Financial Section
Consolidated Balance Sheets
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of March 31, 2020 and 2019
Thousands of | Thousands of | |||||||||
Millions of yen | U.S. dollars (Note 1) | Millions of yen | U.S. dollars (Note 1) | |||||||
2020 | 2019 | 2020 | 2020 | 2019 | 2020 | |||||
Assets | Liabilities and Net Assets | |||||||||
Current assets: | Current liabilities: | |||||||||
Cash, time and notice deposits (Notes 3, 5 and 6) | ¥ 195,361 | ¥ 172,192 | $ 1,795,432 | Short-term debt (Notes 6 and 8) | ¥ 146,726 | ¥ 25,643 | $ 1,348,461 | |||
Notes and accounts receivable-trade (Note 6) | 17,406 | 21,567 | 159,967 | Long-term debt due within one year (Notes 5, 6 and 8) | 131,471 | 169,619 | 1,208,262 | |||
Allowance for doubtful accounts | (61) | (73) | (561) | Long-termnon-recourse debt due within one year (Notes 5, 6 and 8) | 70,373 | 102,298 | 646,751 | |||
Inventories (Note 4) | 648,881 | 679,903 | 5,963,432 | Notes and accounts payable-trade (Note 6) | 36,393 | 54,937 | 334,464 | |||
Other current assets | 54,447 | 59,422 | 500,386 | Accrued income taxes | 32,344 | 29,260 | 297,252 | |||
Total current assets | 916,034 | 933,011 | 8,418,656 | Accrued bonuses | 5,440 | 5,573 | 49,995 | |||
Deposits received (Note 14) | 51,196 | 61,582 | 470,508 | |||||||
Other current liabilities | 148,102 | 137,128 | 1,361,108 | |||||||
Total current liabilities | 622,045 | 586,040 | 5,716,801 | |||||||
Investments: | ||||||||||
Investments in unconsolidated subsidiaries and affiliates (Note 6) | 100,156 | 61,544 | 920,467 | Long-term liabilities: | ||||||
Investments in securities and other (Notes 6 and 7) | 372,414 | 433,301 | 3,422,608 | Long-term debt due after one year (Notes 5, 6 and 8) | 2,842,156 | 2,744,327 | 26,120,357 | |||
Allowance for doubtful accounts | (2,082) | (9,154) | (19,134) | Long-termnon-recourse debt due after one year (Notes 5, 6 and 8) | 250,182 | 300,900 | 2,299,256 | |||
Total investments | 470,488 | 485,691 | 4,323,941 | Guarantee and deposits received (Notes 6 and 14) | 293,505 | 278,766 | 2,697,408 | |||
Net defined benefit liability (Note 9) | 6,270 | 6,019 | 57,623 | |||||||
Other long-term liabilities (Note 12) | 8,465 | 11,964 | 77,796 | |||||||
Total long-term liabilities | 3,400,578 | 3,341,976 | 31,252,440 | |||||||
Property and equipment: | ||||||||||
Land (Notes 4, 5 and 20) | 2,558,356 | 2,523,937 | 23,512,140 | Contingent liabilities (Note 21) | ||||||
Buildings and structures (Notes 4, 5 and 20) | 1,584,047 | 1,378,337 | 14,557,917 | |||||||
Machinery and equipment (Notes 4, 5 and 20) | 40,382 | 35,518 | 371,124 | Net assets (Note 15): | ||||||
Leased assets | 2,054 | 2,150 | 18,877 | Shareholders' equity | ||||||
Construction in progress (Notes 4, 5 and 20) | 133,718 | 139,451 | 1,228,914 | Common stock: | ||||||
4,318,557 | 4,079,393 | 39,688,972 | Authorized -1,900,000 thousand shares | |||||||
Issued -476,086 thousand shares | 122,805 | 122,805 | 1,128,619 | |||||||
Accumulated depreciation and accumulated impairment losses | (578,302) | (548,382) | (5,314,788) | Capital surplus | 104,154 | 104,154 | 957,210 | |||
Net property and equipment | 3,740,255 | 3,531,011 | 34,374,184 | Retained earnings | 1,002,634 | 876,803 | 9,214,539 | |||
Treasury stock | (4,473) | (4,470) | (41,109) | |||||||
Total shareholders' equity | 1,225,120 | 1,099,291 | 11,259,259 | |||||||
Accumulated other comprehensive income (loss) | ||||||||||
Other assets: | Net unrealized holding gains on securities | 76,335 | 109,210 | 701,544 | ||||||
Guarantee and lease deposits paid to lessors (Notes 6 and 7) | 70,172 | 70,299 | 644,904 | Net deferred losses on hedges | (3,560) | (3,972) | (32,718) | |||
Leasehold rights and other intangible assets | 57,562 | 56,752 | 529,014 | Foreign currency translation adjustments | (2,718) | (2,352) | (24,979) | |||
Deferred income taxes (Note 12) | 30,067 | 17,464 | 276,326 | Remeasurements of defined benefit plans | (177) | (74) | (1,627) | |||
Other | 33,045 | 35,892 | 303,695 | Total accumulated other comprehensive income | 69,880 | 102,812 | 642,220 | |||
Total other assets | 190,846 | 180,407 | 1,753,939 | Total net assets | 1,295,000 | 1,202,104 | 11,901,479 | |||
Total assets | ¥5,317,623 | ¥5,130,120 | $48,870,720 | Total liabilities and net assets | ¥5,317,623 | ¥5,130,120 | $48,870,720 |
See accompanying notes.
Sumitomo Realty & Development Co., Ltd.
Financial Section
Consolidated Statements of Income
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2020, 2019 and 2018
Millions of yen | |||
2020 | 2019 | 2018 | |
Revenue from operations | ¥1,013,513 | ¥1,012,198 | ¥948,402 |
Costs and expenses: | |||
Cost of revenue from operations | 691,832 | 711,050 | 664,015 |
Selling, general and administrative expenses | 87,349 | 81,759 | 78,750 |
779,181 | 792,809 | 742,765 | |
Operating income | 234,332 | 219,389 | 205,637 |
Other income (expenses): | |||
Interest expense, net | (18,530) | (19,589) | (20,096) |
Dividend income | 11,024 | 9,472 | 8,229 |
Gain on sale of property and equipment | 278 | 75 | 38 |
Loss on sale of property and equipment | (2,131) | (3,724) | (217) |
Loss on impairment of fixed assets (Note 10) | (9,660) | (8,576) | (10,635) |
Loss on disposal of property and equipment | (1,567) | (1,280) | (601) |
Gain on sale of investments in securities (Note 7) | 1,417 | 12 | 1,010 |
Loss on sale of investments in securities | - | - | (47) |
Loss on devaluation of investments in securities (Note 7) | (7,838) | (1,105) | - |
Reversal of allowance for doubtful accounts | 4,824 | - | - |
Other, net | (6,339) | (6,115) | (6,874) |
(28,522) | (30,830) | (29,193) | |
Income before income taxes | 205,810 | 188,559 | 176,444 |
Income taxes (Note 12): | |||
Current | 68,180 | 62,823 | 62,098 |
Deferred | (3,367) | (4,367) | (6,180) |
Total | 64,813 | 58,456 | 55,918 |
Profit | 140,997 | 130,103 | 120,526 |
Profit attributable to non-controlling interests | - | - | 795 |
Profit attributable to owners of parent | ¥ 140,997 | ¥ 130,103 | ¥119,731 |
Yen | |||
2020 | 2019 | 2018 | |
Amounts per share of common stock: | |||
Profit attributable to owners of parent: | |||
-Basic | ¥297.50 | ¥274.51 | ¥252.62 |
-Diluted | - | - | - |
Cash dividend applicable to the year | 35.00 | 30.00 | 27.00 |
See accompanying notes. | |||
Consolidated Statements of Comprehensive Income | |||
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries | |||
For the years ended March 31, 2020, 2019 and 2018 | |||
Millions of yen | |||
2020 | 2019 | 2018 | |
Profit | ¥140,997 | ¥130,103 | ¥120,526 |
Other comprehensive income (loss) (Note 19) | |||
Net unrealized holding gains (losses) on securities | (32,875) | (21,905) | 33,935 |
Net deferred gains (losses) on hedges | 412 | (1,923) | 538 |
Foreign currency translation adjustments | (366) | (259) | (1,098) |
Remeasurements of defined benefit plans | (103) | (234) | 188 |
Total other comprehensive income (loss) | (32,932) | (24,321) | 33,563 |
Comprehensive income | ¥108,065 | ¥105,782 | ¥154,089 |
Comprehensive income attributable to: | |||
Owners of the parent | ¥108,065 | ¥105,782 | ¥153,493 |
Non-controlling interests | - | - | 596 |
See accompanying notes.
