ANNUAL REPORT FOR THE YEAR ENDE
D M
ARC
H 31
, 2018
KobelcoEco-Solutionsgroup(the“Group”)consistsoftheParentCompany,KobelcoEco-SolutionsCo.,Ltd.,(the“Company”)andnineteensubsidiaries.InadditiontothemanufactureandsaleofproductsusedintheWaterTreatmentAssociatedBusiness,theWasteTreatmentAssociatedBusinessandtheChemicalandFoodMachineAssociatedBusiness,theGroupisinvolvedinprovidingafter-saleservicesintheirrespectivefields.WaterTreatmentAssociatedBusinessThe WaterTreatmentAssociated BusinessconsistsofKobelco Eco-SolutionsCo.,Ltd.and two subsidiaries.The mainproductsintheWaterTreatmentAssociatedBusinessarefacilitiesandequipmentforindustrialwastewater,watersupplysystemsandsewagesystems,processingequipmentforultrapurewater,waterpurification,industrialwasteandgeneralwastewater,recyclingequipmentfororganicwastesuchassewagesludgeandfoodproductsandcoolingtowersforindustrialapplicationsandair-conditioning.ThemainsubsidiariesareKobelcoEco-MaintenanceCo.,Ltd.andKobelcoEco-SolutionsVietnam Co.,Ltd.WasteTreatmentAssociatedBusinessTheWasteTreatmentAssociatedBusinessconsistsofKobelcoEco-SolutionsCo.,Ltd.andfourteensubsidiaries.Themainproductsin the Waste TreatmentAssociated Business are incinerating and melting equipmentforcity waste,recyclingequipmentforbulkywasteanddiscardedelectronicsandPCB detoxificationtreatmentfacilities.ThemainsubsidiariesareKobelcoEco-MaintenanceCo.,Ltd.,E.R.C.TakajoCo.,Ltd.,ToyotaEnvironmentServicesCo.,Ltd.,KakogawaEnvironmentServicesCo.,Ltd.andFukuiGreenPowerCo.,Ltd.ChemicalandFoodMachineAssociatedBusinessTheChemicalandFoodMachineAssociatedBusinessconsistsofKobelcoEco-SolutionsCo.,Ltd.andonesubsidiary.Themain productsin the Chemicaland Food Machine Associated Business are equipmentforchemicalindustries,powdermaterials,brewingindustriesandhydrogen-oxygengenerators.ThemainsubsidiaryisKobelcoEco-SolutionsVietnam Co.,Ltd.
YearsendedMarch31Millionsofyen
ThousandsofU.S.dollars(Note1)
2018 2017 2016 2018
Netsales ¥78,766 ¥78,698 ¥83,005 $741,397WaterTreatmentAssociatedBusiness 33,404 33,447 35,205 314,420WasteTreatmentAssociatedBusiness 36,568 37,175 41,601 344,202ChemicalandFoodMachineAssociatedBusiness 8,845 8,786 6,860 83,255Corporateandeliminations (51) (710) (661) (480)Segmentincome(loss) 3,849 3,011 3,624 36,229WaterTreatmentAssociatedBusiness 402 61 220 3,784WasteTreatmentAssociatedBusiness 2,972 2,421 3,306 27,974ChemicalandFoodMachineAssociatedBusiness 1,233 814 277 11,606Corporateandeliminations (758) (285) (179) (7,135)Incomebeforeincometaxes 3,849 3,011 3,624 36,229Netincomeattributabletoownersoftheparent 2,546 2,062 2,219 23,965Depreciation 1,552 1,525 1,805 14,608Capitalexpenditures 754 1,422 3,983 7,097Researchanddevelopmentexpenses 1,522 1,422 1,293 14,326Totalassets 71,750 69,713 73,980 675,358Netassets 25,661 23,812 22,261 241,538
Persharedata (Yen) (U.S.dollars)Netincome* ¥158.00 ¥127.92 ¥137.70 $1.49Netassets* 1,585.49 1,472.65 1,378.26 14.92Cashdividends 45.00 9.00 9.00 0.42
*TheCompanycarriedouta5-to-1shareconsolidationofitscommonstockeffectiveOctober1,2017.*TheCompanyNetincomepershareandnetassetspersharearecalculatedwiththeassumptionthattheconsolidationofshareswasconductedatthebeginningof2016.
1
DuringthefiscalyearendedMarch31,2018,theJapaneseeconomyremainedonamoderaterecoverypathowingtoeconomicmeasuresthatincludedmonetaryandfiscalpolicies.Capitalinvestmentslightlyincreasedintheprivatesectorandremainedconstantinthepublicsector.Althoughtheoverseaseconomycontinuedtorecover,itbecameincreasinglynecessarytopayattentiontotheeconomicoutlook,theimpactofuncertaintyconcerning economicpoliciesand fluctuationsin the financialand capitalmarketsmainlyin China and theemergingcountriesinAsia.WithregardtothebusinessenvironmentsurroundingourGroupofcompanies,domesticinvestmentinthepublicsectorrelated to the WaterTreatmentAssociated Business and the Waste TreatmentAssociated Businesspromotedpublic-privatepartnershipprojectsthatutilizedthefundingandexpertiseoftheprivatesector.Atthesame time,the value oftechnology used to convertwaste into renewable energy was being increasinglyrecognized.Owingtoimprovementsincorporateearnings,domesticinvestmentsintheprivatesectorrelatedtotheWaterTreatmentAssociatedBusinessandtheChemicalandFoodMachineAssociatedBusinesscontinuedtopromoteprojectsfortherenewalofagingfacilitiesandtherenovationofequipmenttomaintainandenhanceproductivityandbusinessesingrowthareas.Underthesecircumstances,theGrouphasexpandeditsbusinessinlinewiththemeasuresoutlinedinthe
basicpoliciesofthefive-year,medium-term managementplan(from fiscalyear2016through2020),including(1)“Renovation ofcore businesses,”(2)“Steadyexpansion in overseasmarketsand new businesses”and (3)“StrengtheningcoordinationwiththeKobeSteelGroup.”
Overall,theconsolidatedresultsforthefiscalyearsawordersdecline25,872millionyento75,132millionyen(a25.6% decrease)from thepreviousterm,duringwhichanumberoforderswerereceivedforlargeprojects.Saleswere78,766millionyen,similartothoseofthepreviousterm.Duemainlytocostreductions,operatingincomeincreased830millionyento3,814millionyenfrom thepreviousyear,ordinaryincomeincreased838millionyento3,849millionyen,andnetincomeattributabletotheownersoftheparentincreased481millionyento2,546millionyen.
June2018
TsuyoshiKasuyaPresident
2
Water Treatment Associated BusinessIntheWaterTreatmentAssociatedBusiness,weimplementedpowergenerationprojectsthatutilizedigestiongasgenerated
from multiplesewagetreatmentfacilities.Theseprojectsarepositionedandpromotedaslong-term ventures.Overseas,wesecuredordersforadvancedwatercleaningfacilitiesforawatersupplyprojectinVietnam andwatercleaning
facilitiesforawaterandsewertreatmentsystem inMyanmar.Asforthefinancialandoperatingresults,ordersincreasedyear-on-year3,103millionyento38,228millionyen.Sales
remainedonparwiththepreviousterm at33,404millionyen,andordinaryincomerosefrom 341millionyento402millionyen.
Theconditionofthebusinessesinourgroupisasfollows:
SewageTreatmentFacilitiesinMyanmar
AdvancedTwo−stageIncinerator
CoolingTower MembraneBio-reactor(MBR)
3
Chemical and Food Machine Associated Business
Waste Treatment Associated BusinessIntheWasteTreatmentAssociatedBusiness,wecommencedthelong-term comprehensivemanagementofmunicipalsolid
wastetreatmentfacilitiesinYamanashiandMiyagiPrefecturesandrenovatedthemainequipmentatmunicipalsolidwastetreatmentfacilitiesinHiroshimaPrefecture.Asforthefinancialandoperatingresults,ordersdecreasedyear-on-year30,487millionyento26,161millionyen.Salesremainedsimilartothepreviousterm at36,568millionyenandordinaryincomeincreased551millionyento2,972millionyen.
TheChemicalandFoodMachineAssociatedBusinessremainedfirm mainlybyimprovementsinplantoperationratesandcostreductionsthroughmeasuressuchasstrengtheningourmanufacturingcapabilitiesandfinancingcapitalinvestmentandequipmentrepairswithhigherdomesticearnings.Additionally,westartedsellingglass-linedstandardreactors(WS-R)thatachieveabalancebetweenlowpriceandhighqualityandenablepromptdelivery.Asforthefinancialandoperatingresults,ordersincreasedyear-on-year1,481millionyento10,771millionyen.Sales
remainedsimilartothepreviousterm at8,845millionyenandordinaryincomerose419millionyento1,233millionyen.
