366) $ 83,000 $ 995,365 $ 19,647 $ 4,095,149 TAISEI ANNUAL REPORT 98

100 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Millions of Yen Thousands of U.S. Dollars Cash ows from operating activities: Income before income taxes 46,593 66,980 $ 557,377 Depreciation and amortization... 7,407 8,288 68,969 Impairment losses on xed assets... 4,599 6,688 55,654 Increase (decrease) in allowance for doubtful accounts... (1,265) (1,180) (9,819) Increase (decrease) in allowance for losses on construction contracts... 19,369 (9,444) (78,589) Increase (decrease) in retirement bene ts... (33,729) - - Increase (decrease) in net de ned bene t liability... 54,279 2,458 20,454 Interest and dividend income... (3,264) (3,196) (26,596) Interest expenses... 5,071 4,095 34,077 Foreign exchange losses (gains)... (3,568) (3,768) (31,356) Write-down of investment securities ,695 Losses (gains) on sales of investment securities... (1,895) (383) (3,187) Losses (gains) on sales of property and equipment... 6,337 (533) (4,435) Write-down of cost on development projects in progress... 24, ,559 Decrease (increase) in trade receivables... (13,370) (45,670) (380,045) Decrease (increase) in cost on uncompleted contract... 9,791 (3,064) (25,497) Decrease (increase) in inventories other than cost on uncompleted contract... 14,228 5,811 48,356 Decrease (increase) in other inventories other than cost on uncompleted contract... (361) 1,630 13,564 Decrease (increase) in other current assets... (582) (38,937) (324,016) Decrease (increase) in prepaid pension cost... 6, Decrease (increase) in net de ned bene t asset... (30,337) (6,471) (53,849) Decrease (increase) in investment and other assets... 1,712 2,141 17,817 Investment gain on equity method... (1,549) (1,725) (14,355) Increase (decrease) in trade payables... (18,293) 22, ,113 Increase (decrease) in advances received and progress billings on uncompleted contracts... 24,479 (3,367) (28,019) Increase (decrease) in deposits received... 31,173 19, ,183 Other, net ,977 66, ,150 31, ,437 (Note 1) Cash received (paid) during the year for: Interest and dividends received... 3,416 3,347 27,852 Interest paid... (5,203) (4,230) (35,201) Income taxes paid... (8,613) (6,575) (54,714) Net cash provided by (used in) operating activities 138,750 24, ,374 Cash ows from investing activities: Decrease (increase) in time deposits... (142) 190 1,581 Purchase of marketable and investment securities... (9,863) (17,925) (149,164) Proceeds from sale of marketable and investment securities... 24,260 8,283 68,927 Purchase of property, equipment and intangible assets... (12,194) (7,032) (58,517) Proceeds from sale of property, equipment and intangible assets... 14,503 2,545 21,178 Other, net... (536) (37) (307) Net cash provided by (used in) investing activities 16,028 (13,976) (116,302) Cash ows from nancing activities: Increase (decrease) in short-term borrowings... (36,648) 7,368 61,313 Proceeds from long-term borrowings... 14,600 30, ,975 Repayment of long-term borrowings... (58,331) (69,772) (580,611) Issue of bonds... 19, Redemption of bonds... (2,200) (11,200) (93,201) Proceeds from issuance of common shares , ,400 Cash dividends paid, including those to minority interest... (5,695) (7,403) (61,604) Other, net... (464) (340) (2,829) Net cash provided by (used in) nancing activities (68,827) (30,470) (253,557) Effect of exchange rate changes on cash and cash equivalents... 2,648 3,161 26,305 Net increase (decrease) in cash and cash equivalents... 88,599 (17,206) (143,180) Cash and cash equivalents at beginning of year , ,372 2,948,922 Cash and cash equivalents at end of year (Note 3) , ,166 $ 2,805,742 The accompanying notes are an integral part of these statements. 99

101 Years Ended March 31, 2014 and 2015 The accompanying consolidated nancial statements of Taisei Corporation (the Company ) and its consolidated subsidiaries (collectively the Group ) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan ( Japanese GAAP ), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. The accompanying consolidated nancial statements have been reformatted and translated into English (with some expanded descriptions) from the consolidated nancial statements of the Company prepared in accordance with Japanese GAAP and led with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese language consolidated nancial statements but not required for fair presentation, is not presented in the accompanying consolidated nancial statements. (a) Consolidation and equity method The Company prepares the consolidated nancial statements including the accounts of the Company and those of its majority-owned subsidiaries, whether directly or indirectly controlled. The consolidated nancial statements include the accounts of 25 subsidiaries for the year ended March 31, 2015 (25 subsidiaries for the year ended March 31, 2014). Exclusion of certain small-scale subsidiaries from the scope of consolidation does not have a material impact on the consolidated nancial statements. All signi cant intercompany transactions, account balances and unrealized gains or losses have been eliminated in consolidation. Investments in af liated companies, in which the Company does not have control, but has the ability to exercise signi cant inuence, are accounted for by the equity method. Investments in 8 af liated companies are accounted for by the equity method for the year ended March 31, 2015 (7 af liated companies for the year ended March 31, 2014). The company included SHINAGAWA SEASON TERRACE BUILDING MANAGEMENT Co., Ltd. in the scope of equity method as it was newly established and became an af liated company in the year ended March 31, Exclusion of certain small-scale af liated companies from the scope of equity method does not have a material impact on the consolidated nancial statements. All consolidated subsidiaries other than 6 consolidated overseas subsidiaries have the same balance sheet date, March 31, corresponding with that of the Company. As for the 6 consolidated overseas subsidiaries whose scal year ends are December 31, their nancial statements as of December 31 are used in the preparation of the consolidated nancial statements. Signi cant transactions, if any, in the period from January 1 to March 31 have been adjusted in the consolidated nancial statements. (b) Valuation of Assets and Liabilities of Subsidiaries In the elimination of the investments in subsidiaries, the assets and liabilities of the subsidiaries including the portion attributable to minority shareholders are recorded based on their fair value at the time the Company acquired control of the respective subsidiaries. The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2015, which was to U.S. $ 1. The translations should not be construed as representations of what the Japanese yen amounts have been, could have been, or could in the future be when converted into U.S. dollars at this or any other rate of exchange. (c) Goodwill Signi cant excesses of investment cost over net equity of consolidated subsidiaries and af liated companies accounted for by the equity method are recognized as goodwill (negative goodwill, if credit balance), and amortized principally over the estimated useful lives or less than twenty years on a straight-line basis. However, immaterial goodwill charged to income in the year of acquisition. Negative goodwill is credited to income upon occurrence. (d) Foreign Currency Translation Receivables and payables denominated in foreign currencies are translated into Japanese yen at year-end exchange rates. The resulting exchange gains and losses are re ected in the consolidated statements of income. All revenues and expenses associated with foreign currencies are translated at rates of exchange prevailing when such transactions are made. The nancial statements of consolidated foreign subsidiaries and af liated companies under the equity method are translated into Japanese yen at exchange rates prevailing at the respective year-end dates except for shareholders equity accounts, which are translated at historical rates. The resulting foreign currency translation adjustments are presented in accumulated other comprehensive income in the net assets section of the consolidated balance sheets. (e) Cash and Cash Equivalents in the Consolidated Statements of Cash Flows In preparing the consolidated statements of cash ows, cash on hand, readily available deposits and short-term highly liquid investments with maturities not exceeding three months at the date of purchase and with insigni cant risks of change in value are considered to be cash and cash equivalents. 100