Thousands of
U.S. dollars (Note 1)
2020
$9,314,521
6,358,166
802,766
7,160,932
2,153,589
(170,297)
101,314
2,555
(19,585)
(88,779)
(14,401)
13,023
-
(72,034)
44,334
(58,257)
(262,127)
1,891,462
626,597
(30,944)
595,653
1,295,809
-
$1,295,809
U.S. dollars (Note 1)
2020
$2.73
-
0.32
Thousands of
U.S. dollars (Note 1)
2020
$1,295,809
(302,132)
3,786
(3,364)
(946)
(302,656) $ 993,153
$ 993,153
-
Consolidated Statements of Changes in Net Assets
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2020, 2019 and 2018
Thousands | Millions of yen | |||||||||||||||
Shareholders' equity | Accumulated other comprehensive income (loss) | |||||||||||||||
Remeasure- | Total | |||||||||||||||
Number of | Net unrealized | Foreign | ments of | accumulated | ||||||||||||
shares of | Total | holding gains | Net deferred | currency | defined | other | Non- | |||||||||
common | Common | Capital | Retained | Treasury | shareholders' | (losses) on | gains (losses) | translation | benefit | comprehensive | controlling | Total net | ||||
stock | stock | surplus | earnings | stock | equity | securities | on hedges | adjustments | plans | income (loss) | interests | assets | ||||
Balance at April 1, 2017 | 476,086 | ¥122,805 | ¥132,748 | ¥ 662,802 | ¥(4,379) | ¥ 913,976 | ¥ 97,192 | ¥(2,529) | ¥(1,265) | ¥ (27) | ¥ 93,371 | ¥ 31,756 | ¥1,039,103 | |||
Profit attributable to owners of parent | - | - | - | 119,731 | - | 119,731 | - | - | - | - | - | - | 119,731 | |||
Foreign currency translation adjustments | - | - | - | - | - | - | - | - | (828) | - | (828) | - | (828) | |||
Net unrealized holding gains (losses) on securities | - | - | - | - | - | - | 33,923 | - | - | - | 33,923 | - | 33,923 | |||
Acquisition of treasury stock | - | - | - | - | (64) | (64) | - | - | - | - | - | - | (64) | |||
Disposal of treasury stock | - | - | - | - | - | - | - | - | - | - | - | - | - | |||
Change in scope of consolidation | - | - | - | (4,885) | - | (4,885) | - | - | - | - | - | - | (4,885) | |||
Cash dividends paid: | ||||||||||||||||
Final for prior year (¥13 per share) | - | - | - | (6,161) | - | (6,161) | - | - | - | - | - | - | (6,161) | |||
Interim for current year (¥13 per share) | - | - | - | (6,161) | - | (6,161) | - | - | - | - | - | - | (6,161) | |||
Change in treasury shares of parent arising from | ||||||||||||||||
transactions with non-controlling shareholders | - | - | (28,594) | - | - | (28,594) | - | - | - | - | - | - | (28,594) | |||
Profit attributable to non-controlling interests | - | - | - | - | - | - | - | - | - | - | - | (31,756) | (31,756) | |||
Net deferred gains (losses) on hedges | - | - | - | - | - | - | - | 480 | - | - | 480 | - | 480 | |||
Remeasurements of defined benefit plans | - | - | - | - | - | - | - | - | - | 187 | 187 | - | 187 | |||
Balance at April 1, 2018 | 476,086 | ¥122,805 | ¥104,154 | ¥ 765,326 | ¥(4,443) | ¥ 987,842 | ¥131,115 | ¥(2,049) | ¥(2,093) | ¥ 160 | ¥127,133 | ¥ - | ¥1,114,975 | |||
Cumulative effects of changes in accounting policies | - | - | - | (5,299) | - | (5,299) | - | - | - | - | - | - | (5,299) | |||
Restated balance | 476,086 | 122,805 | 104,154 | 760,027 | (4,443) | 982,543 | 131,115 | (2,049) | (2,093) | 160 | 127,133 | - | 1,109,676 | |||
Profit attributable to owners of parent | - | - | - | 130,103 | - | 130,103 | - | - | - | - | - | - | 130,103 | |||
Foreign currency translation adjustments | - | - | - | - | - | - | - | - | (259) | - | (259) | - | (259) | |||
Net unrealized holding gains (losses) on securities | - | - | - | - | - | - | (21,905) | - | - | - | (21,905) | - | (21,905) | |||
Acquisition of treasury stock | - | - | - | - | (27) | (27) | - | - | - | - | - | - | (27) | |||
Disposal of treasury stock | - | - | 0 | - | 0 | 0 | - | - | - | - | - | - | 0 | |||
Change in scope of consolidation | - | - | - | (57) | - | (57) | - | - | - | - | - | - | (57) | |||
Cash dividends paid: | ||||||||||||||||
Final for prior year (¥14 per share) | - | - | - | (6,635) | - | (6,635) | - | - | - | - | - | - | (6,635) | |||
Interim for current year (¥14 per share) | - | - | - | (6,635) | - | (6,635) | - | - | - | - | - | - | (6,635) | |||
Profit attributable to non-controlling interests | - | - | - | - | - | - | - | - | - | - | - | - | - | |||
Net deferred gains (losses) on hedges | - | - | - | - | - | - | - | (1,923) | - | - | (1,923) | - | (1,923) | |||
Remeasurements of defined benefit plans | - | - | - | - | - | - | - | - | - | (234) | (234) | - | (234) | |||
Balance at April 1, 2019 | 476,086 | ¥122,805 | ¥104,154 | ¥ 876,803 | ¥(4,470) | ¥1,099,292 | ¥109,210 | ¥(3,972) | ¥(2,352) | ¥ (74) | ¥102,812 | ¥ - | ¥1,202,104 | |||
Profit attributable to owners of parent | - | - | - | 140,997 | - | 140,997 | - | - | - | - | - | - | 140,997 | |||
Foreign currency translation adjustments | - | - | - | - | - | - | - | - | (366) | - | (366) | - | (366) | |||
Net unrealized holding gains (losses) on securities | - | - | - | - | - | - | (32,875) | - | - | - | (32,875) | - | (32,875) | |||
Acquisition of treasury stock | - | - | - | - | (3) | (3) | - | - | - | - | - | - | (3) | |||
Disposal of treasury stock | - | - | 0 | - | 0 | 0 | - | - | - | - | - | - | 0 | |||
Change in scope of consolidation | - | - | - | - | - | - | - | - | - | - | - | - | - | |||
Cash dividends paid: | ||||||||||||||||
Final for prior year (¥16 per share) | - | - | - | (7,583) | - | (7,583) | - | - | - | - | - | - | (7,583) | |||
Interim for current year (¥16 per share) | - | - | - | (7,583) | - | (7,583) | - | - | - | - | - | - | (7,583) | |||
Profit attributable to non-controlling interests | - | - | - | - | - | - | - | - | - | - | - | - | - | |||
Net deferred gains (losses) on hedges | - | - | - | - | - | - | - | 412 | - | - | 412 | - | 412 | |||
Remeasurements of defined benefit plans | - | - | - | - | - | - | - | - | - | (103) | (103) | - | (103) | |||
Balance at March 31, 2020 | 476,086 | ¥122,805 | ¥104,154 | ¥1,002,634 | ¥(4,473) | ¥1,225,120 | ¥ 76,335 | ¥(3,560) | ¥(2,718) | ¥(177) | ¥ 69,880 | ¥ - | ¥1,295,000 | |||
Thousands of U.S. dollars (Note 1) | ||||||||||||||||
Shareholders' equity | Accumulated other comprehensive income (loss) | |||||||||||||||
Remeasure- | Total | |||||||||||||||
Net unrealized | Foreign | ments of | accumulated | |||||||||||||
Total | holding gains | Net deferred | currency | defined | other | Non- | ||||||||||
Common | Capital | Retained | Treasury | shareholders' | (losses) on | gains (losses) | translation | benefit | comprehensive | controlling | Total net | |||||
stock | surplus | earnings | stock | equity | securities | on hedges | adjustments | plans | income (loss) | interests | assets | |||||
Balance at April 1, 2019 | $1,128,619 | $957,210 | $8,058,110 | $(41,081) | $10,102,858 | $1,003,676 | $(36,504) | $(21,616) | $ (680) | $944,876 | $- | $11,047,734 | ||||
Profit attributable to owners of parent | - | - | 1,295,809 | - | 1,295,809 | - | - | - | - | - | - | 1,295,809 | ||||
Foreign currency translation adjustments | - | - | - | - | - | - | - | (3,363) | - | (3,363) | - | (3,363) | ||||
Net unrealized holding gains (losses) on securities | - | - | - | - | - | (302,132) | - | - | - | (302,132) | - | (302,132) | ||||
Acquisition of treasury stock | - | - | - | (28) | (28) | - | - | - | - | - | - | (28) | ||||
Disposal of treasury stock | - | 0 | - | 0 | 0 | - | - | - | - | - | - | 0 | ||||
Change in scope of consolidation | - | - | - | - | - | - | - | - | - | - | - | - | ||||
Cash dividends paid: | ||||||||||||||||
Final for prior year ($0.15 per share) | - | - | (69,690) | - | (69,690) | - | - | - | - | - | - | (69,690) | ||||
Interim for current year ($0.15 per share) | - | - | (69,690) | - | (69,690) | - | - | - | - | - | - | (69,690) | ||||
Profit attributable to non-controlling interests | - | - | - | - | - | - | - | - | - | - | - | - | ||||
Net deferred gains (losses) on hedges | - | - | - | - | - | - | 3,786 | - | - | 3,786 | - | 3,786 | ||||
Remeasurements of defined benefit plans | - | - | - | - | - | - | - | - | (947) | (947) | - | (947) | ||||
Balance at March 31, 2020 | $1,128,619 | $957,210 | $9,214,539 | $(41,109) | $11,259,259 | $ 701,544 | $(32,718) | $(24,979) | $(1,627) | $642,220 | $- | $11,901,479 |
See accompanying notes.
Sumitomo Realty & Development Co., Ltd.
Financial Section
Consolidated Statements of Cash Flows
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
For the years ended March 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries
As of and for the years ended March 31, 2020, 2019 and 2018
Thousands of | |||||
Millions of yen | U.S. dollars (Note 1) | ||||
2020 | 2019 | 2018 | 2020 | ||
Cash flows from operating activities: | ¥ 205,810 | $ 1,891,462 | |||
Income before income taxes | ¥ 188,559 | ¥ 176,444 | |||
Depreciation and amortization | 48,974 | 46,313 | 41,628 | 450,087 | |
Loss on impairment of fixed assets (Note 10) | 9,660 | 8,576 | 10,635 | 88,779 | |
Provision for (Reversal of) allowance for doubtful accounts | (4,848) | (309) | (525) | (44,555) | |
Increase (Decrease) in net defined benefit liability | 60 | (242) | 91 | 551 | |
Loss (Gain) on sale of property and equipment, net | 1,853 | 3,649 | 179 | 17,030 | |
Loss on disposal of property and equipment | 1,567 | 1,280 | 601 | 14,401 | |
Loss (Gain) on sale of investments in securities, net | (1,417) | (12) | (963) | (13,023) | |
Loss (Gain) on devaluation of investments in securities | 7,838 | 1,105 | - | 72,034 | |
Interest and dividend income | (11,680) | (10,067) | (8,484) | (107,343) | |
Interest expense | 19,186 | 20,184 | 20,352 | 176,326 | |
Decrease (Increase) in notes and accounts receivable-trade | 4,637 | 2,233 | (5,669) | 42,616 | |
Decrease (Increase) in inventories | 46,767 | 65,981 | 25,915 | 429,804 | |
Increase (Decrease) in notes and accounts payable-trade | (18,543) | 26,189 | (12,536) | (170,416) | |
Increase (Decrease) in advances received | (416) | (12,073) | 17,076 | (3,823) | |
Other, net | (6,117) | (1,800) | (6,648) | (56,217) | |
Total | 303,331 | 339,566 | 258,096 | 2,787,713 | |
Proceeds from interest and dividend income | 11,680 | 10,066 | 8,484 | 107,343 | |
Payments for interest | (19,334) | (20,147) | (20,395) | (177,686) | |
Payments for income tax and other taxes | (65,218) | (69,427) | (56,252) | (599,375) | |
Net cash provided by operating activities | 230,459 | 260,058 | 189,933 | 2,117,995 | |
Cash flows from investing activities: | (270,347) | (2,484,579) | |||
Payments for purchases of property and equipment | (188,573) | (220,017) | |||
Proceeds from sale of property and equipment | 11,307 | 6,617 | 357 | 103,915 | |
Payments for purchases of investments in securities | (46,695) | (31,281) | (28,835) | (429,143) | |
Proceeds from sale and redemption of investments in securities | 2,676 | 334 | 2,197 | 24,593 | |
Payments for guarantee and lease deposits paid to lessors | (1,121) | (738) | (1,317) | (10,302) | |
Proceeds from guarantee and lease deposits paid to lessors | 804 | 4,475 | 28,462 | 7,389 | |
Payments for guarantee and lease deposits received | (10,950) | (14,324) | (11,276) | (100,634) | |
Proceeds from guarantee and lease deposits received | 29,525 | 35,664 | 25,271 | 271,345 | |
Receipts of deposits from partnership investors | 23 | 1,004 | 2,420 | 211 | |
Restitution of deposits from partnership investors | (22,208) | (10,442) | (11,544) | (204,099) | |
Other, net | 16,867 | (11,949) | (6,252) | 155,013 | |
Net cash used in investing activities | (290,119) | (209,213) | (220,534) | (2,666,291) | |
Cash flows from financing activities: | 121,083 | 1,112,793 | |||
Increase (Decrease) in short-term debt, net | (35,773) | (2,892) | |||
Proceeds from issuance of bonds | - | - | 30,000 | - | |
Redemption of bonds | (40,000) | (60,000) | (80,000) | (367,613) | |
Proceeds from non-recourse bonds | 2,000 | 4,900 | 1,700 | 18,381 | |
Redemption of non-recourse bonds | (2,000) | (4,900) | (1,700) | (18,381) | |
Proceeds from long-term loans payable | 153,300 | 198,300 | 376,000 | 1,408,878 | |
Repayment of long-term loans payable | (129,619) | (225,752) | (209,622) | (1,191,242) | |
Proceeds from long-termnon-recourse loans | 93,720 | 37,110 | 12,610 | 861,318 | |
Repayment of long-termnon-recourse loans | (100,363) | (44,611) | (21,258) | (922,369) | |
Decrease (Increase) in treasury stocks, net | (3) | (27) | (64) | (28) | |
Cash dividends paid | (15,163) | (13,269) | (12,337) | (139,353) | |
Payments for purchases of investments in subsidiaries not resulting | - | - | |||
in change in scope of consolidation | - | (60,910) | |||
Other, net | (310) | (2,036) | (5,066) | (2,849) | |
Net cash provided by (used in) financing activities | 82,645 | (146,058) | 26,461 | 759,535 | |
Effect of exchange rate changes on cash and cash equivalents | (244) | 243 | (124) | (2,242) | |
Net increase (decrease) in cash and cash equivalents | 22,741 | (94,970) | (4,264) | 208,997 | |
Cash and cash equivalents at beginning of year | 170,707 | 262,046 | 267,944 | 1,568,854 | |
Increase in cash and cash equivalents of a newly consolidated | |||||
subsidiary | - | 3,631 | - | - | |
Decrease in cash and cash equivalents resulting from exclusion | |||||
of subsidiaries from consolidation | - | - | (1,634) | - | |
Cash and cash equivalents at end of year (Note 3) | ¥ 193,448 | ¥ 170,707 | ¥ 262,046 | $ 1,777,851 |
See accompanying notes.