WasteTreatmentFacilityinMiyagiPrefecture PCBWasteTreatmentFacility
GlasslinedEquipment LongDucPlant
4
CONSOLIDATEDBALANCESHEETSKobelcoEco-SolutionsCo.,Ltd.anditsConsolidatedSubsidiariesAsofMarch31,2018and2017
Assets
MillionsofyenThousandsofU.S.dollars(Note1)
2018 2017 2018
Currentassets:Cashandcashequivalents(Note5)・・・・・・・・・・・・ ¥ 2,563 ¥ 2,019 $ 24,125
Notesandaccountsreceivable(Notes5and11):Trade・・・・・・・・・・・・・・・・・・・・・・・ 37,844 38,097 356,213Electronicallyrecordedmonetaryclaims・・・・・・・・・ 1,064 1,418 10,015Short-termloansreceivable・・・・・・・・・・・・・・ 3,695 1,458 34,780Other・・・・・・・・・・・・・・・・・・・・・・・ 951 578 8,951Allowancefordoubtfulreceivables・・・・・・・・・・・ (77) (80) (725)
43,477 41,471 409,234
Inventories(Note3)・・・・・・・・・・・・・・・・・・ 3,233 2,745 30,431Deferredincometaxes(Note13)・・・・・・・・・・・・ 2,798 2,483 26,337Other・・・・・・・・・・・・・・・・・・・・・・・・ 486 662 4,574Totalcurrentassets・・・・・・・・・・・・・・・・・ 52,557 49,380 494,701
Property,plantandequipment(Note4):Land ・・・・・・・・・・・・・・・・・・・・・・・・ 3,634 3,682 34,205Buildingsandstructures・・・・・・・・・・・・・・・・ 17,423 17,316 163,997Machineryandequipment・・・・・・・・・・・・・・・・ 14,147 13,970 133,161Constructioninprogress・・・・・・・・・・・・・・・・ 269 69 2,532
35,473 35,037 333,895Lessaccumulateddepreciation・・・・・・・・・・・・・・ (21,018) (19,740) (197,835)Totalproperty,plantandequipment・・・・・・・・・・ 14,455 15,297 136,060
Intangibleassets(Note4)・・・・・・・・・・・・・・・・ 619 638 5,826
Investmentsandotherassets:Investmentinsecurities(Notes5and6)・・・・・・・・・ 480 592 4,518Investmentinunconsolidatedsubsidiariesandaffiliates(Notes5and6) 123 430 1,158Deferredincometaxes(Note13)・・・・・・・・・・・・ 1,610 1,462 15,154Netdefinedbenefitasset(Note9)・・・・・・・・・・・・ 1,340 1,301 12,613Other・・・・・・・・・・・・・・・・・・・・・・・・ 696 743 6,551Allowancefordoubtfulreceivables・・・・・・・・・・・・ (130) (130) (1,223)Totalinvestmentsandotherassets・・・・・・・・・・・ 4,119 4,398 38,771
Totalassets・・・・・・・・・・・・・・・・・・・・・・ ¥ 71,750 ¥ 69,713 $ 675,358
Seeaccompanyingnotes.
5
LiabilitiesandNetAssets
MillionsofyenThousandsofU.S.dollars(Note1)
2018 2017 2018
Currentliabilities:Short-termborrowings(Notes5,7and11)・・・・・・・・ ¥ 331 ¥ 2,374 $ 3,116Long-termdebtduewithinoneyear(Notes5and7)・・・ 316 115 2,974Notesandaccountspayable(Note5):Trade・・・・・・・・・・・・・・・・・・・・・・・ 11,054 20,692 104,048Electronicallyrecordedobligations・・・・・・・・・・・ 12,257 - 115,371Construction ・・・・・・・・・・・・・・・・・・・・ 243 421 2,287Unconsolidatedsubsidiaries・・・・・・・・・・・・・・ 31 109 292Other・・・・・・・・・・・・・・・・・・・・・・・ 1,004 842 9,450
24,589 22,064 231,448
Advancesfromcustomers・・・・・・・・・・・・・・・・ 1,559 1,293 14,674Incomeandenterprisetaxespayable(Note5)・・・・・・・ 1,729 969 16,274Accruedexpenses・・・・・・・・・・・・・・・・・・・ 2,605 2,404 24,520Provisionforproductwarranties・・・・・・・・・・・・・ 3,548 4,044 33,396Reserveforlossonconstructioncontracts・・・・・・・・・ 630 100 5,930Other・・・・・・・・・・・・・・・・・・・・・・・・ 959 2,750 9,027Totalcurrentliabilities・・・・・・・・・・・・・・・・ 36,266 36,113 341,359
Long-term liabilities:Long-termdebt(Notes5and7)・・・・・・・・・・・・・ 3,281 3,597 30,883Netdefinedbenefitliability(Note9)・・・・・・・・・・・ 5,779 5,347 54,396Assetretirementobligations・・・・・・・・・・・・・・・ 457 455 4,302Other・・・・・・・・・・・・・・・・・・・・・・・・ 306 389 2,880Totallong-termliabilities・・・・・・・・・・・・・・・ 9,823 9,788 92,461
Netassets(Note10):Stockholders’equity:CommonstockAuthorized- 64,000,000sharesIssued- 16,120,000shares ・・・・・・・・・・・・・ 6,020 6,020 56,664Capitalsurplus・・・・・・・・・・・・・・・・・・・・ 3,332 3,332 31,363Retainedearnings・・・・・・・・・・・・・・・・・・・ 16,482 14,669 155,139Lesstreasurystock ・・・・・・・・・・・・・・・・・・ (6) (6) (56)Totalstockholders’equity・・・・・・・・・・・・・・・ 25,828 24,015 243,110
Accumulatedothercomprehensiveincome(Note14):Unrealizedgainsonsecurities,netoftaxes・・・・・・・・ 138 137 1,299Unrealizedlosses(gains)onhedgingderivatives,netoftaxes (8) 4 (75)Foreigncurrencytranslationadjustments ・・・・・・・・・ 38 59 357Remeasurementsofdefinedbenefitplans,netoftaxes・・・ (444) (482) (4,179)Totalaccumulatedothercomprehensiveincome・・・・・ (276) (282) (2,598)
Non-controllinginterests・・・・・・・・・・・・・・・・・ 109 79 1,026Totalnetassets ・・・・・・・・・・・・・・・・・・・・ 25,661 23,812 241,538Totalliabilitiesandnetassets・・・・・・・・・・・・・・ ¥ 71,750 ¥ 69,713 $ 675,358
Seeaccompanyingnotes.
6
CONSOLIDATEDSTATEMENTSOFINCOMEKobelcoEco-SolutionsCo.,Ltd.anditsConsolidatedSubsidiariesYearsendedMarch31,2018and2017
MillionsofyenThousandsofU.S.dollars(Note1)
2018 2017 2018
Netsales(Note11)・・・・・・・・・・・・・・・・・・・ ¥ 78,766 ¥ 78,698 $ 741,397Costofsales・・・・・・・・・・・・・・・・・・・・・・ 65,474 66,257 616,284Grossprofit・・・・・・・・・・・・・・・・・・・・・ 13,292 12,441 125,113
Selling,generalandadministrativeexpenses(Note12)・・・ 9,478 9,457 89,213Operatingincome・・・・・・・・・・・・・・・・・・・ 3,814 2,984 35,900
Otherincome(expenses):Interestanddividendincome(Note11)・・・・・・・・・・ 27 28 254Interestexpense(Note11)・・・・・・・・・・・・・・・ (50) (51) (471)Lossonsalesanddisposalsofproperty,plantandequipment (5) (13) (47)Gainonsalesofinvestmentsecurities(Note6)・・・・・・ 50 18 471Other,net・・・・・・・・・・・・・・・・・・・・・・ 13 45 122Ordinaryincome・・・・・・・・・・・・・・・・・・・・ 3,849 3,011 36,229Incomebeforeincometaxes・・・・・・・・・・・・・・・ 3,849 3,011 36,229
Incometaxes(Note13):Current・・・・・・・・・・・・・・・・・・・・・・・ 1,747 998 16,444Deferred・・・・・・・・・・・・・・・・・・・・・・・ (475) (79) (4,471)
Netincomeattributabletonon-controllinginterests・・・・ 31 30 292Netincomeattributabletoownersoftheparent・・・・・・ ¥ 2,546 ¥ 2,062 $ 23,964
Amountspershare: Yen U.S.dollars
Netincome*・・・・・・・・・・・・・・・・・・・・・ ¥ 158.00 ¥ 127.92 $ 1,49Cashdividendsapplicabletotheyear・・・・・・・・・・ 45.00 9.00 0.42
*TheCompanycarriedouta5-to-1shareconsolidationofitscommonstockeffectiveOctober1,2017.*TheCompanyNetincomepershareiscalculatedwiththeassumptionthattheconsolidationofshareswasconductedatthebeginningof2017.
Seeaccompanyingnotes.
7
CONSOLIDATEDSTATEMENTSOFCOMPREHENSIVEINCOMEKobelcoEco-SolutionsCo.,Ltd.anditsConsolidatedSubsidiariesYearsendedMarch31,2018and2017
MillionsofyenThousandsofU.S.dollars(Note1)
2018 2017 2018
Netincome ・・・・・・・・・・・・・・・・・・・・・・ ¥ 2,577 ¥ 2,092 $ 24,256
Othercomprehensiveincome(Note14):Unrealizedgainsonsecurities,netoftaxes・・・・・・・・ 1 10 9Unrealizedlosses(gains)onhedgingderivatives,netoftaxes (12) 7 (113)Foreigncurrencytranslationadjustments ・・・・・・・・・ (21) (13) (197)Remeasurementsofdefinedbenefitplans・・・・・・・・・ 38 181 358Totalothercomprehensiveincome・・・・・・・・・・・ 6 185 57
Comprehensiveincome・・・・・・・・・・・・・・・・・ 2,583 2,277 24,313
Comprehensiveincomeattributableto:Ownersoftheparent・・・・・・・・・・・・・・・・・ 2,552 2,247 24,021Non-controllinginterests・・・・・・・・・・・・・・・・ ¥ 31 ¥ 30 $ 292
Seeaccompanyingnotes.