102 Financial and Corporate Data Years Ended March 31, 2014 and 2015 (f) Securities Securities held by the Group are classi ed into (a) debt securities intended to be held to maturity (hereafter, held-to-maturity debt securities ), (b) equity securities issued by subsidiaries and af liated companies, and (c) all other securities that are not classi ed in any of the above categories (hereafter, available-for-sale securities ). Held-to-maturity debt securities are stated at amortized cost. Equity securities issued by subsidiaries and af liated companies that are not consolidated or accounted for by the equity method are stated at moving-average cost. Available-for-sale securities with available fair market values are stated at fair market value. Unrealized gains and losses on available-for-sale securities are reported, net of applicable income taxes, as a separate component of accumulated other comprehensive income in the net assets section. Realized gains and losses on sales of such securities are computed using moving-average cost. Other securities with no available fair market value are stated at moving-average cost. (g) Revenue Recognition of Construction Revenue associated with construction contracts of which the outcome can be reliably estimated is accounted for by the percentage-ofcompletion method; otherwise contract revenue is accounted for by the completed-contract method. The percentage of completion at the end of the reporting period is determined by the percentage of the cost incurred to the estimated total costs. (h) Inventories The Company and its certain subsidiaries develop real estate projects on their own account. Cost on development projects in progress are mainly stated at the lower of cost based on the specic-identication cost method or net realizable value. For this purpose, the cost includes the purchase cost of land, incidental costs, direct development costs and (in relation to certain developments by one of the subsidiaries) interest expenses. Cost on uncompleted contracts is mainly stated at cost based on the specic-identication cost method. (i) Property, plant and Equipment Property, plant and equipment except for buildings are recorded at cost and depreciated principally by the declining-balance method over the standard useful lives prescribed in the Corporation Tax Law. Buildings are principally depreciated by the straight-line method. (j) Accounting for Lease Transactions Finance leases, except for certain immaterial or short-term nance leases in which ownership is not transferred to lessee, are capitalized. Capitalized leased assets whose ownership is transferred to lessee are depreciated by the same method of depreciation applied to property, plant and equipment. Capitalized leased assets whose ownership is not transferred to lessee are depreciated to a residual value of zero by the straight-line method over a useful life period corresponding to the lease contract period. (k) Derivatives and Hedge Accounting Derivative nancial instruments are stated at fair value and changes in fair value are recognized as gains or losses unless derivative nancial instruments are used for hedging purposes. If derivative nancial instruments are used as hedges and meet certain hedging criteria, the Company and its consolidated domestic subsidiaries defer recognition of gains or losses resulting from changes in fair value of the derivative nancial instruments until related losses or gains on hedged items are recognized. If interest rate swap contracts are used as hedge and meet certain hedging criteria, net amounts to be paid or received under the interest rate swap contracts are added to or deducted from the interest on liabilities for which the swap contract were executed. (l) Income Taxes The Company and its wholly owned domestic subsidiaries apply the system of consolidated tax returns. The Company computes the provision for income taxes based on the pretax income included in the consolidated statement of income and recognizes deferred tax assets and liabilities for expected future tax consequences of temporary differences between the nancial statement basis and the tax basis of assets and liabilities. (m) Allowance for Doubtful Accounts Allowance for doubtful accounts is provided to reserve for probable losses from bad debt. It consists of the estimated uncollectible amount of certain identi ed doubtful receivables and the amount estimated on the basis of the past default ratio for normal receivables. (n) Allowance for Warranty on Completed Contracts Allowance for warranty on completed contracts is provided as the amount estimated using an actual ratio of related losses during the past certain periods. (o) Allowance for Losses on Construction Contracts Allowance for losses on construction contracts is provided with respect to construction projects for which eventual losses are reasonably estimated. (p) Allowance for Losses on Order Received Allowance for losses on order received is provided with respect to orders (excluding construction contracts) for which eventual losses are reasonably estimated. (q) Retirement Benets for Directors and Corporate Auditors Retirement bene ts for directors and corporate auditors of certain consolidated subsidiaries have been set up in accordance with each company s regulations. (r) Allowance for Losses on Investments in Subsidiaries and Afliates Allowance for losses on investments in subsidiaries and af liates is provided for estimated losses from certain subsidiaries and af liates in liquidation. (s) Allowance for Environmental Spending Allowance for environmental spending is provided based on estimated costs for disposal of Polychlorinated Biphenyl ( PCB ) waste, which is obligated to dispose by the Act on Special Measures Concerning Promotion of Proper Treatment of PCB Waste. (t) Accounting Method for Retirement Benet Net de ned bene t liability is provided for severance and retirement bene ts for employees and executive of cers of the Company s certain consolidated subsidiaries based on estimated amounts of projected bene t obligations and plan assets at the year-end. In calculating projected bene t obligations, the method of attributing estimated amounts of retirement bene ts to the period until this scal year is based on the bene t formula basis. (In some consolidated subsidiaries, the straight line basis is used.) Past service costs are amortized using the straight-line method (some consolidated subsidiaries use the declining-balance method) over 1-10 years, which is not longer than an average remaining service period of the employees when the costs are incurred. Actuarial gains and losses are amortized from the subsequent scal year (some consolidated subsidiaries amortize actuarial gains and losses from the current scal year) using the straight line method (some consolidated subsidiaries use the declining balance method) over 1-10 years, which is not longer than an estimated average remaining service period of the employees when the gains or losses are incurred. 101

103 (u) Net Income and Cash Dividends per Share Net income per share is calculated by dividing net income available to common shares by the weighted average number of common shares outstanding during the year. Cash dividends per share shown for each year represent dividends declared as applicable to the respective years. (v) Reclassications Certain prior year amounts have been reclassi ed to conform to the current year presentation. These reclassi cations have no impact on previously reported results of operations or retained earnings. (w) Change in Accounting Policy Adoption of the Accounting Standard for Retirement Bene ts Effective from the scal year ended March 31, 2015, the Company and its domestic subsidiaries adopted Accounting Standard for Retirement Bene ts (Accounting Standards Board of Japan ( ASBJ ) Statement No.26, issued on May 17, 2012 (hereinafter the Statement No.26 )) and Guidance on Accounting Standard for Retirement Bene ts (ASBJ Guidance No.25, issued on March 26, 2015 (hereinafter the Guidance No.25 )) in accordance with the provisions stated in the paragraph 35 of the Statement No.26 and the paragraph 67 of the Guidance No.25. By this adoption, the calculation methods for projected bene t obligations and current service costs were reviewed. The method of attributing estimated retirement bene ts to periods was changed from the straight line basis to the bene t formula basis and the method of determining the discount rate was changed from a method based on a yield of the bonds carrying the same remaining life as an average remaining service period of the employees to a method of using a single weighted average discount rate re ecting the estimated payment period and the amount for each estimated payment period of the retirement bene t. In transition, as stipulated in the paragraph 37 of the Statement No.26, the impact associated with the change in calculation methods for projected bene t obligations and current service costs was re ected in retained earnings carried forward at the beginning of the scal year. As a result, net de ned bene t asset decreased by 3,290 million ($ 27,378 thousand), net de ned bene t liability increased by 6,670 million ($ 55,505 thousand) and retained earnings decreased by 6,447 million ($ 53,649 thousand) at the beginning of the scal year ended March 31, In addition, operating income, ordinary income and income before income taxes increased by 435 million ($ 3,620 thousand) as of the scal year ended March 31. The effect of this change on Per Share Data is described in the relevant section. Cash and cash equivalents at March 31, 2014 and 2015 consist of the following: Thousands of Millions of Yen U.S. Dollars Cash and time deposits , ,309 $ 2,815,253 Less: Time deposits with maturities exceeding three months... (1,176) (1,143) (9,511) Cash and cash equivalents , ,166 $ 2,805,

