A n n u a l R e p o r t 2 0 1 9 2019Annual Report C O N T E N T S To Our Shareholders, Customers and Friends ..................... 1 2019 Medium-Term Management Plan ................................ 4 CSR and Social Contribution Activity Report ....................... 5 Business Strategies by Segment ........................................... 6 Topics ...................................................................................... 8 Consolidated Six-Year Summary / Financial Review .......... 9 Consolidated Balance Sheet ................................................ 10 Consolidated Statement of Income ..................................... 12 Consolidated Statement of Comprehensive Income ......... 13 Consolidated Statement of Changes in Net Assets ........... 14 Consolidated Statement of Cash Flows .............................. 15 Notes to Consolidated Financial Statements ..................... 16 Independent Auditor’s Report ............................................. 46 Stock Information / Corporate Data .................................... 47 2019 A n n u a l R e p o r t Forward-Looking Statements In this annual report, statements o t h e r t h a n h i s t o r i c a l f a c t s a r e forward-looking statements that reflect our plans and expectations. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results and achievements to differ materially from those anticipated in these statements. Note: In this annual report, planning and design are referred to as “engineering,” while field testing, trial operation, adjustment and service are referred to as “field services.” To Our Shareholders, Customers and Friends My name is Koichi Harazono, and I recently assumed the office of president and chief executive officer (CEO). While serving in this capacity, I intend to do my best to help the Toshiba Plant Systems Group develop further and meet shareholders’ expectations. As the previous president and CEO, Masataka Hayashi, did before me, I humbly ask for your input and support as we move forward. I would like to take this opportunity to provide an overview of our operations during our 113th business period, fiscal 2018, ended March 31, 2019. Overview of Performance and Principal Initiatives Undertaken in Fiscal 2018 thermal and hydroelectric power plants in Japan and overseas, as well as new manufacturing plants, buildings, and water and sewage treatment plants. In addition, we strove to introduce clean energy systems that consider the environment, including in hydrogen In fiscal 2018, the Japanese economy continued a solar, and biofuel power generation plants. Further, modest recovery with increases in production and we reached a basic technical cooperation agreement capital investment, as well as improvements in with Siempelkamp NIS Ingenieurgesellschaft mbH, a corporate earnings and employment. However, the German engineering company with an extensive business outlook remains uncertain due to factors track record in decommissioning and demolitions. such as the global economic slowdown that began This agreement was one of our initiatives to during the second half of fiscal 2018, causing strengthen our business, something that will previously buoyant production and corporate contribute to safety while decommissioning nuclear earnings to stagnate. power plants in Japan. In addition, this agreement Under these conditions, the Toshiba Plant Systems will help reduce labor requirements, raise efficiency, Group promoted initiatives based on the core and shorten lead times. We also reached an strategies of our 2018 medium-term management plan: agreement with plant owner B.Grimm Power Public “creating a business model to achieve steady earnings Company Limited and Siemens Limited Thailand/ and growth,” “pursuing innovation through Toshiba’s BCM1 management system,” and “implementing CSR-oriented management.” Siemens Industrial Turbomachinery AB, a supplier and manufacturer of gas turbine generators. This agreement covers the combined-cycle cogeneration Aiming to create a business model for achieving power plants for industrial parks that were constructed steady earnings and growth—a core strategy of our in Thailand. Through this agreement, the three 2018 medium-term management plan—we worked companies will discuss, collaborate on, and implement to build a range of plants and facilities, including initiatives to increase reliability and operating rates at 1. Balanced CTQ Management (BCM) is a methodology for achieving our management vision through a balanced management approach, including financial and other business conditions and management quality. 1 existing plants, and for digitalizing plant operations. We awarded dividends for the year of ¥42 per Looking for better cost competitiveness, we expanded share, including an interim dividend of ¥21 and a integrated global procurement while improving year-end dividend of ¥21. construction methods and operational processes to Additionally, we revised our management further raise quality. We simultaneously worked to shorten construction times, reduce variable costs, and lower fixed costs. commitment2 and management vision3 during the fiscal year under review as Toshiba Corporation established the new The Essence of Toshiba and In August 2018, we established the Power Project updated the Toshiba Group Management Philosophy. Promotion Office to support our entry into the power generation business and to advance our broader goal of cultivating new markets and businesses. In January 2019, we opened the Plant Digitalization Strategy Office to boost competitiveness through the digitalization of power plants and general industrial plants. On April 1, we acquired ES Toshiba Engineering Corporation to increase the operational efficiency of Japanese affiliates, while Toshiba Engineering Service Corporation absorbed SKS Corp. 2. For humanity, the earth, and a better tomorrow. Based on a fundamental respect for humanity, the Toshiba Plant Systems Group aims to create abundant value and contribute to the lifestyles and cultures of people around the world through electric power as well as industrial and social infrastructure businesses. 3. Excellent Company capable of flexibly responding in the Market Environment. Future Approach In pursuing innovation through Toshiba’s BCM We expect the moderate rate of economic recovery to management system, we actively promoted continue, thanks in part to the current higher levels Management Innovation (MI) and continued to make of corporate earnings, strong capital investment, and improvements through Small Group Activities (SGA), steady improvement in employment. However, carrying out these activities on a Group-wide basis. uncertainty concerning future prospects is rising due When implementing CSR-oriented management, to concerns of a global economic slowdown caused to be a corporate group trusted by society by placing by trade friction between the US and China. the highest priority on life, safety, and compliance in Under these conditions, the Toshiba Plant Systems all of our business activities, we strengthened efforts Group is pursuing a “target vision” within the 2019 on compliance and risk management in terms of laws Medium-Term management plan of “becoming an and regulations, social norms, ethics, and other aspects. excellent company that responds flexibly to changing At the same time, we continued to reduce our market environments.” environmental impact and improve our quality Our operating environment is changing: the management systems, and worked to maintain and decarbonization trend is picking up speed and the enhance the quality of business management. In our coal-fired thermal power market is shrinking, while social contribution activities, we supported the building renewable energy is expected to continue growing. of primary schools overseas and projects related to Supported by healthy earnings to date, we will the protection of Japanese cultural properties. We also strengthen our response to new markets opened up took part in community volunteer activities at all of by electric power deregulation while continuing to our offices and sites and continued to support the social focus on environmentally friendly clean energy plants, contribution activities of individual employees. including those for solar power, small hydro, and As a result, net orders came to ¥233,153 million, biofuel power generation. In addition, we will harness down 13.4% year on year. Net orders from overseas the strength and technological capabilities of our operations were ¥40,414 million, accounting for engineering, procurement, and construction (EPC) 17.3% of the total. Net sales were ¥244,239 million, business, which deals mainly in power plants and up 5.0%, with net sales from overseas operations plant equipment. These promotion initiatives will focus accounting for ¥43,067 million, or 17.6%. on Southeast Asia, where we have enjoyed numerous Operating income was ¥20,359 million, (up 0.6% year achievements, as well as Africa and other new markets. on year), ordinary income was ¥22,324 million (up We will also work to strengthen overseas affiliates and 10.3% year on year) and profit attributable of owners train human resources while accelerating improvements of parent was ¥14,354 million (up 5.9% year on year). to our global business framework. 2 We will respond swiftly to changes in the business environment and cultivate new markets and businesses. To grow these new businesses, we will push for Net Orders and Net Sales Net orders Net sales (Billions of yen) entry into the power generation business and promote Net Orders the digitalization of power plants and general industrial plants. Furthermore, we intend to maintain and improve operational performance by enhancing our competitiveness through improvements in construction methods and operating processes and by further refining our strengths in integrated and global procurement, as well as quality and technology. Moving forward, the Toshiba Plant Systems Group will work to realize sound, effective management through continual compliance with laws and regulations, respect for human rights, and other initiatives that cover a variety of fields, including social contribution and environmental conservation. We will strive to offer electric power, industrial, and social infrastructure systems that are safe and offer peace of mind, while contributing to the development of society. Our consolidated targets for fiscal 2021, ending March 31, 2022, are net sales of ¥250 billion and ordinary income of ¥21 billion. Building on a wide range of technologies in fields such as plant engineering and information systems underpinned by the trust we have earned over the years, we will pursue even more advanced technological development and contribute to progress and development by providing a foundation that supports individuals, industry, and society. In fulfilling our role of supporting entire social infrastructure systems, we will respond quickly to market changes and work to ensure the world-class quality and safety of our business operations. In addition, we will promote CSR-oriented management, seek to build strong relationships based on trust with our customers, shareholders, and other stakeholders, and enhance our corporate value. ¥ 233.1 billion 13.4 % yoy Down Net Sales ¥ 244.2 billion 5.0 % yoy Up Net Sales from Overseas Operations ¥ 43.1 billion 26.0 % yoy Down Profitability ¥ 20.4 billion 0.6 % yoy Up In these endeavors, we ask for your continued Ordinary Income guidance and support. June 2019 Koichi Harazono President and Chief Executive Officer, Representative Director ¥ 22.3 billion 10.3 % yoy Up Profit Attributable to Owners of Parent ¥ 14.4 billion 5.9 % yoy Up 300 240 180 120 60 0 269.1 251.1 226.9 232.6 233.1 244.2 FY2016 FY2017 FY2018 Net sales from overseas operations (Billions of yen) 60 45 30 15 0 58.2 55.4 43.1 FY2016 FY2017 FY2018 Operating income Ordinary income Profit attributable to owners of parent 25 20 15 10 5 0 22.3 20.4 14.4 20.2 20.2 13.6 19.1 17.6 12.8 FY2016 FY2017 FY2018 3 Operating Income (Billions of yen) 2019 Medium-Term Management Plan Realization of an “Excellent Company capable of flexibly responding in the Market Environment” FY2021 Net Sales 250 ¥ Ordinary Income billion ¥ 21 billion Aspiring to be "Excellent Company capable of flexibly responding in the Market Environment," Toshiba Plant Systems & Services Corporation Group has mapped out a mid-term management plan, with 2019 as the first year. We will implement concrete measures to accomplish the following three basic strategies adopted in conjunction with the management plan: 1) Business promotion to steadily achieve high profitability, 2) Pursuit of innovation by BCM* management, and 3) Accomplishment of CSR (corporate social responsibility) management. Net Sales Ordinary Income Net Sales (Billions of yen) Ordinary Income (Billions of yen) 300 240 180 120 60 0 250 21 230 19 FY2019 FY2021 30 24 18 12 6 0 * BCM (Balanced CTQ Management) is a management execution methodology designed to achieve a balance between financial and other business conditions as well as the management quality necessary to accomplish the company's management vision. Measures for Achieving Medium-Term Management Plan Objectives Expand the markets for the existing businesses Power Systems Infrastructure and Industrial Systems • Nuclear power generation | Reactor decommissioning, new regulatory standards for resuming operations • Thermal power generation plants in Japan | LNG thermal power generation, biomass mixed combustion power generation facilities, gas-fired combined cycle power generation facilities • Power generation facilities overseas | Combined cycle power generation facilities, renewable energy power generation facilities • EPC*1 business for manufacturing plants | Semiconductor, chemical, life science-related, etc. • Clean energy power generation facilities | Biofuel power generation facilities, solar photovoltaic power generation facilities, etc. • Water supply and sewage systems, buildings and data centers • Transportation systems | Airports, railways, roads Expanding business domains and markets • Creating new businesses | Entering the power generation business and the vegetable factory business • Deploying CPS*2 technology for the existing businesses | Supplying energy management services to industrial parks, etc. Enhance EPC business competitiveness • Quality | Implementing steadily a quality management system, eliminating quality nonconformities through COPQ*3 reduction activities, reinforcing risk management • Process improvement | Improving work efficiency using IT, optimizing business processes • Enhancing competitiveness through cost reduction | Integrated and global procurement, standardizing design, improving construction methods and test efficiency • Technological capabilities | Expanding the applications of engineering tools, raising licensed technical supervisors, chief engineers, and project managers according to the plan *1 EPC: Packaged orders that include engineering, procurement, and construction and commissioning. *2 Cyber-physical system (CPS): A mechanism for collecting physical data, analyzing the collected data in cyberspace using digital technology to convert it into easy-to-use information and knowledge, and providing feedback to the physical world to create added value. *3 COPQ: “Cost of poor quality” or needless cost resulting from low or defective quality. 