1 Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of Sumitomo Realty
-
Development Co., Ltd. ("the Company") and its consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Act 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 from International Financial Reporting Standards ("IFRS").
The accounts of the Company's overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. The accompanying consolidated financial statements have been restructured and translated into English (with certain expanded disclosure) from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Certain supplementary information included in the statutory Japanese-language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2020, which was ¥108.81 to U.S. $1. The translation should not be construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or any other rate of exchange.
2 Accounting policies
(1) Consolidation
The accompanying consolidated financial statements include the accounts of the Company and significant companies over which the Company has power of control through majority voting rights or existence of certain conditions evidencing control by the Company.
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to minority shareholders, are recorded based on the fair value at the time the Company acquired control of the respective subsidiaries.
All significant intercompany balances, transactions and profits have been eliminated in consolidation.
In the year ended March 31, 2020, the Company acquired the entire shares of PrimeQuest Three Co., Ltd. (the operator of PrimeQuest Three silent partnership) and PrimeQuest Four Co., Ltd (the operator of PrimeQuest Four silent partnership), to make them wholly owned subsidiaries, after which the Company merged the two companies in an absorption-type merger with the Company as the surviving company. As a result, the two companies were included in the scope of consolidation while the silent partnerships were excluded, then the two companies were dissolved and excluded from the scope of consolidation.
(2) Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the year-end rate.
Financial statements of consolidated overseas subsidiaries are translated into Japanese yen at the year-end rate, except for shareholders' equity accounts, which are translated at historical rates,
and income statement items resulting from transactions with the Company, which are translated at the rates used by the Company. Differences arising from translation are presented as "Foreign
currency translation adjustments" in net assets.
(3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term, highly liquid investments with maturities not exceeding three months at the time of purchase are considered to be cash and cash equivalents.
(4) Recognition of revenue
Revenues from sales operations of condominiums, detached houses and land lots are recognized when the units are delivered and customers accepted the delivery. Revenues from leasing operations of office buildings, residences and other properties are recognized as rent accrues over the lease term.
The Company's consolidated subsidiary, Sumitomo Real Estate Sales Co., Ltd. recognizes brokerage fees as revenue at the delivery of the property. However, the amount received of the brokerage fees was previously recognized as revenue on the date it was received in case of which the brokerage fees are received after the conclusion of the sales contracts and before the delivery of property. From the year ended March 31, 2020, its revenue recognition has been changed and the total amount received of the brokerage fees are recognized as revenue at the timing of the delivery of the property.
This change was made as a result of reviewing the revenue recognition policy of Sumitomo Real Estate Sales Co., Ltd. to be aligned with the policy of the Company, after it was delisted and became a wholly owned subsidiary to the Company, and implemented as the Company completed the preparation of the operation system to accommodate the change at the timing of formulating the Eighth Management Plan starting from the year ended March 31, 2020.
The consolidated financial statements for the year ended March 31, 2019 have been adjusted reflecting the retroactive application of the new accounting policy.
As a result, revenue from operations decreased by ¥1,032 million,
operating income and income before income taxes decreased by ¥1,030 million respectively. In addition, the balance of retained earnings at April 1, 2018 decreased by ¥5,299 million reflecting cumulative effects to net assets at the beginning of the year ended March 31, 2019.
As the effect of the change on amounts per share of common stock, earnings per share decreased by ¥1.51 for the year ended March 31, 2019.
(5) Inventories
Inventories are stated at cost, determined by the specific identification method principally. The carrying amount of inventories is written down when the profitability declines.
(6) Securities
Held-to-maturity securities are stated at amortized cost. Investments in subsidiaries and affiliates that are not consolidated or accounted for using the equity method are stated at moving-average cost. Available-for-sale securities with available fair values are stated at fair value. Unrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate component of net assets. Realized gains and losses on the sale of such securities are computed using moving-average cost.
Sumitomo Realty & Development Co., Ltd.
Financial Section
Preferred equity securities are stated at cost determined by the specific identification method, and securities with no available fair value are stated at moving-average cost.
Investments in limited partnerships, which are regarded as securities under the Financial Instruments and Exchange Act, are accounted for in a manner similar to the equity method based on the recent financial statements.
If the market value of held-to-maturity securities, investments in subsidiaries and affiliates and available-for-sale securities declines significantly, such securities are stated at fair value and the difference between fair value and the carrying amount is recognized as a loss in the period of the decline. If the fair value of investments in unconsolidated subsidiaries and affiliated companies not accounted for using the equity method is not readily available, such securities should be written down to the net asset value with a corresponding charge in the income statement in the event net asset value declines significantly. In these cases, such fair value or the net asset value will be the carrying amount of the securities at the beginning of the next fiscal year.
(7) Property and equipment
The Company and its consolidated domestic subsidiaries depreciate buildings using the straight-line method, and other property and equipment (excluding facilities attached to buildings and structures acquired on or after April 1, 2016) using the declining-balance method over their estimated useful lives. The consolidated overseas subsidiaries depreciate property and equipment using primarily the straight-line method in accordance with the accounting principles in the respective countries.
In addition, the Company and its consolidated domestic subsidiaries depreciate facilities attached to buildings and structures acquired on or after April 1, 2016 using the straight-line method.
Leased assets related to finance lease transactions without title transfer are depreciated using the straight-line method over the lease periods as their useful lives with no residual value.
Estimated useful lives used in the computation of depreciation are
generally as follows: | |
Buildings and structures...................... | 6 to 60 years |
Machinery and equipment.................. | 2 to 20 years |
Leased assets...................................... | Lease periods |
(8) Software costs
Software costs are amortized using the straight-line method over the estimated useful lives (five years).
(9) Allowance for doubtful accounts
(11) Income taxes
Income taxes are provided for on the basis of income for financial statement purposes. The tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statements and income tax purposes are recognized as deferred income taxes.
(12) Employees' severance and retirement benefits
The Company and its certain consolidated subsidiaries provide two types of post-employment benefit plans, lump-sum payment plans and defined benefit corporate pension plans, under which all eligible employees are entitled to benefits based on their current rate of pay, length of service and the conditions under which termination occurs.
For the calculation of retirement benefit obligations, the estimated amount of retirement benefits is allocated to the respective fiscal years by the straight-line method.
Some of the Company's consolidated subsidiaries calculate net defined benefit liability and retirement benefit expenses by using a simplified method in which retirement benefit obligations are equal to the amount that would be paid if all employees resigned voluntarily at the end of the fiscal year.
Prior service costs are recognized as expenses in the period in which they are incurred, and actuarial gains and losses are recognized as expenses in the following period.
(13) Construction contracts
The construction projects for which the outcome of the portion completed by the end of the fiscal year under review can be reliably estimated are accounted for by the percentage-of-completion method (the degree of completion of each construction project is estimated using the cost-comparison method), while other construction projects are accounted for by the completed-contract method.
(14) Derivative transactions and hedge accounting
The Company and its consolidated subsidiaries state derivative financial instruments at fair value and recognize changes in the fair value as gains or losses unless derivative financial instruments are used for hedging purposes and qualify for hedge accounting.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Company and its consolidated subsidiaries defer recognition of gains or losses resulting from changes in fair value of the derivative financial instruments until the related gains or losses on the hedged items are recognized.
Also, if interest rate swap contracts are used as a hedge and meet certain hedging criteria (regarding interest rate swap contracts), the net amount to be paid or received under the interest rate swap contracts is
Diluted earnings per share is not presented as there are no potential shares.
Cash dividends per share represent actual amounts applicable to the respective year.
- New accounting pronouncements (Accounting standards and guidance issued but not yet effective)
"Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020)
"Implementation Guidance on Accounting Standard for Revenue Recognition" (ASBJ Guidance No. 30, March 31, 2020)
-
Overview
The standard and guidance provide comprehensive principles for revenue recognition. Under the standard and guidance, revenue is recognized by applying the following 5 steps:
Step 1: Identify contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligation in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation - Effective date
Effective from the beginning of the year ending March 31, 2022 - Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards on the consolidated financial statements.
"Accounting Standard for Fair Value Measurement" (ASBJ Statement No. 30, July 4, 2019)
"Implementation Guidance on Accounting Standard for Fair Value Measurement" (ASBJ Guidance No. 31, July 4, 2019)
"Accounting Standard for Measurement of Inventories" (ASBJ Statement No. 9, July 4, 2019)
"Accounting Standard for Financial Instruments" (ASBJ Statement No. 10, July 4, 2019)
"Implementation Guidance on Disclosures about Fair Value of Financial Instruments" (ASBJ Guidance No. 19, March 31,2020)
-
Overview
In order to enhance comparability with internationally recognized accounting standards, "Accounting Standard for Fair Value Measurement" and "Implementation Guidance on Accounting Standard for Fair Value Measurement" (together, hereinafter referred
to as "Fair Value Accounting Standards") were developed and guidance on methods measuring fair value was issued. Fair Value Accounting Standards are applicable to the fair value measurement of the following items:
- Financial instruments in "Accounting Standard for Financial Instruments"; and
- Inventories held for trading purposes in "Accounting Standard for Measurement of Inventories."
In addition, "Implementation Guidance on Disclosures about Fair Value of Financial Instruments" has been revised, and items of notes such as the breakdown by the fair value level of financial instruments are required.
-
Effective date
Effective from the beginning of the year ending March 31, 2022 - Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards on the consolidated financial statements.
"Accounting Standard for Disclosure of Accounting Estimates" (ASBJ Statement No. 31, March 31, 2020)
-
Overview
For the purpose of disclosing information that contributes to the users of financial statements to understand, the standard addresses figures recorded in the financial statements for the current fiscal year based on accounting estimates for items that have a risk of a significantly impacting financial statements in the next fiscal year. - Effective date
Effective from the end of the year ending March 31, 2021
(17) Additional information
(Accounting estimates regarding the impact of COVID-19 pandemic) The accounting estimates such as the valuation of real estate for sale and the loss on impairment of fixed assets are calculated reasonably based on data available at the time of preparing the consolidated financial statements.
The Company and its consolidated subsidiaries calculated the accounting estimates based on the assumption that the impact of COVID-19 shall be temporary. However, its effect to the business activities and business results is unclear for the time being. Despite the anticipation that business activities will be gradually resumed and return toward normal from the second quarter of the next fiscal year, the Company assumes that they will not return to the level of the previous fiscal year during the next fiscal year and will take 1 - 2 years to recover.
The Company and its consolidated subsidiaries provide for doubtful accounts at an estimated uncollectable amount based on the evaluation of certain identified doubtful and bankrupt receivables plus an amount calculated using the percentage of actual collection losses in certain reference periods with respect to remaining receivables.
(10) Lease transactions
Leased assets related to finance lease transactions without title transfer are depreciated using the straight-line method over the lease periods as their useful lives with no residual value.
added to or deducted from the interest on the assets or liabilities relative to which the swap contract was executed as a hedge.
(15) Amounts per share of common stock
The computation of earnings per share is based on the weighted-average number of shares of common stock outstanding during each year.
Diluted earnings per share is computed based on the amount of profit attributable to owners of parent on common stock and the weighted- average number of shares of common stock outstanding during each year after giving effect to the dilutive potential of shares of common stock to be issued upon the exercise of stock options.
3 Cash and cash equivalents
Cash and cash equivalents at March 31, 2020 and 2019 consisted of the following:
Thousands of | ||||
Millions of yen | U.S. dollars | |||
2020 | 2019 | 2020 | ||
Cash, time and notice deposits | ¥195,361 | ¥172,192 | $1,795,432 | |
Time deposits | (1,913) | (1,485) | (17,581) | |
Cash and cash equivalents | ¥193,448 | ¥170,707 | $1,777,851 |
Sumitomo Realty & Development Co., Ltd.