104 Financial and Corporate Data Years Ended March 31, 2014 and 2015 (1) Policies for using nancial instruments The Group restricts investments to the low risk assets such as deposits, and raise funds by the indirect nance such as borrowings from bank as well as by the direct nance such as issuing corporate bonds or commercial papers. Derivative nancial instruments are employed mainly for hedging uctuation in interest rate and foreign currency exchange, and not used to speculate. Receivables: trade notes and trade accounts are exposed to the credit risks of customers. In order to reduce such risks, the Group conducts strict credit examinations when orders are received, and afterward manage the receivables individually and make effort to detect reduction of credit risks early. For investment securities which are mainly held-to-maturity debt securities and shares held to keep the relationship with business partners, the Group regularly monitors the fair values or nancial positions of the invested companies, and revises the portfolio timely (except for held-to-maturity debt securities) considering the relationship with them. Debts, trade payables: notes and accounts are debts mostly due within one year. Borrowings, commercial papers and bonds are primarily for working capital, and have maturity dates of ve years or less. Although the borrowings or bonds issued at variable rates are exposed to interest rate uctuation risk, the risk is hedged by derivative transactions (interest rate swap contracts). The Group primarily utilizes derivative transactions related to interest rates in order to mitigate the uctuation risk in interest rates or to reduce nancing costs, and derivative transactions related to currency in order to mitigate the foreign exchange risk. These transactions are exposed to the uctuation risk in interest rates and the foreign exchange risk. However, the Group is exposed to limited risk, because most of them are hedged by the corresponding transactions. They consider the credit risk to be low, because they conduct derivative transactions solely with reliable international nancial institutions. The Group executes and manages derivative transactions in accordance with internal rules. Their Finance Departments are responsible for conducting, evaluating transactions and managing related risks. (2) Fair Value of Financial Instruments (a) Book values of the nancial instruments included in the consolidated balance sheet, the fair values of said items as of March 31, 2014 and 2015, were as follows. Items for which it is extremely dif cult to calculate the fair value were not included in the following table (see Note 2 below). Millions of Yen 2014 Book Value Fair Value Difference [ASSETS] Cash and time deposits 355, ,548 - Notes and accounts receivable, trade 444, ,362 (63) Investment securities Debt securities intended to be held to maturity Available-for-sale securities 207, ,055 - [LIABILITIES] Notes and accounts payable, trade 466, ,030 - Short-term borrowings and Long-term borrowings due within one year 118, ,423 (624) Straight bonds due within one year 11,200 11,225 (25) Deposits received 122, ,875 - Straight bonds 55,000 55,992 (992) Long-term borrowings 131, ,789 (1,295) [Derivative nancial instruments ()] (275) (275) Millions of Yen 2015 Book Value Fair Value Difference [ASSETS] Cash and time deposits 338, ,309 - Notes and accounts receivable, trade 490, ,685 (27) Investment securities Debt securities intended to be held to maturity Available-for-sale securities 287, ,515 - [LIABILITIES] Notes and accounts payable, trade 489, ,707 - Short-term borrowings and Long-term borrowings due within one year 104, ,177 (222) Straight bonds due within one year 15,000 15,047 (47) Deposits received 142, ,016 - Straight bonds 40,000 40,782 (782) Long-term borrowings 113, ,411 (1,077) [Derivative nancial instruments ()] (245) (245) -

105 Thousands of U.S. dollars Book Value Fair Value Difference [ASSETS] Cash and time deposits $ 2,815,253 $ 2,815,253 $ - Notes and accounts receivable, trade 4,083,482 4,083,257 (225) Investment securities Debt securities intended to be held to maturity 6,116 6, Available-for-sale securities 2,392,569 2,392,569 - [LIABILITIES] Notes and accounts payable, trade 4,075,119 4,075,119 - Short-term borrowings and Long-term borrowings due within one year 873, ,235 (1,847) Straight bonds due within one year 124, ,214 (391) Deposits received 1,181,792 1,181,792 - Straight bonds 332, ,369 (6,507) Long-term borrowings 943, ,076 (8,962) [Derivative nancial instruments ()] (2,039) (2,039) - ()Note The assets and liabilities are reported as net amounts. Any items for which the total becomes a net liability are indicated in parentheses. Note 1: The calculation method of the fair values of nancial instrument and securities, derivative transactions [ASSETS] The fair values of these nancial instruments are almost equivalent to the book value, due to the short term settlements; although, the fair value of receivables due after one year are based on the present values of discounted cash ows re ecting the interest rate, the estimated collection terms and credit risks with respect to each receivables categorized by collection terms. The fair values of marketable securities are based on the quoted market value, and bonds are based on the market value, the price indicated by a third party such as broker or the present value of discounted cash ows. See the notes on 5 Securities for notes pertaining to securities categorized by the purposes for which they are held. [LIABILITIES] The fair values of these nancial instruments are almost equivalent to the book value, due to the short term settlements; although, the fair value of long-term borrowings due within one year is based on the same method as that for long-term borrowings. The fair value of long-term borrowings is based on the present value of discounted cash ows by the interest rate which may be applicable when the same kind of borrowings is conducted. The fair value of marketable bonds is based on the quoted market value, otherwise the fair value of nonmarketable bonds are based on the present value of discounted cash ows by the interest rate re ecting the estimated redemption terms and issuer s credit risk. [Derivative nancial instruments] See the notes on 13 Derivative Transactions. Note 2: Financial instruments for which it is deemed to be extremely dif cult to calculate the fair value Nonmarketable securities (book value amount to 57,986 million and 60,077 million ($ 499,933 thousand) at March 31, 2014 and 2015, respectively) are not included in the [Assets] Investment securities Available-for-sale securities above, as it is extremely dif cult to calculate the fair values because they have no quoted market prices and the future cash ows cannot be estimated. Note 3: Scheduled redemption amounts after the consolidated balance sheet date for monetary claims and securities with period of maturities as of March 31, 2014 and 2015 were as follows: Millions of Yen 2014 Due within one year Due after one year but within ve years Due after ve years but within ten years Time deposits , Receivables: Trade notes and Trade accounts ,396 7,029 - Investment securities Debt securities intended to be held to maturity Government bonds Bonds Other bonds Available-for-sale securities Government bonds Others Total ,757 7,

