Annual Report 2010 for the Fiscal Year Ended March 31, 2010
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Annual Report 2010 For the fiscal year ended March 31, 2010 Creating Value through Environmental Leadership “ As a group of individuals working together as one, we pursue creative progress and development founded on both rational, scientific principles and a humanitarian outlook, through which we strive to continually advance our business operations and contribute to society.” Profile The Kajima Group is one of Japan’s largest general contractors. Established in 1840 and headquartered in Tokyo, the Kajima Group has more than 15,000 employees serving customers in over 20 countries. For the fiscal year ended March 31, 2010, consolidated revenues totaled ¥1,637 billion (U.S.$17.6 billion). Customer satisfaction is a priority. In our core building construction, civil engineering and real estate development operations, we use our comprehensive capabilities in every area and phase of our business activities to provide total solutions. Our broad technical expertise underpins our comprehensive capabilities. We consistently develop innovative technologies that help us add value to our products and earn customer satisfaction. Committed to global corporate citizenship, we emphasize ethical operations, compliance and corporate social responsibility in continually working to earn the trust and respect of all stakeholders. Forward-Looking Statements This Annual Report includes forward-looking statements that represent Kajima’s assumptions and expectations in light of information available as of May 13, 2010. These statements reflect industry trends, customer’s situations and other factors, and involve risks and uncertainties that may cause actual performance results to differ from those discussed in the forward-looking statements in accordance with changes in the domestic and overseas business environment. Kajima Corporation Annual Report 2010 Contents Financial Highlights (Consolidated and Non-Consolidated) 2 Message from the Management 3 Feature: Creating Value through Environmental Leadership 5 Fundamental Stance on Corporate Governance 12 Board of Directors, Corporate Auditors and Executive Officers 14 Kajima at a Glance (Consolidated) 16 Review of Operations Domestic Operations Construction Business 18 Real Estate Development Business 22 Other Business 24 Overseas Operations Overseas Construction & Real Estate Development Business 28 Selected Financial Data (Consolidated and Non-Consolidated) 31 Summary and Forecast of Business Performance 32 Consolidated Financial Statements 36 Notes to Consolidated Financial Statements 42 Independent Auditors’ Report 65 Corporate Organization 66 Corporate Information/Principal Subsidiaries and Affiliates in Japan 67 Global Network 68 Corporate History 70 Kajima Corporation Annual Report 2010 1 Financial Highlights (Consolidated and Non-Consolidated) For the years ended March 31, 2010 and 2009 2010 2009 2010 (Millions of Yen) (Thousands of U.S. Dollars) Consolidated: Revenues ............................................................ ¥1,637,362 ¥1,948,540 $17,606,043 Operating Income (Loss) ...................................... (6,762) 19,696 (72,710) Net Income (Loss) ............................................... 13,226 (6,297) 142,215 Total Assets ......................................................... 1,796,865 1,885,427 19,321,129 Total Equity ......................................................... 262,165 239,046 2,818,979 Per Share: (Yen) (U.S. Dollars) Basic Net Income (Loss) ................................... ¥ 13.03 ¥ (6.20) $ 0.140 Cash Dividends ................................................ 6.00 6.00 0.064 (Millions of Yen) (Thousands of U.S. Dollars) Non-Consolidated: Revenues ............................................................ ¥1,244,411 ¥1,491,937 $13,380,763 Operating Income (Loss) ...................................... (7,977) 9,362 (85,774) Net Income (Loss) ............................................... 3,129 (7,548) 33,645 Total Assets ......................................................... 1,440,662 1,530,350 15,490,989 Total Equity ......................................................... 232,212 215,946 2,496,903 Contract Awards ................................................. 944,005 1,387,640 10,150,591 Total Contract Backlog ........................................ 1,191,281 1,491,687 12,809,473 Per Share: (Yen) (U.S. Dollars) Basic Net Income (Loss) ................................... ¥ 3.07 ¥ (7.40) $ 0.033 Notes: 1. The U.S. dollar amounts included herein are presented solely for convenience of the reader. Such dollar amounts have been translated from yen at the approximate exchange rate in Tokyo on March 31, 2010 of ¥93=U.S.