8
CONSOLIDATEDSTATEMENTSOFCHANGESINNETASSETSKobelcoEco-SolutionsCo.,Ltd.anditsConsolidatedSubsidiariesYearsendedMarch31,2018and2017
Millionsofyen
Numberofsharesofcommonstock
Commonstock
Capitalsurplus
Retainedearnings
Treasurystock
Unrealizedgainsonsecurities,netoftaxes
Unrealizedgains(losses)onhedgingderivatives,netoftaxes
Foreigncurrencytranslationadjustments
Remeasurementsofdefinedbenefitplans,netoftaxes
Non-controllinginterests
Total
NetassetsatApril1,2016 80,600,000 ¥6,020 ¥3,332 ¥13,333 ¥(6) ¥127 ¥(3) ¥72 ¥(663) ¥49 ¥22,261Cashdividendspaid (726) (726)Netincomeattributabletoownersoftheparent 2,062 2,062Purchaseoftreasurystock (0) (0)Changesinstockholders’interestduetotransactionswithnon-controllinginterestsChangesinscopeofconsolidationNetchangesinitemsotherthanstockholders’equity 10 7 (13) 181 30 215
BalanceatMarch31,2017 80,600,000 ¥6,020 ¥3,332 ¥14,669 ¥(6) ¥137 ¥4 ¥59 ¥(482) ¥79 ¥23,812
Millionsofyen
Numberofsharesofcommonstock
Commonstock
Capitalsurplus
Retainedearnings
Treasurystock
Unrealizedgainsonsecurities,netoftaxes
Unrealizedgains(losses)onhedgingderivatives,netoftaxes
Foreigncurrencytranslationadjustments
Remeasurementsofdefinedbenefitplans,netoftaxes
Non-controllinginterests
Total
NetassetsatApril1,2017 16,120,000 ¥6,020 ¥3,332 ¥14,669 ¥(6) ¥137 ¥4 ¥59 ¥(482) ¥79 ¥23,812Cashdividendspaid (725) (725)Netincomeattributabletoownersoftheparent 2,546 2,546Purchaseoftreasurystock (0)Changesinstockholders’interestduetotransactionswithnon-controllinginterestsChangesinscopeofconsolidation (8) (8)Netchangesinitemsotherthanstockholders’equity 1 (12) (21) 38 30 36
BalanceatMarch31,2018 16,120,000 ¥6,020 ¥3,332 ¥16,482 ¥(6) ¥138 ¥(8) ¥38 ¥(444) ¥109 ¥25,661
ThousandsofU.S.dollars(Note1)
Numberofsharesofcommonstock
Commonstock
Capitalsurplus
Retainedearnings
Treasurystock
Unrealizedgainsonsecurities,netoftaxes
Unrealizedgains(losses)onhedgingderivatives,netoftaxes
Foreigncurrencytranslationadjustments
Remeasurementsofdefinedbenefitplans,netoftaxes
Non-controllinginterests
Total
NetassetsatApril1,2017 16,120,000 $56,664 $31,363 $138,073 $(56) $1,290 $38 $555 $(4,537) $744 $224,134Cashdividendspaid (6,824) (6,824)Netincomeattributabletoownersoftheparent 23,965 23,965Purchaseoftreasurystock (0) (0)Changesinstockholders’interestduetotransactionswithnon-controllinginterestsChangesinscopeofconsolidation (75) (75)Netchangesinitemsotherthanstockholders’equity 9 (113) (198) 358 282 338
BalanceatMarch31,2018 16,120,000 $56,664 $31,363 $155,139 $(56) $1,299 $(75) $357 $(4,179) $1,026 $241,538
Seeaccompanyingnotes.
9
CONSOLIDATEDSTATEMENTSOFCASHFLOWSKobelcoEco-SolutionsCo.,Ltd.anditsConsolidatedSubsidiariesYearsendedMarch31,2018and2017
MillionsofyenThousandsofU.S.dollars(Note1)
2018 2017 2018
Cashflowsfrom operatingactivities:Incomebeforeincometaxes ・・・・・・・・・・・・・・ ¥ 3,849 ¥ 3,011 $ 36,229
Adjustmentstoreconcileincomebeforeincometaxestonetcashprovidedby(usedin)operatingactivities:Depreciation ・・・・・・・・・・・・・・・・・・・・・ 1,552 1,525 14,608Interestanddividendincome・・・・・・・・・・・・・・ (27) (28) (254)Interestexpense・・・・・・・・・・・・・・・・・・・・ 50 51 471Lossonsalesanddisposalsofproperty,plantandequipment 2 13 19Decrease(increase)inprovisionforproductwarranties・・・ (494) 710 (4,650)Increaseanddecreaseinnetdefinedbenefitassetandliability 444 393 4,179Decrease(increase)intradereceivables・・・・・・・・・・ 859 3,554 8,086Decrease(increase)ininventories・・・・・・・・・・・・ (492) 407 (4,631)Increase(decrease)intradepayables・・・・・・・・・・・ 2,755 (6,439) 25,932Other・・・・・・・・・・・・・・・・・・・・・・・・ (1,361) 2,672 (12,811)Subtotal・・・・・・・・・・・・・・・・・・・・・・ 7,137 5,869 67,178Interestanddividendsreceived ・・・・・・・・・・・・・ 27 28 254Interestpaid ・・・・・・・・・・・・・・・・・・・・・ (50) (51) (470)Incometaxespaid・・・・・・・・・・・・・・・・・・・ (1,008) (736) (9,488)Netcashprovidedby(usedin)operatingactivities・・・・ 6,106 5,110 57,474
Cashflowsfrom investingactivities:Increase(decrease)inshort-termloansreceivable・・・・・・ (2,237) 912 (21,056)Collectionoflong-termloansreceivable ・・・・・・・・・ 1 6 9Paymentsforpurchasesofproperty,plantandequipment・・ (651) (1,685) (6,128)Paymentsforpurchasesofintangiblefixedassets・・・・・ (166) (207) (1,562)Paymentsforpurchasesofinvestmentsecurities・・・・・・ - (320) -Proceedsfromsalesofinvestmentsecurities・・・・・・・・ 162 58 1,525Other・・・・・・・・・・・・・・・・・・・・・・・・ (3) (15) (28)Netcashusedininvestingactivities・・・・・・・・・・ (2,894) (1,251) (27,240)
Cashflowsfrom financingactivities:Increase(decrease)inshort-termborrowings・・・・・・・・ (2,024) (5,131) (19,051)Proceedsfromlong-termdebt・・・・・・・・・・・・・・ - 2,683 -Cashdividendspaid・・・・・・・・・・・・・・・・・・ (726) (725) (6,834)Other・・・・・・・・・・・・・・・・・・・・・・・・ (199) (85) (1,873)Netcashprovidedby(usedin)financingactivities・・・・ (2,949) (3,258) (27,758)
Effectofexchangeratechangesoncashandcashequivalents (20) 7 (188)Increaseincashandcashequivalents・・・・・・・・・・ 243 608 2,288Cashandcashequivalentsatbeginningofyear・・・・・・ 2,019 1,411 19,004Increaseincashandcashequivalentsfrom newlyconsolidatedsubsidiary 301 - 2,833Cashandcashequivalentsatendofyear ・・・・・・・・ ¥ 2,563 ¥ 2,019 $ 24,125
Seeaccompanyingnotes.
10
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS
1.BasisofPresentingConsolidatedFinancialStatements―――――――――――――TheaccompanyingconsolidatedfinancialstatementshavebeenpreparedinaccordancewiththeprovisionssetforthintheJapaneseFinancialInstrumentsandExchangeLaw andits related accounting regulations and in conformity withaccountingprinciplesgenerallyacceptedinJapan(“JapaneseGAAP”),which are different in certain respects as toapplication and disclosure requirements from InternationalFinancialReportingStandards.
Theaccompanyingconsolidatedfinancialstatementshavebeen restructured and translated into English with someexpanded descriptions and the inclusion ofconsolidatedstatements ofstockholders’equity from the consolidatedfinancialstatements of Kobelco Eco-Solutions Co., Ltd.preparedinaccordancewithJapaneseGAAPandfiledwiththe appropriate LocalFinance Bureau ofthe Ministry ofFinance as required by the Financial Instruments andExchangeLaw.Somesupplementaryinformationincludedinthe statutory Japanese language consolidated financialstatements,butnotrequired forfairpresentation,is notpresented in the accompanying consolidated financialstatements.
The translation ofthe Japanese yen amountsinto U.S.dollaramounts is included solely forthe convenience ofreadersoutsideJapan,usingtheprevailingexchangerateatMarch 31,2018,which was¥106.24 to U.S.$1.00.ThetranslationsshouldnotbeconstruedasrepresentationsthattheJapaneseyenamountshavebeen,couldhavebeenorcouldinthefuturebeconvertedintoU.S.dollarsatthisoranyotherrateofexchange.