106 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Due within one year Millions of Yen 2015 Due after one year but within ve years Due after ve years but within ten years Time deposits , Receivables: Trade notes and Trade accounts ,401 3,311 - Investment securities Debt securities intended to be held to maturity Government bonds Available-for-sale securities Government bonds Others Total ,955 4, Thousands of U.S. Dollars 2015 Due within one year Due after one year but within ve years Due after ve years but within ten years Time deposits... $ 2,808,080 $ - $ - Receivables: Trade notes and Trade accounts... 4,055,929 27,553 - Investment securities Debt securities intended to be held to maturity Government bonds ,337 2,272 Available-for-sale securities Government bonds ,297 - Others Total... $ 6,864,900 $ 33,436 $ 2,272 Note 4: See the notes on 7 Short-term Borrowings, Long-term Borrowings and Straight Bonds for notes pertaining to the aggregate annual maturities of long term debt after the consolidated balance sheet date. (1) Following tables summarized acquisition costs, book values and fair values of securities with fair values available as of March 31, 2014 and 2015: (a) Held-to-maturity debt securities: Securities with fair values exceeding book values Millions of Yen 2014 Type Book value Fair value Difference Government bonds Corporate bonds Others Total Millions of Yen Thousands of U.S. Dollars Type Book value Fair value Difference Book value Fair value Difference Government bonds $ 6,091 $ 6,166 $

107 Other securities Millions of Yen 2014 Type Book value Fair value Difference Government bonds (0) Millions of Yen Thousands of U.S. Dollars Type Book value Fair value Difference Book value Fair value Difference Government bonds (0) $ 25 $ 25 $ (0) (b) Available-for-sale securities: Securities with book values exceeding acquisition costs Millions of Yen 2014 Type Book value Acquisition cost Difference Equity securities ,502 94,703 95,799 Government bonds Others Total ,744 95,682 96,062 Millions of Yen Thousands of U.S. Dollars Type Book value Acquisition cost Difference Book value Acquisition cost Difference Equity securities , , ,458 $ 2,302,047 $ 925,181 $ 1,376,866 Government bonds ,430 2, Others... 1, ,769 6,175 3,594 Total , , ,899 $ 2,314,246 $ 933,711 $ 1,380,535 Other securities Millions of Yen 2014 Type Book value Acquisition cost Difference Equity securities... 15,085 18,513 (3,428) Government bonds (0) Others (9) Total... 15,311 18,748 (3,437) Millions of Yen Thousands of U.S. Dollars Type Book value Acquisition cost Difference Book value Acquisition cost Difference Equity securities... 9,370 11,033 (1,663) $ 77,973 $ 91,811 $ (13,838) Government bonds (0) (0) Others (0) (0) Total... 9,413 11,076 (1,663) $ 78,331 $ 92,169 $ (13,838) 106

108 Financial and Corporate Data Years Ended March 31, 2014 and 2015 (2) Total sales of available-for-sale securities and the related gains and losses for the years ended March 31, 2014 and 2015 were as follows: Millions of Yen 2014 Type Equity securities Bonds Others Total Total amount of available-for-sale securities sold... 4,110 2,829 3,890 10,829 Gains on sales of available-for-sale securities... 1, ,022 Losses on sales of available-for-sale securities ,781 4,908 Millions of Yen 2015 Type Equity securities Others Total Total amount of available-for-sale securities sold Gains on sales of available-for-sale securities Losses on sales of available-for-sale securities Thousands of U.S. Dollars 2015 Type Equity securities Others Total Total amount of available-for-sale securities sold... $ 3,803 $ 1,465 $ 5,268 Gains on sales of available-for-sale securities... 2, ,405 Losses on sales of available-for-sale securities (3) Impairment losses on securities The Group recognized impairment losses on the following securities for the years ended March 31, 2014 and 2015 as followings: Thousands of Millions of Yen U.S. Dollars Type Write-down of investment securities included in cost of sales (Real estate development) $ 25 Write-down of investment securities ,653 (1) The following assets were pledged as long-term debt at March 31, 2014 and 2015: Thousands of Millions of Yen U.S. Dollars Buildings and structures (net of accumulated depreciation)... 4,139 3,906 $ 32,504 (2) The following assets were pledged principally as collateral for loans of companies, which were not consolidated at March 31, 2014 and 2015 Thousands of Millions of Yen U.S. Dollars Investment securities... 2,106 2,191 $ 18,233 Other assets... 1,922 1,907 15,869 Total... 4,028 4,098 $ 34,

109 Short-term borrowings at March 31, 2014 and 2015 mainly consisted of short-term notes and overdrafts from banks. The weighted average interest rates of short-term borrowings at March 31, 2014 and 2015 were 0.7% and 0.6% per annum, respectively. The Group has had no dif culty in renewing such notes and overdraft facility agreements, when they considered such renewal advisable. Long-term borrowings at March 31, 2014 and 2015 consisted of the following: Thousands of Millions of Yen U.S. Dollars Bonds and notes: Issued by the Company: 1.80% yen bonds due in ,000 - $ % yen bonds due in , % yen bonds due in ,000 15, , % yen bonds due in ,000 10,000 83, % yen bonds due in ,000 10,000 83, % yen bonds due in ,000 10,000 83, % yen bonds due in ,000 10,000 83,215 Loans, principally from banks and insurance companies: Secured loans... 1, ,991 Unsecured loans , ,374 1,334, , ,214 1,799,234 Amount due within one year... (80,292) (62,880) (523,258) Total long-term borrowings (due after one year) , ,334 $ 1,275,976 The annual interest rates applicable to long-term loans due within one year averaged 1.1% and 1.8% as of March 31, 2014 and 2015, respectively, and the annual interest rates applicable to long-term loans due after one year averaged 1.2% as of March 31, 2014 and The aggregate annual maturities of long-term borrowings (including current portion) at March 31, 2015 were summarized as follows: Year ending March 31, Millions of Yen Thousands of U.S. Dollars ,880 $ 523, , , , , , , , , and thereafter... 10,000 83,215 Total ,214 $ 1,799,234 The Company has a commitment line provided by co- nancing consisting of several correspondent nancial institutions for the purpose of securing nancing in case of an emergency. The commitment line amounts as of March 31, 2014 and 2015 were 100,000 million and 75,000 million ($ 624,116 thousand), respectively, although there was no amount of corresponding loans as of March 31, 2014 and

