Nippon Koei : Consolidated Financial Results for the Fiscal Year Ended June 30, 2021

Consolidated Financial Results

for the Fiscal Year Ended June 30, 2021

[IFRS]

August 13, 2021

Company name: Nippon Koei Co., Ltd.

Stock exchange listing: Tokyo Stock Exchange

Code number: 1954

URL: https://www.n-koei.co.jp/english

Representative: Hiroaki Shinya, Representative Director and President

Contact: Yasushi Hirusaki, Director General, Corporate Management Headquarters

Phone: [phone]

Scheduled date of holding general shareholder's meeting: September 29, 2021

Scheduled date of commencing dividend payments: September 9, 2021

Scheduled date of filing securities report: September 29, 2021

Availability of supplementary briefing material on quarterly financial results: Yes

Schedule of quarterly financial results briefing session: Yes (for institutional investors and securities analysts)

							(Amounts of less than one million yen are rounded down.)
1. Consolidated Financial Results for the Fiscal Year Ended June 30, 2021 (July 1, 2020 to June 30, 2021)
(1) Consolidated Operating Results						(% indicates changes from the previous fiscal year.)
														Profit
	Revenue	Operating profit	Profit before tax	Profit			attributable to
														owners of parent
Fiscal year ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%		Million yen	%
June 30, 2021	117,859	8.7	7,128	35.9	7,176		42.7	4,518		39.2	4,531		46.2
June 30, 2020	108,441		-	5,245		-	5,029		-	3,246		-		3,099		-
	Basic earnings	Diluted earnings	Return on equity	Ratio of profit		Ratio of operating
	attributed to	before tax to total
	per share	per share		profit to revenue
	owners of parent	assets
Fiscal year ended			Yen			Yen			%			%				%
June 30, 2021		300.00		300.00			6.7			4.7				6.0
June 30, 2020		204.94		204.94			4.8			3.6				4.8
(Reference) Share of profit of investments accounted (Equity method):Fiscal year ended June 30, 2021	: ¥35 million
							Fiscal year ended June 30, 2020	: ¥144 million
(2) Consolidated Financial Position
							Equity		Ratio of equity		Equity attributable to
								attributable to
	Total assets	Total equity	attributable to		owners of parent per
	owners of parent to
							owners of parent		share
							total assets
Fiscal year ended	Million yen	Million yen	Million	yen			%				Yen
June 30, 2021	156,137		72,294	70,725			45.3	4,699.82
June 30, 2020	147,408		65,721	64,219			43.6		4,260.82

(3) Consolidated Cash Flows

	Cash flows from	Cash flows from	Cash flows from	Cash and cash equivalents
	operating activities	investing activities	financing activities	at end of period
Fiscal year ended	Million yen	Million yen	Million yen	Million yen
June 30, 2021	12,073	(2,750)	(7,928)	17,838
June 30, 2020	4,365	(7,129)	4,529	15,472

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2. Dividends

	Dividends per share		Total	Payout ratio	Dividend on
					dividends paid	equity ratio
1st	2nd	3rd	Year-end	Total	(consolidated)
quarter-end	quarter-end	quarter-end	(annual)		(consolidated)

Fiscal year ended June 30, 2020 Fiscal year ended June 30, 2021

Fiscal year ending June 30, 2022 (Forecast)

Yen	Yen	Yen	Yen	Yen	Million yen	%	%
-	-	-	75.00	75.00	1,138	36.6	1.8
						25.0	1.7
-	-	-	75.00	75.00	1,128
-	-	-	100.00	100.00		32.0

3. Consolidated Financial Results Forecast for the Fiscal Year Ending June 30, 2022 (July 1, 2021 to June 30, 2022) (% indicates changes from the previous fiscal year.)

	Revenue		Operating Profit	Profit attributable to	Basic earnings
		owners of parent		per share
	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	131,000		11.1	7,700	8.0	4,700		3.7	312.32

(Note) Given the growing repercussions of the novel coronavirus (COVID-19), this forecast was developed on the information available to the Company as of the date of publication of this document. Since the forecast may change significantly depending on when the COVID-19 is contained and other variables, the Company will disclose revised forecasts as soon as possible if any revisions become necessary based on its performance outlook.