2.SummaryofAccountingPolicies―――――――TheconsolidatedfinancialstatementsincludetheaccountsoftheCompanyanditsfifteen(fourteenin2017)significantmajority-ownedsubsidiaries(the“Companies”).Intercompanytransactionsandaccountshavebeeneliminated.The Company does not account for unconsolidated
subsidiariesusingtheequitymethodbecausedoingsowouldnothave a materialaffecton the consolidated financialstatements.Intheeliminationofinvestmentsinsubsidiaries,the assetsand liabilitiesofthe subsidiaries,including theportion attributable to non-controlling stockholders, areevaluated using the fairvalue atthe time the Companyacquired the control of the respective subsidiary. Thedifference,ifconsideredsignificant,betweenthecostoftheinvestmentandtheequityinthenetassetsatthedateofacquisitionisamortizedoveranestimatednumberofyearswhentheamortizationperiodcanbeestimatedoroverfiveyears.When the difference is small,itis recognized asexpensewhenincurred.
CashandCashEquivalentsIn preparing the consolidated statementsofcash flows,cash on hand,readily available deposits and short-termhighlyliquidinvestmentswithmaturitiesnotexceedingthreemonthsatthetimeofpurchaseareconsideredtobecashandcashequivalents.
AllowanceforDoubtfulAccountsReceivablesTheallowancefordoubtfulaccountsreceivablesisprovidedin amounts considered to be sufficientto coverpossiblelossesoncollection.Withrespecttonormaltradeaccountsreceivable,the allowance isbased on the actualrate ofhistoricalbad debts.Forcertain doubtfulreceivables,theuncollectibleamountisindividuallyestimated.
InventoriesWork-in-process is stated at specific identified cost.
Merchandiseandfinishedgoods,raw materialsandsuppliesarestatedataveragecost.TheCompanieswritedownthevalue ofinventory based on decreases in profitability tocalculatetheinventoryvalueonthebalancesheets.
Property,PlantandEquipmentProperty,plantand equipmentare carried atcostlessaccumulated depreciation and accumulated impairment.Depreciation is computed mainly using the straight-linemethod overthe estimated usefullife ofthe assetinaccordancewithtaxlaws.
SoftwareCostsTheCompaniesincludeinternalusesoftwareinintangibleassetsandamortizeitusingthestraight-linemethodovertheestimatedusefullifeoffiveyears.
LeasesDepreciationforleaseassetsiscomputedbythestraight-linemethodovertheterm oftheleasewitharesidualvalueofzero.
MarketableSecuritiesandInvestmentsinSecuritiesAvailable-for-salesecuritieswithavailablefairmarketvaluesare stated atfair marketvalue.Unrealized gains andunrealized losseson these securitiesare reported,netofapplicable income taxes, as a separate component ofstockholders’equity.Realized gains on the sale ofsuchsecuritiesarecomputedusingmovingaveragecost.Available-for-salesecuritieswithnoavailablefairmarketvaluesarestatedatmovingaveragecost.
HedgeAccountingThe Companies deferrecognition ofgains and lossesresultingfrom changesinthefairvalueofderivativefinancialinstrumentsuntiltherelatedlossesandgainsonthehedgeditems are recognized. When forward foreign exchange
KobelcoEco-SolutionsCo.,Ltd.anditsConsolidatedSubsidiariesYearsendedMarch31,2018and2017
11
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Merchandiseandfinishedgoods ¥18 ¥16 $170Work-in-process 2,269 1,647 21,357Rawmaterialsandsupplies 946 1,082 8,904Total ¥3,233 ¥2,745 $30,431
contractsmeetcertain hedging criteria,related transactionsarerecordedusingthecontractedforwardrate.
ProvisionforProductWarrantiesA provision for product warranties provides for the
estimatedfuturecostsarisingfrom therepairorreplacementofproductsaftersale.Theprovisioniscalculatedbasedona percentage ofpastcosts multiplied by the sales ofproductsforthe yearand the estimated costsassociatedwithcertainindividualcontracts.
ReserveforLossonConstructionContractsA reserveforlossonconstructioncontractsprovidesforlossesonconstructioncontractsforuncompletedworkattheendofthefiscalyear.Todeterminetheamountofreserve,the Companies recognize reasonably estimated losses forspecificconstructionorderswhichareexpectedtoresultinlosses.
Employees’SeveranceandRetirementBenefitsThe employee projected benefitobligation is computedprimarilybasedonthestraight-lineattributionstandardusingtheprojectedbenefitobligationattheendoftheconsolidatedfiscalyear.Pastservicecostisamortizedusingthestraight-line method overthe estimated average remaining serviceyearsoftheemployees.Actuarialdifference are amortizedfrom the yearfollowing the yearin which the actuarialdifferenceareincurredusingthestraight-linemethodovertheestimatedaverageremainingserviceyearsoftheemployees.
RevenueRecognitionForconstructioncontractsforwhichtheprogressthroughthefiscalyear-endcanbemeasured,theCompaniesrecordrevenuesbythepercentageofcompletionmethod.Theworkcompletedismeasuredbythepercentageofcostmethod.For other construction contracts, the Companies recordrevenue atthe time ofcompletion using the completedcontractmethod.
ResearchandDevelopmentExpensesExpensesassociatedwiththedevelopmentofnewproductsandresearchintoandtheapplicationofnew technologiesare charged directly to income and loss.Research anddevelopmentexpensesfortheyearsendedMarch31,2018and2017were¥1,522million($14,326thousand)and¥1,422million,respectively.
IncomeTaxesIncome taxes consist of corporation, inhabitants and
enterprisetaxes.TheCompaniesapplydeferredincometaxaccounting to recognize the tax effects of temporarydifferences between the carrying amounts ofassets andliabilitiesfortaxandfinancialreportingpurposes.
TranslationofForeignCurrenciesReceivablesandpayablesdenominatedinforeigncurrencies
are translated into Japanese yen atthe year-end rates.Balance sheets ofconsolidated overseas subsidiaries aretranslatedintoJapaneseyenatyear-endrates,exceptnetassetaccounts,which are translated athistoricalrates.StatementsofincomeofconsolidatedoverseassubsidiariesaretranslatedintoJapaneseyenattheaverageratesfortheperiod. The Company and its domestic consolidatedsubsidiariesreportforeigncurrencytranslationadjustmentsinnetassets.
AmountsPerShareNetincomepershareisbasedontheweightedaveragenumber of shares outstanding during the year. Cashdividendsapplicabletotheyearincludeyear-enddividendsapprovedbythegeneralstockholdersmeetingheldaftertheendofthefiscalyear.Dilutednetincomepershareisnotdisclosed because potentially dilutive securities are notissued.
StandardsandguidancenotyetadoptedThefollowingstandardandguidancewereissuedbutnotyetadopted.“Accounting Standard for Revenue Recognition” (ASBJStatementNo.29,March30,2018)“Implementation Guidance on Accounting Standard forRevenueRecognition”(ASBJGuidance No.30,March 30,2018)a)OverviewThe Accounting Standards Board of Japan (ASBJ)
announcedtheabovestandardandguidancefollowingthemove of The InternationalAccounting Standards Board(IASB)andtheFinancialAccountingStandardsBoard(FASB)in the United Statesthatjointlydeveloped comprehensiveaccountingstandardsforrevenuerecognitionandannounced"Revenuefrom ContractswithCustomers"(IFRS 15intheIASB and Topic 606 in the FASB)in May 2014.ASBJdevelopeditsthestandardandguidancebasedonIFRS15and the basic principle of comparability of financialstatements.ASBJaddedsomealternativeapproachesoutofconsideration fordomestic business practice and withoutdamagingthecomparability.
b)EffectivedateEffective from the beginning ofthe fiscalyearendingMarch31,2022.
c)EffectsoftheapplicationTheCompanyand itsconsolidated domesticsubsidiariesarein the processofdetermining the effectsofthe newstandard and guidance on the consolidated financialstatements.