110 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Taxes on income consist of corporation, enterprise and inhabitants taxes. The adjustment of deferred tax assets and liabilities due to the reduction of corporation tax rates On March 31, 2015, amendments to the Japanese tax regulations Act on Partial Amendment of the Income Tax Act and Others (Act No. 9 of 2015) and Act on Partial Amendment of the Local Tax Act and Others (Act No. 2 of 2015) were enacted into law. As a result of these amendments, the effective statutory tax rate used to measure deferred income tax assets and liabilities was changed subject to those are to be eliminated after April 1, 2015 from 35.6% to 33.1% for those expected to be eliminated in the scal year beginning on April 1, 2015 until that ended on March 31, 2016 and to 32.3% for those expected to be eliminated in the scal years beginning on and after April 1, Due to this change in the effective statutory tax rate, amount of deferred income tax liabilities (net of deferred income tax assets) decreased by 490 million ($ 4,078 thousand), deferred income taxes increased by 5,321 million ($ 44,279 thousand), unrealized gains on available-for-sale securities, net of taxes increased by 5,324 million ($ 44,304 thousand) and remeasurements of de ned bene t plans increased by 487 million ($ 4,053 thousand). In addition, deferred income tax liabilities for revaluation reserve for land decreased by 453 million ($ 3,770 thousand) and revaluation reserve for land increased by 453 million ($ 3,770 thousand). The following table summarized the signi cant differences between the statutory tax rate and the Company s effective tax rate for nancial statement purposes for the year ended March 31, 2014 and Statutory tax rate 38.0% 35.6% Permanent differences: Non-deductible expenses Non-taxable income (11.1) (2.4) Per capita inhabitant tax and others Changes in valuation reverse (6.8) 0.6 Tax rate difference of foreign consolidated subsidiaries (1.7) (1.4) Reversal of revaluation reserve for land (1.7) (0.7) Effect of enacted changes in tax laws and rates on Japanese tax Others (1.3) 0.0 Effective tax rate Signi cant components of deferred income taxes at March 31, 2014 and 2015 were as follows: Thousands of Millions of Yen U.S. Dollars Deferred income tax assets: Disallowed portion of expenses and losses: Net dened benet liability... 42,277 43,164 $ 359,191 Inventories... 28,774 23, ,361 Accrued bonuses... 4,680 4,702 39,128 Fixed assets... 2,130 4,627 38,504 Bad debt expenses and allowance for doubtful accounts... 3,841 3,523 29,317 Others... 8,916 8,224 68,436 Tax loss carryforward... 2, ,998 Unrealized prots... 7,372 7,424 61,779 Sub-total ,318 95, ,714 Valuation allowance... (4,718) (4,292) (35,716) Total... 95,600 91, ,999 Deferred income tax liabilities: Unrealized holding gains on securities... (32,954) (53,013) (441,150) Gains on securities contribution to employee retirement benet trust... (20,605) (18,695) (155,571) Net dened benet asset... (6,367) (11,831) (98,452) Others... (1,419) (1,117) (9,295) Total... (61,345) (84,656) (704,468) Net total... 34,255 6,673 $ 55,531 In addition to the deferred income taxes shown above, deferred tax liabilities concerning revaluation of land amounting to 4,913 million at March 31, 2014 and 4,430 million ($ 36,864 thousand) at March 31, 2015 were included in the consolidated balance sheets. 109

111 (1) The Company and certain consolidated subsidiaries hold some of ce buildings for rent in Tokyo and other areas. The rental income on of ce buildings for rent was 3,657 million and 2,734 million ($ 22,751 thousand) at the year ended on March 31, 2014 and 2015, respectively. Rental income is mainly booked in Net Sales: Real estate development and other, and rental cost is mainly booked in Cost of Sales. (2) The amounts of investment and rental property which booked in consolidated balance sheets, the amounts of increase or decrease, and fair value at March 31, 2014 and 2015 were as follows: Millions of Yen 2014 Book value Fair value March 31, 2013 increase (decrease) March 31, 2014 March 31, ,731 (27,596) 59,135 65,882 Millions of Yen 2015 Book value Fair value March 31, 2014 increase (decrease) March 31, 2015 March 31, ,135 (7,997) 51,138 57,284 Thousands of U.S. Dollars 2015 Book value Fair value March 31, 2014 increase (decrease) March 31, 2015 March 31, 2015 $ 492,095 $ (62,548) $ 425,547 $ 476,691 Note 1: The carrying amount is stated at cost of acquisition less accumulated depreciation and impairment losses. Note 2: The main reasons of decrease for the years ended March 31, 2014 and March 31, 2015 were sales of xed assets in the amounts of 18,297 million and 686 million ($ 5,709 thousand), impairment loss on xed assets in the amounts of 3,987 million and 4,883 million ($ 40,634 thousand), and reclassi cation to inventories (real estate) in the amounts of 5,339 million and 1,959 million ($ 16,302 thousand), respectively. Note 3: The book value at March 31, 2014 and 2015 included asset retirement obligations of 240 million and 233 million ($ 1,939 thousand), respectively. Note 4: The fair value of investment and rental property as of March 31, 2014 and 2015 were mainly calculated by the Company according to the appraisal standard of real-estate (including those which were adjusted by the land price index, if any). 1. The Company and its main consolidated subsidiaries have adopted the dened-benet pension plans and dened-contribution pension plans. The dened-benet pension plans adopted consist of dened-benet corporate pension plans and lump-sum payment plans. Liabilities and expenses for severance and retirement bene ts of the Company and its consolidated domestic subsidiaries are determined based on amounts obtained by actuarial calculations. The Company may also pay additional retirement bene ts which are not subject to actuarial calculation. The Company has established a retirement bene t trust. As a result of the change of retirement bene t system in one of the consolidated subsidiaries of the Company, from de ned-bene t pension plan to de ned-contribution pension plan, the number of companies applying de ned-bene t pension plan decreased by 1 and de ned-contribution pension plan increased by 1 during scal year Besides, as a result of the change of retirement bene t system in the Company, the number of companies applying de ned-contribution pension plan increased by 1 during scal year Accordingly, the numbers of consolidated companies which have adopted lump-sum payment plans, de ned-bene t corporate pension plans and de nedcontribution pension plans were 20, 8 and 4, respectively, as of March 31,

112 Financial and Corporate Data Years Ended March 31, 2014 and Dened-benet pension plans (1) Movement in retirement bene t obligations Thousands of Millions of Yen U.S. Dollars Balance at April 1, beginning of the year , ,594 $ 1,211,567 Cumulative effects of changes in accounting policies ,960 82,883 Related balance after reecting changes in accounting policies , ,554 1,294,450 Current service cost... 5,632 6,178 51,411 Interest cost... 2,760 1,616 13,448 Actuarial loss (gain) (1,449) (12,058) Benets paid... (12,848) (12,074) (100,474) Past service costs... (97) (255) (2,122) Other Balance at end of the year , ,626 $ 1,245,119 Some of the consolidated subsidiaries use simpli ed method for the calculation of retirement bene t obligations. Retirement bene t expenses in the consolidated subsidiaries applying simplifying method are recorded in current service cost. (2) Movements in plan assets Thousands of Millions of Yen U.S. Dollars Balance at beginning of the year , ,653 $ 1,012,341 Expected return on plan assets... 1,629 1,699 14,138 Actuarial loss (gain)... 7,449 10,353 86,153 Contributions paid by the employer... 6,143 3,978 33,103 Benets paid... (9,202) (7,997) (66,547) Balance at end of the year , ,686 $ 1,079,188 (3) Reconciliation from retirement bene t obligations and plan assets to net de ned bene t liability (asset) Thousands of Millions of Yen U.S. Dollars Funded retirement benet obligations , ,187 $ 1,224,823 Plan assets... (121,653) (129,686) (1,079,188) 21,724 17, ,635 Unfunded retirement bene t obligations... 2,218 2,439 20,297 Net total at year-end... 23,942 19, ,932 Net dened benet liability... 54,279 56, ,231 Net dened benet asset... (30,337) (36,808) (306,299) Net total at year-end... 23,942 19,940 $ 165,932 (4) Retirement bene t costs Thousands of Millions of Yen U.S. Dollars Current service cost... 5,632 6,178 $ 51,411 Interest cost... 2,760 1,616 13,448 Expected return on plan assets... (1,629) (1,699) (14,138) Net actuarial loss amortization... 1,503 4,218 35,100 Past service costs amortization... (1,736) (1,760) (14,646) Other Total retirement bene t costs for the year... 6,546 8,590 $ 71,482 (5) Remeasurements of de ned bene t plans Items recorded in remeasurements of de ned bene t plans, before tax were as follows: Millions of Yen Thousands of U.S. Dollars Past service costs... - (1,505) $ (12,524) Actuarial gains and losses , ,311 Total balance at March 31, 2014 and ,515 $ 120,