* Notes

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): None
   New companies: None
   Excluded companies: None
2. Changes in accounting policies and changes in accounting estimates
3. 1. Changes in accounting policies required by IFRS: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
4. Total number of issued shares (common stock)
5. 1. Total number of issued shares at the end of the period (including treasury stock)

Fiscal year ended June 30, 2021	:	15,048,568 shares
Fiscal year ended June 30, 2020	:	15,933,058 shares
2) Total number of treasury stock at the end of the period
Fiscal year ended June 30, 2021	:	60 shares
Fiscal year ended June 30, 2020	:	861,023 shares
3) Average number of shares during the period
Fiscal year ended June 30, 2021	:	15,106,105 shares
Fiscal year ended June 30, 2020	:	15,124,770 shares

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(Reference) Nonconsolidated Financial Results
1. Nonconsolidated Financial Results for the Fiscal Year Ended June 30, 2021 (July 1, 2020 to June 30, 2021)
(1) Nonconsolidated Operating Results				(% indicates changes from the previous fiscal year.)
	Revenue	Operating income	Ordinary income	Net income
Fiscal year ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
June 30, 2021	73,970	6.5	4,185	159.5	5,750	83.3	2,480	(1.8)
June 30, 2020	69,431		2.1	1,613	(40.5)	3,136	(6.7)	2,526		8.5
	Net income	Diluted net income
	per share	per share
Fiscal year ended			Yen		Yen
June 30, 2021		164.23		-
June 30, 2020		167.07		-
(2) Nonconsolidated Financial Position
	Total assets	Net assets	Equity ratio	Net assets per share
Fiscal year ended	Million yen	Million yen		%			Yen
June 30, 2021		110,295		55,043		49.9		3,657.72
June 30, 2020		106,240		53,444		50.3		3,545.95

(Reference) Equity: Fiscal year ended June 30, 2021: ¥55,043 million Fiscal year ended June 30, 2020: ¥53,444 million

2. Nonconsolidated Financial Results Forecast for the Fiscal Year Ending June 30, 2022 (July 1, 2021 to June 30, 2022) (% indicates changes from the previous fiscal year.)

	Revenue		Ordinary income	Net income		Net income
			per share
	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	82,000		10.9	4,800	(16.5)	3,500		41.1	232.58

(Note) Given the growing repercussions of the novel coronavirus (COVID-19), this forecast was developed on the information available to the Company as of the date of publication of this document. Since the forecast may change significantly depending on when the COVID-19 is contained and other variables, the Company will disclose revised forecasts as soon as possible if any revisions become necessary based on its performance outlook.

• These consolidated financial results are not subject to audit procedures by certified public accountants or audit firm.
• Explanation of the proper use of financial results forecast and other notes:
• 1. The earnings forecasts and other forward-looking statements disclosed herein are based on information available to the Company as of the date of publication of this document and certain assumptions deemed reasonable. Actual results, etc. may differ significantly due to a wide range of factors.
  2. The Company is scheduled to hold a financial results briefing session for investors and analysts on September 8, 2021. The financial briefing materials to be distributed at this briefing session will be subsequently posted on the Company's website.
  3. The Group has applied International Financial Reporting Standards (IFRS) from the year-end of fiscal year ended June 30, 2021. In addition, financial figures for the previous fiscal year are also disclosed in accordance with IFRS.

