Financial DataExplanation and Analysis of Business Results

Millions of Yen
(except for per share figures)
Thousands of U.S. Dollars
(except for per share figures)
2016 2017 2017 Change (%)
Contract backlog at the beginning of the year ¥ 1,956,266 ¥ 2,081,438 $ 18,552,794 6.4%
New orders received during the year 1,671,061 1,655,036 14,752,082 (1.0)
Net sales 1,545,889 1,487,253 13,256,556 (3.8)
Contract backlog at the end of the year ¥ 2,081,438 ¥ 2,249,221 $ 20,048,320 8.1%
Net income attributable to owners of parent

Per share (in yen and dollars)

¥ 77,045 ¥ 90,566 $ 807,256 17.5%
65.85 78.57 0.700 19.3
Cash dividends applicable to the year

Per share (in yen and dollars)

18,719 22,907 204,180 22.4
16.00 20.00 0.178 25.0
Net assets

Per share (in yen and dollars)

521,278 570,814 5,087,922 9.5
442.67 496.6 4.426 12.2
Total assets 1,660,822 1,760,079 15,688,377 6.0

U.S. dollar amounts above and elsewhere in this Annual Report were translated from yen, for convenience only, at the rate of US $1=¥112.19, the approximate exchange rate at March 31, 2017.

Status of Results

The Japanese economy during this fiscal year continued to recover overall as capital investment has been moderately bouncing back responding to strong corporate performance, and consumer spending has been gradually picking up.
In the domestic construction market, both government and private investments in construction were steady, allowing the construction industry to maintain a solid business environment.
Under these circumstances, the Company and its affiliated companies reported consolidated results of its operations as follows:
Orders received of 1,655.0 billion yen, 1.0% decrease compared to the previous fiscal year, net sales of 1,487.3 billion yen, 3.8% decrease, operating income of 140.8 billion yen, 19.9% increase, and net income attributable to owners of parent of 90.6 billion yen,17.5% increase compared to the previous fiscal year.

Major new orders received during FY ended March 2017

Client Project
JAPAN SPORT COUNCIL New National Stadium Development Project (2nd Period)
Hotel Okura Co.,Ltd. (Tentative Name) Toranomon 2-10 Project
East Nippon Expressway Company Limited Construction Work of the Tokyo Outer Ring Road at Oizumi South
Mitsui Fudosan Co., Ltd. Toyosu 2nd District 2-1 Project (Towers A and C)
Tokyo Metropolitan Government Construction of Wide-area Balancing Reservoir under the Loop Route No.7
(Shakujii River Section)

Major projects completed during FY ended March 2017

Client Project
Okada Building Co.,Ltd. (Tentative Name) MM59th Town Area B Block Development Plan
Cooperative for Urban Renewal of Roppongi 3-chome East District Urban Renewal of Roppongi 3-chome East District
JAPANESE RED CROSS SOCIETY Construction of SAITAMA RED CROSS HOSPITAL
Urban Renaissance Agency Land Preparation (First Phase) at the Area of Nobiru Northern Hills
Ministry of Land, Infrastructure, Transport and Tourism Kinki Regional Development Bureau Construction of the Intake of Tunnel Outlet Facility in Redevelopment of Amagase Dam

Results according to reporting segment, etc., are as follows (the results for reporting segments include internal transactions between segments).

1. Civil Engineering

In our Group, net sales decreased by 1.4% compared with the previous consolidated fiscal year to ¥449.4 billion, due to a decrease in net sales for both the Company and its consolidated subsidiaries. Also, operating income increased by 8.8% year on year to ¥55.1 billion, due to an improvement in gross profit margin.

2. Building Construction

In our Group, net sales decreased by 3.7% compared with the previous consolidated fiscal year, to ¥977.7 billion, due to a decrease in net sales for the Company. Also, operating income increased by 30.1% year on year to ¥73.3 billion, due to an increase in gross profit margin.

3. Real Estate Development

In the real estate sales market, while demand was strong in the condominium market mainly for properties in central Tokyo as sales prices remained high due to the rising cost of land, some properties in the suburbs took a long time to sell. The building leasing market was robust, amid improvement in the vacancy rate as corporate demand related to relocation and expansion of floor space continued to flourish and the average rent continued to climb.
In our Group, net sales decreased by 4.6% compared with the previous consolidated fiscal year to ¥121.7 billion, due to a decrease in sales for both the Company and its consolidated subsidiaries. Also, operating income increased by 41.1% year on year to ¥13.3 billion, due to an increase in gross profit margin.

4. Other

In our Group, net sales decreased by 12.2% compared with the previous consolidated fiscal year to ¥13.0 billion, and operating income increased by 27.5% year on year to ¥1.2 billion.

(Consolidated) Orders received

Millions of Yen
Name of reporting segment, etc.: 2016 2017
Civil engineering ¥ 444,462 ¥ 427,594
Building construction 1,101,915 1,101,472
Real estate development 112,201 115,337
Others 12,482 10,630
Total ¥ 1,671,061 ¥ 1,655,035

(Consolidated) Sales

Millions of Yen
Name of reporting segment, etc.: 2016 2017
Civil engineering ¥ 433,924 ¥ 422,847
Building construction 978,176 938,548
Real estate development 121,305 115,225
Others 12,482 10,630
Total ¥ 1,545,889 ¥ 1,487,252

Note: In Orders received and Sales, transactions between segments have been eliminated.