113 (6) Accumulated remeasurements of de ned bene t plans Items recorded in accumulated remeasurements of de ned bene t plans (before considering tax effect) were as follows: Thousands of Millions of Yen U.S. Dollars Unrecognized past service costs... (11,722) (10,216) $ (85,013) Unrecognized actuarial gains and losses... 11,524 (4,497) (37,422) Total balance at March 31, 2014 and (198) (14,713) $ (122,435) (7) Plan assets Plan assets comprise: Equity securities... 43% 47% Bonds General accounts Special accounts Cash and cash equivalents Other Total The retirement bene t trust established for corporate pension plans accounted for 31% and 35% of total plan assets, for the scal year ended March 31, 2014 and 2015, respectively. Long-term expected rate of return Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining the long-term expected rate of return. (8) Actuarial assumptions The principal actuarial assumptions at March 31, 2014 and 2015 (expressed as weighted averages) were as follows: Discount rate The Company and its consolidated domestic subsidiaries ~2.0% 0.8~1.5% Consolidated overseas subsidiaries Long-term expected rate of return ~ ~ Dened-contribution pension plans Amount payable for de ned-contribution pension plans of the Company and its consolidated subsidiaries were 2,058 million and 2,161 million ($ 17,983 thousand), for the scal year ended March 31, 2014 and 2015, respectively. Net assets comprise three subsections; which are shareholders equity, accumulated other comprehensive income and minority interests. Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus. Under the Japanese Corporate Law ( the Law ), when a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets. Under the Law, appropriations of legal earnings reserve and additional paid-in capital generally require a resolution of the shareholders meeting. Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, however, all additional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends. The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated nancial statements of the Company in accordance with the Law. The number of treasury stock owned by the Company, consolidated subsidiaries and af liated companies adopting the equity method as of March 31, 2014 and 2015 were 1,278 thousand shares and 1,322 thousand shares, respectively. 112

114 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Operating leases (a) Lessee Future minimum lease payments as of March 31, 2014 and 2015 were as follows: Thousands of Millions of Yen U.S. Dollars Due within one year... 4,386 4,209 $ 35,026 Due after one year... 29,046 25, ,596 Total... 33,432 29,276 $ 243,622 (b) Lesser Future minimum lease receipts as of March 31, 2014 and 2015 were as follows: Thousands of Millions of Yen U.S. Dollars Due within one year... 3,337 3,576 $ 29,758 Due after one year... 25,601 25, ,302 Total... 28,938 28,848 $ 240,060 (1) Derivative transactions of the Company and its consolidated subsidiaries as of March 31, 2014 and 2015 were as follows: Derivative transactions which were not accounted for by the hedge accounting Currency-related transactions Corresponding derivative transactions at March 31, 2014 were not applicable. ) Over-the counter transactions Millions of Yen 2015 Contract amount Total Due after one year Fair value Unrealized loss Currency swap contracts short commitment... 33,004 - (245) (245) Thousands of U.S. Dollars 2015 Contract amount Total Due after one year Fair value Unrealized loss Currency swap contracts short commitment... $ 274,644 $ - $ (2,039) $ (2,039) Derivative transactions which were accounted for by the hedge accounting Interest Rate-Related Derivatives: Main items hedged by interest rate swap contracts are long-term debt. The following interest rate swaps are used as hedges. The net amounts to be paid or received are added to or deducted from interests. (a) Special treatment of swap Millions of Yen 2014 Contract amount Total Due after one year Fair value Interest rate swaps receive oating rate, pay xed rate ,638 85,328 - Millions of Yen 2015 Contract amount Total Due after one year Fair value Interest rate swaps receive oating rate, pay xed rate... 95,064 87,

115 Thousands of U.S. Dollars 2015 Contract amount Total Due after one year Fair value Interest rate swaps receive oating rate, pay xed rate... $ 791,079 $ 729,217 $ - Note 1: Fair value of interest rate swaps was included in the corresponding hedged long-term debt (long term debt due within one year was considered as short-term debt) as those interest rate swaps were recorded as an adjustment to the corresponding hedged long-term debt under the special treatment. (b) Deferred swap The Company had no deferred swap as of March 31, The information as of March 31, 2014 was as follows: Millions of Yen 2014 Contract amount Total Due after one year Fair value Interest rate swaps receive oating rate, pay xed rate... 20,000 20,000 (275) Note 1: Fair value was determined at the quoted price obtained from the counterparty nancial institutions. (1) General information on the asset retirement obligations is as follows: Asset retirement obligations are based on the estimated future restoration obligations pursuant to the of ce rental agreements and future obligations for asbestos removal pursuant to the Ordinance on Prevention of Health Impairment due to Asbestos. (2) Calculation method of the asset retirement obligations Asset retirement obligations are calculated based on the estimated period of use depending on the period of useful life of the relevant tangible xed assets and discounted by rates of % which are estimated based on the rate of return on government bonds for the each period mainly corresponding to the useful life. (3) Asset retirement obligations as of March 31, 2014 and 2015 were as follows: Thousands of Millions of Yen U.S. Dollars As of beginning of the year... 1, $ 7,623 New obligations by acquisition of xed assets Changes in estimated obligations and accretion Settlement payment... (10) (12) (100) Others... (321) 6 51 As of end of the year $ 7,881 (4) Asset retirement obligations which were not recognized on the consolidated balance sheet were as follows: The Company and its certain consolidated subsidiaries have obligation for future restoration mainly relating to the head of ces, assumed pursuant to the of ce rental agreements. However, they did not recognize these obligations because they could not specify the timing of its pursuance and estimate reasonably the amounts of these obligations, for estimated period of use of the relevant tangible xed assets was uncertain and no plan or expectation of relocation according to their business strategy was existed. 114