Financial Section
4 Inventories
6 Financial instruments
Inventories at March 31, 2020 and 2019 are as follows:
Thousands of | ||||
Millions of yen | U.S. dollars | |||
2020 | 2019 | 2020 | ||
Real estate for sale | ¥351,369 | ¥390,026 | $3,229,198 | |
Real estate for sale in process | 286,254 | 282,595 | 2,630,769 | |
Costs on uncompleted construction contracts | 10,370 | 5,827 | 95,304 | |
Other | 888 | 1,455 | 8,161 | |
Total | ¥648,881 | ¥679,903 | $5,963,432 |
The Company transferred amounts between inventories and property and equipment. Such transfers at March 31, 2020 and 2019 are as follows:
1. Policy for financial instruments
The Company and its consolidated subsidiaries ("the Group") have the policy to limit its fund management to short-term deposits with funds through loans from banks and the issuance of corporate bonds and commercial paper.
The Group utilizes derivative financial instruments only for the
purpose of hedging the interest rate risk associated with the Group's loans payable, and does not utilize derivative financial instruments for any speculative purposes.
2. Details of financial instruments, risks, and policies and |
fluctuations in interest rates on certain loans and corporate bonds. In regard to derivative transactions, the Group utilizes interest rate
swaps for bank loans and deposits, and utilizes foreign exchange forward contracts and cross currency swap contracts for foreign currency- denominated transactions. Interest rate swap contracts are exposed to the risks of interest rate changes, and foreign exchange forward contracts and cross currency swap contracts are exposed to the risks of foreign exchange rate changes. The derivative financial instruments are executed with creditworthy financial institutions, and the Group's management believes there is insignificant risk of default by counterparties. Derivative transactions are executed by the Group's
Millions of yen | ||
2020 | 2019 | |
Inventories: | ||
Transferred to property and equipment | ¥(6,785) | ¥(23,162) |
Transferred from property and equipment | 3,523 | 4,822 |
Net decrease | ¥(3,262) | ¥(18,340) |
5 Pledged assets
Assets pledged as collateral at March 31, 2020 and 2019 are as follows:
Millions of yen
Thousands of
U.S. dollars
2020
$(62,356) 32,378
$(29,978)
Thousands of
U.S. dollars
systems of risk management |
Operating receivables such as notes and accounts receivable-trade are exposed to customers' credit risk, but this risk is generally avoided through the receipt of deposits.
Investments in securities are business-related equities and are exposed to market price fluctuation risk. The Group regularly checks the market value of the securities and the financial condition of the issuers, and continuously reviews whether it continues to hold securities with consideration for its relationships with the issuers.
Guarantee and lease deposits are mostly deposits related to leasing properties, and are exposed to the counterparty credit risk.
In addition, the Group accommodates counterparties with loans and
Finance Department in accordance with the decisions of a committee whose chairman is the director of the Finance Department. The Finance Department prepares reports on derivative transactions that are provided to the director of the Finance Department periodically.
3. Supplemental information on fair values of financial instruments |
The fair values of financial instruments are based on their market prices, |
and if the market price is not available, other rational valuation |
techniques are used instead. The rational valuation techniques |
incorporate variable factors, and as a result the values may change due |
to using different assumptions. |
The amounts of derivative transactions shown in Note 17 "Derivative |
2020 | 2019 | |
Cash, time and notice deposits | ¥ 2,091 | ¥ 2,068 |
Buildings and structures | 108,863 | 103,708 |
Land | 418,971 | 393,316 |
Construction in progress | - | 85 |
Machinery and equipment | 127 | 210 |
Total | ¥530,052 | ¥499,387 |
2020
$ 19,217 1,000,487 3,850,482
-
1,168
$4,871,354
consequently is exposed to the borrowers' credit risk. However, the Group constantly checks the financial condition of principal borrowers and their performance using the funds lent to those borrowers even after accommodation.
The majority of due dates of operating debt, such as notes and accounts payable, are within one year.
Interest rate swap contracts are used to hedge risks arising from
For 2020
transactions" are not representing the market risks related to derivative |
transactions. |
The carrying amounts of financial instruments on the consolidated |
balance sheets, their fair values and the differences between them as of |
March 31, 2020 and 2019 are as follows. (Financial instruments whose |
fair value is extremely difficult to estimate are not included; please see |
(Note 2).) |
Secured liabilities at March 31, 2020 and 2019 are as follows:
Millions of yen
Thousands of
U.S. dollars
Millions of yen | Thousands of U.S. dollars | |||||
Carrying amount | Fair value | Difference | Carrying amount | Fair value | Difference |
Assets: |
2020 | 2019 | |
Long-term debt due within one year | ¥ 190 | ¥ - |
Long-termnon-recourse debt due within one year | 70,373 | 102,298 |
Long-term debt due after one year | 94,810 | - |
Long-termnon-recourse debt due after one year | 250,182 | 300,900 |
Total | ¥415,555 | ¥403,198 |
Specified assets for non-recourse debts at March 31, 2020 and 2019 are as follows:
Millions of yen
2020
$ 1,746 646,751 871,335 2,299,256
$3,819,088
Thousands of
U.S. dollars
(1) | Cash, time and notice deposits | ¥ 195,361 | ¥ 195,361 | ¥ - |
(2) | Notes and accounts receivable-trade | 17,406 | 17,406 | - |
(3) | Investments in securities | |||
Available-for-sale securities | 366,734 | 366,734 | - | |
(4) | Guarantee and lease deposits | |||
Held-to-maturity securities | 200 | 200 | 0 | |
Available-for-sale securities | 747 | 747 | - | |
Total assets | ¥ 580,448 | ¥ 580,448 | ¥ 0 | |
Liabilities: | ||||
(1) | Notes and accounts payable-trade | ¥ 36,393 | ¥ 36,393 | ¥ - |
$ 1,795,432 | $ 1,795,432 | $ - |
159,967 | 159,967 | - |
3,370,407 | 3,370,407 | - |
1,838 | 1,838 | 0 |
6,865 | 6,865 | - |
$ 5,334,509 | $ 5,334,509 | $ 0 |
$ 334,464 | $ 334,464 | $ - |
2020 | 2019 | |
Cash, time and notice deposits | ¥ 3,261 | ¥ 11,345 |
Buildings and structures | 86,741 | 103,708 |
Land | 273,324 | 393,316 |
Construction in progress | - | 85 |
Machinery and equipment | 96 | 210 |
Total | ¥363,422 | ¥508,664 |
(Note) "Specified assets for non-recourse debts" includes a portion of the amount of "Assets pledged as collateral" for the years ended March 31, 2020 and 2019.
2020
$ 29,970 797,179 2,511,938
-
882
$3,339,969
(2) | Short-term debt | 146,726 | 146,726 | - |
(3) | Long-term debt (including due within one year) | 2,973,627 | 3,026,438 | 52,811 |
(4) | Long-termnon-recourse debt (including due within one year) | 320,555 | 325,637 | 5,082 |
Total liabilities | ¥3,477,301 | ¥3,535,194 | ¥57,893 | |
Derivative transactions*: | ||||
Hedge accounting | ¥ (5,134) | ¥ (5,134) | ¥ - | |
Total derivative transactions | ¥ (5,134) | ¥ (5,134) | ¥ - |
1,348,461 | 1,348,461 | - |
27,328,619 | 27,813,969 | 485,350 |
2,946,007 | 2,992,712 | 46,705 |
$31,957,551 | $32,489,606 | $532,055 |
$ (47,183) | $ (47,183) | $ - |
$ (47,183) | $ (47,183) | $ - |
Sumitomo Realty & Development Co., Ltd.
Financial Section
For 2019
Millions of yen | ||||
Carrying amount | Fair value | Difference | ||
Assets: | ||||
(1) | Cash, time and notice deposits | ¥ 172,192 | ¥ 172,192 | ¥ - |
(2) | Notes and accounts receivable-trade | 21,567 | 21,567 | - |
(3) | Investments in securities | |||
Available-for-sale securities | 414,743 | 414,743 | - | |
(4) | Guarantee and lease deposits | |||
Held-to-maturity securities | 3,169 | 3,167 | (2) | |
Available-for-sale securities | 1,170 | 1,170 | - | |
Total assets | ¥ 612,841 | ¥ 612,839 | ¥ (2) | |
Liabilities: | ||||
(1) | Notes and accounts payable-trade | ¥ 54,937 | ¥ 54,937 | ¥ - |
(2) | Short-term debt | 25,643 | 25,643 | - |
(3) | Long-term debt (including due within one year) | 2,913,946 | 2,964,782 | 50,836 |
(4) | Long-termnon-recourse debt (including due within one year) | 403,198 | 410,218 | 7,020 |
Total liabilities | ¥3,397,724 | ¥3,455,580 | ¥57,856 | |
Derivative transactions*: | ||||
Hedge accounting | ¥ (5,733) | ¥ (5,733) | ¥ - | |
Total derivative transactions | ¥ (5,733) | ¥ (5,733) | ¥ - |
* Derivative transactions are stated at net of assets and liabilities. Figures in parentheses indicate net liabilities.
Derivative transactions:
Please see Note 17 "Derivative transactions."
(Note 2) Financial instruments whose fair value is extremely difficult to estimate
Carrying amount | ||||
Thousands of | ||||
Millions of yen | U.S. dollars | |||
2020 | 2019 | 2020 | ||
Investments in subsidiaries and affiliates*1 | ¥ 74,468 | ¥ 35,856 | $ 684,386 | |
Unlisted equity securities*1 | 2,338 | 2,327 | 21,487 | |
Preferred equity securities, etc.*1 | 25,688 | 25,688 | 236,081 | |
Investments in limited partnerships, etc.*1 | 2 | 352 | 18 | |
Guarantee and lease deposits (excluding held-to-maturity securities and available-for-sale securities)*2 | 69,224 | 65,960 | 636,192 | |
Guarantee and deposits received*3 | 247,610 | 228,959 | 2,275,618 |
*1. The fair value of these items are not disclosed since their market price is unavailable and the assessment of their fair value is deemed extremely difficult.
*2. Guarantee and lease deposits (excluding held-to-maturity securities and available-for-sale securities) are not included in "Assets (4) Guarantee and lease deposits" because their remaining terms cannot be determined and the assessment of their fair value is deemed extremely difficult.
*3. The fair value of guarantee and deposits received (mainly consisting of lease deposits) are not disclosed because their remaining terms cannot be determined and the assessment of their fair value is deemed extremely difficult.
(Note 3) Redemption schedule of pecuniary claims and securities with maturities For 2020
Millions of yen | ||||
1 year or less | 1 to 5 years | 5 to 10 years | Over 10 years | |
Cash, time and notice deposits | ¥195,361 | ¥ - | ¥- | ¥- |
(Note 1) The calculation methods of fair value for financial instruments Assets:
(1) Cash, time and notice deposits
The fair value of cash, time and notice deposits approximates their carrying amounts because of their short-term maturities.
(2) Notes and accounts receivable-trade
The fair value of notes and accounts receivable-trade approximates their carrying amounts unless the credit standing of debtors has changed significantly since the loan origination.
The allowance for doubtful receivables is estimated based on expected recoverable amounts, considering the possibility of individual collections. Therefore, the fair value of doubtful receivables approximates the carrying amount deducted by the estimated allowance for doubtful accounts on the consolidated balance sheets as of the end of the fiscal year.
(3) Investments in securities
The fair value of listed shares is based on the exchange prices at market. For floating rate notes, the carrying amount is presented as the fair value, as the fair value approximates the carrying amount because the market interest rate is reflected in such notes within a short time period. The fair value of the fixed-coupon debt is determined based on the present value discounted at the interest rate which reflects the period remaining to maturity and the credit risk.
For notes on securities classified by purpose of holding, please see Note 7 "Securities."