Cash Flows

1. Cash Flows from Operating Activities

Income before income taxes of ¥135.1 billion was earned in this term, which, together with an increase in deposits received and other factors, resulted in a balance of excess revenue of ¥218.1 billion for this consolidated fiscal year (excess revenue in the previous consolidated fiscal year was ¥95.3 billion).

2. Cash Flows from Investing Activities

A balance of excess revenue of ¥6.2 billion was recorded for this consolidated fiscal year due to the sales of investment securities, etc. (expenditure of ¥25.0 billion in the previous consolidated fiscal year).

3. Cash Flows from Financing Activities

A balance of expenditure of ¥60.0 billion was incurred in this consolidated fiscal year due to cash dividends paid and acquisition of treasury stock, etc. (expenditure of ¥35.1 billion in the previous consolidated fiscal year).

Cash Flows

Cash Flows

As a result of the above, cash and cash equivalents at the end of this consolidated fiscal year was ¥534.7 billion (an increase of ¥163.0 billion compared with the end of the previous consolidated fiscal year), and the balance of interest-bearing loans associated with procurement of finance was ¥238.1 billion (a decrease of ¥16.5 billion year on year). In addition, of the balance of interest-bearing loans associated with procurement of finance at the end of this consolidated fiscal year, non-recourse loans were ¥3.5 billion (a decrease of ¥1.6 billion year on year).

Analysis of Financial Position and Business Results

1. Overview

Although the business results for this consolidated fiscal year did not achieve the predictions at the beginning of the fiscal year for net sales, predictions were achieved for orders received, operating income, and net income attributable to owners of parent. Also, as net income attributable to owners of parent increased by ¥13.5 billion from the previous consolidated fiscal year to ¥90.5 billion, ROE (return on equity) increased by 1.4% to 16.7%.
Despite an increase of ¥1.1892 trillion in liabilities due to an increase in deposits received, net assets increased to ¥570.8 billion due to posting of net income attributable to owners of parent, and the ratio of capital to assets increased by 1.1% compared with the end of the previous consolidated fiscal year to 32.3%. Also, as a result of a decrease in interest-bearing loans associated with procurement of finance by ¥16.5 billion to ¥238.1 billion (including non-recourse loans of ¥3.5 billion, down ¥1.6 billion), the D/E ratio improved 0.1 points to 0.4 times.

2. Financial Position

(1) Assets

As a result of an increase in cash and time deposits, total assets increased by 6.0% or ¥99.2 billion compared with the end of the previous consolidated fiscal year to ¥1.7600 trillion.

(2) Liabilities

Total liabilities increased by 4.4% or ¥49.7 billion compared with the end of the previous consolidated fiscal year to ¥1.1892 trillion, due to an increase in deposits received.

(3) Net Assets

Net assets increased by 9.5% or ¥49.5 billion to ¥570.8 billion compared with the end of the previous consolidated fiscal year, due to posting of net income attributable to owners of parent, etc., despite carrying out an acquisition and cancellation of treasury stock.

3. Business Results

(1) New Orders and Net Sales

Despite an increase in Real Estate Development, new orders received have decreased in Building Construction, decreasing overall by 1.0% compared with the previous consolidated fiscal year to ¥1.6550 trillion.
Also, net sales decreased in all segments, decreasing by 3.8% to ¥1.4872 trillion, compared with the previous consolidated fiscal year.

(2) Operating Income

Operating income increased by 19.9% to ¥140.8 billion compared with the previous consolidated fiscal year, due to an increase in gross profit resulting from an increase in gross margin rates in all segments.

(3) Net Income Attributable to Owners of Parent

Net income attributable to owners of parent increased by 17.5% to ¥90.5 billion compared with the previous fiscal year, due to the increase in operating income, offsetting deterioration of extraordinary loss (income) due to losses incurred in relation to the Anti-Monopoly Act.

Dividend Policy

The Company has made it a basic policy to pay long-term stable dividend to Shareholders. The Company tries to reinforce internal reserve for the future business operation, and returns the profit to the Shareholders by way of a special dividend and the like when the business performance of the Company is well.
Comprehensively taking into account both achievement of much greater performance than the initial plan, and business surroundings in the future, etc., it has been decided to increase the dividend by ¥4 compared with the previous term and the last dividend forecast, or a dividend of ¥20 per year per ordinary share is allocated (of which ¥8 is allocated as an interim dividend).
The Articles of Incorporation of the Company permit an interim dividend to be allocated, in accordance with Paragraph 5 of Article 454 of the Companies Act, with dividends allocated twice every year, at the middle and at the end of the fiscal year. These dividends are decided at the General Meeting of Shareholders for the end of term and the Board meeting for the interim dividend.
Also, it is the policy to utilize retained earnings to promote next generation technology development, etc.
At the Board meeting on May 12, 2017, acquisition of treasury stock, the maximum limitation of which is 40 million shares (¥25.0 billion), was resolved in order to increase shareholder returns and to improve the capital efficiency.

Total dividend amount and dividend per share

Millions of Yen Yen
Resolution meeting date: Total dividend amount Dividend per share
Board meeting, November 11, 2016 ¥ 9,162 ¥ 8.00
General Meeting of Shareholders, June 29, 2017 13,744 12.00

Note: The dividends on retained at the record date of this term are as shown above.