116 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Transactions of the Company s consolidated subsidiaries with related individuals, including shareholders and directors, for the years ended March 31, 2014 and 2015 were as follows: (a) Name (b) Attribution (c) Capital (Million yen) (d) Equity ownership percentage of the Company (a) Yoshiyuki Murata (b) The director of the Corporation (c) - (d) 0.00% (a) Toyoko Murata (b) Close relative of the director of the Corporation (c) - (d) - Millions of Yen 2014 Transactions during the year ended March 31, 2014 Balance at the end of the year Description of transaction Amount Amount Amount Housing construction by Taisei Housing Co., Ltd. Housing construction by Taisei Housing Co., Ltd. (a) Takao Kanai Housing construction (b) Close relative of the operating of cer of the Corporation by Taisei Housing Co., (c) - Ltd. (d) 0.00% Notes 1: Consumption taxes were not included in the transaction amounts. 2: Transaction conditions and policies to decide transaction conditions (1) Transaction condition including the contract price was determined properly on an arm s length basis as in the case of other general transactions. The amount of transaction above represents the contract price on the construction contract. (2) Yoshiyuki Murata, the director of the Corporation and his close relative, Toyoko Murata jointly ordered the housing construction. (a) Name (b) Attribution (c) Capital (Million yen) (d) Equity ownership percentage of the Company (a) Yasushi Yoshinari (b) Close relative of the director of the Corporation (c) - (d) 0.00% (a) Yasushi Yoshinari (b) Close relative of the director of the Corporation (c) - (d) 0.00% Millions of Yen 2015 Transactions during the year ended March 31, 2015 Balance at the end of the year Description of transaction Amount Amount Amount Purchase of land by Taisei Yuraku Real Estate Co., Ltd. Housing construction by Taisei Housing Co., Ltd (a) Name (b) Attribution (c) Capital (Million yen) (d) Equity ownership percentage of the Company (a) Yasushi Yoshinari (b) Close relative of the director of the Corporation (c) - (d) 0.00% (a) Yasushi Yoshinari (b) Close relative of the director of the Corporation (c) - (d) 0.00% Thousands of U.S. dollars 2015 Transactions during the year ended March 31, 2015 Balance at the end of the year Description of transaction Amount Amount Amount Purchase of land by Taisei Yuraku Real Estate Co., Ltd. Housing construction by Taisei Housing Co., Ltd. $ $ - $ $ - Notes 1: Consumption taxes were not included in the transaction amounts. 2: Transaction conditions and policies to decide transaction conditions (1) The purchase price of land was determined on an arm s length basis considering the market price. The amount of transaction above represents the price on the contract for sales of real estate. (2) Transaction condition including the contract price was determined properly on an arm s length basis as in the case of other general transactions. The amount of transaction above represents the contract price on the construction contract. 115

117 (1) Segment Information (a) General information on reportable segments Each reportable segment of the Group is a business unit in the Group, whose discrete nancial information is available. Reportable segments are reviewed periodically at the Board of Directors Meeting in order to determine distribution of management resources and evaluate business result of each reportable segment. The headquarters in the head of ce are established by the products of construction and the services. Each headquarter proposes comprehensive domestic and oversea strategies with respect to products and services, and operates its business activities. The Group consists of segments identi ed by products and services based on the headquarters, and identi es the three segments, Civil engineering, Construction contracts, and Real estate development as reportable segments: Civil engineering delivering construction of civil engineering, etc.; Construction contracts delivering construction of building and housing, etc.; Real estate development delivering purchase, sale and rental of land and buildings, etc. (b) Basis of measurement of net sales, pro t or loss and other material items on reportable segment The accounting methods for each reportable segment are the same as that set forth in the Summary of Signi cant Accounting Policies. The pro t (loss) of a reportable segment is based on the operating income (loss) before amortization of good will in Consolidated Statements of Income. In addition, conditions of intersegment transactions and transfers are determined by considering market prices as in the case of other general transactions. Assets of the Group are not allocated to the segments. However, the corresponding depreciation expenses are allocated to the segments according to the rational bases such as the usage of assets. (c) Information of net sales, pro t or loss and other material items on reportable segment Segment information as for the years ended March 31, 2014 and 2015 were as follows: Civil engineering Reportable segments Construction contracts Millions of Yen 2014 Real estate development Others Total Adjustments Consolidated Net sales: Customers , , ,346 9,954 1,533,473-1,533,473 Intersegment... 29,642 33,378 6,089 2,010 71,119 (71,119) - Total , , ,435 11,964 1,604,592 (71,119) 1,533,473 Operating income... 32,568 (8,950) 27, ,147 1,626 53,773 Depreciation expense... 3,070 2,681 1, ,448 (41) 7,407 Increase (decrease) in allowance for losses on construction contracts , ,369-19,369 Notes 1: Others presented businesses such as incidental business to the construction business, leisure business, and other service businesses, which are not included in reportable segments. 2: Adjustment amount of operating income was 1,626 million, which included 1,684 million of intersegment elimination, etc. and (58) million of the amount of amortization of goodwill. 3: Segment operating income was adjusted against operating income of Consolidated Statement of Income. 116

118 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Civil engineering Reportable segments Construction contracts Millions of Yen 2015 Real estate development Others Total Adjustments Consolidated Net sales: Customers , , ,555 12,449 1,573,270-1,573,270 Intersegment... 22,331 42,718 5,874 2,026 72,949 (72,949) - Total ,058 1,017, ,429 14,475 1,646,219 (72,949) 1,573,270 Operating income... 33,128 24,453 12, , ,417 Depreciation expense... 4,623 2,478 1, ,356 (68) 8,288 Increase (decrease) in allowance for losses on construction contracts... (49) (9,395) - - (9,444) - (9,444) Civil engineering Reportable segments Construction contracts Thousands of U.S. Dollars 2015 Real estate development Others Total Adjustments Consolidated Net sales: Customers... $ 3,734,102 $ 8,109,670 $ 1,144,670 $ 103,594 $ 13,092,036 $ - $ 13,092,036 Intersegment , ,479 48,881 16, ,049 (607,049) - Total... 3,919,930 8,465,149 1,193, ,455 13,699,085 (607,049) 13,092,036 Operating income... $ 275,676 $ 203,487 $ 101,881 $ 2,954 $ 583,998 $ 1,980 $ 585,978 Depreciation expense... $ 38,471 $ 20,621 $ 9,736 $ 707 $ 69,535 $ (566) $ 68,969 Increase (decrease) in allowance for losses on $ (408) $ (78,181) $ - $ - $ (78,589) $ - $ (78,589) construction contracts... Notes 1: Others presented businesses such as incidental business to the construction business, leisure business, and other service businesses, which are not included in reportable segments. 2: Adjustment amount of operating income was 238 million ($ 1,980 thousand), which included 317 million ($ 2,638 thousand) of intersegment elimination, etc. and (79) million ($ (658) thousand) of the amount of amortization of goodwill. 3: Segment operating income was adjusted against operating income of Consolidated Statement of Income. (2) Related Information (a) Information about products and services The information about products and services is included in (c) Information of net sales, pro t or loss and other material items on reportable segment of (1) Segment Information for the years ended March 31, 2014 and (b) Information about geographic areas Net sales The information about net sales was not presented for the years ended March 31, 2014 and 2015 since sales to unaf liated customers in Japan accounted for more than 90% of sales of Consolidated Statement of Income. Property, plant and equipment The information about property, plant and equipment was not presented for the years ended March 31, 2014 and 2015 since the amounts of property, plant and equipment that located in Japan accounted for more than 90% of the amounts of property, plant and equipment of Consolidated Balance Sheet. (c) Information about major customers The information about major customers was not presented for the years ended March 31, 2014 and 2015 since net sales to any customer were less than 10% of the amounts of sales of Consolidated Statement of Income. 117