4 2019 CSR and Social Contribution Activity Report CSR As a company contributing to the creation of the foundations that support industry and society, we consider the promotion of CSR management to be a core strategy, together with the provision of quality infrastructure facilities and services. We aim to be a global company trusted by society. As a company helping to build the infrastructure, we provide ongoing support, mainly in countries and territories where we operate, with activities related to improving the social infrastructure and educating future generations (such as building schools). As a good corporate citizen, we value communication with local communities and are promoting social contribution activities at all of our overseas and domestic offices and worksites. Social Contribution Activity Report Supporting Activities to Improve the Social Infrastructure Infrastructure Projects in Emerging Countries We supported a project that built a drinking water supply system in Cambodia to provide safe drinking water to elementary schools and other Promoting of Activities Rooted in Local Communities Community social contribution activities locations that were using unhygienic water, such as rainwater, for daily use. at each of our offices and worksites (Cleanup projects, etc.) Solar Lantern Project We continue to support a project for setting up solar panels in parts of India with poor electric power by lending lanterns that can be charged during the day and then used at night. Supporting Activities to Educate Future Generations We supported a reconstruction project for the Redang Elementary School building in the Republic of Indonesia to ensure safer, cleaner conditions for the students. Volunteers managing forests, including thinning out trees Selling candy and other items within the Company made by people with disabilities, in this way supporting their independence 5 2019 Business Strategies by Segment Power Systems Division Operations This division handles engineering, construction, testing, trial operation and such maintenance services as inspections and renovations for thermal, hydroelectric and nuclear power plants. We conduct a broad range of business involving thermal and hydroelectric power plants in Japan and overseas. In particular, we have built up a track record through numerous projects centered in the ASEAN region. In addition to commercial power plants, we apply our nuclear power technologies at nuclear power plants and related facilities. Power Systems Division Net Orders and Net Sales Net Orders 116.3 ¥ 27.3% decrease Year on year Percentage of orders 49.9% billion Net Sales 127.3 ¥ 11.6% decrease Year on year Percentage of sales 52.1% billion Kinyerezi Thermal Power Station in Tanzania Business Review and Outlook Net Orders and Net Sales by Segment Net Orders Net Sales (Billions of yen) 160 144.6 139.7 160.1 144.1 During the fiscal year under review, net orders for this division came to ¥116,309 million down 27.3% year on year. The decline was mostly due to a drop in the number of overseas thermal power projects. This drop was also primarily responsible for the decrease in net sales, which were ¥127,341 million down 11.6% year on year. Looking at future market trends that are affecting this division, domestic demand from industry in general for the conversion of private power generation facilities to combined cycle and demand for services for older plants will likely increase. However, demand for maintenance and setting up power generation for business use is expected to decline. Overseas, we anticipate ongoing demand for electric power in response to steady growth in Southeast Asia. We will continue to meet society’s needs by leveraging our technological strengths, backed by solid experience, as we contribute to the stable supply of electricity. We will also concentrate on increasing orders for power generating plants overseas, where demand for electric power is high. 120 80 40 0 6 116.3 127.3 FY2016 FY2017 FY2018 Infrastructure and Industrial Systems Division Operations This division performs engineering, construction, test operations, adjustments, and field services for clean energy power plants, infrastructure facilities, and plant and equipment for general industry. The division handles business in the public and private sector in a broad range of fields, including electric plants and equipment, dispersed power source systems, substations, transmission and distribution systems, and other energy-related business, as well as production and related facilities. Central Nippon Expressway Company Limited’s Fujiyoshida Nishikatsura Smart Interchange Annaka Solar LLC’s Annaka Solar Power Plant in Gunma Prefecture Business Review and Outlook During the fiscal year under review, net orders for this division came to at ¥116,844 million up 7.2% year on year. This increase was due to a rise in the number of general industry projects. Net sales were ¥116,898 million up 32.1% year on year, thanks to more general industry projects in Japan and an increase in the number of solar power plants. For the future market trends for this division, private-sector capital investment is expected to continue, primarily because of increasingly spirited public investment. Also expected are increased demand for gas engines and biofuel generation plants due to environmental considerations and electricity market deregulation, as well as increased investment in Japanese-owned companies overseas. By applying the technologies we have accumulated and with the track record we have established, we aim to increase orders for public facilities and for clean energy-related systems, as well as for plants facilities both in Japan and overseas. At the same time, we will contribute to the development of society and industry. Infrastructure and Industrial Systems Division Net Orders and Net Sales Net Orders 116.8 ¥ 7.2% increase Year on year Percentage of orders 50.1% billion Net Sales 116.9 ¥ 32.1% increase Year on year Percentage of sales 47.9% billion Net Orders and Net Sales by Segment Net Orders Net Sales (Billions of yen) 160 120 106.5 109.0 116.8 116.8 80 40 0 87.2 88.5 FY2016 FY2017 FY2018 7 2019 Topics Conclusion of a Memorandum of Understanding with B.Grimm Power Public Company Limited and Siemens Limited Thailand/Siemens Industrial Turbomachinery AB in Pursuit of Higher Plant Efficiency, etc. The Company concluded a memorandum of understanding on combined- systems that are both highly convenient and useful for power generation cycle cogeneration power plants for industrial parks built in Thailand. This providers. memorandum was concluded with two companies: B.Grimm Power Public Since 2015, we have been promoting the digitalization of engineering Company Limited, a plant owner, and Siemens Limited Thailand/Siemens though our EPC Project, and have developed and introduced a variety of Industrial Turbomachinery AB, a supplier and manufacturer of gas turbine solutions, including the TIET integrated engineering tool and our plant generators. The three companies will promote initiatives, such as the digital twin simulator. Moving forward, we intend to ensure more efficient digitalization of existing plants to improve their performance. and stable plant operations, as well as a steady supply of electric power As an EPC*1 contractor, we have accepted and completed orders for and generated gas within industrial parks, by using IoT*2 technology to building nine power plants in Thailand for B.Grimm Power PCL. These keep plant operation data in the cloud and to spread the application of plants were built at industrial parks: Amata Nakorn in Chonburi Province; CPS*3 technology. Amata City Rayong in Rayong Province; and Hemaraj Chonburi in Bowin, Chonburi Province. A portion of the electricity generated at these plants is sold to the Electricity Generating Authority of Thailand (EGAT) and surplus power and gas produced through power generation are supplied to companies within the industrial parks. Together with the two other parties in this memorandum, we have agreed to discuss, collaborate on, and subsequently implement measures aimed at digitalizing these plants and raising their operational efficiency and reliability. Signing the memorandum is ground breaking: a power generation company, a manufacturer of primary turbine machinery, and an EPC contractor will use their accumulated knowledge to jointly promote development from three unique viewpoints. This will, in turn, enable the construction of Memorandum signing ceremony at IEEE PES GTD ASIA (Bangkok International Trade and Exhibition Centre) in March 2019 *1 EPC: Packaged orders that include engineering, procurement, and construction and commissioning. *2 Internet of things (IoT): Connecting devices to the Internet and using them to acquire data remotely, run operations remotely, etc. *3 Cyber-physical system (CPS): A mechanism for collecting physical data, analyzing the collected data in cyberspace using digital technology to convert it into easy-to-use information and knowledge, and providing feedback to the physical world to create added value. Basic Agreement on Technical Cooperation for Nuclear Power Plant Decommissioning The Company has reached a basic technological cooperation agreement these projects, which range from design to onsite response, we are with Siempelkamp NIS Ingenieurgesellschaft (engineering company) mbH conducting operations using remotely controlled devices (site (NIS) to support decommissioning work at nuclear power plants in Japan. investigations, decontamination, disassembly, etc.). We believe that, in NIS is based in Germany and has participated in the decommissioning of addition to existing plant construction technology, we will be able to use many reactors in both Europe and the US. advanced technologies and construction methods developed through This agreement was made to introduce technologies used in the decommissioning work at the Fukushima Daiichi Nuclear Power Plant to disassembly of reactor pressure vessels and core internals, which are dismantle other reactors at nuclear power plants in Japan. phases of decommissioning work. Combining the technologies we have Through this technical cooperation agreement, we will further developed for construction and maintenance of nuclear power plants in strengthen collaboration between Toshiba Energy Systems & Solutions Japan with NIS’s reactor disassembly technologies will make it possible Corporation and electric power companies, as well as conduct research for us to ensure safe decommissioning work while saving on labor, and develop technologies and construction methods. Further, we will improving efficiency, and shortening completion times. cooperate within Japan and internationally with other companies and As a member of the Toshiba Group, we participate in many projects organizations that possess sophisticated and applicable professional related to decommissioning work on Tokyo Electric Power Company technologies to grow our business activities that contribute to improved Holdings, Inc.’s Fukushima Daiichi Nuclear Power Plant. In addition to reliability within the nuclear power industry. 8 2019 Consolidated Six-Year Summary / Financial Review Consolidated Six-Year Summary Years ended March 31 Millions of yen Thousands of U.S. dollars (Note 2) 2019 2018 2017 2016 2015 2014 2019 Net Sales Cost of Sales ¥ 244,239 ¥ 232,571 ¥ 226,867 ¥ 219,354 ¥ 218,652 ¥ 182,257 $ 2,200,554 210,639 200,160 195,270 188,377 189,544 155,045 1,897,828 Operating Income 20,359 20,246 17,583 18,648 16,942 16,278 183,431 Interest and Dividend Income 1,581 397 1,111 244 257 222 14,252 Profit Before Income Taxes 22,097 20,239 19,093 18,558 17,805 16,740 199,093 Profit Attributable to Owners of Parent Per Share of Common Stock (in yen and dollars): Profit Attributable to Owners of Parent 14,354 13,552 12,797 11,243 10,045 9,832 129,332 ¥ 147.35 ¥ 139.12 ¥ 131.36 ¥ 115.40 ¥ 103.11 ¥ 100.92 $ 1.33 Cash Dividends 42.00 40.00 38.00 37.50 7.50 15.00 0.38 Total Assets Net Assets ¥ 274,290 ¥ 256,003 ¥ 244,407 ¥ 238,254 ¥ 229,436 ¥ 221,135 $ 2,471,306 156,852 145,380 133,289 121,282 116,059 104,664 1,413,213 Number of Employees 4,319 4,318 4,353 4,283 4,225 4,055 Note: The U.S. dollar amounts represent translation of Japanese yen at the exchange rate on March 31, 2019 of ¥110.99 to $1. Financial Review Operating Income Operating income for the fiscal year ended March 31, 2019 climbed by 0.6% to ¥20,359 million (US$183,431 thousand). The ratio of operating income to net sales decreased by 0.4% to 8.3%. Profit Attributable to Owners of Parent Profit attributable to owners of parent for the fiscal year ended March 31, 2019 climbed by 5.9% to ¥14,354 million (US$129,332 thousand). Total Assets and Net Assets Total consolidated assets at March 31, 2019 climbed by ¥18,287 million from the previous fiscal year-end to ¥274,290 million (US$2,471,306 thousand). Among total assets, time deposits increased by ¥73,782 million to ¥74,987 million (US$675,615 thousand). Trade notes and accounts receivable increased by ¥12,015 million to ¥112,551 million (US$1,014,066 thousand). Cash and cash equivalents decreased by ¥69,845 million to ¥29,445 million (US$265,295 thousand). Net assets rose ¥11,472 million to ¥156,852 million (US$1,413,213 thousand) due to an increase of ¥10,360 million in retained earnings. The equity ratio at March 31, 2019 was 57.1%. 9 2019 Consolidated Balance Sheet As of March 31, 2019 and 2018 Millions of yen Thousands of U.S. dollars (Note 2) 2019 2018 2019 ASSETS Current assets: Cash and cash equivalents (Note 5) ¥ 29,445 ¥ 99,290 $ 265,295 Time deposits Trade notes and accounts receivable Electronically recorded monetary claims-operating Less: allowance for doubtful accounts Inventories (Note 3) Other current assets Total current assets 74,987 112,551 1,784 (251) 26,645 7,126 1,205 675,615 100,536 1,014,066 1,080 (474) 24,900 7,621 16,072 (2,265) 240,068 64,210 252,287 234,158 2,273,061 Property, plant and equipment, at cost: Land Buildings and structures Machinery and equipment Tools, furniture and fixtures Leased assets Construction in progress Less: accumulated depreciation Total property, plant and equipment, net Intangible assets Investments and other assets: Investment securities (Note 11) Investments in affiliates (Note 4) Deferred tax assets (Note 10) Net defined benefit asset Other Less: allowance for doubtful accounts Total investments and other assets Total assets See the accompanying Notes to Consolidated Financial Statements. 