(4) Guarantee and lease deposits
The fair value of guarantee and lease deposits are based on the value offered by correspondent financial institutions.
For notes on securities classified by purpose of holding, please see Note 7 "Securities."
Liabilities:
- Notes and accounts payable-trade and (2) Short-term debt The fair value of these items approximates their carrying amounts because of their short-termmaturities.
-
Long-termdebt (including due within one year)
For floating rate notes, the carrying amount is used as the fair value because the market interest rate is reflected in such notes within a short time period and because the credit standing of the Company is the same after borrowing. The fixed-coupon debt is calculated by discounting the combined total of principal and interest at an interest rate assumed for similar new borrowings.
The specific matching criteria of interest rate swaps are applicable to some long-term debts with floating interest rates (please see Note 17 "Derivative transactions"). The fair value of these items is calculated by discounting the combined total of interest and principal, with which the interest rate swap has been accounted for, at an interest rate rationally estimated for similar borrowings.
The fair value of corporate bonds issued by the Company (included in
- Long-termdebt (including due within one year)) is based on the market price.
- Long-termnon-recourse debt (including due within one year) For floating rate notes, the carrying amount is used as the fair value because the market interest rate is reflected in such notes within a short time period and the value of its non-exemptproperties has not been changed.
The fixed-coupon debt is calculated by discounting the combined total of principal and interest at an interest rate assumed for similar new borrowings or bonds.
The specific matching criteria of interest rate swaps are applicable to some long-termnon-recourse debts with floating interest rates (please see Note 17 "Derivative transactions"). The fair value of these items is calculated by discounting the combined total of interest and principal, with which the interest rate swap has been accounted for, at an interest rate rationally estimated for similar borrowings or bonds.
Notes and accounts receivable-trade | 17,406 | - | - | - |
Guarantee and lease deposits: | ||||
Held-to-maturity securities (National government bonds) | 200 | - | - | - |
Available-for-sale securities with maturities (National government bonds) | 206 | 483 | 43 | - |
Total | ¥213,173 | ¥483 | ¥43 | ¥- |
For 2019 | ||||
Millions of yen | ||||
1 year or less | 1 to 5 years | 5 to 10 years | Over 10 years | |
Cash, time and notice deposits | ¥172,192 | ¥ - | ¥ - | ¥- |
Notes and accounts receivable-trade | 21,567 | - | - | - |
Guarantee and lease deposits: | ||||
Held-to-maturity securities (National government bonds) | 2,969 | 200 | - | - |
Available-for-sale securities with maturities (National government bonds) | 407 | 561 | 171 | - |
Total | ¥197,135 | ¥761 | ¥171 | ¥- |
For 2020 | ||||
Thousands of U.S. dollars | ||||
1 year or less | 1 to 5 years | 5 to 10 years | Over 10 years | |
Cash, time and notice deposits | $1,795,432 | $ - | $ - | $- |
Notes and accounts receivable-trade | 159,967 | - | - | - |
Guarantee and lease deposits: | ||||
Held-to-maturity securities (National government bonds) | 1,838 | - | - | - |
Available-for-sale securities with maturities (National government bonds) | 1,893 | 4,439 | 395 | - |
Total | $1,959,130 | $4,439 | $395 | $- |
Sumitomo Realty & Development Co., Ltd.
Financial Section
(Note 4) Repayment schedule of corporate bonds, long-term debt, long-termnon-recourse debt and other interest-bearing debt For 2020
Millions of yen | ||||||
Year ending March 31 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 and thereafter |
Short-term debt | ¥146,726 | ¥ - | ¥ - | ¥ - | ¥ - | ¥ - |
Long-term debt (including due within one year) | 131,471 | 211,446 | 237,386 | 289,472 | 379,414 | 1,724,438 |
Long-termnon-recourse debt (including due within one year) | 70,373 | 15,404 | 3,846 | 3,700 | 3,434 | 223,798 |
Total | ¥348,570 | ¥226,850 | ¥241,232 | ¥293,172 | ¥382,848 | ¥1,948,236 |
For 2019 | ||||||
Millions of yen | ||||||
Year ending March 31 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 and thereafter |
Short-term debt | ¥ 25,643 | ¥ - | ¥ - | ¥ - | ¥ - | ¥ - |
Long-term debt (including due within one year) | 169,619 | 131,281 | 211,256 | 237,196 | 289,282 | 1,875,312 |
Long-termnon-recourse debt (including due within one year) | 102,298 | 69,913 | 14,944 | 3,386 | 3,240 | 209,417 |
Total | ¥297,560 | ¥201,194 | ¥226,200 | ¥240,582 | ¥292,522 | ¥2,084,729 |
For 2020 | ||||||
Thousands of U.S. dollars | ||||||
Year ending March 31 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 and thereafter |
Short-term debt | $1,348,461 | $ - | $ - | $ - | $ - | $ - |
Long-term debt (including due within one year) | 1,208,262 | 1,943,259 | 2,181,656 | 2,660,344 | 3,486,941 | 15,848,157 |
Long-termnon-recourse debt (including due within one year) | 646,751 | 141,568 | 35,346 | 34,004 | 31,560 | 2,056,778 |
Total | $3,203,474 | $2,084,827 | $2,217,002 | $2,694,348 | $3,518,501 | $17,904,935 |
7 Securities
For 2020
A. The following tables summarize the acquisition costs, carrying amounts and fair values of securities with available fair values as of March 31, 2020:
(a) Held-to-maturity securities:
For 2019
A. The following tables summarize the acquisition costs, carrying amounts and fair values of securities with available fair values as of March 31, 2019:
(a) Held-to-maturity securities:
Millions of yen
Carrying amount | Fair value | Difference | |
Securities whose fair value exceeds carrying amount: | |||
National and local government bonds, etc. | ¥ 461 | ¥ 462 | ¥ 1 |
Securities whose fair value does not exceed carrying amount: | |||
National and local government bonds, etc. | 2,708 | 2,705 | (3) |
Total | ¥3,169 | ¥3,167 | ¥(2) |
(b) Available-for-sale securities: | Millions of yen | ||
Carrying amount | Acquisition cost | Difference | |
Securities whose carrying amount exceeds acquisition cost: | |||
Equity securities | ¥348,562 | ¥180,791 | ¥167,771 |
Debt securities* | 1,171 | 1,140 | 31 |
Other | - | - | - |
Subtotal | 349,733 | 181,931 | 167,802 |
Securities whose carrying amount does not exceed acquisition cost: | |||
Equity securities | 65,517 | 75,824 | (10,307) |
Debt securities | - | - | - |
Other | 664 | 664 | - |
Subtotal | 66,181 | 76,488 | (10,307) |
Total | ¥415,914 | ¥258,419 | ¥157,495 |
- Debt securities in securities whose carrying amount exceeds acquisition cost are included in "Guarantee and lease deposits paid to lessors" on the consolidated balance sheets. (Note) The Company recognized impairment loss on investments in securities of ¥1,105 million related to equity securities in available-for-sale securities.
B. Total sales of available-for-sale securities sold in the year ended March 31, 2019 amounted to ¥264 million and the related gains amounted to ¥12 million.
Carrying amount | Difference | ||
Securities whose fair value exceeds carrying amount: | |||
National and local government bonds, etc. | ¥200 | ¥200 | ¥ 0 |
Securities whose fair value does not exceed carrying amount: | |||
National and local government bonds, etc. | - | - | - |
Total | ¥200 | ¥200 | ¥ 0 |
(b) Available-for-sale securities: | Millions of yen | ||
Carrying amount | Acquisition cost | Difference |
Carrying amountDifference
$1,838 | $1,838 | $ 0 |
- | - | - |
$1,838 | $1,838 | $ 0 |
Thousands of U.S. dollars | ||
Carrying amount | Acquisition cost | Difference |
Securities whose carrying amount exceeds acquisition cost: | |||
Equity securities | ¥257,807 | ¥124,727 | ¥133,080 |
Debt securities* | 747 | 732 | 15 |
Other | - | - | - |
Subtotal | 258,554 | 125,459 | 133,095 |
Securities whose carrying amount does not exceed acquisition cost: | |||
Equity securities | 108,045 | 130,965 | (22,920) |
Debt securities | - | - | - |
Other | 882 | 891 | (9) |
Subtotal | 108,927 | 131,856 | (22,929) |
Total | ¥367,481 | ¥257,315 | ¥110,166 |
$2,369,332 | $1,146,283 | $1,223,049 |
6,865 | 6,727 | 138 |
- | - | - |
2,376,197 | 1,153,010 | 1,223,187 |
992,969 | 1,203,612 | (210,643) |
- | - | - |
8,106 | 8,189 | (83) |
1,001,075 | 1,211,801 | (210,726) |
$3,377,272 | $2,364,811 | $1,012,461 |
- Debt securities in securities whose carrying amount exceeds acquisition cost are included in "Guarantee and lease deposits paid to lessors" on the consolidated balance sheets. (Note) The Company recognized impairment loss on investments in securities of ¥7,838 million ($72,034 thousand) related to equity securities in available-for-sale securities.
B. Total sales of available-for-sale securities sold in the year ended March 31, 2020 amounted to ¥2,302 million ($21,156 thousand) and the related gains amounted to ¥1,417 million ($13,023 thousand).
Sumitomo Realty & Development Co., Ltd.
Financial Section
8 Short-term debt and long-term debt
Short-term debt at March 31, 2020 and 2019 consisted of the following:
Thousands of |
Non-recourse debt at March 31, 2020 and 2019 consisted of the following:
Thousands of | |
Millions of yen | U.S. dollars |
Millions of yen | U.S. dollars | |||||
2020 | Average interest | Average interest | 2020 | |||
rate (%) | 2019 | rate (%) | ||||
Loans, principally from banks | ¥ 26,726 | 0.27 | ¥25,643 | 0.27 | $ 245,621 | |
Commercial paper | 120,000 | 0.00 | - | - | 1,102,840 | |
Total | ¥146,726 | ¥25,643 | $1,348,461 |
The interest rates represent weighted-average rates in effect at March 31, 2020 and 2019, regardless of borrowing currencies, though the range of the interest rate varies by borrowing currency.