$1. The translations should not be construed as representations that Japanese yen have been, could have been or could in the future be converted into U.S. dollars at that or any other rate. 2. Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the fiscal years ended March 31, 2010 and 2009, respectively. Contract Awards Revenues Operating Income (Loss) Gross Profit Margin (%) (Billions of yen) (Billions of yen) (Billions of yen) 10 2,000 2,000 60 50 1,500 1,500 40 8 30 1,000 1,000 20 Consolidated Non- 500 10 500 6 Consolidated 0 2004 2005 2006 2007 2008 0 0 -10 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 (Years ended March 31) (Years ended March 31) (Years ended March 31) Interest-Bearing Debt (billion ¥) Consolidated (Construction) Non-Consolidated Consolidated Non-Consolidated Consolidated Non-Consolidated 600 400 200 2 Kajima Corporation Annual Report 2010 Consolidated Kajima Corporation Annual Report 2010 3 Non- 0 Consolidated 2004 2005 2006 2007 2008 Message from the Management In a challenging business environment, the Kajima Group aims to generate steady earnings by further enhancing cooperation among sales, design and construction units and optimally allocating company resources to strengthen competitiveness and profitability. Mitsuyoshi Nakamura President, Representative Director Results for the Fiscal Year decline in orders for building construction at Ended March 31, 2010 Kajima Corporation as the private sector cut back During the fiscal year ended March 31, 2010, on construction spending. Consolidated revenues construction spending decreased substantially in decreased 16.0 percent to ¥1,637.4 billion, mainly the Japanese construction market, particularly in due to lower order volume as construction the private sector. Consequently, the business spending fell. environment remained challenging,Mitsuyoshi with Nakamura more Despite recovery in the gross profit margin for President, Representative Director severe conditions for contract awards. the construction business in Japan, we recorded an To establish a foundation for stable earnings that operating loss of ¥6.8 billion mainly due to can weather the volatile business environment, in substantial deterioration of profitability for large- April 2009 the Kajima Group launched a new scale overseas construction projects and an Medium-Term Business Plan for the three years aggravated real estate development environment ending March 2012 and made a concerted effort to both inside and outside Japan. Consolidated net further strengthen the competitiveness and income, however, amounted to ¥13.2 billion, profitability of its core businesses. However, in the compared with net loss of ¥6.3 billion for the severe environment, consolidated construction previous fiscal year, due largely to the disposal of a contract awards decreased 28.2 percent to portion of our ownership in UDX SPC. ¥1,138.4 billion due to factors including a large 2 Kajima Corporation Annual Report 2010 Kajima Corporation Annual Report 2010 3 Policies for the Fiscal Year With these initiatives, we will stably build up Ending March 31, 2011 profits and thereby steadily increase equity and Our outlook for the current fiscal year includes reduce interest-bearing debt. We will thus gain an ineluctable decrease in public-sector spending higher tolerance for risks associated with real and uncertain private-sector demand in Japan. We estate development and the overseas construction therefore expect competition for orders to intensify, business. while prices for certain construction materials appear likely to rise. Consequently, the business Raising Corporate Value environment in Japan is likely to worsen. Our basic shareholder return policy is to stably The Kajima Group aims to lay robust foundations provide year-end dividends in line with our earnings for becoming a truly profitable enterprise by while securing internal reserves to maintain a continuing to execute its Medium-Term Business sound business foundation. Plan for the three years ending March 2012. We Taking into account the Group’s financial will work to further enhance cooperation across performance and business foundation, we departments and to optimally allocate company maintained annual dividends for the fiscal year resources in order to maximize the profitability of ended March 31, 2010 at ¥6.00 per share, our core businesses: civil engineering, building unchanged from the previous fiscal year. construction and real estate development. We will The Kajima Group is working to raise its ensure appropriate profit by improving technology- corporate value by reliably generating earnings, related proposal capabilities, enhancing estimate based on customer-oriented management. and procurement functions,