10 2,941 8,835 2,841 3,897 26 48 18,588 (11,672) 6,916 197 2,710 149 11,217 40 1,057 (283) 3,044 8,739 2,758 4,421 50 11 19,023 (12,106) 6,917 229 1,161 164 12,577 7 908 (118) 14,890 14,699 26,498 79,605 25,594 35,113 231 431 167,472 (105,161) 62,311 1,777 24,414 1,345 101,067 356 9,521 (2,546) 134,157 ¥ 274,290 ¥ 256,003 $ 2,471,306 As of March 31, 2019 and 2018 Millions of yen Thousands of U.S. dollars (Note 2) 2019 2018 2019 LIABILITIES AND NET ASSETS Current liabilities: Trade notes and accounts payable Accounts payable non-trade Advances received on uncompleted construction contracts Allowance for bonuses to directors and statutory auditors Accrued expenses Completed work compensation reserve Provision for loss on construction contracts Accrued income taxes Other current liabilities (Note 12) Total current liabilities Long-term liabilities: ¥ 57,688 ¥ 48,457 $ 519,758 2,517 24,831 100 8,716 709 451 4,671 1,039 100,722 3,874 17,459 93 8,737 578 27 4,505 1,618 85,348 22,678 223,723 898 78,529 6,384 4,060 42,090 9,365 907,485 Liability for retirement benefit (Note 13) 16,261 24,812 146,506 Accrued directors' retirement benefits Asset retirement obligations Other long-term liabilities (Note 12) Total long-term liabilities Total liabilities Contingent liabilities: (Note 18) Net assets: (Note 19) Shareholders' equity: Common stock Capital surplus Retained earnings Treasury stock, at cost Total shareholders' equity Accumulated other comprehensive income: Unrealized gains or losses on securities Deferred gains or losses on hedges Currency translation adjustments Retirement benefits liability adjustments Total accumulated other comprehensive income Non-controlling interests Total net assets 27 398 30 16,716 117,438 44 392 27 245 3,584 273 25,275 150,608 110,623 1,058,093 11,876 20,911 11,876 20,911 107,001 188,401 124,568 114,208 1,122,338 (168) (167) (1,514) 157,187 146,828 1,416,226 42 86 317 (1,149) (704) 369 8 (209) 230 (1,807) (1,778) 330 377 778 2,856 (10,350) (6,339) 3,326 156,852 145,380 1,413,213 Total liabilities and net assets ¥ 274,290 ¥ 256,003 $ 2,471,306 11 2019 Consolidated Statement of Income Years ended March 31, 2019 and 2018 Millions of yen Thousands of U.S. dollars (Note 2) Net sales (Note 6) Cost of sales (Notes 7,8) Gross profit Selling, general and administrative expenses (Notes 8,14) Operating income Other income: Interest income Dividends income Equity in income of affiliates Other Other expenses: Loss on disposal of fixed assets Foreign exchange losses Other Ordinary income Extraordinary losses: Impairment loss (Note 9) Profit before income taxes Income taxes: (Note 10) Current Deferred Profit 2019 2018 2019 ¥ 244,239 ¥ 232,571 $ 2,200,554 210,639 200,160 1,897,828 33,600 13,241 20,359 1,557 24 38 395 2,014 24 — 25 49 32,411 12,165 20,246 346 51 38 279 714 8 648 65 721 302,726 119,295 183,431 14,032 220 340 3,552 18,144 218 — 221 439 22,324 20,239 201,136 227 227 — — 2,043 2,043 22,097 20,239 199,093 6,822 888 7,710 6,102 582 6,684 61,470 7,998 69,468 14,387 13,555 129,625 Profit attributable to non-controlling interests 33 3 293 Profit attributable to owners of parent (Note 19) ¥ 14,354 ¥ 13,552 $ 129,332 See the accompanying Notes to Consolidated Financial Statements. 12 2019 Consolidated Statement of Comprehensive Income Years ended March 31, 2019 and 2018 Millions of yen Thousands of U.S. dollars (Note 2) Profit Other comprehensive income Unrealized gains or losses on securities Deferred gains or losses on hedges Currency translation adjustments Retirement benefits liability adjustments Other comprehensive income (Note 15) 2019 2018 2019 ¥ 14,387 ¥ 13,555 $ 129,625 34 296 96 658 1,084 11 59 146 2,123 2,339 303 2,662 869 5,930 9,764 Total comprehensive income ¥ 15,471 ¥ 15,894 $ 139,389 Comprehensive income attributable to Owners of parent Non-controlling interests See the accompanying Notes to Consolidated Financial Statements. ¥ 15,429 ¥ 15,875 $ 139,008 42 19 381 13 2019 Consolidated Statement of Changes in Net Assets Years ended March 31, 2019 and 2018 Number of shares issued Common stock Capital surplus Retained earnings Treasury stock, at cost Unrealized gains or losses on securities Deferred gains or losses on hedges Currency translation adjustments Retirement benefits liability adjustments Non- controlling interests Total net assets Balance at April 1, 2017 97,656,888 ¥ 11,876 ¥ 20,911 ¥ 104,455 ¥ (165) ¥ (3) ¥ (268) ¥ 99 ¥ (3,930) ¥ 314 ¥ 133,289 Millions of yen Profit attributable to owners of parent Cash dividends (Note 16) Purchase of treasury stock Other changes 13,552 (3,799) (2) 13,552 (3,799) (2) 11 59 131 2,123 16 2,340 Balance at April 1, 2018 97,656,888 ¥ 11,876 ¥ 20,911 ¥ 114,208 ¥ (167) ¥ 8 ¥ (209) ¥ 230 ¥ (1,807) ¥ 330 ¥ 145,380 Profit attributable to owners of parent Cash dividends (Note 16) Purchase of treasury stock Other changes 14,354 (3,994) (1) 14,354 (3,994) (1) 34 295 87 658 39 1,113 Balance at March 31, 2019 97,656,888 ¥ 11,876 ¥ 20,911 ¥ 124,568 ¥ (168) ¥ 42 ¥ 86 ¥ 317 ¥ (1,149) ¥ 369 ¥ 156,852 Thousands of U.S. dollars (Note 2) Common stock Capital surplus Retained earnings Treasury stock, at cost Unrealized gains or losses on securities Deferred gains or losses on hedges Currency translation adjustments Retirement benefits liability adjustments Non- controlling interests Total net assets Balance at April 1, 2018 $ 107,001 $ 188,401 $ 1,028,991 $ (1,506) $ 74 $ (1,884) $ 2,075 $ (16,280) $ 2,970 $ 1,309,842 Profit attributable to owners of parent Cash dividends (Note 16) Purchase of treasury stock Other changes 129,332 (35,985) (8) 129,332 (35,985) (8) 303 2,662 781 5,930 356 10,032 Balance at March 31, 2019 $ 107,001 $ 188,401 $ 1,122,338 $ (1,514) $ 377 $ 778 $ 2,856 $ (10,350) $ 3,326 $ 1,413,213 See the accompanying Notes to Consolidated Financial Statements. 14 2019 Consolidated Statement of Cash Flows Years ended March 31, 2019 and 2018 Millions of yen Thousands of U.S. dollars (Note 2) Cash flows from operating activities: Profit before income taxes Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation Impairment loss (Decrease) in allowance for doubtful accounts (Decrease) in net defined benefit liability Interest and dividends (Gain) loss on sales of property, plant and equipment Share of (profit) of entities accounted for using equity method (Increase) decrease in trade notes and accounts receivable (Increase) in inventories (Increase) decrease in other current assets Increase in trade notes and accounts payable Increase in advances received on uncompleted construction contracts Increase in completed work compensation reserve Increase in provision for loss on construction contracts Increase (decrease) in other current liabilities Other Interest and dividends received Income taxes paid Net cash provided by operating activities Cash flows from investing activities: (Increase) in time deposits Proceeds from sales of property, plant and equipment Payments for acquisition of property, plant and equipment Payments for acquisition of intangible assets Payments for purchase of investment securities Other Net cash used in investing activities Cash flows from financing activities: Repayments of lease liabilities Dividends paid Purchase of treasury stock Dividends paid to non-controlling interests Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year See the accompanying Notes to Consolidated Financial Statements. 2019 2018 2019 ¥ 22,097 ¥ 20,239 $ 199,093 587 227 (49) (7,598) (1,582) (1) (38) (12,914) (1,750) 552 9,215 7,367 121 421 (1,462) 58 15,251 1,634 (6,695) 10,190 (73,799) 23 (818) (5) (1,500) (36) (76,135) (6) (3,994) (1) (3) (4,004) 104 (69,845) 99,290 ¥ 29,445 601 — (767) (3,057) (397) 30 (38) 2,205 (637) (1,418) 1,027 4,226 255 24 126 139 22,558 433 (6,264) 16,727 (917) 230 (650) (16) (1,000) 525 (1,828) (7) (3,799) (2) (2) (3,810) 204 11,293 87,997 5,292 2,043 (438) (68,463) (14,253) (7) (340) (116,357) (15,765) 4,972 83,026 66,379 1,086 3,796 (13,172) 520 137,412 14,722 (60,328) 91,806 (664,914) 211 (7,370) (47) (13,515) (327) (685,962) (50) (35,985) (8) (24) (36,067) 935 (629,288) 894,583 ¥ 99,290 $ 265,295 15 2019 Notes to Consolidated Financial Statements 1. Summary of Significant Accounting Policies (a) Basis of presenting financial statements The accompanying consolidated financial statements of Toshiba Plant Systems & Services Corporation (the “Company”) and its consolidated subsidiaries (collectively, the “Companies”) are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan. In preparing the accompanying consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside of Japan. In addition, the notes to the consolidated financial statements include information which is not required under accounting principles generally accepted in Japan, but is presented herein as additional information. Certain amounts in the prior year’s financial statements have been reclassified to align with the current year presentation. (b) Basis of consolidation and accounting for investments in affiliates The accompanying consolidated financial statements include the accounts of the Company and all of its subsidiaries. The consolidated subsidiaries are determined based on effective control. All intercompany accounts and transactions are eliminated in consolidation. Investments in affiliates are accounted for by the equity method. The Company adopted the influence-based definition to determine the affiliated companies to be accounted for using the equity method. (c) Foreign currency translations Monetary claims and liabilities denominated in foreign currencies are translated into Japanese yen using the spot exchange rate as of the consolidated balance sheet date, and translation differences are included in gains or losses. Assets and liabilities of overseas consolidated subsidiaries are translated to yen using the spot exchange rate as of each company’s respective balance sheet date. Revenue and expenses of those subsidiaries are translated to yen using the average exchange rate during the period. Exchange differences are included in foreign currency translation adjustment and in non-controlling interests as part of net assets. (d) Accounting for net sales and related costs Construction contracts for progress at the end of the fiscal year can be reliably measured are recorded on the percentage-of-completion basis (stage of progress estimated using the cost-ratio method), while all other projects are recorded on the completed construction basis. (e) Investment securities All investment securities are "Available-for-sale" securities. Investment securities whose fair values are determinable are stated at fair value, with unrealized gains or losses recorded as a component of net assets, net of applicable taxes. Investment securities whose fair values are not determinable are stated at cost, determined by the moving average method. (f) Inventories Work in progress is stated at the lower of accumulated cost (determined on a specific project basis) or net realizable value. (g) Property, plant and equipment (excluding leased assets) Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment of the Companies is principally computed using the straight-line method and based on the 16 following useful lives: Buildings and structures ..................... 3–59 years Machinery and equipment .................. 2–20 years Tools, furniture and fixtures ............... 2–20 years (h) Intangible assets (excluding leased assets) Intangible assets are amortized using the straight-line method. (i) Leased assets Depreciation of leased assets is computed using the straight-line method with no residual value, and by using the term of contract as the useful life. (j) Allowance for doubtful accounts Allowance for doubtful accounts is provided in an amount sufficient to cover possible losses on collection. The amount is computed by applying the rate of actual losses on collection experienced in the past to general trade receivables and by individually assessing collectability of specific receivables where there are doubts over recovery. (k) Allowance for bonuses to directors and statutory auditors To prepare for the payment of bonuses to directors and statutory auditors, the estimated amount to be paid is provided as an allowance. (l) Completed work compensation reserve To ensure reserve is provided for anticipated compensation payments for which the Company is liable in respect of completed works, the Company records a projected compensation amount, based on past history of compensation payments made for completed works, as the completed work compensation reserve. (m) Provision for loss on construction contracts To cover possible losses on construction contracts, the estimated amount of losses during and after the following fiscal year is provided as the provision for loss on construction contracts. The amount is reasonably estimated at the end of the fiscal year in respect of construction projects in progress for which significant losses are expected. (n) Accrued severance indemnities The Company and its domestic subsidiaries’ employees are covered by an employee defined retirement benefit plan and an employee defined pension plan. The Company and its domestic subsidiaries’ employees with more than one year of service are entitled to a lump-sum severance payment determined by reference to current rate of pay, length of service and the conditions under which the termination occurs. To prepare for payment of retirement benefits to employees, at the end of the fiscal year an amount based on the retirement benefit obligations and fair value of plan assets at the end of the fiscal year is provided. The retirement benefit obligations for employees are attributed to each period using the benefit formula basis over the estimated years of service of the eligible employees. Prior service costs are amortized, on a straight-line basis, over the set period (currently 10 years) which reflects the average remaining service period of the employees at the time of occurrence. Actuarial gains or losses are amortized, on a straight-line basis, over the set period (currently 10 years) which reflects the average remaining service period of the employees from the fiscal year following the year in which such gains or losses are incurred. 