3.Inventories ―――――――――――――――――InventoriesatMarch31,2018and2017consistedofthefollowing:
12
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Buildingsandstructures ¥326 ¥326 $3,068Machineryandequipment 486 486 4,574Intangibleassets 26 26 245Total ¥838 ¥838 $7,887
March31,2018 MillionsofyenBookvalues Fairvalues Differences
1.Cashandcashequivalents ¥2,563 ¥2,563 -2.Notesandaccountsreceivable-trade 37,844 37,844 -
3.Electronicallyrecordedmonetaryclaims 1,064 1,064 -
4.Short-term loansreceivable 3,695 3,695 -5.Investmentinsecurities 365 365 -Totalassets ¥45,531 ¥45,531 -1.Notesandaccountspayable-trade ¥11,054 ¥11,054 -
2.Electronicallyrecordedobligations 12,257 12,257 ¥(0)
3.Short-term borrowingsandlong-term debtduewithinoneyear
647 647 -
4.Incomeandenterprisetaxespayable 1,729 1,729 -
5.Long-term debt 3,281 3,174 (107)Totalliabilities ¥28,968 ¥28,861 ¥(107)Derivativetransactions ¥(12) ¥(12) -
March31,2017 MillionsofyenBookvalues Fairvalues Differences
1.Cashandcashequivalents ¥2,019 ¥2,019 -2.Notesandaccountsreceivable-trade 38,097 38,097 -
3.Electronicallyrecordedmonetaryclaims 1,418 1,418 -
4.Short-term loansreceivable 1,458 1,458 -5.Investmentinsecurities 308 308 -Totalassets ¥43,300 ¥43,300 -1.Notesandaccountspayable-trade ¥20,692 ¥20,692 -
2.Short-term borrowingsandlong-term debtduewithinoneyear
2,489 2,489 ¥0
3.Incomeandenterprisetaxespayable 969 969 -
4.Long-term debt 3,597 3,511 (86)Totalliabilities ¥27,747 ¥27,661 ¥(86)Derivativetransactions ¥5 ¥5 -
4.ReductionEntriesDuetoStateSubsidies,Etc.―Cumulativereductionentriesduetostatesubsidies,etc.,forthe acquisition of property, plant and equipment andintangibleassetsasofMarch31,2018and2017wereasfollows:
5.FinancialInstruments ――――――――――――a)PoliciesforusingfinancialinstrumentsThe Companies raise funds according to theircapitalbudgets.Short-term financingforoperatingcapitalislimitedto borrowings in accordance with the Cash ManagementSystem (CMS),anefficientfundmanagementsystem oftheKobeSteelGroup.Long-term financingforpurposessuchascapitalinvestment is sourced from financial institutions.Temporarysurplusesoffundsarelimitedtodepositsorloansmade under the CMS in accordance with internalmanagementrules.TheCompaniesenterintoderivativecontractstohedgetherisks discussed below and do notenterinto derivativetransactionsfortradingorspeculativepurposes.
b)FinancialinstrumentsandexposuretoriskAlthough notes and accounts receivable generally havepaymentdateswithinoneyearandaresettledintheshortterm,theyexposetheCompaniestocreditrisk,theriskthatthe customermightdefaulton payment.The Companiesminimizetheirexposuretothecreditriskoftheircustomersatthebusinessdivisionlevelbymonitoringtheduedatesand balances ofreceivables and regularly evaluating thecreditstatusofmajorcustomers.
c)Managingrisks(1)CreditriskmanagementWith regard to operating receivables, the Companies
closely monitor the due dates and balances for eachcustomeratthebusinessdivisionlevel.TheCompaniesseekearly identification of any deterioration in the financialconditionofitscounterpartiesorotherpaymentconcernsandworktoalleviatetheseconcernsthroughreceivablecontrolmanagement, including the implementation of receivablerecoveryschedules.
(2)Marketriskmanagement(exchangeratefluctuationrisk)Forreceivables and liabilities in foreign currencies,theCompaniesgenerallyhedgeagainstexchangeratefluctuationriskbyusingforwardcurrencyexchangecontracts.Forwardcurrency exchange contracts are executed through thefinance division according to the rules governing foreignexchange contracts that set out trading authority andmaximum contractlimits.Tomanageinvestmentsinsecurities,thefinancedivisionregularlyevaluatesmarketpricesandthefinancialstatusoftheissuingcompanies(clientcompanies,etc.).
(3)Managementofliquidityriskrelatedtofinancing(theriskofnotbeingabletomakepaymentbypaymentdeadlines)Liquidityriskismanaged atthe Companiesbycreating
and updating cash flow plans at the finance division,receiving reportsfrom allthe divisionsand maintaining areadyliquidityposition.
d) SupplementalinformationonfairvaluesThefairvalueoffinancialinstrumentsincludesestimatesmade using reasonable methods ofvaluation as wellasquotedmarketprices.Estimatesresultingfrom thesemethodsare subjective in nature and involve uncertainties and,therefore,cannotbedeterminedwithprecision.Changesinassumptions upon which the estimates are made couldsignificantlyaffectthevaluations.The contracted amounts ofthe derivative transactionspresentedinNote8donotreflectexposuretothemarketriskforthederivativeinstrumentsthemselves.
FairValueofFinancialInstrumentsThebookvaluesofthefinancialinstrumentsincludedintheconsolidatedbalancesheetsandtheirfairvaluesatMarch31,2018and2017wereasfollows:
13
March31,2018 ThousandsofU.S.dollars(Note1)Bookvalues Fairvalues Differences
1.Cashandcashequivalents $24,125 $24,125 -2.Notesandaccountsreceivable-trade 356,212 356,212 -
3.Electronicallyrecordedmonetaryclaims 10,015 10,015 -
4.Short-term loansreceivable 34,780 34,780 -5.Investmentinsecurities 3,435 3,435 -Totalassets $428,567 $428,567 -1.Notesandaccountspayable-trade $104,048 $104,048 -
2.Electronicallyrecordedobligations 115,371 115,371 $(0)
3.Short-term borrowingsandlong-term debtduewithinoneyear
6,090 6,090 -
4.Incomeandenterprisetaxespayable 16,274 16,274 -
5.Long-term debt 30,883 29,876 (1,007)Totalliabilities $272,666 $271,659 $(1,007)Derivativetransactions $(113) $(113) -
March31,2018 Millionsofyen ThousandsofU.S.dollars(Note1)
Non-listedequitysecurities ¥115 $1,082Non-listedsecuritiesofsubsidiaries 123 1,158Total ¥238 $2,240
Cashandcashequivalents Millionsofyen ThousandsofU.S.dollars(Note1)
2019 ¥2,563 $24,1252020andthereafter - -Total ¥2,563 $24,125
Notesandaccountsreceivable-trade Millionsofyen ThousandsofU.S.dollars(Note1)
2019 ¥37,844 $356,2122020andthereafter - -Total ¥37,844 $356,212
Electronicallyrecordedmonetaryclaims Millionsofyen ThousandsofU.S.dollars(Note1)
2019 ¥1,064 $10,0152020andthereafter - -Total ¥1,064 $10,015
Short-term loansreceivable Millionsofyen ThousandsofU.S.dollars(Note1)
2019 ¥3,695 $34,7802020andthereafter - -Total ¥3,695 $34,780
Short-term borrowingsandlong-term debtduewithinoneyear Millionsofyen Thousandsof
U.S.dollars(Note1)
2019 ¥647 $6,0902020andthereafter - -Total ¥647 $6,090
Long-term debt Millionsofyen ThousandsofU.S.dollars(Note1)
2019 - -2020 ¥366 $3,4452021 366 3,4452022 366 3,4452023 286 2,6922024andthereafter 1,897 17,856Total ¥3,281 $30,883
Assetsandliabilitiesarisingfrom derivativetransactionsarepresentedasnetamounts,withparentheses()iftheresultisaliability.
MethodsUsedtoEstimatetheFairValueWereasFollows:a)Assets(1)Cashandcashequivalents,notesandaccountsreceivable-trade,electronicallyrecordedmonetaryclaimsandshort-termloansreceivableThecarryingamountofcashandcashequivalents,notesandaccountsreceivable-trade,electronicallyrecordedmonetaryclaimsandshort-termloansreceivableapproximatesfairvaluebecauseoftheshortmaturitiesoftheseinstruments.(2)InvestmentinsecuritiesThefairvalueofinvestmentsinsecuritiesisbasedmainlyonquotedmarketprices.
b)Liabilities(1)Notesandaccountspayable-trade,electronicallyrecordedobligations,short-term borrowings and long-term debtduewithinoneyearandincomeandenterprisetaxespayableThecarryingamountofnotesandaccountspayable-trade,short-term borrowingsandlong-term debtduewithinoneyearand income and enterprise taxespayable approximate fairvaluebecauseoftheshortmaturitiesoftheseinstruments.The fairvalue oflong-term debtdue within one yearisestimatedbasedonthepresentvalueoffuturecashflowsusing the current borrowing rate for similar debt ofcomparablematurity.(2)Long-term debtThefairvalueoflong-term debtisestimatedbasedonthepresent value of future cash flows using the currentborrowingrateforsimilardebtofcomparablematurity.
c)DerivativetransactionsInformationonderivativetransactionsisdescribedinNote8.
Financialinstrumentsforwhichfairvaluewasdifficulttoestimatewereasfollows:
Non-listed equity securities and non-listed securities ofsubsidiarieshave no marketprice and cannotbe reliablyestimated.Therefore,they are notincluded in item 5,“Investmentinsecurities,”intheabovetables.