Long-term debt at March 31, 2020 and 2019 consisted of the following:
Thousands of | ||||
Millions of yen | U.S. dollars | |||
2020 | 2019 | 2020 | ||
2.50% domestic straight bonds, due 2019 | ¥ - | ¥ 10,000 | $ - | |
0.563% domestic straight bonds, due 2020 | - | 10,000 | - | |
0.877% domestic straight bonds, due 2020 | - | 20,000 | - | |
1.098% domestic straight bonds, due 2023 | 10,000 | 10,000 | 91,903 | |
0.950% domestic straight bonds, due 2023 | 10,000 | 10,000 | 91,903 | |
0.968% domestic straight bonds, due 2023 | 10,000 | 10,000 | 91,903 | |
0.987% domestic straight bonds, due 2024 | 20,000 | 20,000 | 183,807 | |
0.914% domestic straight bonds, due 2024 | 20,000 | 20,000 | 183,807 | |
0.904% domestic straight bonds, due 2024 | 20,000 | 20,000 | 183,807 | |
0.884% domestic straight bonds, due 2024 | 20,000 | 20,000 | 183,807 | |
0.836% domestic straight bonds, due 2024 | 20,000 | 20,000 | 183,807 | |
0.809% domestic straight bonds, due 2024 | 20,000 | 20,000 | 183,807 | |
0.429% domestic straight bonds, due 2021 | 10,000 | 10,000 | 91,903 | |
0.392% domestic straight bonds, due 2022 | 10,000 | 10,000 | 91,903 | |
0.670% domestic straight bonds, due 2025 | 10,000 | 10,000 | 91,903 | |
0.826% domestic straight bonds, due 2025 | 20,000 | 20,000 | 183,807 | |
0.992% domestic straight bonds, due 2025 | 20,000 | 20,000 | 183,807 | |
0.400% domestic straight bonds, due 2026 | 10,000 | 10,000 | 91,903 | |
0.230% domestic straight bonds, due 2026 | 10,000 | 10,000 | 91,903 | |
0.400% domestic straight bonds, due 2027 | 30,000 | 30,000 | 275,710 | |
Loans, principally from banks and insurance companies, with interest at weighted-average rates of 0.31% | ||||
in 2020 and 2019, respectively: | ||||
Secured | 95,000 | - | 873,082 | |
Unsecured | 2,608,627 | 2,603,946 | 23,974,147 | |
Subtotal | 2,973,627 | 2,913,946 | 27,328,619 |
2020 | 2019 | ||
Non-recourse bonds, with interest at weighted-average rates of 0.09% in 2020 and 0.07% in 2019: | |||
Due within one year | ¥ 8,000 | ¥ 2,000 | |
Due after one year | 31,100 | 37,100 | |
Subtotal | 39,100 | 39,100 | |
Non-recourse loans, with interest at weighted-average rates of 0.11% in 2020 and 2019, respectively: | |||
Due within one year | 62,373 | 100,298 | |
Due after one year | 219,082 | 263,800 | |
Subtotal | 281,455 | 364,098 | |
Total | ¥320,555 | ¥403,198 | |
Secured | ¥320,555 | ¥403,198 | |
Unsecured | - | - | |
Total | ¥320,555 | ¥403,198 | |
The aggregate annual maturities of long-term debt at March 31, 2020 are as follows: | |||
Year ending March 31 | Millions of yen | ||
2021 | ¥ 131,471 | ||
2022 | 211,446 | ||
2023 | 237,386 | ||
2024 | 289,472 | ||
2025 | 379,414 | ||
2026 and thereafter | 1,724,438 | ||
Total | ¥2,973,627 | ||
The aggregate annual maturities of non-recourse debt at March 31, 2020 are as follows: | |||
Year ending March 31 | Millions of yen | ||
2021 | ¥ 70,373 | ||
2022 | 15,404 | ||
2023 | 3,846 | ||
2024 | 3,700 | ||
2025 | 3,434 | ||
2026 and thereafter | 223,798 | ||
Total | ¥320,555 |
2020
$ 73,523 285,819
359,342
573,229
2,013,436
2,586,665
$2,946,007
$2,946,007
-
$2,946,007
Thousands of
U.S. dollars
$ 1,208,262 1,943,259 2,181,656 2,660,344 3,486,941
15,848,157
$27,328,619
Thousands of
U.S. dollars
$ 646,751 141,568 35,346 34,004 31,560 2,056,778
$2,946,007
Amount due within one year | (131,471) | (169,619) | (1,208,262) | |
Total | ¥2,842,156 | ¥2,744,327 | $26,120,357 |
It is customary in Japan that security must be given if requested by lending banks under certain circumstances, and generally banks have the right to offset cash deposited with them against any debt or obligations payable to the bank that becomes due in the case of default and certain other specified events. The Company and its consolidated subsidiaries have never received such a request.
Sumitomo Realty & Development Co., Ltd.
Financial Section
9 Employees' severance and retirement benefits
As explained in Note 2 (12), the liabilities and expenses for severance and retirement benefits are determined based on the amounts obtained by actuarial calculations except for the cases using the simplified method.
(6) Components of remeasurements of defined benefit plans (before deducting tax effect) | Thousands of | |||
Millions of yen | U.S. dollars | |||
2020 | 2019 | 2020 | ||
Unrecognized actuarial differences | ¥257 | ¥66 | $2,362 |
For 2020 and 2019
1. Defined benefit plan
(1) Adjustment table of retirement benefit obligations between the beginning and the end of the fiscal year
Millions of yen | ||
2020 | 2019 | |
Retirement benefit obligations at beginning of year | ¥11,876 | ¥11,615 |
Service costs | 732 | 714 |
Interest costs | 48 | 48 |
Actuarial differences | (64) | (1) |
Retirement benefits paid | (523) | (500) |
Retirement benefit obligations at end of year | ¥12,069 | ¥11,876 |
(2) Adjustment table of plan assets between the beginning and the end of the fiscal year | ||
Millions of yen | ||
2020 | 2019 | |
Plan assets at beginning of year | ¥5,857 | ¥5,650 |
Expected return on plan assets | 117 | 113 |
Actuarial differences | (321) | (67) |
Employer contributions | 380 | 388 |
Retirement benefits paid | (234) | (227) |
Plan assets at end of year | ¥5,799 | ¥5,857 |
Thousands of
U.S. dollars
2020
$109,144 6,727 441 (588) (4,806)
$110,918
Thousands of
U.S. dollars
2020
$53,828 1,075 (2,950) 3,492 (2,150)
$53,295
Total | ¥257 | ¥66 | $2,362 | |
(7) Major breakdown of plan assets | ||||
2020 | 2019 | |||
Debt securities | 29.7% | 25.6% | ||
Equity securities | 29.1 | 34.9 | ||
General life insurance accounts | 39.5 | 37.8 | ||
Other | 1.7 | 1.7 | ||
Total | 100.0% | 100.0% | ||
(8) Actuarial assumptions | ||||
2020 | 2019 | |||
Discount rate | 0.4% | 0.4% | ||
Rate of expected return on plan assets | 2.0 | 2.0 |
2. Defined contribution plan
The required contribution amount for a defined contribution plan that one of the Company's consolidated subsidiaries adopted is ¥394 million ($3,621 thousand) and ¥389 million for the years ended March 31, 2020 and 2019, respectively.
10 Loss on impairment of fixed assets
The Company and its consolidated domestic subsidiaries recognized impairment losses on the following assets for the years ended March 31, 2020, 2019 and 2018, respectively.
- Adjustment table of retirement benefit obligations and plan assets at the end of the fiscal year and net defined benefit liability on the consolidated balance sheets
For 2020
Millions of yen | ||
2020 | 2019 | |
Obligations under retirement benefit plans (funded) | ¥ 6,307 | ¥ 6,295 |
Fair value of plan assets | (5,799) | (5,857) |
508 | 438 | |
Obligations under retirement benefit plans (unfunded) | 5,762 | 5,581 |
Net amount of liabilities on the consolidated balance sheets | ¥ 6,270 | ¥ 6,019 |
Net defined benefit liability | ¥ 6,270 | ¥ 6,019 |
Net amount of liabilities on the consolidated balance sheets | ¥ 6,270 | ¥ 6,019 |
2020
$ 57,963 (53,295)
4,668
52,955
$ 57,623
$ 57,623
$ 57,623
Use | Location | Number of properties |
Assets leased to others | Tokyo | 2 |
For 2019 | ||
Use | Location | Number of properties |
Asset leased to others | Tokyo | 1 |
For 2018 | ||
Use | Location | Number of properties |
Asset leased to others | Tokyo | 1 |
(4) Components of retirement benefit expenses | ||
Millions of yen | ||
2020 | 2019 | |
Service costs | ¥ 732 | ¥ 714 |
Interest costs | 48 | 48 |
Expected return on plan assets | (117) | (113) |
Actuarial differences | 66 | (229) |
Retirement benefit expenses | ¥ 729 | ¥ 420 |
(5) Remeasurements of defined benefit plans (before deducting tax effect)
Millions of yen
Thousands of
U.S. dollars
2020
$ 6,727 441 (1,075) 607
$ 6,700
Thousands of
U.S. dollars
The Company and its consolidated domestic subsidiaries recognized losses on the impairment of certain properties, which are generally assessed individually for impairment. The Company's houses are treated as common assets.
Loss on sales of property and equipment of ¥9,660 million ($88,779 thousand) and ¥8,576 million were recognized by a consolidated subsidiary by restructuring of assets within the Group for the years ended March 31, 2020 and 2019, respectively. The selling price of the asset, based on evaluation by a real estate appraiser, was determined as its
recoverable amount, and loss on sales of property and equipment of the asset was recognized as impairment losses in other expenses for the years ended March 31, 2020 and 2019, respectively.
The carrying value of the asset has been reduced to its recoverable
amount by ¥10,635 million since the total amount of its future cash flow is estimated to be less than the carrying value for the year ended March 31, 2018. The recoverable amount is calculated by discounting the future cash flow at 4.0%. The write-down was recognized as impairment losses in other expenses for the years ended March 31, 2018.
2020 | 2019 | 2020 | ||
Actuarial differences | ¥191 | ¥295 | $1,755 | |
Total | ¥191 | ¥295 | $1,755 |
Sumitomo Realty & Development Co., Ltd.
Financial Section
11 Asset retirement obligations
13 Business Combination
Even though removing asbestos is required for some buildings the Company and its consolidated subsidiaries ("the Group") operate at the time of demolishing, it is difficult to estimate the fair value of obligations associated with such assets reasonably since the timing and/or method of settlement for the retirement obligations are not clear enough. Therefore, for the years ended March 31, 2020 and 2019, asset retirement obligations related to such a case are not recorded (except for the asset retirement obligations recorded on the financial statements).
In addition, under the partial lease contracts, the Group has obligations for restoring office spaces when they move out. For the asset retirement obligations associated with such a case, the duration of use of the assets is not clear enough and these assets do not have any relocation plans. Therefore, the Group is unable to estimate the asset retirement obligations since it is difficult to estimate the timing of fulfillment of the obligations. Consequently, for the years ended March 31, 2020 and 2019, asset retirement obligations related to such a case are not recorded (except for the asset retirement obligations recorded on the financial statements).
(Transactions conducted by commonly controlled entities) (An absorption-type merger of consolidated subsidiaries)
The Company resolved at its board of directors meeting held on August 13, 2019 to merger by absorption with its consolidated subsidiaries, PrimeQuest Three Co., Ltd. and PrimeQuest Four Co., Ltd. The merger agreement had been executed on the same date, and these subsidiaries were absorbed and merged as of October 1, 2019.
1. Overview of business combination |
(1) Name and business of the target companies |
(4) | Name of company after combination |
No change | |
(5) | Purpose of business combination |
The purpose is to simplify the organization of the Company's | |
consolidated Group as PrimeQuest Three Co., Ltd. and | |
PrimeQuest Four Co., Ltd. jointly own 100% of the trust | |
beneficiary rights of Shinjuku Sumitomo Building. | |
2. Overview of accounting treatments | |
The transaction is treated as a common control transaction |
12 Income taxes
The normal effective statutory income tax rate in Japan arising out of the aggregation of corporate, enterprise and inhabitants' taxes was approximately 30.62% for the years ended March 31, 2020 and 2019 respectively, and 30.86% for the year ended March 31, 2018.