17 2019 Notes to Consolidated Financial Statements (o) Accrued directors’ retirement benefits Retirement benefits for directors and statutory auditors are recorded based on the estimated amount payable at the end of the fiscal year as stipulated by internal regulations. (p) Income taxes The provision for income taxes is computed based on income before income taxes and non-controlling interests in the consolidated statement of income. The assets and liabilities approach is adopted to recognize deferred tax assets and liabilities arising from temporary differences between the carrying amounts for financial reporting, and the tax bases of assets and liabilities. A valuation allowance is established to reduce deferred tax assets to their net realizable value if it is more likely than not that some portion or all of the deferred tax assets will not be realized. (q) Derivative financial instruments Derivative financial instruments are carried at fair value, except for those which meet the criteria for deferral hedge accounting. (r) Principal hedge accounting method (1) Hedge accounting method In principle, deferral hedge accounting is applied. (2) Hedging instruments and hedged items Hedging instruments: Forward exchange contracts Hedged items: Forecasted foreign currency-denominated transactions (3) Hedging policies The Companies adhere to their regulations concerning the handling of derivative transactions, and individual forward exchange contracts are executed for hedging with the aim of mitigating currency risk for foreign currency-denominated transactions. (4) Method for assessment of hedge effectiveness Assessment of hedge effectiveness is omitted for forward exchange contracts because the notional principals of the hedging instruments and the major conditions of the hedged items are deemed identical and can be assumed to completely offset fluctuations of foreign exchange rates from the start of the hedge and thereafter. (s) Cash and cash equivalents In preparing the consolidated statement 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. (t) Consumption taxes Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. (u) Standards issued but not yet effective “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 dated March 30, 2018 issued by the Accounting Standards Board of Japan) “Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 dated March 30, 2018 issued by the Accounting Standards Board of Japan) 18 1. Overview The International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB) jointly developed comprehensive revenue recognition standards and issued “Revenue from Contracts with Customers” in May 2014 (IASB’s IFRS No. 15 and FASB’s Topic 606). Considering that IFRS No. 15 shall apply to the fiscal years beginning on or after January 1, 2018, and Topic 606 shall apply to the fiscal years beginning after December 15, 2017, the ASBJ developed a comprehensive accounting standard on revenue recognition and thus issued the accounting standard together with the implementation guidance. The ASBJ established the accounting standard on revenue recognition by following the basic policies in developing it. The basic policies were: firstly, incorporating the core principle of IFRS No. 15 as the starting point from the perspective of facilitating comparability among financial statements, which is one of the benefits of ensuring consistency with IFRS No. 15; secondly, adding alternative treatments, but to the extent not impairing comparability, where consideration should be given to the practice having been used in Japan. 2. Effective date The above guidance is scheduled to be applied from the beginning of the fiscal year beginning on April 1, 2021. 3. Effects of application of the accounting standards. The Companies are currently evaluating the effect of adopting the “Accounting Standard for Revenue Recognition, etc.” on its consolidated financial statements. 2. U.S. Dollar Amounts The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetical computation only, at the rate of ¥110.99 = US$1.00, the rate prevailing on March 31, 2019. The translations should not be construed as representations that yen amounts have been, could have been or could in the future be converted into U.S. dollars at the above or any other rate. 3. Inventories Inventories at March 31, 2019 and 2018 consisted of the following: Work in progress Materials and supplies Total Millions of yen 2019 ¥ 26,607 38 ¥ 26,645 2018 ¥ 24,862 38 Thousands of U.S. dollars 2019 $ 239,728 340 ¥ 24,900 $ 240,068 4. Investments in Affiliates Investments in affiliates at March 31, 2019 and 2018 consisted of the following: Millions of yen 2019 2018 Investments in capital stock, at cost Equity in accumulated earnings and losses since acquisition, net Total ¥ 5 144 ¥ 149 ¥ 5 159 ¥ 164 Thousands of U.S. dollars 2019 $ 41 1,304 $ 1,345 5. Assets Pledged as Collateral and Obligations Related to Collateral Assets pledged as collateral: Cash and deposits Millions of yen 2019 ¥ 11,009 2018 ¥ 1,894 Thousands of U.S. dollars 2019 $ 99,189 (Note) The assets above are pledged as collateral mainly for performance bonds for construction. 19 2019 Notes to Consolidated Financial Statements 6. Net Sales Recognized Using the Percentage- of-Completion Method 7. Provision Included in Cost of Sales of Completed Construction Contracts 8. Aggregate Amount of Research and Development Costs included in Selling, General and Administrative Expenses and Cost of Sales 9. Impairment Loss Net sales recognized using the percentage-of- completion method Millions of yen 2019 2018 Thousands of U.S. dollars 2019 ¥ 118,391 ¥ 109,855 $ 1,066,684 Completed work compensation reserve Provision for loss on construction contracts Total Selling, general and administrative expenses Cost of sales Total Millions of yen 2019 2018 ¥ 131 423 ¥ 554 ¥ 259 27 ¥ 286 Millions of yen 2019 2018 ¥ 910 — ¥ 910 ¥ 953 — ¥ 953 Thousands of U.S. dollars 2019 $ 1,180 3,812 $ 4,992 Thousands of U.S. dollars 2019 $ 8,201 — $ 8,201 In the fiscal year ended March 31, 2019, the Company recorded impairment losses in respect of the following asset groups: Location Application Type Ito City, Shizuoka Business assets Buildings and structures Ito City, Shizuoka Business assets Tools, furniture and fixtures Ito City, Shizuoka Business assets Land Ito City, Shizuoka Business assets Intangible assets India India India Total Business assets Buildings and structures Business assets Tools, furniture and fixtures Business assets Leased assets Impairment loss Millions of yen Thousands of U.S. dollars ¥ 17 ¥ 1 ¥ 81 ¥ 1 ¥ 23 ¥ 95 ¥ 9 ¥ 227 $ 150 $ 6 $ 728 $ 10 $ 206 $ 863 $ 80 $ 2,043 In principle the Company groups business assets based on their related business division. Each of the business assets of Ito City, Shizuoka listed above is an asset designated for sale and has been grouped at the level of each individual asset to be sold. When grouping the assets of a consolidated subsidiary, taking into account its size, etc., the in-principle criteria is to make the company itself the unit of grouping. For Shizuoka, as each market value of the assets designated for sale has lowered significantly in the fiscal year ended March 31, 2019, the Company has reduced their carrying values to the recoverable values and recorded this reduction as an impairment loss under extraordinary losses. Furthermore, in the case of consolidated subsidiaries with continuing operating loss, the carrying value of the business assets has been reduced to its recoverable value in the fiscal year ended March 31, 2019, and the decrease has been recognized as an impairment loss under extraordinary losses. 20 Note that the recoverable values of these asset groups are measured based on the net sales values. For tools, furniture and fixtures, the recoverable value is evaluated by deducting the cost of disposal from the expected sales amount. For land, and for buildings and structures, the recoverable value is evaluated based on real estate appraisal values. In the fiscal year ended March 31, 2018, the Company recorded no impairment losses. 10. Income Taxes The Companies are subject to a number of different taxes based on income which, in the aggregate, indicate a normal statutory tax rate in Japan of approximately 30.5% and 30.8% for the years ended March 31, 2019 and 2018, respectively. The Company has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018) effective from the beginning of the fiscal year ended March 31, 2019. Accordingly, deferred tax assets (if any) were presented under “investments and other assets” and deferred tax liabilities (if any) were presented under “long-term liabilities,” and the Company has changed the notes on tax effect accounting. As a result, ¥3,666 million that had been presented in “deferred tax assets” under current assets in the consolidated balance sheet for the previous fiscal year has been included in ¥12,577 million in “deferred tax assets” under investments and other assets. Reconciliations between the statutory tax rate and the effective income tax rate for the years ended March 31, 2019 and 2018 are as follows: Statutory tax rate Non deductible expenses Prefectural and municipal inhabitant per capita tax Change in valuation allowance Tax rate differences in foreign subsidiaries Other Effective income tax rate 2019 30.5% 0.3 0.4 2.5 1.5 (0.4) 34.8% 2018 30.8% 0.5 0.4 (1.3) 1.8 0.8 33.0% The significant components of deferred tax assets and liabilities were as follows: Deferred tax assets Liability for retirement benefit Accrued bonuses Accounts payable Allowance for doubtful accounts Depreciation Completed work compensation reserve Provision for loss on construction contracts Accrued enterprise tax Deferred gains or losses on hedges Other Valuation allowance pertaining to total future deductible temporary differences Valuation allowance for deferred tax assets Deferred tax assets Deferred tax liabilities Retained earnings appropriated for tax allowance reserves Gain on contribution of securities to retirement benefit trust Other Deferred tax liabilities Net deferred tax assets Millions of yen 2019 2018 Thousands of U.S. dollars 2019 ¥ 7,323 2,133 608 90 940 99 96 293 (40) 725 12,267 (447) (447) 11,820 (487) (114) (2) (603) ¥ 8,537 2,155 619 147 1,018 69 8 270 121 965 13,909 (617) (617) 13,292 (492) (110) (113) (715) $ 65,985 19,215 5,479 814 8,470 892 865 2,636 (360) 6,530 110,526 (4,027) (4,027) 106,499 (4,388) (1,027) (17) (5,432) ¥ 11,217 ¥ 12,577 $ 101,067 21 2019 Notes to Consolidated Financial Statements 11. Investment Securities (1) Information regarding securities classified as available-for-sale security The aggregate costs, gross unrealized gains or losses and fair values pertaining to other securities are as follows: Millions of yen 2019 2018 Cost Gross unrealized gains Gross unrealized losses Fair value Cost Gross unrealized gains Gross unrealized losses Fair value Equity securities ¥ 97 Investment trusts ¥ 2,500 Total ¥ 2,597 ¥ 3 ¥ 58 ¥ 61 ¥ — ¥ 100 ¥ 99 ¥ — ¥ 2,558 ¥ 1,000 ¥ — ¥ 2,658 ¥ 1,099 ¥ 10 ¥ 1 ¥ 11 ¥ — ¥ — ¥ — ¥ 109 ¥ 1,001 ¥ 1,110 Since unlisted stocks (¥200 million and ¥215 million at March 31, 2019 and 2018, respectively) have no market value and their fair value is not easily determinable, they are not included in available-for-sale security above. Thousands of U.S. dollars 2019 Cost Gross unrealized gains Gross unrealized losses Fair value Equity securities $ 878 Investment trusts $ 22,525 Total $ 23,403 $ 27 $ 521 $ 548 $ — $ 905 $ — $ 23,046 $ — $ 23,951 Since unlisted stocks (US$1,808 thousand at March 31, 2019) have no market value and their fair value is not easily determinable, they are not included in available-for-sale security above. (2) Investment securities for which impairment losses were recorded In the fiscal years ended March 31, 2019 and 2018, no impairment loss was recorded on investment securities. (3) Other securities sold Millions of yen 2019 2018 Proceeds from sales Total gain on sales Total loss on sales Proceeds from sales Total gain on sales Total loss on sales Equity securities ¥ — ¥ — ¥ — ¥ 2 ¥ 0 ¥ — 12. Short-Term Borrowings and Long- Term Debt At March 31, 2019 and 2018, short-term borrowings and current portion of long-term debt consisted of the following: Current portion of lease obligations Millions of yen 2019 ¥ 2 2018 ¥ 5 Thousands of U.S. dollars 2019 $ 22 At March 31, 2019 and 2018, long-term debt consisted of the following: Lease obligations Less current portion Millions of yen 2019 2018 ¥ 21 2 ¥ 19 ¥ 21 5 ¥ 16 Thousands of U.S. dollars 2019 $ 191 22 $ 169 22 The maturities of lease obligations as of March 31, 2019 are summarized as follows: Year ending March 31 Millions of yen Thousands of U.S. dollars 2019 2019 2020 2021 2022 2023 and thereafter ¥ 2 2 2 13 $ 22 22 21 104 13. Retirement Benefits 1. Outline of adopted retirement benefit plans The Company and some of its domestic subsidiaries have established funded, defined benefit corporate pension plans and lump-sum retirement benefit plans as defined benefit plans, and defined contribution pension plans and prepaid retirement allowance plans as defined contribution plans. The Company and some of its domestic subsidiaries revised the previous defined benefit corporate pension plans in January 2011 after the consent of management and workers was gained, and have adopted a cash balance plan from April 2011. The cash balance plan is a system in which pensions are funded for each eligible employee at the amount calculated in light of the benefit level, market interest rate of each year and other factors. The Company and some of its domestic subsidiaries introduced a defined contribution pension plan in October 2015, in which 50% of the future funding portion of previous lump-sum retirement benefits is regarded as defined contribution pension plan and each individual employee operates its pension funds. To employees who do not participate in this defined contribution pension plan at their request, the amount equal to employer contributions stipulated in the guidance of defined contribution pension plan is provided as prepaid retirement allowance. In March 2016, the Company set up a retirement benefit trust for the lump-sum retirement benefit plan. For lump-sum retirement benefit plans of some consolidated subsidiaries, liability for retirement benefits and retirement benefit expenses are calculated using the simplified method. Among domestic subsidiaries, one subsidiary previously participated in a multi-employer’s retirement benefit plan. Because the amount of pension assets corresponding to the contributions made by that subsidiary was not practically determinable under this plan, it accounted for this multi-employer pension plan as if it is a defined contribution plan. However, that subsidiary withdrew from this retirement benefit plan and has shifted to a funded, defined benefit corporate pension plan effective on October 1, 2015. 