Theaggregateannualmaturitiesoffinancialassetswereasfollows:
Theaggregateannualmaturitiesofshort-term borrowingsandlong-term debtduewithinoneyearwereasfollows:
Theaggregateannualmaturitiesoflong-term debtwereasfollows:
14
March31,2018 MillionsofyenAcquisitioncost
Book(fair)value Difference
Equitysecurities ¥194 ¥365 ¥171
March31,2017 MillionsofyenAcquisitioncost
Book(fair)value Difference
Equitysecurities ¥194 ¥308 ¥114
March31,2018 ThousandsofU.S.dollars(Note1)Acquisitioncost
Book(fair)value Difference
Equitysecurities $1,826 $3,436 $1,610
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Available-for-salessecuritiesNon-listedequitysecurities ¥115 ¥284 $1,082
March31,2018 Millionsofyen
Sales Gainsonsales
Lossesonsales
Equitysecurities ¥162 ¥50 -
March31,2017 Millionsofyen
Sales Gainsonsales
Lossesonsales
Equitysecurities ¥58 ¥18 -
March31,2018 ThousandsofU.S.dollars(Note1)
Sales Gainsonsales
Lossesonsales
Equitysecurities $1,525 $471 -
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Investmentinunconsolidatedsubsidiaries - ¥200 -Total - ¥200 -
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Bankloans ¥331 ¥2,374 $3,116
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Unsecured:Loansfrom banks,interestrateof0.6%,due2018to2032 ¥3,597 ¥3,712 $33,857
Lessamountsduewithinoneyea 316 115 2,974Total ¥3,281 ¥3,597 $30,883
Lease:Leaseobligations,interestrateof3.7%,due2018to2028 ¥358 ¥435 $3,370
Lessamountsduewithinoneyear 74 77 697Total ¥284 ¥358 $2,673
Long-term debt Millionsofyen ThousandsofU.S.dollars(Note1)
2020 ¥441 $4,1512021 442 4,1602022 406 3,8222023andthereafter 2,277 21,433Total ¥3,566 $33,566
6.Securities――――――――――――――――――a)ThefollowingtablessummarizesecuritieswithavailablefairvaluesasofMarch31,2018and2017.Available-forsalesecuritiesBookvalues(fairvalues)exceedingacquisitioncosts:
b)Thefollowingtablesummarizesbookvaluesofsecuritieswithnoavailablefairvaluesasof March31,2018and2017.
c)Salesofavailable-for-salesecuritiesfortheyearsendedMarch31,2018and2017wereasfollows:
d) Securities pledged as collateral for subsidiaries’maintenanceandmanagementofwastetreatmentfacilities:
Otherthantheabove,securitiesintheamountof¥305million ($2,871 thousand) eliminated in intercompanytransactions were pledged as collateralfor subsidiaries’maintenance and managementofwaste treatmentfacilitiesfortheyearsendedMarch31,2018and2017.
7.Short-term BorrowingsandLong-term DebtShort-term borrowingsatMarch31,2018and2017consistedofthefollowing:
The weighted average interest rate on short-termborrowingsoutstanding atMarch 31,2018 and 2017 was1.7% and1.2%,respectively.
Long-term debtatMarch31,2018and2017consistedofthefollowing:
Theweightedaverageinterestrateonlong-term loansfrombanksoutstandingatMarch31,2018and2017was0.6%and0.6%,respectively.The weighted average interestrate on long-term leaseobligations atMarch 31,2018 and 2017 was 3.7% and3.7%,respectively.
Theaggregateannualmaturitiesoflong-term debtwereasfollows:
8.DerivativeTransactions ―――――――――――The Companies enter into forward currency exchangecontractstohedgetheriskofchangesinforeigncurrencyexchangeratesassociatedwithtransactionsdenominatedinforeign currencies. The Companies do not enter intoderivativetransactionsforspeculativepurposes.
TheCompaniesmaybeexposedtolossfrom fluctuationsinforeigncurrencyexchangerates.However,theCompaniesdo notanticipate any significantcreditrisk because thecounterparties for its derivatives are highly rated majorfinancialinstitutions.
Derivative transactions are made in accordance withinternalregulationsandarereportedtomanagement.
Derivative transactions for which hedge accounting wasappliedForwardcurrencyexchangecontractsoutstandingatMarch
15
March31,2018 Millionsofyen
Foreigncurrencyexchange contracts:
Hedgeditems
Contractedamount
Contractedamount
(overoneyear)Fairvalue
DeferredhedgemethodTobuyforeigncurrencies:U.S.dollars Tradepayables ¥265 ¥23 ¥(11)Euros Tradepayables 26 - (1)
March31,2017 Millionsofyen
Foreigncurrencyexchangecontracts:
Hedgeditems
Contractedamount
Contractedamount
(overoneyear)Fairvalue
DeferredhedgemethodTobuyforeigncurrencies:U.S.dollars Tradepayables ¥209 ¥5 ¥9Tosellforeigncurrencies:U.S.dollars Tradereceivables 41 - (4)AssigningmethodTobuyforeigncurrencies:Euros Tradepayables ¥14 - -
March31,2018 ThousandsofU.S.dollars(Note1)
Foreigncurrencyexchange contracts:
Hedgeditems
Contractedamount
Contractedamount
(overoneyear)Fairvalue
DeferredhedgemethodTobuyforeigncurrencies:U.S.dollars Tradepayables $2,494 $216 $(104)Euros Tradepayables 245 - (9)
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Definedbenefitplans(1)Movementinprojectedbenefitobligations
Balanceatbeginningoftheyear ¥8,528 ¥8,496 $80,271Servicecost 675 690 6,353Interestcost 68 68 640Actuarialdifferences 14 (63) 132Benefitspaid (362) (663) (3,407)
Balanceatendoftheyear ¥8,923 ¥8,528 $83,989
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018(2)MovementsinplanassetsBalanceatbeginningoftheyear ¥4,482 ¥4,576 $42,187Expectedreturnonplanassets 59 57 555
Actuarialdifferences (22) 57 (207)Contributionspaidbytheemployer 126 130 1,186
Benefitspaid (161) (338) (1,515)Balanceatendoftheyear ¥4,484 ¥4,482 $42,206
(3)Reconciliationfrom projectedbenefitobligationsandplanassetstonetdefinedbenefitliabilityandassetFundedprojectedbenefitobligations ¥7,531 ¥7,282 $70,886Planassets (4,484) (4,482) (42,206)
3,047 2,800 28,680Unfundedprojectedbenefitobligations 1,392 1,246 13,103
Totalnetdefinedbenefitliabilityandassetatendoftheyear ¥4,439 ¥4,046 $41,783
Netdefinedbenefitasset (1,340) (1,301) (12,613)Netdefinedbenefitliability 5,779 5,347 54,396
Totalnetdefinedbenefitliabilityandassetatendoftheyear ¥4,439 ¥4,046 $41,783
(4)RetirementbenefitcostsServicecost ¥675 ¥690 $6,354Interestcost 68 68 640Expectedreturnonplanassets (59) (57) (555)Amortizationofactuarialdifferences 100 155 941Amortizationofpastservicecost (9) (9) (85)
Totalretirementbenefitcostsforthefiscalyearendedoftheyear ¥775 ¥847 $7,295
(5)AdjustmentsforretirementbenefitPastservicecost ¥(8) ¥(9) $(75)Actuarialdifferences 63 276 593Total ¥55 ¥267 $518
(6)AccumulatedadjustmentsforretirementbenefitUnrecognizedpastservicecost ¥(11) ¥(20) $(104)Unrecognizedactuarialdifferences 651 715 6,128
Totalbalanceatendoftheyear ¥640 ¥695 $6,024
(7)Planassets1.Planassetscomprise:Generalaccountsoflifeinsurance ¥3,224 ¥3,215 $30,346
Bonds 545 354 5,130Cashandcashequivalents 414 626 3,897Equitysecurities 297 283 2,795Other 4 4 38Total ¥4,484 ¥4,482 $42,206
2.Long-term expectedrateofreturnCurrentandtargetassetallocations,historicalandexpectedreturnsonvariouscategoriesofplanassetshavebeenconsideredindeterminingthelong-term expectedrateofreturn.
2018 2017
Discountrate 0.8%~0.9% 0.8%~0.9%Long-term expectedrateofreturn 1.5% 1.4%
31,2018and2017wereasfollows:
Thefairvalueisrecognizedatthepricepresentedbythefinancialinstitution.
AssigningmethodForcertain accounts receivable denominated in foreigncurrencies forwhich foreign currency exchange contractswereusedtohedgetheforeigncurrencyfluctuations,thefairvalues ofthe foreign currency exchange contracts wereincludedinthefairvaluesofthehedgedaccountsreceivable.
9.Employees’SeveranceandRetirementBenefitsSummaryofadoptedretirementbenefitsThe Companies operate two types ofdefined benefitretirementplans,unfunded lump-sum paymentplans andfunded non-contributorypension plans.The Companyalsooperatesaretirementbenefittrust.
Netdefined benefitassetorliabilityin the consolidatedbalancesheetsforthe yearsended March 31,2018 and2017consistedofthefollowing:
(8)ActuarialassumptionsTheprincipalactuarialassumptionsatMarch31,2018and2017wereasfollows:
16
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Currentreceivables ¥1,057 ¥1,539 $9,949
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Sales ¥1,248 ¥1,876 $11,747
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Short-term loansreceivables ¥960 - $9,036Short-term borrowings - ¥2,028 -
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Loansadvanced ¥5,270 ¥6,788 $49,605Interestincome 2 3 19Borrowingfunds 1,750 2,347 16,472Interestexpense 2 4 19
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Short-term loansreceivables ¥2,267 ¥1,112 $21,338
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Loansadvanced ¥2,201 ¥1,231 $20,727Interestincome 1 1 9
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Employees’salariesandallowances ¥2,289 ¥2,284 $21,546
Bonuses 838 772 7,888Severanceandretirementbenefitexpenses 176 184 1,657
Depreciation 185 182 1,741Expensesforestimatesanddesigns 1,567 1,464 14,750
Otherexpenses 4,423 4,571 41,631Total ¥9,478 ¥9,457 $89,213
Informationabouttheexpectedrateofpayincreaseisnotdisclosed because the Companieshave mainlyadopted apointbasisand the effecton the calculation ofprojectedbenefitobligationswouldbeinsignificant.