Details of deferred tax assets and liabilities at March 31, 2020 and 2019 are as follows: | Thousands of |
Millions of yen | U.S. dollars |
Name: PrimeQuest Three Co., Ltd. and PrimeQuest Four Co., Ltd. | |
Business: Property leasing | |
(2) | Date of business combination |
October 1, 2019 | |
(3) | Legal form of business combination |
An absorption-type merger in which the Company is the |
pursuant to "Accounting Standard for Business Combinations" |
(ASBJ Statement No. 21, January 16, 2019), as well as "Guidance |
on Accounting Standard for Business Combinations and |
Accounting Standard for Business Divestitures" (ASBJ Guidance No. |
10, January 16, 2019). |
2020 | 2019 | |
Deferred tax assets: | ||
Loss on devaluation of real estate for sale | ¥ 18,582 | ¥ 14,415 |
Loss on impairment of fixed assets | 13,899 | 17,077 |
Loss on adjustment of profit and loss on transfer | 11,633 | 4,254 |
Depreciation and amortization of consolidated adjustment | 6,312 | 7,258 |
2020
$ 170,775 127,736 106,911 58,009
surviving company and PrimeQuest Three Co., Ltd. and |
PrimeQuest Four Co., Ltd. are absorbed. |
14 Deposits received with interest rate
Guarantee and deposits received at March 31, 2020 and 2019 are as follows:
Thousands of | |
Millions of yen | U.S. dollars |
Net operating loss carryforwards | 3,136 | 1,593 |
Accrued enterprise tax and business office tax | 2,284 | 1,834 |
Loss on devaluation of investments in securities | 1,951 | 797 |
Net defined benefit liability | 1,847 | 1,759 |
Accrued bonuses | 1,742 | 1,875 |
Net deferred losses on hedges | 1,571 | 1,752 |
Loss on devaluation of investments in SPEs' holding properties for sale | 1,413 | 1,413 |
Allowance for doubtful accounts | 1,290 | 3,439 |
Elimination of unrealized profit | 909 | 926 |
Other | 17,495 | 15,767 |
Subtotal of deferred tax assets | 84,064 | 74,159 |
Valuation allowance | (14,613) | (9,247) |
Total deferred tax assets | ¥ 69,451 | ¥ 64,912 |
Deferred tax liabilities: | ||
Net unrealized holding gains on securities | ¥(33,756) | ¥(48,241) |
28,821
20,991
17,930
16,975
16,010
14,438
12,986
11,856
8,354
160,784
772,576
(134,298)
$ 638,278
$(310,229)
2020 | Average interest | Average interest | ||
rate (%) | 2019 | rate (%) | ||
Short-term deposits and long-term deposits due within one year: | ||||
Non-interest-bearing | ¥ 51,196 | ¥ 61,582 | ||
Interest-bearing | - | - | - | - |
51,196 | 61,582 | |||
Guarantee and lease deposits from tenants: | ||||
Non-interest-bearing | 247,610 | 228,959 | ||
Interest-bearing | - | - | - | - |
Long-term deposits: | ||||
Non-interest-bearing | 45,895 | 49,807 | ||
Interest-bearing | - | - | - | - |
293,505 | 278,766 | |||
Total | ¥344,701 | ¥340,348 |
15 Net assets
2020
$ 470,508
-
470,508
2,275,618
-
421,790
-
2,697,408
$3,167,916
Retained earnings appropriated for tax allowable reserves | (3,731) | (3,731) |
Other | (1,908) | (637) |
Total deferred tax liabilities | ¥(39,395) | ¥(52,609) |
Net deferred tax assets | ¥ 30,056 | ¥ 12,303 |
(34,289)
(17,535)
$(362,053)
$ 276,225
Under the Japanese Corporate Law ("the Law") and its 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 Law, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit and capitalized by a resolution of the shareholders' meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in capital
(Notes)
- Valuation allowance increased by ¥5,366 million ($49,315 thousand) as a result of mainly the recognition of loss on adjustment of profit and loss on transfer.
- The amounts of deferred tax assets for the year ended March 31, 2019 are restated after reflecting retroactive application of the new accounting policy as stated in (4) "Recognition of revenue" in Note 2 "Accounting policies."
The difference between the statutory tax rate and the effective tax rate for the years ended March 31, 2020, 2019 and 2018 was insignificant and not presented.
Under the Law, in cases where 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 on the accompanying consolidated balance sheets.
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 financial statements of the Company in accordance with the Law and its regulations.
Sumitomo Realty & Development Co., Ltd.
Financial Section
16 Information for certain lease transactions
18 Segment information
Future lease payments and receipts under such non-cancelable operating leases at March 31, 2020, 2019 and 2018 are as follows:
Thousands of | |||||
Millions of yen | U.S. dollars | ||||
2020 | 2019 | 2018 | 2020 | ||
Operating leases: | |||||
Future lease payments: | |||||
Due within one year | ¥ 1,526 | ¥ 1,526 | ¥ 1,401 | $ 14,024 | |
Due after one year | 39,395 | 42,211 | 38,241 | 362,053 | |
Total | ¥ 40,921 | ¥ 43,737 | ¥ 39,642 | $ 376,077 |
The Company and its consolidated subsidiaries mainly operate their business in five segments: (1) Leasing business consists of leasing of office buildings, residences and other properties, and management of these properties; (2) Sales business consists of sale of condominiums, detached houses and land lots; (3) Construction business consists of construction of housing, condominiums and buildings; (4) Brokerage business; and (5) Other businesses including fitness business and restaurant business.
The calculation method for segment profit/loss has been changed reflecting the change of the revenue recognition method of brokerage fees as stated in (4) "Recognition of revenue" in Note 2 "Accounting policies". The segment information for the year ended March 31, 2019 has been adjusted retroactively, and as a result, revenue from operations from customers decreased ¥1,032 million and segment profit decreased ¥1,030 million, respectively, compared to the amount before its application.
Future lease receipts: | ||||||
Due within one year | ¥ 89,154 | ¥ 95,607 | ¥ 83,254 | $ 819,355 | ||
Due after one year | 122,544 | 142,321 | 153,777 | 1,126,220 | ||
Total | ¥211,698 | ¥237,928 | ¥237,031 | $1,945,575 |
17 Derivative transactions
Hedge accounting was applied to all derivative transactions for the years ended March 31, 2020 and 2019.
The summary of these transactions is as follows:
- Foreign currency-related derivatives Not applicable
- Interest-relatedderivatives
For 2020 | Millions of yen | ||||
Contract amounts | |||||
Hedging accounting | Types of derivative transactions | Hedged items | Contract amounts | due after one year | Fair value |
Deferred hedge | Interest rate swap contracts | Bank loans | ¥ 342,900 | ¥ 302,900 | ¥(5,134) |
accounting | Fixed rate payments / Floating rate receipts | ||||
Exceptional accounting for | Interest rate swap contracts | Bank loans and bonds | 1,474,995 | 1,333,990 | - (*) |
interest rate swaps | Fixed rate payments / Floating rate receipts | ||||
Thousands of U.S. dollars | |||||
Contract amounts | |||||
Hedging accounting | Types of derivative transactions | Hedged items | Contract amounts | due after one year | Fair value |
Deferred hedge | Interest rate swap contracts | Bank loans | $ 3,151,365 | $ 2,783,751 | $(47,183) |
accounting | Fixed rate payments / Floating rate receipts | ||||
Exceptional accounting for | Interest rate swap contracts | Bank loans and bonds | 13,555,693 | 12,259,811 | - (*) |
interest rate swaps | Fixed rate payments / Floating rate receipts | ||||
For 2019 | Millions of yen | ||||
Contract amounts | |||||
Hedging accounting | Types of derivative transactions | Hedged items | Contract amounts | due after one year | Fair value |
Deferred hedge | Interest rate swap contracts | Bank loans | |||
accounting | Fixed rate payments / Floating rate receipts | ¥ 248,600 | ¥ 208,600 | ¥(5,733) | |
Exceptional accounting for | Interest rate swap contracts | Bank loans and bonds | |||
interest rate swaps | Fixed rate payments / Floating rate receipts | 1,507,198 | 1,415,693 | - (*) | |
(Note) Fair value is determined based on the quoted price obtained from relevant financial institutions.
- Interest rate swap contracts which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential paid or received under the swap agreements is recognized and included in interest expenses or income of the long-term debt or the long-termnon-recourse debt as hedged items. Thus, the fair value of such interest rate swap contracts is included in the fair value of the long-term debt.
Information by business segment for the years ended March 31, 2020, 2019 and 2018 is summarized as follows:
Millions of yen | ||||||||
For 2020 | ||||||||
Reportable segments | ||||||||
Leasing | Sales | Construction | Brokerage | Consolidated financial | ||||
business | business | business | business | Other businesses | Total | Adjustments | statements amounts | |
Revenue from operations: | ||||||||
Customers | ¥ 392,110 | ¥324,700 | ¥216,622 | ¥69,119 | ¥10,962 | ¥1,013,513 | ¥ - | ¥1,013,513 |
Intersegment | 3,482 | 267 | 2,309 | 212 | 1,135 | 7,405 | (7,405) | - |
Total | 395,592 | 324,967 | 218,931 | 69,331 | 12,097 | 1,020,918 | (7,405) | 1,013,513 |
Segment profit | ¥ 169,416 | ¥ 47,374 | ¥ 20,583 | ¥19,337 | ¥ 775 | ¥ 257,485 | ¥ (23,153) | ¥ 234,332 |
Segment assets | ¥3,922,318 | ¥670,079 | ¥ 25,053 | ¥ 8,181 | ¥72,476 | ¥4,698,107 | ¥619,516 | ¥5,317,623 |
Other: | ||||||||
Depreciation and amortization | ¥ 45,421 | ¥ 119 | ¥ 1,283 | ¥ 462 | ¥ 314 | ¥ 47,599 | ¥ 1,375 | ¥ 48,974 |
Loss on impairment of fixed assets | 9,660 | - | - | - | - | 9,660 | - | 9,660 |
Increase in property and equipment, | 273,245 | 2,919 | 1,553 | 429 | 608 | 278,754 | 620 | 279,374 |
and intangible assets | ||||||||
Millions of yen | ||||||||
For 2019 | ||||||||
Reportable segments | ||||||||
Leasing | Sales | Construction | Brokerage | Consolidated financial | ||||
business | business | business | business | Other businesses | Total | Adjustments | statements amounts | |
Revenue from operations: | ||||||||
Customers | ¥ 378,091 | ¥331,516 | ¥219,776 | ¥71,490 | ¥11,325 | ¥1,012,198 | ¥ - | ¥1,012,198 |
Intersegment | 3,673 | 236 | 1,917 | 377 | 1,419 | 7,622 | (7,622) | - |
Total | 381,764 | 331,752 | 221,693 | 71,867 | 12,744 | 1,019,820 | (7,622) | 1,012,198 |
Segment profit | ¥ 149,933 | ¥ 47,115 | ¥ 20,407 | ¥20,978 | ¥ 1,528 | ¥ 239,961 | ¥ (20,572) | ¥ 219,389 |
Segment assets | ¥3,737,136 | ¥713,300 | ¥ 30,057 | ¥14,074 | ¥32,545 | ¥4,527,112 | ¥603,008 | ¥5,130,120 |
Other: | ||||||||
Depreciation and amortization | ¥ 43,201 | ¥ 145 | ¥ 1,182 | ¥ 458 | ¥ 227 | ¥ 45,213 | ¥ 1,100 | ¥ 46,313 |
Loss on impairment of fixed assets | 8,576 | - | - | - | - | 8,576 | - | 8,576 |
Increase in property and equipment, | ||||||||
and intangible assets | 179,872 | 590 | 2,015 | 920 | 1,001 | 184,398 | 397 | 184,795 |
Millions of yen | ||||||||
For 2018 | ||||||||
Reportable segments | ||||||||
Leasing | Sales | Construction | Brokerage | Consolidated financial | ||||
business | business | business | business | Other businesses | Total | Adjustments | statements amounts | |
Revenue from operations: | ||||||||
Customers | ¥ 350,211 | ¥310,914 | ¥206,839 | ¥68,858 | ¥11,580 | ¥ 948,402 | ¥ - | ¥ 948,402 |
Intersegment | 3,670 | 279 | 2,517 | 311 | 1,297 | 8,074 | (8,074) | - |
Total | 353,881 | 311,193 | 209,356 | 69,169 | 12,877 | 956,476 | (8,074) | 948,402 |
Segment profit | ¥ 139,368 | ¥ 46,839 | ¥ 16,109 | ¥21,457 | ¥ 1,628 | ¥ 225,401 | ¥ (19,764) | ¥ 205,637 |
Segment assets | ¥3,565,088 | ¥826,574 | ¥ 27,946 | ¥12,200 | ¥25,203 | ¥4,457,011 | ¥710,187 | ¥5,167,199 |
Other: | ||||||||
Depreciation and amortization | ¥ 38,981 | ¥ 174 | ¥ 1,022 | ¥ 471 | ¥ 217 | ¥ 40,865 | ¥ 763 | ¥ 41,628 |
Loss on impairment of fixed assets | 10,635 | - | - | - | - | 10,635 | - | 10,635 |
Increase in property and equipment, | ||||||||
and intangible assets | 220,785 | 672 | 1,027 | 859 | 428 | 223,771 | 4,523 | 228,294 |
Sumitomo Realty & Development Co., Ltd.