2. Defined benefit plan The changes in the retirement benefit obligation during the years ended March 31, 2019 and 2018 are as follows: Retirement benefit obligation at April 1 Service cost Interest cost Actuarial gains or losses Retirement benefit expenses applying the simplified method Retirement benefit paid Other Millions of yen 2019 ¥ 73,857 2018 ¥ 75,374 Thousands of U.S. dollars 2019 $ 665,439 2,298 382 (328) 258 (4,796) (1) 2,347 390 99 125 (4,473) (5) 20,703 3,444 (2,956) 2,326 (43,211) (5) Retirement benefit obligation at March 31 ¥ 71,670 ¥ 73,857 $ 645,740 23 2019 Notes to Consolidated Financial Statements The changes in plan assets during the years ended March 31, 2019 and 2018 are as follows Plan assets at April 1 Expected return on plan assets Actuarial gains or losses Contributions by the Company Retirement benefits paid Amount of contributions made due to the setup of a retirement benefit trust Plan assets at March 31 Millions of yen Thousands of U.S. dollars 2019 ¥ 49,051 1,235 (462) 3,480 (2,355) 4,500 ¥ 55,449 2018 2019 ¥ 44,427 $ 441,944 1,109 1,374 3,553 (2,412) 11,126 (4,161) 31,355 (21,218) 1,000 ¥ 49,051 40,544 $ 499,590 The following table sets forth the funded status of the plan and the amounts recognized in the consolidated balance sheet as of March 31, 2019 and 2018 for the Companies’ defined benefit plans: Contributory retirement benefit obligation Plan assets at fair value Non-contributory retirement benefit obligation Net liability for retirement benefit in the balance sheet Liability for retirement benefit Asset for retirement benefit Millions of yen 2019 ¥ 70,049 (55,449) 14,600 1,622 16,222 16,261 (40) 2018 ¥ 72,334 (49,052) 23,282 1,523 24,805 24,812 (7) Thousands of U.S. dollars 2019 $ 631,129 (499,590) 131,539 14,611 146,150 146,506 (356) Net liability for retirement benefit in the balance sheet ¥ 16,221 ¥ 24,805 $ 146,150 The components of retirement benefit expenses for the years ended March 31, 2019 and 2018 are as follows: Service cost Interest cost Expected return on plan assets Amortization of actuarial gains or losses Amortization of prior service cost Retirement benefit expenses applying the simplified method Retirement benefit expenses Millions of yen Thousands of U.S. dollars 2019 ¥ 2,298 382 (1,235) 1,203 (117) 258 ¥ 2,789 2018 ¥ 2,347 390 (1,109) 1,915 (117) 125 ¥ 3,551 2019 $ 20,703 3,444 (11,126) 10,842 (1,056) 2,326 $ 25,133 The breakdown of the amount recognized in retirement benefits liability adjustments in other comprehensive income (before tax effect) is as follows: Prior service cost Actuarial gains or losses Total Millions of yen 2019 2018 ¥ (117) 1,070 ¥ 953 ¥ (117) 3,190 ¥ 3,073 Thousands of U.S. dollars 2019 $ (1,056) 9,637 $ 8,581 24 Unrecognized prior service cost and unrecognized actuarial gains or losses included in accumulated other comprehensive income (before tax effect) as of March 31, 2019 and 2018 are as follows: Unrecognized prior service cost Unrecognized actuarial gains or losses Total Millions of yen 2019 ¥ (170) 1,832 ¥ 1,662 2018 ¥ (287) 2,901 ¥ 2,614 Thousands of U.S. dollars 2019 $ (1,533) 16,506 $ 14,973 The details of plan assets, by major category, as a percentage of total plan assets as of March 31, 2019 and 2018 are as follows: Bonds Stocks Alternative* General accounts Other Total 2019 2018 38% 25% 24% 8% 5% 100% 37% 25% 26% 8% 4% 100% * The main plan assets in “Alternative” are hedge funds and real estate. The expected rates of return on plan assets have been estimated based on the anticipated allocation to each asset class, the expected long-term return on assets held in each category, and past performance. The main actuarial assumptions for the years ended March 31, 2019 and 2018 were as follows (weighted averages): Discount rates Expected rates of return on plan assets Expected rates of salary increase 2019 2018 0.5% 2.5% 4.4% 0.5% 2.5% 4.6% 3. Defined contribution plan Contributions to be made by the Company and some of its domestic consolidated subsidiaries to defined contribution pension plans were ¥337 million (US$3,040 thousand) and ¥340 million for the years ended March 31, 2019 and 2018, respectively. Amortization of prepaid retirement allowance plans was ¥5 million (US$47 thousand) and ¥7 million for the fiscal years ended March 31, 2019 and 2018, respectively. Salaries and wages Retirement benefit expenses Directors' retirement benefit expenses Bonuses to directors and statutory auditors (Reversal) Provision of allowance for doubtful accounts Other Total Millions of yen 2019 ¥ 5,884 520 4 38 (25) 6,820 ¥ 13,241 2018 Thousands of U.S. dollars 2019 ¥ 5,733 $ 53,010 649 8 5 (766) 6,536 4,686 39 342 (223) 61,441 ¥ 12,165 $ 119,295 Research and development costs were ¥910 million (US$ 8,201 thousand) and ¥953 million for the years ended March 31, 2019 and 2018, respectively. Research and development costs are included in Other Selling, General and Administrative Expenses. 25 14. Selling, General and Administrative Expenses 2019 Notes to Consolidated Financial Statements 15. Other Comprehensive Income Recycling and tax effects relating to other comprehensive income for the years ended March 31, 2019 and 2018 were as follows: Unrealized gains or losses on securities: Amount arising during the year ¥ 46 ¥ 20 $ 411 Millions of yen 2019 2018 Thousands of U.S. dollars 2019 Recycling Before tax effect adjustment Tax effect Unrealized gains or losses on securities Deferred gains or losses on hedges: Amount arising during the year Recycling Asset acquisition cost adjustments Before tax effect adjustment Tax effect Deferred gains or losses on hedges Currency translation adjustments: Amount arising during the year Retirement benefits liability adjustments: Amount arising during the year Recycling Before tax effect adjustment Tax effect Retirement benefits liability adjustments — 46 (12) 34 389 (13) 81 457 (161) 296 96 (134) 1,086 952 (294) 658 — 20 (9) 11 (144) 73 128 57 2 59 146 1,275 1,798 3,073 (950) 2,123 — 411 (108) 303 3,509 (124) 728 4,113 (1,451) 2,662 869 (1,205) 9,785 8,580 (2,650) 5,930 Other comprehensive income ¥ 1,084 ¥ 2,339 $ 9,764 16. Dividends 1) Dividends paid For the year ended March 31, 2019 Resolution Class of shares Total dividends (millions of yen) Total dividends (thousands of U.S. dollars) Source of dividends Dividends per share (yen) Dividends per share (U.S. dollars) Cut-off date Effective date Resolution Class of shares Total dividends (millions of yen) Total dividends (thousands of U.S. dollars) Source of dividends Dividends per share (yen) Dividends per share (U.S. dollars) Cut-off date Effective date For the year ended March 31, 2018 Resolution Class of shares Total dividends (millions of yen) Source of dividends Dividends per share (yen) Cut-off date Effective date Meeting of the Board of Directors on May 11, 2018 Common stock ¥1,948 $18,339 Retained earnings ¥20.0 $0.18 March 31, 2018 June 4, 2018 Meeting of the Board of Directors on October 31, 2018 Common stock ¥2,045 $18,431 Retained earnings ¥21.0 $0.19 September 30, 2018 December 3, 2018 Meeting of the Board of Directors on May 15, 2017 Common stock ¥1,850 Retained earnings ¥19.0 March 31, 2017 June 2, 2017 26 Resolution Class of shares Total dividends (millions of yen) Source of dividends Dividends per share (yen) Cut-off date Effective date Meeting of the Board of Directors on October 31, 2017 Common stock ¥1,948 Retained earnings ¥20.0 September 30, 2017 December 1, 2017 2) Dividends with the cut-off date in the year ended March 31, 2019 and the effective date in the year ending March 31, 2020 Resolution Class of shares Total dividends (millions of yen) Total dividends (thousands of U.S. dollars) Source of dividends Dividends per share (yen) Dividends per share (U.S. dollars) Cut-off date Effective date Meeting of the Board of Directors on May 13, 2019 Common stock ¥2,045 $18,431 Retained earnings ¥21.0 $0.19 March 31, 2019 June 3, 2019 Dividends with the cut-off date in the year ended March 31, 2018 and the effective date in the year ended March 31, 2019 Resolution Class of shares Total dividends (millions of yen) Source of dividends Dividends per share (yen) Cut-off date Effective date Meeting of the Board of Directors on May 11, 2018 Common stock ¥1,948 Retained earnings ¥20.0 March 31, 2018 June 4, 2018 17. Leases Details of leased assets: Property, plant and equipment The main items listed are automobiles and equipment (“machinery and equipment,” and “tools, furniture and fixtures”) in the construction business. Future minimum lease payments subsequent to March 31, 2019 and 2018 for non- cancelable operating leases to which the Companies are lesses are summarized as follows: Due within one year Due after one year Total Millions of yen Thousands of U.S. dollars 2019 2018 2019 ¥ 14 29 ¥ 43 ¥ 9 21 ¥ 30 $ 130 258 $ 388 18. Contingent Liabilities The Companies had the following contingent liabilities at March 31, 2019 and 2018 As guarantor of employees' housing loans from banks ¥ 103 2019 2018 ¥ 148 2019 $ 927 Millions of yen Thousands of U.S. dollars 19. Per Share Information Profit attributable to owners of parent and net assets per share for the years ended March 31, 2019 and 2018 were as follows: Profit attributable to owners of parent (basic) Net assets Yen 2019 ¥ 147.35 1,606.41 2018 ¥ 139.12 1,489.03 U.S. dollars 2019 $ 1.33 14.47 Notes: 1. Diluted earnings per share is not presented because there were no potential shares. 2. The basis for calculation of earnings per share is as follows 27 2019 Notes to Consolidated Financial Statements Millions of yen 2019 2018 Thousands of U.S. dollars 2019 Profit attributable to owners of parent ¥ 14,354 ¥ 13,552 $ 129,332 Amounts not attributable to common shareholders — — — Profit attributable to owners of parent related to common stock ¥ 14,354 ¥ 13,552 $ 129,332 Average number of shares during the period ¥ 97,411 ¥ 97,412 Thousands of shares 2019 2018 20. Segment Information (a) Overview of reporting segments The Company’s reporting segments are business units for which separate financial information can be obtained and which are subject to periodic reviews for deciding the allocation of management resources and evaluating business performance. The Company has established business divisions according to the fields in which it undertakes its business and carries out integrated business activities spanning engineering, procurement, construction, test operation, adjustments and services. The Company has aggregated its businesses according to common technologies and facilities into two reporting segments: the Power Systems Division and the Infrastructure and Industrial Systems Division. The Power Systems Division undertakes business operations that include planning, design, supervised construction, test operation and maintenance of thermal, hydroelectric and nuclear power generating facilities. The Infrastructure and Industrial Systems Division carries out business operations that include planning, design, supervised construction, test operation and maintenance of substation facilities, public facilities, equipment for general industry, equipment for buildings and for information-related businesses. (b) Method of computing sales, profit/loss, assets and other items by reporting segment The accounting policies of the segments are substantially the same as those described in the significant accounting policies in Note 1. The figures for segment profits are on the basis of ordinary income. Intersegment sales or transfers are based on current market prices. (c) Reporting segment information Year ended March 31, 2019 Net sales: Sales to customers Intersegment sales or transfers Total Segment profits Other items: Depreciation Interest income Equity in income of affiliates Millions of yen 2019 Infrastructure and Industrial Systems Division Total Power Systems Division ¥ 127,341 ¥ 116,898 ¥ 244,239 954 128,295 8,929 479 724 38 110 117,008 13,395 108 833 — 1,064 245,303 22,324 587 1,557 38 Note: Because no assets were allocated to the business segments, information on segment assets has been omitted. However, undistributed depreciation and interest income are allocated to each business segment in accordance with reasonable allocation standards. 28 Net sales: Sales to customers Intersegment sales or transfers Total Segment profits Other items: Depreciation Interest income Equity in income of affiliates Thousands of U.S. dollars 2019 Infrastructure and Industrial Systems Division Total Power Systems Division $ 1,147,320 $ 1,053,234 $ 2,200,554 8,594 1,155,914 80,455 4,316 6,529 340 988 1,054,222 120,681 976 7,503 — 9,582 2,210,136 201,136 5,292 14,032 340 Note: Because no assets were allocated to the business segments, information on segment assets has been omitted. However, undistributed depreciation and interest income are allocated to each business segment in accordance with reasonable allocation standards. Year ended March 31, 2018 Net sales: Sales to customers Intersegment sales or transfers Total Segment profits Other items: Depreciation Interest income Equity in income of affiliates Millions of yen 2018 Infrastructure and Industrial Systems Division Total Power Systems Division ¥ 144,055 ¥ 88,516 ¥ 232,571 835 144,890 11,757 495 195 38 129 88,645 8,482 106 151 — 964 233,535 20,239 601 346 38 Note: Because no assets were allocated to the business segments, information on segment assets has been omitted. However, undistributed depreciation and interest income are allocated to each business segment in accordance with reasonable allocation standards. (d) Difference between total amount for reporting segments and amount recorded on the consolidated financial statements and principal components of this difference (items concerning difference adjustment) Millions of yen Thousands of U.S. dollars 2019 2018 2019 Net sales: Total of reporting segments ¥ 245,303 ¥ 233,535 $ 2,210,136 Eliminations (1,064) (964) (9,582) Net sales in consolidated statement of income ¥ 244,239 ¥ 232,571 $ 2,200,554 Segment profits: Total of reporting segments ¥ 22,324 ¥ 20,239 $ 201,136 Ordinary income 22,324 20,239 201,136 29 2019 Notes to Consolidated Financial Statements Others: Depreciation Total of reporting segments Adjustment Consolidated Interest income Total of reporting segments Adjustment Consolidated Equity in income of affiliates Total of reporting segments Adjustment Consolidated Millions of yen Thousands of U.S. dollars 2019 2018 2019 ¥ 587 — 587 1,557 — 1,557 38 — 38 ¥ 601 — 601 346 — 346 38 — 38 $ 5,292 — 5,292 14,032 — 14,032 340 — 340 (e) Related information (i) Information on products and services Because the same information is included in Reporting segment information, this information has been omitted. (ii) Geographical information (1) Net sales Net sales Japan Southeast Asia Other Asia Other areas Total Millions of yen Thousands of U.S. dollars 2019 2018 2019 ¥ 201,171 ¥ 174,333 $ 1,812,520 34,807 4,149 4,112 41,313 5,334 11,591 313,605 37,379 37,050 ¥ 244,239 ¥ 232,571 $ 2,200,554 Notes: 1. Sales, based on the location of customers, are classified by country or region. 