10.NetAssets―――――――――――――――――Underthe Japanese CompaniesAct,the entire amountpaidfornewsharesisrequiredtobedesignatedascommonstock.However,a companymay,by a resolution oftheBoardofDirectors,designateanamountnotexceedingonehalfofthe price ofthe new sharesasadditionalpaid-incapital,whichisincludedincapitalsurplus.
In cases in which a dividend distribution ofsurplus ismade,the smallerofan amountequalto 10% ofthedividendortheexcess,ifany,of25% ofcommonstockoverthe totalofadditionalpaid-in capitaland legalearningsreservemustbesetasideasadditionalpaid-incapitalorlegalearningsreserve.Legalearningsreserveisincludedinretainedearningsintheaccompanyingconsolidatedbalancesheets.
Additionalpaid-incapitalandlegalearningsreservemaynotbedistributedasdividends.However,alladditionalpaid-incapitalandalllegalearningsreservemaybetransferredtoothercapitalsurplusandretainedearnings,respectively,whicharepotentiallyavailablefordividends.
Themaximum amountthattheCompanycandistributeasdividends is calculated based on the nonconsolidatedfinancialstatements ofthe Company in accordance withJapaneseCompaniesAct.
Atthe generalstockholders meeting held on June 27,2018,thestockholdersapprovedcashdividendsamountingto¥725 million ($6,824 thousand).These appropriationshavenotbeenaccruedintheconsolidatedfinancialstatementsasofMarch31,2018.Suchappropriationsarerecognizedintheperiodinwhichtheyareapprovedbythestockholders.
11.RelatedPartyTransactions―――――――――a)RelatedpartytransactionsbetweentheCompanyanditsrelatedcompaniesAccountbalances with Kobe Steel,Ltd.,the majoritystockholderoftheCompany,atMarch31,2018and2017wereasfollows:
Transactions with Kobe Steel,Ltd.forthe years endedMarch31,2018and2017wereasfollows:
Accountbalances with Kobelco FinancialCenter,Ltd.,afellowsubsidiaryofKobeSteel,Ltd.atMarch31,2018and2017wereasfollows:
TransactionswithKobelcoFinancialCenter,Ltd.fortheyearsendedMarch31,2018and2017wereasfollows:
b)Related party transactions between the Company’sconsolidatedsubsidiariesanditsrelatedcompaniesAccountbalances with Kobelco FinancialCenter,Ltd.atMarch31,2018and2017wereasfollows:
TransactionswithKobelcoFinancialCenter,Ltd.fortheyearsendedMarch31,2018and2017wereasfollows:
12.Selling,GeneralandAdministrativeExpensesSelling,generaland administrative expensesforthe yearsendedMarch31,2018and2017wereasfollows:
17
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Deferredincometaxassets:Netdefinedbenefitliability ¥1,702 ¥1,574 $16,020Provisionforproductwarranties 1,075 1,235 10,119Accruedbonuses 608 549 5,723Percentageofcompletionmethod 533 323 5,017Researchanddevelopmentexpenses 276 199 2,598Depreciation 255 172 2,400Consolidatedadjustmentforgainfrom transferofbusiness 221 368 2,080
Provisionforlossonconstructioncontracts 202 52 1,901
Assetretirementobligations 127 126 1,196Accruedbusinessenterprisetax 116 89 1,092Other 574 552 5,403Totaldeferredincometaxassets 5,689 5,239 53,549Valuationallowance (279) (254) (2,627)Deferredincometaxassets,net 5,410 4,985 50,922Deferredincometaxliabilities:Reserveforadvanceddepreciationofnon-currentassets 770 (801) 7,248
Assetretirementobligations 113 (119) 1,064Goodwill 61 (61) 574Other 58 (59) 546
Totaldeferredincometaxliabilities 1,002 (1,040) 9,431Netdeferredincometaxassets ¥4,408 ¥3,945 $41,491
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Currentassets ¥2,798 ¥2,483 $26,337Investmentsandotherassets 1,610 1,462 15,154Netdeferredincometaxassets ¥4,408 ¥3,945 $41,491
2018 2017Statutorytaxrate 30.8 % - %Nondeductibleexpenses 1.2 -Nontaxabledividendincome (0.1) -Percapitainhabitantstaxes 1.1 -Taxcreditforresearchanddevelopmentexpenses,etc. (2.2) -
Valuationallowance 0.8 -Recalculationofdeferredincometaxassetsandliabilities from changesintaxrates 0.5 -
Other 0.9 -Effectivetaxrate 33.0 % - %
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Unrealizedgains(losses)onsecuritiesIncreaseduringtheyear ¥51 ¥32 $480Reclassificationadjustments (50) (18) (471)Subtotal,beforetax 1 14 9Tax(expense)orbenefit (0) (4) (0)Subtotal,netoftax 1 10 9
Unrealizedgains(losses)onhedgesIncrease(decrease)duringtheyear (17) 10 (160)Reclassificationadjustments - - -Subtotal,beforetax (17) 10 (160)Tax(expense)orbenefit 5 (3) 47Subtotal,netoftax (12) 7 (113)
ForeigncurrencytranslationadjustmentsDecreaseduringtheyear (21) (13) (198)Reclassificationadjustments - - -Subtotal,beforetax (21) (13) (198)Tax(expense)orbenefit - - -Subtotal,netoftax (21) (13) (198)
RemeasurementsofdefinedbenefitplansIncrease(decrease)duringtheyear (36) 121 (339)Reclassificationadjustments 91 146 857Subtotal,beforetax 55 267 518Taxexpense (17) (86) (160)Subtotal,netoftax 38 181 358
Totalothercomprehensiveincome ¥6 ¥185 $56
13.IncomeTaxes ―――――――――――――――Significantcomponentsofthe Companies’deferred incometaxassetsandliabilitiesasofMarch31,2018and2017wereasfollows:
Netdeferred income tax assets were included in theconsolidatedbalancesheetsasfollows:
ThefollowingtablesummarizesthesignificantdifferencesbetweenthestatutorytaxrateandtheCompanies’effectivetaxrateforfinancialstatementpurposesfortheyearsendedMarch31,2018and2017.
14.ConsolidatedStatementsofComprehensiveIncomeAmountsreclassifiedtonetincomeinthecurrentperiodthatwere recognized in othercomprehensive income in thecurrentorprevious periods and the tax effects foreachcomponentofothercomprehensiveincomewereasfollows:
15.SegmentInformation――――――――――――a) GeneralinformationaboutreportablesegmentsTheCompanies’reportablesegmentsareconsistentunitsofthe Companies for which separate financialdata isaccessible.TheBoardofDirectorsconductsregularreviewsofeach segmentin order to decide the allocation ofmanagerialresourcesandanalyzeandassessresults.TheCompany has three reporting segments,WaterTreatmentAssociatedBusiness,WasteTreatmentAssociatedBusinessandChemicalandFoodMachineAssociatedBusiness,basedon the businessdivisionsestablished atthe Companyfordifferentproducts.Each segmentdevelops comprehensivestrategiesforthe business itis responsible for(includingbusinessatsubsidiaries)bothwithinJapanandoverseasandpromotesbusinessactivitiesaccordingly.
b)Basisofmeasurementaboutreportablesegmentincomeorloss,segmentassets,segmentliabilitiesandothermaterialitemsThe accounting policies ofthe reportable segments arethose same as ones described in Note 2.Reportablesegmentincome orloss is ordinary income.Intersegmenttransactionsarebasedonmarketprices.