119 (d) Information about impairment loss on xed assets of reportable segment for the years ended March 31, 2014 and 2015 were as follows: Millions of Yen 2014 Reportable segments Civil engineering Construction contracts Real estate development Others Elimination and/or corporate Total Impairment loss on xed assets , ,599 Millions of Yen 2015 Reportable segments Civil engineering Construction contracts Real estate development Others Elimination and/or corporate Total Impairment loss on xed assets ,292 4,946 - (13) 6,688 Thousands of U.S. Dollars 2015 Reportable segments Civil engineering Construction contracts Real estate development Others Elimination and/or corporate Total Impairment loss on xed assets... $ 3,853 $ 10,751 $ 41,158 $ - $ (108) $ 55,654 (e) Information about amortization and unamortized balance of goodwill of reportable segment for the years ended March 31, 2014 and 2015 were as follows: Millions of Yen 2014 Reportable segments Civil engineering Construction contracts Real estate development Others Elimination and/or corporate Total Amortization of goodwill Unamortized balance of goodwill Millions of Yen 2015 Reportable segments Civil engineering Construction contracts Real estate development Others Elimination and/or corporate Total Amortization of goodwill Unamortized balance of goodwill Thousands of U.S. Dollars 2015 Reportable segments Civil engineering Construction contracts Real estate development Others Elimination and/or corporate Total Amortization of goodwill... $ 183 $ - $ 474 $ - $ - $ 657 Unamortized balance of goodwill... $ - $ - $ - $ - $ - $ - (f) Information about gains on negative goodwill of reportable segment Information about gains on negative goodwill for the years ended March 31, 2014 and 2015 were not applicable. 118

120 Financial and Corporate Data Years Ended March 31, 2014 and 2015 The Group was contingently liable as guarantors for borrowings of companies, which were not consolidated, with the amount of 5,647 million and 2,684 million ($ 22,335 thousand) at March 31, 2014 and 2015, respectively. In addition, the Group was contingently liable to invest in the speci c purpose companies for their repayment and other obligations of borrowings with the amount of 17,280 million and 17,280 million ($ 143,796 thousand) at March 31, 2014 and 2015, respectively. The amounts indicated their shares of the additional investment obligations. In the year ended March 31, 2002, certain consolidated domestic subsidiaries executed revaluation of their land for business in accordance with the Law Concerning Revaluation of Land (the Law ). As a result of this revaluation, deferred income taxes concerning the differences between the amounts after revaluation and the book values before revaluation were stated in the assets and liabilities in the consolidated balance sheets. The differences between these amounts, net of taxes, were stated as Revaluation reserve for land in Accumulated other comprehensive income. The revaluation was executed in accordance with the method prescribed in the Article 2, Items 3, 4 and 5 of the Law on November 30, 2001 and March 31, One of the consolidated subsidiaries, which was merged with another consolidated subsidiary on December 1, 2001, executed the revaluation on November 30, Excess amount of the book values of the revaluated land over the fair values as of March 31, 2014 and 2015 was 8,289 million and 4,500 million ($ 37,447 thousand), respectively (including the excess amount of 2,482 million and short amount of 1,021 million ($ 8,496 thousand) related to investment and rental property at March 31, 2014 and 2015, respectively). Research and development expenses, which were included in selling, general and administrative expenses and cost of sales, amounted to 9,534 million and 10,665 million ($ 88,749 thousand) for the years ended March 31, 2014 and 2015, respectively. Impairment losses on xed assets for the years ended March 31, 2014 and 2015 consisted of the following: 2014 Use Type of assets Location Assets for business use... Land, Building and others Tokyo and others (14 lots) Leased assets... Machinery and equipment Hokkaido (1 lot) Assets reclassied from Land, Building, Structure business purpose to trading purpose... Dormant assets... Land, Building, Structure Kanagawa and others (3 lots) Nagano and another (2 lots) 2015 Use Type of assets Location Land, Building, Machinery and equipment Assets for business use... and others Kanagawa and others (33 lots) Dormant assets... Land and Building Hokkaido and others (4 lots) The Company and its consolidated domestic subsidiaries grouped their xed assets based on units, for which decisions for investments were made. Book values of the xed assets listed above were reduced to recoverable amounts and impairment losses were recognized as follows: Thousands of Millions of Yen U.S. Dollars Buildings and structures... 1,481 1,754 $ 14,596 Land... 2,982 4,016 33,419 Others ,639 Total... 4,599 6,688 $ 55,654 The recoverable amount of the xed assets for the years ended March 31, 2014 and 2015 were their net realizable values mainly based on amounts determined by valuations made in accordance with real estate appraisal standards. 119

121 Net assets per share and net income per share as of and for the years ended March 31, 2014 and 2015 were as follows: Yen U.S. Dollars Net assets per share $ Net income per share Diluted Net income per share Diluted net income per share for the years ended March 31, 2014 and 2015 were not presented because the Company had no shares with dilutive effects. Calculation bases for basic net income per share for the years ended March 31, 2014 and 2015 were as follows: Thousands of Millions of Yen U.S. Dollars Basic Net income per share Net income... 32,089 38,177 $ 317,692 Net income not available to common stock holders Net income available to common stock... 32,089 38, ,692 Average common stock outstanding (in thousands share)... 1,139,022 1,139,057 As described in 2. (w) Changes in accounting policy, the Company has adopted Accounting Standard for Retirement Bene ts. As a result, net assets per share decreased by 5.28 ($ ) and net income per share increased by 0.24 ($ ). Recycling adjustments and tax effects for each component of other comprehensive income were as follows: Millions of Yen Thousands of U.S. Dollars Unrealized holding gains on securities Amount incurred... 22,774 71,659 $ 596,314 Recycling... (1,482) (50) (416) Before Tax... 21,292 71, ,898 Tax effect... (7,574) (20,059) (166,922) Unrealized holding gains on securities, net of taxes... 13,718 51, ,976 Deffered gains or losses on hedging derivatives Amount incurred ,139 Recycling Before Tax ,288 Tax effect... (15) (98) (815) Unrealized gains or losses on hedging derivatives, net of taxes ,473 Revaluation reserve for land Tax effect ,761 Foreign currency translation adjustments Amount incurred ,767 Recycling... (127) (60) (499) Foreign currency translation adjustments, net of taxes ,268 Remeasurements of dened bene t plans Amount incurred , ,449 Recycling ,444 20,338 Before Tax , ,787 Tax effect... - (4,662) (38,795) Remeasurements of de ned bene t plans, net of tax ,853 81,992 Share of other comprehensive income of associates accounted for by the equity method Amount incurred ,704 Total other comprehensive income... 14,140 62, ,

122 Financial and Corporate Data Years Ended March 31, 2014 and 2015 Cash dividends The following appropriation of retained earnings at March 31, 2015 was approved at the annual meeting of the Company s shareholders held on June 26, Millions of Yen Thousands of U.S. Dollars Cash dividends, 5 ($ 0.042) per share... 5,850 $ 48,

123 Years Ended March 31, 2013 and

124 123 Financial and Corporate Data

125 124

126 Financial and Corporate Data 125

127