2. Major countries or regions included in such geographical areas are as follows: (1) Southeast Asia: Indonesia, Thailand, Malaysia, Cambodia, Philippines, Vietnam etc. (2) Other Asia: India, Taiwan, Bangladesh, Kuwait, China, South Korea, Myanmar, United Arab Emirates etc. (3) Other areas: Tanzania, United States of America, Italy, Montenegro, Mexico, Micronesia etc. (2) Property, plant and equipment Because the amount of property, plant and equipment in Japan exceeds 90% of property, plant and equipment recorded in the consolidated balance sheet, information on property, plant and equipment has been omitted. (iii) Information of main customer Customer Net sales Segment concerned Toshiba Energy Systems & Solutions Corporation ¥ 89,637 million Power Systems Division 2019 $ 807,613 thousand Infrastructure and Industrial Systems Division 30 Customer Net sales Segment concerned Toshiba Energy Systems & Solutions Corporation ¥ 54,131 million Power Systems Division 2018 Infrastructure and Industrial Systems Division Toshiba Corporation ¥ 44,654 million Power Systems Division Infrastructure and Industrial Systems Division (iv) Information on impairment loss on fixed assets for each reporting segment Fiscal year ended March 31, 2019 Millions of yen 2019 Infrastructure and Industrial Systems Division Total Power Systems Division Impairment loss ¥ 227 ¥ — ¥ 227 Fiscal year ended March 31, 2018 Not applicable 21. Financial Instruments (a) Matters concerning financial instruments 1) Policy toward financial instruments Regarding fund management, in principle, the Companies carry out short-term fund management under the Toshiba Group Finance System. The Companies' policy is to use derivatives in fund management to avoid currency risk, and not to engage in speculative transactions. 2) Details of financial instruments and their risk and risk management structure The Companies detcrmine their depositing plan using the Toshiba Group Finance System and exercise judgment on whether to execute such transactions after giving adequate consideration to economic rationalism, comprehensive management strategies, etc. and with the aim of mitigating the risk of loss to the Companies’ profit. Trade notes and accounts receivable and Electronically recorded monetary claims– operating are operating receivables that are exposed to customer credit risk. For dealing with this risk, the Company has adopted a structure whereby the sales departments within each business division monitor the state of principal customers and ascertain the state of credit annually in accordance with the Toshiba Plant Systems & Services Group credit administration regulations. By carrying out business overseas, a portion of the Companies' operating receivables are exposed to currency risk. In principle, the Companies use forward exchange contracts to hedge this risk. Investment securities are exposed to market risk. The Companies mainly hold investment trusts and stocks of companies with which they have relations in carrying out business, and fair value of these stocks is ascertained and reported to the Board of Directors on a regular basis. Trade notes and accounts payable are operating liabilities and most of these have payment due dates of less than one year. Derivative transactions consist of forward exchange contracts for the purpose of hedging currency risk for foreign currency-denominated payments and income. Regarding derivative transactions, the Companies engage in transactions only with financial institutions with high creditworthiness and therefore consider their exposure to credit risk to be virtually nil. The execution and management of derivative transactions are carried out 31 2019 Notes to Consolidated Financial Statements in accordance with internal regulations that stipulate authority for transactions, and the General Manager of the Accounting Department ascertains the position on derivative transaction contracts every half-year period and reports on these to the Board of Directors. Refer to the previous “1. Summary of Significant Accounting Policies, (r) Principal hedge accounting method” regarding hedging instruments and hedged items, hedging policies and method for assessment of hedge effectiveness pertaining to hedge accounting. (b) Matters concerning the fair value of financial instruments 2019: The consolidated balance sheet amounts and fair values as of March 31, 2019 are as shown in table below. Financial instruments for which determining fair value is considered to be extremely difficult are not included in the following table. Millions of yen Thousands of U.S. dollars 2019 2019 Consolidated balance sheet amount Fair value Consolidated balance sheet amount Fair value 1. Cash and cash equivalents ¥ 29,445 ¥ 29,445 $ 265,295 $ 265,295 2. Time deposits 3. Trade notes and accounts receivable Allowance for doubtful accounts 74,987 112,551 (102) 74,987 675,615 675,615 1,014,066 (922) 4. Electronically recorded monetary claims-operating 5. Investment securities Assets total 112,449 112,449 1,013,144 1,013,144 1,784 2,658 1,784 2,658 16,072 23,951 16,072 23,951 221,323 221,323 1,994,077 1,994,077 1. Trade notes and accounts payable ¥ 57,688 ¥ 57,688 $ 519,758 $ 519,758 2. Accounts payable non-trade 3. Accrued income taxes Liabilities total Derivatives 2,517 4,671 64,876 2,517 4,671 22,678 42,090 22,678 42,090 64,876 584,526 584,526 ¥ 187 ¥ 187 $ 1,686 $ 1,686 Notes: (1) Method of calculation of fair value of financial instruments and matters concerning marketable securities and derivatives Assets 1. Cash and cash equivalents, 2. Time deposits, 3. Trade notes and accounts receivable, 4. Electronically recorded monetary claims-operating These are listed at carrying value since fair value approximates their carrying value because of their short-term settlement. 5. Investment securities Fair value of investment trusts is based on the prices published by counterparty financial institutions, and fair value of stocks is based on quoted market prices on stock exchanges. Liabilities 1. Trade notes and accounts payable, 2. Accounts payable non-trade, 3. Accrued income taxes These are listed at carrying value since fair value approximates their carrying value because of their short-term settlement. Derivatives Refer to Note 22. (2) Unlisted stocks (consolidated balance sheet amount of ¥200 million (US$1,808 thousand)) have no quoted market prices and their future cash flows cannot be estimated, thus determining fair value is considered to be extremely difficult. Therefore, these are not included in Note 11 Investment Securities. Millions of yen 2019 1. Cash and cash equivalents 2. Time deposits 3. Trade notes and accounts receivable 4. Electronically recorded monetary claims - operating Within 1 year Over 1 year within 5 years Over 5 years within 10 years Over 10 years ¥ 29,411 74,987 112,551 1,784 ¥ — — — — ¥ — — — — ¥ — — — — 32 Thousands of U.S. dollars 2019 Within 1 year Over 1 year within 5 years Over 5 years within 10 years Over 10 years 1. Cash and cash equivalents 2. Time deposits 3. Trade notes and accounts receivable $ 264,990 675,615 1,014,066 4. Electronically recorded monetary claims - operating 16,072 $ — — — — $ — — — — $ — — — — 2018: The consolidated balance sheet amounts and fair values as of March 31, 2018 are shown in the table below. Financial instruments for which determining fair value is considered to be extremely difficult are not included in the following table. Millions of yen 2018 Consolidated balance sheet amount Fair value 1. Cash and cash equivalents ¥ 99,290 ¥ 99,290 2. Time deposits 3. Trade notes and accounts receivable Allowance for doubtful accounts 4. Electronically recorded monetary claims-operating 5. Investment securities Assets total 1,205 1,205 100,536 (295) 100,241 100,241 1,080 1,110 1,080 1,110 202,926 202,926 1. Trade notes and accounts payable ¥ 48,457 ¥ 48,457 2. Accounts payable non-trade 3. Accrued income taxes Liabilities total Derivatives 3,874 4,505 56,836 3,874 4,505 56,836 ¥ (529) ¥ (529) Notes: (1) Method of calculation of fair value of financial instruments and matters concerning marketable securities and derivatives Assets 1. Cash and cash equivalents, 2. Time deposits, 3. Trade notes and accounts receivable, 4. Electronically recorded monetary claims-operating These are listed at carrying value since fair value approximates their carrying value because of their short-term settlement. 5. Investment securities Fair value is based on quoted market prices on stock exchanges. Liabilities 1. Trade notes and accounts payable, 2. Accounts payable non-trade, 3. Accrued income taxes These are listed at carrying value since fair value approximates their carrying value because of their short-term settlement. Derivatives Refer to Note 22. (2) Unlisted stocks (consolidated balance sheet amount of ¥215 million) have no quoted market prices and their future cash flows cannot be estimated, thus determining fair value is considered to be extremely difficult. Therefore, these are not included in Note 11 Investment securities. Millions of yen 2018 Within 1 year Over 1 year within 5 years Over 5 years within 10 years Over 10 years 1. Cash and cash equivalents 2. Time deposits 3. Trade notes and accounts receivable ¥ 99,283 1,205 100,536 4. Electronically recorded monetary claims - operating 1,080 ¥ — — — — ¥ — — — — ¥ — — — — 33 2019 Notes to Consolidated Financial Statements 22. Derivative Transactions Matters regarding the current prices of transactions 2019: 1) Currency-related transactions to which hedge accounting is not applied Millions of yen 2019 Contract amounts Over one year Fair value Unrealized gain (loss) Forward foreign exchange contract Selling position U.S. dollars Euro Buying position U.S. dollars Euros Total ¥ 3,245 206 1,457 46 ¥ 4,954 ¥ 53 — — — ¥ 53 ¥ (2) 6 51 (2) ¥ 53 ¥ (2) 6 51 (2) ¥ 53 Note: The fair value is calculated based on prices published by the correspondent financial institutions. Thousands of U.S. dollars 2019 Contract amounts Over one year Fair value Unrealized gain (loss) Forward foreign exchange contract Selling position U.S. dollars Euro Buying position U.S. dollars Euros Total $ 29,238 1,852 13,131 410 $ 44,631 $ 480 — — — $ 480 $ (14) 55 459 (22) $ 478 $ (14) 55 459 (22) $ 478 Note: The fair value is calculated based on prices published by the correspondent financial institutions. 2) Currency-related transactions to which hedge accounting is applied Millions of yen 2019 Hedged items Contract amounts Over one year Fair value Forward foreign exchange contract Selling position U.S. dollars Euros Buying position Euros U.S. dollars Trade notes and accounts receivable Trade notes and accounts receivable Trade notes and accounts payable Trade notes and accounts payable ¥ 1,644 445 3,567 37 ¥ 47 — — — ¥ (28) 13 151 (2) Total ¥ 5,693 ¥ 47 ¥ 134 Note: The fair value is calculated based on prices published by the correspondent financial institutions. 34 Thousands of U.S. dollars 2019 Hedged items Contract amounts Over one year Fair value Forward foreign exchange contract Selling position U.S. dollars Euros Buying position Euros U.S. dollars Trade notes and accounts receivable Trade notes and accounts receivable Trade notes and accounts payable Trade notes and accounts payable $ 14,811 $ 428 $ (252) 4,013 32,140 330 — — — 118 1,359 (17) Total $ 51,294 $ 428 $ 1,208 Note: The fair value is calculated based on prices published by the correspondent financial institutions. 2018: 1) Currency-related transactions to which hedge accounting is not applied Millions of yen 2018 Contract amounts Over one year Fair value Unrealized gain (loss) Forward foreign exchange contract Selling position U.S. dollars Euros Buying position U.S. dollars Euros Total ¥ 1,661 1 3,489 114 ¥ 5,265 ¥ — — — — ¥ — ¥ 64 (0) (272) 9 ¥ (199) ¥ 64 (0) (272) 9 ¥ (199) Note: The fair value is calculated based on prices published by the correspondent financial institutions. 2) Currency-related transactions to which hedge accounting is applied Millions of yen 2018 Hedged items Contract amounts Over one year Fair value Forward foreign exchange contract Selling position U.S. dollars Buying position U.S. dollars Euros Total Trade notes and accounts receivable Trade notes and accounts payable Trade notes and accounts payable ¥ 1,656 ¥ 500 ¥ 52 6,738 49 1,669 — (383) 1 ¥ 8,443 ¥ 2,169 ¥ (330) Note: The fair value is calculated based on prices published by the correspondent financial institutions. 35 2019 Notes to Consolidated Financial Statements 23. Transactions with Related Parties 2019: Ⅰ) Transactions between related parties and the Company The parent company of the Company and principal shareholders (limited to companies) Status Name Address Capital (Millions of yen) Business Transactions Account item Parent company Toshiba Corporation Minato-ku, Tokyo ¥ 200,044 1. Manufacture of electric machinery and equipment 2. Manufacture of measuring instruments, medical equipment and apparatus, and other machinery and equipment 3. Software development and supply, electronic communication, broadcasting, information processing, information service 4. Chemical industry, metal industry, construction, real estate trading, leasing and brokerage business, ceramic industry, mining, soil and gravel mining, electricity supply business and financial business 5. Business incidental or related to each of the abovementioned businesses or industries 6. Investment in the company engaged in any of the above-mentioned businesses Policy for determining trade terms and other related matters Notes: 1. Of the amount of business transactions, the transaction amount does not include consumption taxes while the balance at fiscal year-end does. 2. Of the amount of non-business transactions, the transaction amount and the balance at fiscal year-end do not include consumption taxes. 