c)Information aboutreportable segmentincome orloss,segmentassets,segmentliabilitiesandothermaterialitems
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Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2017 2018Netsales:WaterTreatmentAssociatedBusiness ¥33,404 ¥33,447 $314,420WasteTreatmentAssociatedBusiness 36,568 37,175 344,202ChemicalandFoodMachineAssociatedBusiness 8,845 8,786 83,255
Adjustment (51) (710) (480)Total ¥78,766 ¥78,698 $741,397
Segmentincomeorloss:WaterTreatmentAssociatedBusiness ¥402 ¥61 $3,784WasteTreatmentAssociatedBusiness 2,972 2,421 27,974ChemicalandFoodMachineAssociatedBusiness 1,233 814 11,606
Adjustment (758) (285) (7,135)Total ¥3,849 ¥3,011 $36,229
Segmentassets:WaterTreatmentAssociatedBusiness ¥18,441 ¥17,741 $173,579WasteTreatmentAssociatedBusiness 29,524 30,300 277,899ChemicalandFoodMachineAssociatedBusiness 8,213 7,845 77,306
Adjustment 15,572 13,827 146,574Total ¥71,750 ¥69,713 $675,358
Segmentliabilities:WaterTreatmentAssociatedBusiness ¥13,223 ¥11,280 $124,464WasteTreatmentAssociatedBusiness 18,261 18,186 171,884ChemicalandFoodMachineAssociatedBusiness 3,110 1,951 29,273
Adjustment 11,495 14,484 108,198Total ¥46,089 ¥45,901 $433,819
Depreciation:WaterTreatmentAssociatedBusiness ¥634 ¥694 $5,968WasteTreatmentAssociatedBusiness 479 357 4,509ChemicalandFoodMachineAssociatedBusiness 188 189 1,769
Adjustment 251 285 2,362Total ¥1,552 ¥1,525 $14,608
Interestincome:WaterTreatmentAssociatedBusiness ¥198 ¥173 $1,864WasteTreatmentAssociatedBusiness 302 241 2,842ChemicalandFoodMachineAssociatedBusiness 14 11 132
Adjustment (499) (411) (4,697)Total ¥15 ¥14 $141
Interestexpense:WaterTreatmentAssociatedBusiness ¥267 ¥256 $2,513WasteTreatmentAssociatedBusiness 238 188 2,240ChemicalandFoodMachineAssociatedBusiness - - -
Adjustment (455) (393) (4,283)Total ¥50 ¥51 $471
Capitalexpenditures:WaterTreatmentAssociatedBusiness ¥302 ¥42 $2,842WasteTreatmentAssociatedBusiness 77 1,657 725ChemicalandFoodMachineAssociatedBusiness 172 158 1,619
Adjustment 203 (435) 1,911Total ¥754 ¥1,422 $7,097
Millionsofyen ThousandsofU.S.dollars(Note1)
2018 2018Salestoexternalcustomers:WaterTreatmentAssociatedBusiness ¥33,364 $314,044WasteTreatmentAssociatedBusiness 36,568 344,202ChemicalandFoodMachineAssociatedBusiness 8,833 83,142
Adjustment 1 9Total ¥78,766 $741,397
Majorcustomers Millionsofyen ThousandsofU.S.dollars(Note1) Reportablesegment
JapanEnvironmentalStorage&SafetyCorporation
¥8,108 $76,318WasteTreatmentAssociatedBusiness
ReportablesegmentinformationfortheyearsendedMarch31,2018and2017wasasfollows:
(1)Thesegmentincomeorlossadjustmentof¥(758)million($7,135thousand)referstocompany-wideexpensesandnon-operatingincomenotallocatedtothereportablesegments.Company-wide expenses are mostly generalmanagementexpensesnotbelonging to a particularreportable segment(includingallocationvarianceforthereportablesegments).(2) The segmentassets adjustment of ¥15,572 million($146,574thousand)referstocashanddeposits,short-termloans receivable, fixed assets of the managementdepartmentsnotallocatedtothereportablesegments.(3)The segmentliabilities adjustmentof¥11,495 million($108,198 thousand)refers to accrued income taxes andexpensesnotallocatedtothereportablesegments.(4)The depreciation expense adjustmentof¥251 million($2,362thousand)referstodepreciationexpenseforbuildings,etc,belongingtothemanagementdepartmentsnotallocatedtothereportablesegments.(5)Interestincome adjustmentof¥(499)million ($(4,697)thousand)refers to the differences between the expectedinterestratesandtheactualinterestrates.(6)Interestexpense adjustmentof¥(455)million ($(4,283)thousand)refers to the differences between the expectedinterestratesandtheactualinterestrates.(7)Capitalexpendituresadjustmentof¥203million($1,911thousand)refersto the increase in systems related fixedassets belonging to the management departments notallocatedtothereportablesegments.
Informationaboutproductsandservices
Salestoexternalcustomersadjustmentof¥1million($9thousand)referstosalesthatdonotbelongtothereportablesegments.
Informationaboutgeographicareas(1)SalesInformation aboutsales by geographic area was notdisclosedbecausesalestoexternalcustomersinJapanweremorethan90% ofconsolidatednetsales.(2)TangiblefixedassetsInformationabouttangiblefixedassetsbygeographicareawasnotdisclosedbecausetangiblefixed assetsin Japanweremorethan90% ofconsolidatedtangiblefixedassets.(3)Informationaboutmajorcustomers
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Shares2018 2017 Difference
Outstandingstock:Commonstock 16,120,000 80,600,000 (64,480,000)Total 16,120,000 80,600,000 (64,480,000)
Treasurystock:Commonstock 4,074 20,157 (16,083)Total 4,074 20,157 (16,083)
16.ChangesintheNumberofShares―――――Changesinthenumberofsharesissued and outstandingduringtheyearsendedMarch31,2018and2017wereasfollows:
(1)The Company consolidated shares atthe ratio of5sharesto1sharewithaneffectivedateofOctober1,2017(2)The numberofoutstanding shares ofcommon stockdecreasedby64,480,000shareswiththereversestocksplit.(3)Thenumberofsharesoftreasurystockdecreasedby16,083shareswiththereversestocksplit.
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●WaterTreatment・Citywaterandsewagetreatmentplant・Sludgetreatment/Sludgevolumereductionequipment・Sludgeincineration/Melting/Recyclingsystem・WastewaterTreatmentFacilities・Industrialwaterprocessingsystem・Watertreatmentsystem forliquidcrystalsandsemiconductors・Purewater/Ultrapurewaterproductionequipment・Leachatetreatmentsystem・Seawaterdesalinationsystem●Biomass・BiogasUpgradingSystem・Biogastechnologyfortheinjectionintothenaturalgasgrid●CoolingTower・Coolingtowerfordistrictheatingandcooling・Super−low−noisecoolingtower・Industrialcoolingtower●WasteTreatmentandWastetoEnergy(Incinerator)・FluidizedBedGasificationandMeltingFurnace・PlasmaMeltingFurnace・Fluidized−bedfurnace●DetoxificationofPCBs・Sodium PulverulentProcess“SPProcess”・SolventExtractionandDecompositionProcess“SEDProcess”・PlasmaMeltingTechnologyforPCB−contaminatedWaste・HeatedOil.CirculationWashing●TechnologicalDevelopment・WaterTreatment/SludgeTreatment/Recycling・CoolingTower・WasteTreatmentandRecycling・EnvironmentalRestorationandRecycling・ProcessEquipment・BusinessDevelopment&InnovativeTechnologies●EnvironmentalAnalysisService・Potablewaterandsewagesludge・Wastewaterfrom factories,researchcenters,etc.・Industrialwaste(PCB,metals,organics,etc.)●ProcessEquipmentforChemicalandFoodIndustries,etc.・GlasslinedReactor・Polymerizer/Reactor・Mixer/Dryer・Evaporator●Hydrogen-Related・High-purityHydrogenOxygenGenerator
●HeadOffice:4-78,1-chome,Wakinohama-cho,Chuo-ku,Kobe,651-0072,JapanTEL:+81-78-232-8018 FAX:+81-78-232-8051(San-nomiyaGrandBuilding)2-21,2-chome,Isogami-dori,Chuo-ku,Kobe,651-0086,JapanTEL:+81-78-232-8018 FAX:+81-78-232-8051*Theswitchboardnumberisforalldivisions.●TokyoBranchOffice:(ONBuilding)9-12,5-chome,Kitashinagawa,Shinagawa-ku,Tokyo,141-8688,JapanTEL:+81-3-5739-5800 FAX:+81-3-5739-5821(OsakiMTBuilding)9-11,5-chome,Kitashinagawa,Shinagawa-ku,Tokyo,141-0001,JapanTEL:+81-3-5739-5800 FAX:+81-3-5739-5821*TheswitchboardnumberissameasONBuilding.●OsakaBranchOffice:(MidosujiMitsuiBuilding)1-3,4-chome,Bingomachi,Chuo-ku,Osaka,541-8536,JapanTEL:+81-6-6206-6751 FAX:+81-6-6206-6760●KyusyuBranchOffice:(ShinkansenHakataBuilding)1-1,HakataekiChuo-gai,Hakata-ku,Fukuoka,812-0012,JapanTEL:+81-92-474-6565 FAX:+81-92-441-4440●HarimaPlant:19,Niijima,Harima-cho,Kako-gun,Hyogo,675-0155,JapanTEL:+81-79-436-2500 FAX:+81-79-436-2506●TechnicalResearchCenter:1-4,1-chome,Murotani,Nishi-ku,Kobe,651-2241,JapanTEL:+81-78-992-6500 FAX:+81-78-997-0550●SalesOffice:Sapporo,Sendai,Nagoya●DüsseldorfOffice:BerlinerAllee55,40212Düsseldorf,GermanyTEL:+49-211-7792-0430 FAX:+49-211-7792-0450●Phnom PenhOffice:SomaTower,1stFloor,#2C,Street120,SangkatPhsarThmeyII,KhanDaunPenh,Phnom Penh,Kingdom ofCambodiaTEL:+855-23-210-301 FAX:+855-23-210-309
●HeadOffice:31stFloor,PearlPlaza,561ADienBienPhuStreet,Ward25,Dist.BinhThanh,HoChiMinhCity,VietnamTEL:+84-28-3899-1355 FAX:+84-28-3899-1525●HanoiBranchOffice:6thFloor,TIDBuilding,4LieuGiaistreet,CongViWard,BaDinhDistrict,HanoiCity,VietnamTEL:+84-24-3762-1940 FAX:+84-24-3762-1942●LongDucPlant:LotⅠ-1,LongDucIndustrialPark,LongDucWard,LongThanhDistrict,DongNaiProvince,VietnamTEL:+84-251-320-1050 FAX:+84-251-320-1051
URL:http://www.kobelco-eco.co.jp/english/
PrintedinJapan18080200FThis brochure is made of recycled papers.
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