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Table of Contents of Attachment
1. Overview of Operating Results, etc........................................................................................................................	2
(1)	Overview of Operating Results for the Current Fiscal Year ...........................................................................	2
(2)	Overview of Financial Position for the Current Fiscal Year.............................................................................	4
(3)	Overview of Cash Flows for the Current Fiscal Year .......................................................................................	4
(4)	Future Outlook..................................................................................................................................................	5
2. Basic Policy Regarding Selection of Accounting Standard....................................................................................	7
3. Consolidated Financial Statement ..........................................................................................................................	8
(1)	Consolidated Statement of Financial Position ..................................................................................................	8
(2)	Consolidated Statement of Profit or Loss and Consolidated Statement of Comprehensive Income ..............	10
(3)	Consolidated Statement of Changes in Equity ...............................................................................................	12
(4)	Consolidated Statement of Cash Flows ..........................................................................................................	13
(5)	Notes to Consolidated Financial Statements ..................................................................................................	14
(Notes on Going Concern Assumption) ...............................................................................................................	14
(Segment Information) .........................................................................................................................................	14
(Per Share Information)........................................................................................................................................	17
(Significant Subsequent Events) ..........................................................................................................................	17
(First-time Adoption)............................................................................................................................................	18
4. Other.....................................................................................................................................................................	29
(1)	Status of Orders and Sales ..............................................................................................................................	29
(2)	Changes in Directors ......................................................................................................................................	30

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1. Overview of Operating Results, etc.

Matters concerning the future in the text are based on judgments as of the end of the consolidated fiscal year under review.

The Group has changed the accounting standards to be applied from the end of the consolidated fiscal year under review to IFRS. Therefore, the financial figures for the previous consolidated fiscal year are also presented in accordance with IFRS.

(1) Overview of Operating Results for the Current Fiscal Year

During the fiscal year under review (from July 1, 2020 to June 30, 2021), the Japanese economy remained in a severe condition due to the impact of the novel coronavirus (COVID-19). While the recovery is expected to continue due to an improvement in overseas economies as measures are taken to prevent the spread of infection and vaccinations are promoted, we need to pay close attention to the impact of COVID-19 on the domestic and international economy. Similarly, we need to closely monitor the impact of fluctuations in financial and capital markets.

With regard to the business environment surrounding Nippon Koei Co., Ltd. (the "Company") and its subsidiaries (together, the "Group"), the Domestic Consulting Business was strong since the Japanese government's budget for public works projects in fiscal years 2020 and 2021 was maintained at the same level as the previous fiscal year. On the other hand, the International Consulting Business was affected by travel restrictions accompanying the spread of COVID-19 although the Japanese government continued with its strategy for exporting high-quality infrastructure systems. In the Power Engineering Business, new business opportunities are expected as a result of the reform of the electric power system while the tough business environment continued as customers continued to request cost reductions when upgrading existing electric power facilities. In the Urban & Spatial Development Business, the economy of the UK, which is a major market, is recovering to the pre-pandemic scale and global demand for infrastructure development increased as urbanization progressed in Asian countries. In the Energy Business, demand for renewable energy grew as the world shifted to development of decarbonization and energy resource decentralization.

Under these circumstances, based on the Medium-Term Management Plan "NK-Innovation 2021" (from July 2018 to June 2021), with the fundamental principles of "Continue evolution into global consulting and engineering firm," the Group tackled the five business strategies of "Enhancement of operating system for Railways Business," "Overseas expansion of Urban & Spatial Development Business," "Establishment of Energy Business," "Creation of businesses and overseas expansion of Consulting Business," and "Product development and overseas expansion of Power Engineering Business." Moreover, as group-wide measures to realize these goals, the Group advanced "Establishment of one-stop marketing system," "Investment in technologies and human resources," and "Enhancement of group governance."

On the other hand, the Group is taking steps to prevent COVID-19 with an active defense system to protect the lives and health of employees and their families and to minimize the impact on customers due to delays in business progress. In addition, our internal policy is to promote telework and other work style reforms in order to achieve a better work- life balance and increase productivity.

As a result, the Group's consolidated results for the fiscal year under review were as follows: Although orders received decreased 8.0% year on year to ¥133,304 million, revenue increased 8.7% year on year to ¥117,859 million, operating profit increased 35.9% year on year to ¥7,128 million and profit attributable to owners of parent increased 46.2% year on year to ¥4,531 million, thanks to the solid demand and efficient business operations in the Domestic Consulting Business and International Consulting Business.

Business results for each segment are as follows:

[Domestic Consulting]

As for the Domestic Consulting Business, we promoted the assignment of human resources engaged in the International Consulting Business to work within Japan, receiving orders jointly and reducing outsourcing of work.

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