Financial Section
Thousands of U.S. dollars | ||||||||
For 2020 | Reportable segments | |||||||
Leasing | Sales | Construction | Brokerage | Consolidated financial | ||||
business | business | business | business | Other businesses | Total | Adjustments | statements amounts | |
Revenue from operations: | ||||||||
Customers | $ 3,603,621 | $2,984,101 | $1,990,828 | $635,227 | $100,744 | $ 9,314,521 | $ - | $ 9,314,521 |
Intersegment | 32,001 | 2,454 | 21,220 | 1,948 | 10,431 | 68,054 | (68,054) | - |
20 Investment and rental properties
The Company and its certain consolidated subsidiaries own some rental properties such as office buildings and residences in Tokyo and other areas. Certain domestic office buildings are not recognized as rental properties but as a portion used as investment and rental properties since the Company or its certain consolidated subsidiaries use some of the floor space of these properties.
The carrying amounts of these properties on the consolidated balance sheets, their changes during the fiscal year and their fair values at March 31,
2020 and 2019 are as follows:
Total | 3,635,622 | 2,986,555 | 2,012,048 | 637,175 | 111,175 | 9,382,575 | (68,054) | 9,314,521 |
Segment profit | $ 1,556,989 | $ 435,383 | $ 189,165 | $177,713 | $ 7,123 | $ 2,366,373 | $ (212,784) | $ 2,153,589 |
Segment assets | $36,047,404 | $6,158,248 | $ 230,245 | $ 75,186 | $666,079 | $43,177,162 | $5,693,558 | $48,870,720 |
Other: | ||||||||
Depreciation and amortization | $ 417,434 | $ 1,094 | $ 11,791 | $ 4,246 | $ 2,886 | $ 437,451 | $ 12,636 | $ 450,087 |
Loss on impairment of fixed assets | 88,779 | - | - | - | - | 88,779 | - | 88,779 |
Increase in property and equipment, | 2,511,212 | 26,827 | 14,273 | 3,943 | 5,587 | 2,561,842 | 5,698 | 2,567,540 |
and intangible assets |
(Note) Information for the year ended March 31, 2018 has been adjusted retroactively reflecting the adoption of "Partial Amendments to Accounting Standard for Tax Effect Accounting" (ASBJ Statement No. 28, February 16, 2018) effective from the beginning of the year ended March 31, 2019.
Millions of yen | |||
2020 | 2019 | ||
Balance at beginning of fiscal year | ¥3,373,449 | ¥3,208,325 | |
Investment and rental properties | Changes during the fiscal year | 42,533 | 165,124 |
Balance at end of fiscal year | 3,415,982 | 3,373,449 | |
Fair value at end of fiscal year | 6,330,951 | 5,838,717 | |
Balance at beginning of fiscal year | ¥ 141,889 | ¥ 141,950 | |
A portion used as investment and rental properties | Changes during the fiscal year | (2,798) | (61) |
Balance at end of fiscal year | 139,091 | 141,889 | |
Fair value at end of fiscal year | 400,272 | 379,883 |
2020
$31,003,116 390,892 31,394,008 58,183,540
$ 1,304,007 (25,715)
1,278,292
3,678,632
Intercompany eliminations between the Company and its | Intercompany eliminations between the Company and its consolidated |
consolidated subsidiaries and undistributed corporate expenses to each | subsidiaries and undistributed corporate assets to each segment are included |
segment are included in adjustments of segment profit, and the | in adjustments of segment assets, and the Company classified cash, time and |
Company classified expenses of the general administrative division in the | notice deposits, investments in securities and assets of the general |
Company and its certain consolidated subsidiaries to corporate expenses | administrative division in the Company and its certain consolidated subsidiaries |
(Notes)
- Carrying amounts on the consolidated balance sheets are the amounts determined by deducting accumulated depreciation and accumulated impairment losses from the acquisition costs.
- Fair values as of March 31, 2020 and 2019 are calculated by the Company primarily based on their fair values according to Real Estate Appraisal Standards.
Significant changes during the years ended March 31, 2020 and 2019 are as follows: | Thousands of |
Millions of yen | U.S. dollars |
for the years ended March 31, 2020, 2019 and 2018. | to corporate assets for the years ended March 31, 2020, 2019 and 2018. |
19 Comprehensive income
Amounts reclassified to profit in the current period that were recognized in other comprehensive income in the current or previous periods and tax effects for each component of other comprehensive income (loss) for the years ended March 31, 2020, 2019 and 2018 are as follows:
Thousands of | |||||
Millions of yen | U.S. dollars | ||||
2020 | 2019 | 2018 | 2020 | ||
Unrealized holding gains (losses) on securities: | |||||
Increase (Decrease) during the fiscal year | ¥(53,788) | ¥(32,668) | ¥ 50,290 | $(494,330) | |
Reclassification adjustments | 6,434 | 1,088 | (1,373) | 59,131 | |
Amounts before tax effects | (47,354) | (31,580) | 48,917 | (435,199) | |
Tax effects | 14,479 | 9,675 | (14,982) | 133,067 |
2020 | 2019 | |
Increase: | ||
Acquired real estate | ¥181,035 | ¥173,144 |
Transferred from real estate for sale in process, etc. | 6,785 | 23,162 |
Decrease: | ||
Depreciation and amortization | ¥ (42,436) | ¥ (42,374) |
Transferred to real estate for sale, etc. | (1,940) | (4,822) |
Loss on impairment of fixed assets | (9,660) | (8,576) |
Transferred to owner-occupied properties, etc. | (67,244) | - |
Income and expenses for investment and rental properties for the years ended March 31, 2020 and 2019 are as follows:
Millions of yen
2020
$1,663,772 62,356
$ (390,001) (17,829) (88,779)
(617,995)
Thousands of
U.S. dollars
Total | ¥(32,875) | ¥(21,905) | ¥ 33,935 | $(302,132) | |
Deferred gains (losses) on hedges: | |||||
Increase (Decrease) during the fiscal year | ¥ (349) | ¥ (3,628) | ¥ (453) | $ (3,207) | |
Reclassification adjustments | 942 | 876 | 1,208 | 8,657 | |
Amounts before tax effects | 593 | (2,752) | 755 | 5,450 | |
Tax effects | (181) | 829 | (217) | (1,664) | |
Total | ¥ 412 | ¥ (1,923) | ¥ 538 | $ 3,786 | |
Foreign currency translation adjustments: | |||||
Increase (Decrease) during the fiscal year | ¥ (366) | ¥ (259) | ¥ (1,098) | $ (3,364) |
2020 | 2019 | ||
Income | ¥291,163 | ¥269,493 | |
Investment and rental properties | Expenses | 135,568 | 137,784 |
Balance | 155,595 | 131,709 | |
Other income (expenses) | (12,197) | (9,193) | |
Income | ¥ 18,536 | ¥ 18,413 | |
A portion used as investment and rental properties | Expenses | 8,869 | 9,176 |
Balance | 9,667 | 9,237 | |
Other income (expenses) | (45) | (4) |
2020
$2,675,885 1,245,915 1,429,970 (112,094)
$ 170,352 81,509 88,843 (414)
Remeasurements of defined benefit plans: | |||||
Increase (Decrease) during the fiscal year | ¥ (257) | ¥ (66) | ¥ 229 | $ (2,362) | |
Reclassification adjustments | 66 | (229) | 41 | 607 | |
Amounts before tax effects | (191) | (295) | 270 | (1,755) | |
Tax effects | 88 | 61 | (82) | 809 | |
Total | ¥ (103) | ¥ (234) | ¥ 188 | $ (946) | |
Total other comprehensive income (loss) | ¥(32,932) | ¥(24,321) | ¥ 33,563 | $(302,656) |
(Notes)
- As a portion used as investment and rental properties includes a portion used by the Company or its certain consolidated subsidiaries for providing services as well as management and administration, income for these are not recorded above. The expenses primarily consist of rent, depreciation, taxes and dues, and others.
- Other income (expenses) for investment and rental properties is mostly the loss on impairment of fixed assets, and Other income (expenses) for a portion used as investment and rental properties is mostly the loss on disposal of property and equipment.
Sumitomo Realty & Development Co., Ltd.
Financial Section | Independent Auditor's Report | ||
21 Contingent liabilities
The Company and its consolidated subsidiaries were contingently liable as guarantors of borrowings by customers and others in an amount aggregating to ¥9,407 million ($86,453 thousand) and ¥7,316 million at March 31, 2020 and 2019, respectively.
22 Subsequent events
(Change in ownership of its subsidiary with transfer of equity interest)
The Company decided to transfer all of its equity interest in its subsidiary, Dalian Qingyun Sky Realty and Development Co., Ltd., to Dalian Jiaguan Guangcheng Corporate Management Centre (Limited Partnership) as of June 12, 2020.
-
Reason for transfer of equity interest
The Company established the subsidiary in 2013, with business objectives of development and sales of condominiums, as a joint-venture with Yida Group Co., Ltd., a prominent developer in Dalian, China (due to the reorganization of Yida Group, the current partner is Dalian Yida Management Consultancy Co., Ltd., herein referred to as "Yida"). Although the subsidiary had been promoting its business thereafter, Yida offered to dissolve the joint venture and the Company decided to transfer all of its equity interest in the subsidiary to a LLP led by Yida, in which the Company holds no stake. - Overview of the subsidiary transferred
Name: Dalian Qingyun Sky Realty and Development Co., Ltd.
Address: Room 524, 9-1 Kuiying Street, Zhongshan District, Dalian City, Liaoning Province, PRC
Position and name of representative: Executive Director, Yusuke Menjo
Description of business: Development, construction, sale, lease and related operations of real estate
Paid-in capital: RMB 2,963,280,000
Establishment: February, 2013
Shareholding ratio: Sumitomo Realty & Development Co., Ltd. 75%, Dalian Yida Management Consultancy Co., Ltd. 25% - Name of the counterparty of the transfer
Dalian Jiaguan Guangcheng Corporate Management Centre (Limited Partnership) - Amount of transfer RMB 3,030,000,000
- Date of transfer June 12, 2020
-
Effect on the financial statements
The gain on sale of investments in securities of ¥12,293 million (¥15.06/RMB) will be recognized as Other income for the year ending March 31, 2021.
(Dividends)
On June 26, 2020, the shareholders of the Company approved payments of a year-end cash dividend of ¥19 ($0.17) per share or a total of ¥9,004 million ($82,750 thousand) to shareholders of record at March 31, 2020. Such appropriations are recognized in the period in which they are approved by the shareholders.
To the Board of Directors of Sumitomo Realty & Development Co., Ltd.:
Opinion
We have audited the accompanying consolidated financial statements of Sumitomo Realty & Development Co., Ltd. ("the Company") and its consolidated subsidiaries (collectively referred to as "the Group"), which comprise the consolidated balance sheets as at March 31, 2020 and 2019, the consolidated statements of income and comprehensive income, changes in net assets and cash flows for each of the years in the three-year period ended March 31, 2020, and notes, comprising a summary of significant accounting policies, other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2020 and 2019, and its consolidated financial performance and cash flows for each of the years in the three-year period ended March 31, 2020, in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors' performance of their duties including the design, implementation and maintenance of the Group's financial reporting process.
Sumitomo Realty & Development Co., Ltd.
Financial Section
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, while the objective of the audit is not to express an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with accounting standards generally accepted in Japan, the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with corporate auditors and the board of corporate auditors regarding, among other matters, the planned scope and timing of the audit, significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2020 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
/S/ Atsuji Maeno
Designated Engagement Partner
Certified Public Accountant
/S/ Hidekazu Takahashi
Designated Engagement Partner
Certified Public Accountant
/S/ Masako Kanno
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
July 29, 2020
Notes to the Reader of Independent Auditor's Report:
This is a copy of the Independent Auditor's Report and the original copies are kept separately by the Company and KPMG AZSA LLC.
Sumitomo Realty & Development Co., Ltd.
Attachments
- Original document
- Permalink
Disclaimer
Sumitomo Realty & Development Co. Ltd. published this content on 07 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 August 2020 06:53:19 UTC