OKUMURA : Annual Report2019

Annual Report 2019

P r o f i l e

Okumura was established in 1907 based on two key principles enshrined in the corporate mottos "steadfast management" and "sincere operation."The steady growth achieved over the years has been made possible through the unflagging support of our customers.

Okumura's main business activities include civil engineering projects for railways, roads, power station facilities, sewage and water works, and others. In the area of construction are projects such as houses, public facilities, medical facilities, and office buildings. The Company has developed technology at the highest level, with achievements including the seismic isolation system used to construct Japan's first earthquake-absorbing building. In the area of environment-related technology, Okumura has developed techniques for 100% recycling of demolished concrete, and natural greening of concrete surfaces on buildings.

Okumura understands what an important mission it is to provide a better environment for the future. Accordingly, the Company is dedicated to contributing to meaningful social infrastructure investment and to always being a corporation regarded highly by society. It will achieve this by continuing to develop as an all-around construction company based on steadfast business management.

C o n t e n t s

1	Financial Highlights	12	Consolidated Statement of Changes in Equity
2	To Our Shareholders	13	Consolidated Statement of Cash Flows
4	Review of Operations	14	Notes to Consolidated Financial Statements
6	Topics	34	Independent Auditor's Report
8	Consolidated Balance Sheet	35	Breakdown of Orders (Nonconsolidated)
10	Consolidated Statement of Income	36	Network
11	Consolidated Statement of Comprehensive Income	37	Board of Directors / Investor Information

Financial Highlights

						Okumura Corporation Annual Report 2019
For the years ended March 31	2017	2018	2019	2019
Consolidated:		Millions of Yen			Thousands of
			U.S. Dollars
Net sales	¥203,091	¥223,928	¥220,884	$1,989,769
Operating income	11,679	15,854	13,717	123,564
Net income attributable to owners of the parent	13,614	15,164	12,314	110,930
Total assets*1	287,675	313,864	297,691	2,681,655		1
Total equity	152,959	167,724	168,401	1,516,986
Per Share:		Yen			U.S. Dollars
Basic net income*2	¥341.69	¥380.65	¥312.93	$2.82
Cash dividends applicable to the year*2	165.00	184.00	153.00	1.38

*1 "Partial Amendments to Accounting Standard for Tax Effect Accounting" (ASBJ Statement No. 28, February 16, 2018), etc. have been applied from the beginning of the fiscal period of March 2019. Accordingly, the summaries of business results for the fiscal period of March 2017 and the fiscal period of March 2018 represent performance results after retrospectively applying the said accounting standards, etc.

*2 Per share figures have been restated, as appropriate, to reflect the consolidation of shares at the rate of five shares to one share of the Company's common stock effective October 1, 2017.

Note: The U.S. dollar amounts included herein are presented solely for convenience of the reader. Such dollar amounts have been translated from yen at the approximate exchange rate in Tokyo on March 31, 2019, of ¥111.01=$1.

Net Sales

(Millions of Yen)

250,000
200,000
150,000
100,000
50,000
0
2017	2018	2019

Net income attributable to owners of the parent

(Millions of Yen)

20,000
16,000
12,000
8,000
4,000
0
2017	2018	2019

TotalEquity

(Millions of Yen)

200,000
175,000
150,000
125,000
100,000
75,000
50,000
25,000
0
2017	2018	2019

Disclaimer Regarding Forecasts and Projections

This Annual Report includes forecasts, projections and other predictive statements that represent Okumura's assumptions and expectations in light of currently available information. These forecasts, etc., are based on industry trends, circumstances involving clients and other factors, and involve risks, variables and uncertainties. The Okumura Group's actual performance results may differ from those projected in this Annual Report. Consequently, no guarantee is presented or implied as to the accuracy of specific forecasts, projections or predictive statements contained herein.

To Our Shareholders

2

We would like to thank our shareholders for their continuing support and encouragement and wish each one of them the greatest success in their endeavors.

A general overview of our business performance for the fiscal period of March 2019 (April 1, 2018 to March 31, 2019) is provided below.

Results for the Year Ended March 31, 2019

During the period under review, the Japanese economy was basically on a recovery trend but there was a certain amount of back and forth due to the downward pressure exerted by natural disasters and the slowdown of the overseas economy. Consequently, the pace of recovery remained sluggish. In this climate, the operating environment surrounding the construction industry remained stable thanks to strong construction investments mainly from the private sector.

In these circumstances, the Company's consolidated net sales decreased 1.4% year on year to ¥220,884 million. Meanwhile, as a result of factors such as the decrease in net sales from construction work, consolidated gross profit decreased 3.7% year on year to ¥31,543 million, operating income decreased 13.5% year on year to ¥13,717 million, and net income attributable to owners of the parent decreased 18.8% year on year to ¥12,314 million.

The Company decided to pay a dividend of ¥153.00 per share for the period ended March 31, 2019 based on its basic policy regarding profit sharing. As for the fiscal year ending March 31, 2020 and thereafter, the Company intends to revise its measures for shareholder returns in an effort to ensure both proactive investments for the future and the steady return of profits to our shareholders.

Looking Ahead and Key Strategies

The Japanese economy is expected to recover at a slow pace due to the current weakness in overseas demand, despite the expectations for internal demand to remain firm. In the construction industry, while there are concerns over the tightening demand and supply of certain construction materials and labor, the business environment is expected to remain solid for the time being, given the continuing

Okumura Corporation Annual Report 2019

3

strong construction investments as a result of the recovery in public investments reflecting the effects of government policies. Meanwhile, in the medium- to long-term, harsh conditions are expected ahead due to the restraints on new construction investments and the increasing shortage of skilled labor.

Under these circumstances, the Okumura Group will continue its business in the long-term and contribute to the sustained development of society. To this end, the Okumura Group has formulated the "Vision toward 2030," indicating its future vision and the "Medium Term Business Plan (FY2019-FY2021)," which upholds the basic policy of promoting the three business strategies of "increasing corporate value," "expanding business domains" and "utilizing human resources," as the initial step in realizing this vision.

Specifically, we will "increase corporate value" by strengthening our marketing capabilities and building our technical superiority in the construction business, and reinforcing our companywide initiatives toward ESG, while at the same time aim to "expand business domains" by reinforcing the real estate business, entering new businesses and building an overseas business base. Furthermore, we will "utilize human resources" through our initiatives toward workstyle reforms, the utilization of diverse talent and reinforced education.

Going forward Okamura will uphold its corporate philosophy which has endured since its founding, while setting its sight on the "Vision toward 2030," and apply all of its resources to build a solid earnings base capable of flexibly and quickly responding to changes in the operating environment and to meet the expectations and trust placed in us by our shareholders.

The Company looks forward to the continued support and guidance of our shareholders.

June 2019

Takanori Okumura

President and Representative Director