3. The indirect portion of the percentage of voting rights held by the parent company, etc. is owned by Toshiba Insurance Service Corporation (1.64%). Companies which have the same parent company as the Company and other subsidiaries of the Company Status Name Address Capital (Millions of yen) Business Subsidiaries of the parent company Toshiba Infrastructure Systems & Solutions Corporation Toshiba Energy Systems & Solutions Corporation Kawasaki City, Kanagawa ¥ 10,000 Development, manufacture, sale and service of products and systems, related to the social infrastructure business Kawasaki City, Kanagawa ¥ 10,000 Development, manufacture, and sale of products, systems, and services related to the energy business Policy for determining trade terms and other related matters Notes: 1. Of the amount of business transactions, the transaction amount does not include consumption taxes while the balance at fiscal year-end does. 36 Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Accepting orders from the parent, the Company performs electric works, pipe works, machinery installation contracts, electric communication works, building construction, firefighting facility construction and steel structure building works. The Company also purchases part of the materials necessary for these building or other works listed above. In addition, the Company deposits and withdraws funds. Business Construction transactions contracting (Note 4) Purchase of materials (Note 4) Transaction amounts (Millions of yen) (Thousands of U.S. dollars) ¥ $ ¥ $ 389 3,508 3,609 32,515 Accounts receivable —completed work Other current assets Advances received on uncompleted construction contracts Withdrawal of funds (Note 5) Receipt of interest ¥ 390,420 $ 3,517,614 ¥ $ 1,312 11,823 Accounts payable non-trade Accrued expenses Group deposits Direct 49.89 Indirect 1.64 Non-business Deposit of funds transactions (Note 5) ¥ 385,090 $ 3,469,592 Accounts payable —construction work Balance at fiscal year-end (Millions of yen) (Thousands of U.S. dollars) ¥ $ ¥ $ ¥ $ ¥ $ ¥ $ ¥ $ 64 576 32 292 0 4 583 5,253 73 658 5 47 ¥ 77,470 $ 697,991 Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Account item Transaction amounts (Millions of yen) (Thousands of U.S. dollars) Balance at fiscal year-end (Millions of yen) (Thousands of U.S. dollars) Construction contracting Construction contracting (Note 2) ¥ 15,233 $ 137,245 — — Business transactions Business transactions Purchase of materials Purchase of materials (Note 2) ¥ 13,670 $ 123,163 Accounts payable non-trade Construction contracting Construction contracting (Note 2) ¥ 89,246 $ 804,090 Purchase of materials Purchase of materials (Note 2) ¥ $ 5,969 53,779 Accounts payable non-trade Accounts receivable - completed work ¥ 7,215 $ 65,005 Other current assets Advances received on uncompleted construction contracts Accounts payable - construction work Accrued expenses Accounts receivable - completed work ¥ 49,677 $ 447,578 Other current assets Advances received on uncompleted construction contracts Accounts payable - construction work Accrued expenses 4,907 $ 44,210 ¥ $ ¥ $ ¥ ¥ $ ¥ $ ¥ $ ¥ $ ¥ ¥ $ ¥ $ 4 33 2 21 43 384 11 99 101 909 1,066 9,603 2,557 125 1,122 23 207 $ 23,039 Status Name Address Business Capital (Millions of yen) Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Parent company Toshiba Minato-ku, Corporation Tokyo ¥ 200,044 4. Chemical industry, metal industry, Direct 49.89 Indirect 1.64 1. Manufacture of electric machinery and equipment 2. Manufacture of measuring instruments, medical equipment and apparatus, and other machinery and equipment 3. Software development and supply, electronic communication, broadcasting, information processing, information service construction, real estate trading, leasing and brokerage business, ceramic industry, mining, soil and gravel mining, electricity supply business and financial business 5. Business incidental or related to each of the abovementioned businesses or industries 6. Investment in the company engaged in any of the above-mentioned businesses Accepting orders from the parent, the Company performs electric works, pipe works, machinery installation contracts, electric communication works, building construction, firefighting facility construction and steel structure building works. The Company also purchases part of the materials necessary for these building or other works listed above. In addition, the Company deposits and withdraws funds. Transactions Business transactions Construction contracting (Note 4) Purchase of materials (Note 4) Transaction amounts (Millions of yen) (Thousands of U.S. dollars) ¥ $ ¥ $ 389 3,508 3,609 32,515 Account item Accounts receivable —completed work Other current assets Advances received on uncompleted construction contracts Non-business transactions Deposit of funds (Note 5) ¥ 385,090 $ 3,469,592 Accounts payable —construction work Withdrawal of funds (Note 5) ¥ 390,420 $ 3,517,614 Accounts payable non-trade Receipt of interest ¥ $ 1,312 11,823 Accrued expenses Group deposits Balance at fiscal year-end (Millions of yen) (Thousands of U.S. dollars) ¥ $ ¥ $ ¥ $ ¥ $ ¥ $ ¥ $ 64 576 32 292 0 4 583 5,253 73 658 5 47 ¥ 77,470 $ 697,991 Status Name Address Business Capital (Millions of yen) Toshiba Systems & Solutions Corporation Infrastructure Kawasaki Development, manufacture, sale and service City, Kanagawa ¥ 10,000 of products and systems, related to the social infrastructure business Subsidiaries of the parent company Toshiba Energy Systems & Solutions Corporation Kawasaki City, Kanagawa Development, manufacture, and sale of ¥ 10,000 products, systems, and services related to the energy business 4. The general terms and conditions are applied to the contract for construction. When purchasing materials, individual estimates are received and transaction amounts are determined through negotiations on a case-by-case basis. 5. The Company is depositing funds with and withdrawing funds from Toshiba Corporation under a basic agreement entered into between the Company and Toshiba Corporation concerning fund transactions. Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Transaction amounts (Millions of yen) (Thousands of U.S. dollars) Account item Balance at fiscal year-end (Millions of yen) (Thousands of U.S. dollars) Accounts receivable - completed work ¥ 7,215 $ 65,005 Construction contracting Construction contracting (Note 2) 15,233 ¥ $ 137,245 Business transactions Other current assets Advances received on uncompleted construction contracts Accounts payable - construction work Purchase of materials Purchase of materials (Note 2) ¥ 13,670 $ 123,163 Accounts payable non-trade Construction contracting Construction contracting (Note 2) ¥ 89,246 $ 804,090 Business transactions Accrued expenses Accounts receivable - completed work Other current assets Advances received on uncompleted construction contracts Accounts payable - construction work — — Purchase of materials Purchase of materials (Note 2) ¥ $ 5,969 53,779 Accounts payable non-trade Accrued expenses 2. The general terms and conditions are applied to the contract for construction. When purchasing materials, individual estimates are received and transaction amounts are determined through negotiations on a case-by-case basis. ¥ $ ¥ $ 4 33 2 21 4,907 ¥ $ 44,210 ¥ $ ¥ $ 43 384 11 99 ¥ 49,677 $ 447,578 ¥ $ ¥ $ 101 909 1,066 9,603 ¥ 2,557 $ 23,039 ¥ $ ¥ $ 125 1,122 23 207 37 2019 Notes to Consolidated Financial Statements Ⅱ) Transactions between related parties and the Company's consolidated subsidiaries The parent company of the Company and principal shareholders (limited to companies) Status Name Address Capital (Millions of yen) Business Parent company Toshiba Corporation Minato-ku, Tokyo ¥ 200,044 1. Manufacture of electric machines and equipment 2. Manufacture of measuring instruments, medical equipment and apparatus, and other machines and equipment 3. Software development and supply, electronic communication, broadcasting, information processing, information service 4. Chemical industry, metal industry, construction, real estate trading, leasing and brokerage business, ceramic industry, mining, soil and gravel mining, electricity supply business and financial business 5. Business incidental or related to each of the abovementioned businesses or industries 6. Investment in the company engaged in any of the above-mentioned businesses Note: Consumption taxes are not included in above-mentioned amounts pertaining to either transaction amounts or the balance at fiscal year-end. Policy for determining trade terms and other related matters The Company is determining trade terms and depositing funds with and withdrawing funds from Toshiba Corporation under a basic agreement entered into between those subsidiaries and Toshiba Corporation concerning fund transactions. Companies which have the same parent company as the Company and other subsidiaries of the Company Status Name Address Capital (Thousands of U.S. dollars) Business Company which has the same parent company Toshiba Asia Pacific Pte. Ltd. Singapore $ 4,853 In charge of general operations in the Asia-Pacific region Deposit and withdrawal Non-business Withdrawal of funds Group deposits — of funds transaction ¥ 2,260 $ 20,359 Note: Consumption taxes are not included in above-mentioned amounts pertaining to either transaction amounts or the balance at fiscal year-end. Policy for determining trade terms and other related matters The Company’s consolidated subsidiaries are depositing funds with and withdrawing funds from Toshiba Asia Pacific Pte. Ltd. under a basic agreement entered into between those subsidiaries and Toshiba Asia Pacific Pte. Ltd. concerning fund transactions. 38 Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Account item Transaction amounts (Millions of yen) (Thousands of U.S. dollars) Balance at fiscal year-end (Millions of yen) (Thousands of U.S. dollars) Deposit of funds Group deposits ¥ 15,186 $ 136,821 ¥ 2,106 $ 18,975 Direct 49.89 Indirect 1.64 of funds Deposit and withdrawal Non-business Withdrawal of funds transactions ¥ 22,045 $ 198,619 Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Account item Balance at fiscal year-end (Millions of yen) (Thousands of U.S. dollars) Receipt of interest ¥ $ 29 264 Transaction amounts (Millions of yen) (Thousands of U.S. dollars) ¥ 33,944 $ 305,833 ¥ 36,105 $ 325,297 ¥ $ 82 731 Deposit of funds Receipt of interest Status Name Address Business Capital (Millions of yen) Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Transaction amounts (Millions of yen) (Thousands of U.S. dollars) Account item Balance at fiscal year-end (Millions of yen) (Thousands of U.S. dollars) Deposit of funds 15,186 ¥ $ 136,821 Group deposits 2,106 ¥ $ 18,975 Parent company Toshiba Minato-ku, Corporation Tokyo ¥ 200,044 4. Chemical industry, metal industry, Direct 49.89 Indirect 1.64 Deposit and withdrawal of funds Non-business transactions Withdrawal of funds ¥ 22,045 $ 198,619 Receipt of interest ¥ $ 29 264 1. Manufacture of electric machines and equipment 2. Manufacture of measuring instruments, medical equipment and apparatus, and other machines and equipment 3. Software development and supply, electronic communication, broadcasting, information processing, information service construction, real estate trading, leasing and brokerage business, ceramic industry, mining, soil and gravel mining, electricity supply business and financial business 5. Business incidental or related to each of the abovementioned businesses or industries 6. Investment in the company engaged in any of the above-mentioned businesses Status Name Address Business Capital (Thousands of U.S. dollars) Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Deposit of funds Company which has the same parent company Toshiba Asia Pacific Pte. Ltd. Singapore $ 4,853 In charge of general operations in the Asia-Pacific region — Deposit and withdrawal of funds Non-business transaction Withdrawal of funds Receipt of interest Account item Balance at fiscal year-end (Millions of yen) (Thousands of U.S. dollars) Group deposits ¥ 2,260 $ 20,359 Transaction amounts (Millions of yen) (Thousands of U.S. dollars) ¥ 33,944 $ 305,833 ¥ 36,105 $ 325,297 ¥ $ 82 731 39 2019 Notes to Consolidated Financial Statements 2018: Ⅰ) Transactions between related parties and the Company The parent company of the Company and principal shareholders (limited to companies) Status Name Address Capital (Millions of yen) Business Parent company Toshiba Corporation Minato-ku, Tokyo 1. Manufacture of electric machinery and equipment 2. Manufacture of measuring instruments, medical equipment and apparatus, and other machinery and equipment 3. Software development and supply, electronic communication, broadcasting, information processing, information service ¥ 499,999 4. Chemical industry, metal industry, construction, real estate trading, leasing and brokerage business, ceramic industry, mining, soil and gravel mining, electricity supply business and financial business 5. Business incidental or related to each of the abovementioned businesses or industries 6. Investment in the company engaged in any of the above-mentioned businesses Policy for determining trade terms and other related matters Notes: 1. Of the amount of business transactions, the transaction amount does not include consumption taxes while the balance at fiscal year-end does. Of the amount of non-business transactions, the transaction amount and the balance at fiscal year-end do not include consumption taxes. 2. 3. The indirect portion of the percentage of voting rights held by the parent company, etc. is owned by Toshiba Insurance Service Corporation (1.64%). 4. The general terms and conditions are applied to the contract for construction. When purchasing materials, individual estimates are received and transaction amounts are determined through negotiations on a case-by-case basis. 5. The Company is depositing funds with and withdrawing funds from Toshiba Corporation under a basic agreement entered into between the Company and Toshiba Corporation concerning fund transactions. Companies which have the same parent company as the Company and other subsidiaries of the Company Status Name Address Capital (Millions of yen) Business Subsidiaries of the parent company Toshiba Memory Corporation Toshiba Infrastructure Systems & Solutions Corporation Toshiba Energy Systems & Solutions Corporation Minato-ku, Tokyo ¥ 10,000 Business involving the development, manufacture, and sale of memory and related products, and other relevant businesses Kawasaki City, Kanagawa ¥ 10,000 Development, manufacture, and sale of products, systems, and services related to the social infrastructure business Kawasaki City, Kanagawa ¥ 10,000 Development, manufacture, and sale of products, systems, and services related to the energy business — Construction contracting Business Construction transactions contracting (Note 2) ¥ 53,922 Accounts receivable - completed work Advances receivad on uncompleted construction contracts ¥ 53,467 ¥ 211 Policy for determining trade terms and other related matters Notes: 1. Of the amount of business transactions, the transaction amount does not include consumption taxes while the balance at fiscal year-end does. 2. The general terms and conditions are applied to the contract for construction. 40 Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Account item Transaction amounts (Millions of yen) Balance at fiscal year-end (Millions of yen) Direct 49.89 Indirect 1.64 Accepting orders from the Business Construction parent, the Company transactions contracting (Note 4) ¥ 44,380 Accounts receivable — completed work ¥ 104 performs electric works, pipe works, machinery installation contracts, electric communication works, building construction, firefighting facility construction and steel structure building works. The Company also purchases part of the materials necessary for these building or other works listed above. In addition, the Company deposits and withdraws funds. Purchase of materials (Note 4) ¥ 8,485 Other current assets ¥ 171 Non-business Deposit of funds transactions (Note 5) ¥ 96,910 Accounts payable — construction work Withdrawal of funds (Note 5) ¥ 14,110 Accounts payable non-trade Advances received on uncompleted construction contracts ¥ 0 ¥ 1,450 ¥ 70 Receipt of interest ¥ 222 Accrued expenses ¥ 7 Group deposits ¥ 82,800 Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Account item Transaction amounts (Millions of yen) Balance at fiscal year-end (Millions of yen) — Construction contracting Business Construction transactions contracting (Note 2) ¥ 13,493 Accounts receivable - completed work ¥ 5,252 — Construction contracting Business Construction transactions contracting (Note 2) ¥ 12,794 Accounts receivable - completed work ¥ 7,098 Status Name Address Business Capital (Millions of yen) Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Parent company Toshiba Minato-ku, Corporation Tokyo ¥ 499,999 4. Chemical industry, metal industry, Direct 49.89 Indirect 1.64 1. Manufacture of electric machinery and equipment 2. Manufacture of measuring instruments, medical equipment and apparatus, and other machinery and equipment 3. Software development and supply, electronic communication, broadcasting, information processing, information service construction, real estate trading, leasing and brokerage business, ceramic industry, mining, soil and gravel mining, electricity supply business and financial business 5. Business incidental or related to each of the abovementioned businesses or industries 6. Investment in the company engaged in any of the above-mentioned businesses Accepting orders from the parent, the Company performs electric works, pipe works, machinery installation contracts, electric communication works, building construction, firefighting facility construction and steel structure building works. The Company also purchases part of the materials necessary for these building or other works listed above. In addition, the Company deposits and withdraws funds. Transactions Transaction amounts (Millions of yen) Account item Balance at fiscal year-end (Millions of yen) Business transactions Construction contracting (Note 4) ¥ 44,380 Accounts receivable — completed work ¥ 104 Purchase of materials (Note 4) ¥ 8,485 Other current assets ¥ 171 Advances received on uncompleted construction contracts Non-business transactions Deposit of funds (Note 5) ¥ 96,910 Accounts payable — construction work Withdrawal of funds (Note 5) ¥ 14,110 Accounts payable non-trade ¥ 0 ¥ 1,450 ¥ 70 Receipt of interest ¥ 222 Accrued expenses ¥ 7 Group deposits ¥ 82,800 Status Name Address Business Capital (Millions of yen) Minato-ku, Tokyo Business involving the development, ¥ 10,000 manufacture, and sale of memory and related products, and other relevant businesses Infrastructure Kawasaki Development, manufacture, and sale of ¥ 10,000 products, systems, and services related to the social infrastructure business Subsidiaries of the parent company Toshiba Memory Corporation Toshiba Systems & Solutions Corporation Toshiba Energy Systems & Solutions Corporation City, Kanagawa Kawasaki City, Kanagawa Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Transaction amounts (Millions of yen) Account item Balance at fiscal year-end (Millions of yen) — Construction contracting Business transactions Construction contracting (Note 2) ¥ 13,493 Accounts receivable - completed work ¥ 5,252 — Construction contracting Business transactions Construction contracting (Note 2) ¥ 12,794 Accounts receivable - completed work ¥ 7,098 Development, manufacture, and sale of ¥ 10,000 products, systems, and services related to the energy business — Construction contracting Business transactions Construction contracting (Note 2) ¥ 53,922 Accounts receivable - completed work Advances receivad on uncompleted construction contracts ¥ 53,467 ¥ 211 41 2019 Notes to Consolidated Financial Statements Ⅱ) Transactions between related parties and the Company's consolidated subsidiaries The parent company of the Company and principal shareholders (limited to companies) Not applicable Companies which have the same parent company as the Company and other subsidiaries of the Company Status Name Address Capital (Thousands of U.S. dollars) Business Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Account item Transaction amounts (Millions of yen) Balance at fiscal year-end (Millions of yen) Company which has the same parent company Toshiba Asia Pacific Pte. Ltd. Singapore $ 4,853 In charge of general operations in the Asia-Pacific region Deposit and withdrawal — of funds Non-business transaction Withdrawal of funds 2,040 Group deposits ¥ 4,420 Deposit of funds 6,460 Receipt of interest 4 ¥ ¥ ¥ 24. Notes concerning the parent company or important affiliates 25. Significant Subsequent Events Note: Consumption taxes are not included in above-mentioned amounts pertaining to either transaction amounts or the balance at fiscal year-end. Policy for determining trade terms and other related matters The Company’s consolidated subsidiaries are depositing funds with and withdrawing funds from Toshiba Asia Pacific Pte. Ltd. under a basic agreement entered into between those subsidiaries and Toshiba Asia Pacific Pte. Ltd. concerning fund transactions. Parent company information: Toshiba Corporation (listed on the Tokyo Stock Exchange and the Nagoya Stock Exchange) As a result of unexpected stock outage, the occurrence of material nonconformities, and the rainy season arriving unexpectedly at the coal-fired thermal power plant operating in Cambodia, our subsidiary, TPSC (THAILAND) CO., LTD., has seen delays in project progress. As a result of increasing subcontractor costs incurred in order to recover from these process delays, we have incurred an additional ¥2.9 billion (US$26,150 thousand) in construction costs (cost of sales) by June 30, 2019. There may be changes regarding the amount of increase in construction costs due to future negotiations with subcontractors. 42 Status Name Address Business Capital (Thousands of U.S. dollars) Percentage of voting rights held by the parent company, etc. (%) Relationship Business relationship Transactions Transaction amounts (Millions of yen) Account item Balance at fiscal year-end (Millions of yen) Company which has the same parent company Toshiba Asia Pacific Pte. Ltd. Singapore $ 4,853 In charge of general operations in the Asia-Pacific region — Deposit and withdrawal of funds Non-business transaction Withdrawal of funds Deposit of funds Receipt of interest ¥ ¥ ¥ 6,460 2,040 Group deposits ¥ 4,420 4 43 2019 Notes to Consolidated Financial Statements 26. Scope of Consolidation All the subsidiaries are consolidated subsidiaries. Number of consolidated subsidiaries: 13 Names of consolidated subsidiaries are as follows. SHIBAURA PLANT CORPORATION KANSAI TOSHIBA ENGINEERING CORPORATION TOSHIBA ENGINEERING SERVICE CORPORATION ES TOSHIBA ENGINEERING CORPORATION S∙K∙S CORPORATION PT. TPSC ENGINEERING INDONESIA TPSC (INDIA) PRIVATE LIMITED TPSC ENGINEERING (MALAYSIA) SDN. BHD. TOSPLANT ENGINEERING (THAILAND) CO., LTD. TPSC (THAILAND) CO., LTD. TPSC US CORPORATION TPSC (VIETNAM) CO., LTD. TPSC PHILIPPINES CORPORATION 27. Application of Equity Method 28. Fiscal Year of Consolidated Subsidiaries 29. Change in Presentation The equity method is applied to all affiliates. The company has one affiliate, Toshiba Power Systems Inspection Services Co., Ltd. The balance sheet dates of all consolidated subsidiaries are the same as the consolidated balance sheet date. Ⅰ) Change in conjunction with application of “Partial Amendments to Accounting Standard for Tax Effect Accounting” The Company has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018) effective from the beginning of the fiscal year ended March 31, 2019. Accordingly, deferred tax assets (if any) were presented under “investments and other assets” and deferred tax liabilities (if any) were presented under “long-term liabilities,” and the Company has changed the notes on tax effect accounting. As a result, ¥3,666 million in “deferred tax assets” that had been presented in “deferred tax assets” under current assets in the consolidated balance sheet for the previous fiscal year has been included in ¥12,577 million in “deferred tax assets” under investments and other assets. Ⅱ) Consolidated statement of income “Dividend income of insurance” under other income, which was listed separately in the previous fiscal year, is included in “other” under other income in the fiscal year ended March 31, 2019 as it now accounts for 10% or less of the total other income. The consolidated financial statements of the previous fiscal year have been reclassified to reflect this change in presentation. 44 As a result, an amount of ¥90 million presented as “dividend income of insurance” under other income in the consolidated statement of income of the previous fiscal year has been reclassified as “other.” “Loss on disposal of fixed assets,” which was included in “other” under other expenses in the previous fiscal year, is listed separately in the fiscal year ended March 31, 2019 as it now accounts for more than 10% of other expenses. The consolidated financial statements of the previous fiscal year have been reclassified to reflect this change in presentation. As a result, an amount of ¥73 million presented as “other” under other expenses in the consolidated statement of income of the previous fiscal year has been reclassified as ¥8 million in “loss on disposal of fixed assets” and ¥65 million in “other.” 30. Stock Information Class and total number of issued shares and class and number of treasury stock Year ended March 31, 2019 Thousands of shares 2019 Number of issued shares Common stock Total Treasury stock Common stock (Note) Total Number of shares at the beginning of the fiscal year Increase during the fiscal year Decrease during the fiscal year Number of shares at the end of the fiscal year 97,656 97,656 244 244 — — 0 0 — — — — 97,656 97,656 244 244 Note: The 0 thousand share increase in the number of treasury stock of common stock is due to the purchase of shares constituting less than one unit of shares. Year ended March 31, 2018 Number of issued shares Common stock Total Treasury stock Common stock (Note) Total Thousands of shares 2018 Number of shares at the beginning of the fiscal year Increase during the fiscal year Decrease during the fiscal year Number of shares at the end of the fiscal year 97,656 97,656 243 243 — — 1 1 — — — — 97,656 97,656 244 244 Note: The 1 thousand share increase in the number of treasury stock of common stock is due to the purchase of shares constituting less than one unit of shares. 31. Quarterly Information for the Fiscal Year under Review Cumulative period First three month First six months First nine months Current fiscal year Millions of yen 2019 Thousands of U.S. dollars 2019 Current fiscal year Net sales ¥ 44,035 ¥ 107,974 ¥ 158,572 ¥ 244,239 $ 2,200,554 Profit before income taxes Profit attributable to owners of parent 41,125 2,608 10,759 7,051 14,589 9,464 22,097 14,354 Yen 199,093 129,332 U.S. dollars Earnings per share ¥ 26.77 ¥ 72.39 ¥ 97.16 ¥ 147.35 $ 1.33 Accounting period First quarter Second quarter Third quarter Fourth quarter Yen 2019 U.S. dollars 2019 Fourth quarter Earnings per share ¥ 26.77 ¥ 45.61 ¥ 24.77 ¥ 50.19 $ 0.45 45 2019 Independent Auditor’s Report 46 2019 Stock Information / Corporate Data Stock Information As of March 31, 2019 Common Stock: 265,000,000 shares Issued and Outstanding: 97,656,888 shares Total Number of Shareholders: 3,318 Paid-in Capital: ¥11,876,021,006 Principal Shareholders: Names of Shareholders Toshiba Corporation The Master Trust Bank of Japan Limited (Trust Account) GOLDMAN, SACHS & CO. REG, State Street Bank and Trust Company 510312 State Street Bank and Trust Company 510311 Distribution of Shareholders: Japan Trustee Services Bank, Ltd. (Trust Account) Treasury Stock 0.25% Financial Institutions 11.16% Toshiba Insurance Service Corporation Number of Shares Held (Thousands) Percentage of Total Shares Outstanding 48,574 49.87% 3,902 2,983 2,431 2,353 1,664 1,600 4.01% 3.06% 2.50% 2.42% 1.71% 1.64% 1,558 1.60% 1,513 1.55% Domestic Companies 52.13% Securities Companies 0.91% Individuals and Others 5.80% Foreign Investors 29.75% BNYM SA/NV FOR BNYM FOR BNYM GCM CLIENT ACCTS M ILM FE Toshiba Plant Systems & Services Employees’ Shareholding Association THE BANK OF NEW YORK MELLON 140051 1,209 1.24% Total of 10 shareholders 67,791 69.59% Corporate Data As of June 20, 2019 SENIOR MANAGEMENT AND CORPORATE AUDITORS DOMESTIC OFFICES President and Chief Executive Officer, Representative Director Koichi Harazono Tsurumi Office (Head Office) 4-36-5, Tsurumichuo, Tsurumi-ku, Yokohama City, Kanagawa 230-8691 Tel: +81-45-500-7050 Kawasaki Solid Square Office 580, Horikawa-cho, Saiwai-ku, Kawasaki City, Kanagawa 212-0013 Tel: +81-50-3180-4424 Executive Vice Presidents and Directors Koichi Kamei Yasuo Yamazaki Kawasaki Office 1310, Omiya-cho, Saiwai-ku, Kawasaki City, Kanagawa 212-8551 Tel: +81-44-548-7777 Isogo Office 8, Shinsugita-cho, Isogo-ku, Yokohama City, Kanagawa 235-8523 Tel: +81-45-769-1216 Senior Vice President and Director Masayuki Kitabayashi Vice Presidents and Directors Kazunori Tsuruhara Kohji Shiotsuki Kazuhiro Uchino Nobuyuki Tada Director Yoshikatsu Tanaka Outside Directors Kishiko Wada Yoshikazu Yokoyama Executive Officers Yoshiteru Yamamoto Noriyoshi Kobayashi Shizuhiro Kondo Shinji Hayashi Tomoki Terasawa Toshinobu Nakajo Takashi Mochizuki Nobuyuki Tomizawa Toshimitsu Yoshida Yukio Ohmae Statutory Auditors Takehisa Uchiyama Tomohiko Yabu Takashi Ishii Yoji Goso SUBSIDIARIES AND AFFILIATES Domestic Overseas SHIBAURA PLANT CORP. 8, Shinsugita-cho, Isogo-ku, Yokohama City, Kanagawa 235-8523 Tel: +81-45-769-1410 KANSAI TOSHIBA ENGINEERING CORP. 2-6-8, Honcho, Chuo-ku, Osaka 541-0053 Tel: +81-6-6252-6344 TOSHIBA ENGINEERING SERVICE CORP. 580, Horikawa-cho, Saiwai-ku, Kawasaki City, Kanagawa 212-0013 Tel: +81-50-3180-4338 VEGENOVA CORP. 1-2-1 Furukawa, Kazo-City, Saitama 347-0004 Tel: +81-50-3191-5040 PT. TPSC ENGINEERING INDONESIA SATRIO TOWER 13th Floor Unit 8, Jl. Prof. Dr. Satrio, Blok C4 Kav. 1-4, Jakarta Selatan 12950, Indonesia Tel: +62-21-2598-3050 / 3051 Fax: +62-21-2598-3910 TPSC (INDIA) PRIVATE LIMITED A-1 Module, D-Quadrant, 2nd & 3rd Floor, Cyber Towers, Hitec City, Madhapur, Hyderabad 500081, India Tel: +91-40-2311-0601 / 0602 / 0603 / 0604 / 0605 Fax: +91-40-2311-0600 TPSC ENGINEERING (MALAYSIA) SDN. BHD. Level 9, Center Point Mid-Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia Tel: +60-3-2282-1257 Fax: +60-3-2282-1258 TOSPLANT ENGINEERING (THAILAND) CO., LTD. 15th Floor, Room No. 1501-04, Q House (Asoke) Building, 66 Sukhumvit 21 (Asoke) Road, North Klongtoey Subdistrict Wattana District, Bangkok 10110, Thailand Tel: +66-2-264-2515 / 2516 / 2517 Fax: +66-2-264-2518 TPSC (THAILAND) CO., LTD. No.66 Q House (Asoke), 15th-16th Floor, Room 1514-15 and 1603, Sukhumvit 21 (Asoke) Road, Kwaeng North Klongtoey Khet Wattana, Bangkok 10110, Thailand Tel: +66-2-664-4204 / 4205 Fax: +66-2-664-4206 TPSC US CORPORATION 3735 Glen Lake Dr. Suite 200 Charlotte, NC 28208, USA Tel: + 1-704-548-7971 Fax: +1- 704-548-7779 TPSC (VIETNAM) CO., LTD. Room 1004, 10th Floor, HCO Building, 44B Ly Thuong Kiet Street, Hoan Kiem Dist, Hanoi, Vietnam Tel: +84-24-3936-4051 / 4052 Fax: +84-24-3936-4053 TPSC PHILIPPINES CORPORATION Unit 1603, 88 Corporate Center, 141 Valero St., Salcedo Village, 1209 Makati City, Metro Manila, Philippines Tel: +63-2-625-5834 Fax: +63-2-625-5824 47 A n n u a l R e p o r t 2 0 1 9 4-36-5, Tsurumichuo, Tsurumi-ku, Yokohama City, Kanagawa 230-8691, Japan Tel: +81-45-500-7050 https://www.toshiba-tpsc.co.jp/english/