2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan
Phone: 81-3-5999-1511

http://www.taiyo-hd.co.jp/English

TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD.

Commitment
to Strong Growth
Annual Report 2012
Year Ended March 31, 2012

Printed in Japan

Opening Feature

No.

The Global Leader
in Solder Resist

The ink, typically green, that is applied
to the surfaces of printed wiring boards(PWBs) is in fact solder resist (known in
the U.S. and elsewhere as solder mask),
the mainstay product of the TAIYOHOLDINGS GROUP. Solder resist is an
essential material in the production of
PWBs used in electronics equipment,from mobile phones and PCs to digitalappliances and automotive electronic
devices. The TAIYO HOLDINGS GROUP
commands a global market share forsolder resist of approximately 50%,
making it the No. 1 specialty chemical
manufacturer in this field.

For details on business domains,
please refer to“ Review of Operations”
on pages 16 and 17.

For details on business domains,
please refer to“Research and Development”
on page 18.

Proven Technical Capabilities
Our business philosophy is to develop and supply products of the highest value based on­superior technical expertise. Guided by this philosophy, we see our mission as the world’s­leading manufacturer as being to tirelessly research and develop high-quality products for
supply to the world. Our technical expertise serves as the backbone of our operations, and weare proud to be a company with the manufacturing excellence to serve the world’s needs. We
aim to create products imbuing the highest value, leveraging the various technologies we haveamassed as a pioneer in solder resist.

Cases
TAIYO HOLDINGS CO., LTD. Annual Report 201201

Global Development
The TAIYO HOLDINGS GROUP deals with PWB manufacturers around the globe. As
such, we believe it is essential to provide products and services that are consistently
excellent in response to changes in the global environment. To this end, we aim to­manufacture in optimal locations and sell in optimal sales channels as befits each market
around the world. We have a global network, with manufacturing and sales bases inJapan, China, Taiwan, Korea and the U.S., and sales and technical service bases inHong Kong, Singapore and Thailand.
At present, we generate approximately 80% of our net sales overseas. As a truly global
company, we are determined to capture robust and expanding global demand by actively
developing our businesses overseas going forward.

%

02

TAIYO HOLDINGS CO., LTD. Annual Report 2012For details, please refer to“Interview With the President”
on pages 6 to 11.

President’s Message

The long-term vision of the Taiyo Holdings Group is to remain the global leader in solder resist, while also
seeking to sustain growth based on the development of new business pillars. We unveiled this vision in our
three-year “Group Business Plan 2010,” or “GBP2010” for short, which finishes in the fiscal year ending
March 31, 2013. Unfortunately, in the fiscal year ended March 31, 2012 both sales and profits declined
year on year. This outcome was mainly due to the impact of the European debt crisis, slowing economic
growth in China, and the yen’s record strength. However, we are implementing a variety of initiatives toensure that we achieve our long-term vision.
Looking ahead, the Group will contribute to the development of the electronics industry by maintaining
its unyielding top position in the solder resist field, by strengthening our ability to respond better to­customers, by developing global human resources, and by moving forward with the creation of new businesses and other initiatives. The Taiyo Holdings Group is determined to rise to every challenge and makeleaps forward in each area of its business operations.

Eiji Sato President and CEO

TAIYO HOLDINGS CO., LTD. Annual Report 201203

Contents
05
06

Financial Highlights
Interview with the President		

12Feature		— Development of Global Human Resources to Be
in Charge of Sustainable Growth

14
18
19
22
24
25

Review of Operations
Research and Development
Corporate Governance
CSR
Domestic and Global Network
Financial Section

26
30
32
33
34
35
36
50

51

Management Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

Corporate Information

Matters Regarding Forward-looking Statements
This annual report contains forward-looking statements regarding TAIYO HOLDINGS’current management plans, strategies and other matters. Readers are cautioned thatthese forward-looking statements hold inherent risks and uncertainties, and may differ
materially from actual results or business performance.

04

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Financial Highlights
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
March 31, 2012, 2011 and 2010

Thousands of
U.S. dollars*Millions of Yen
2012

2011

2012

2010

For the year:
Net sales¥  39,797¥  40,366¥  35,056$485,329

4,040

5,381

4,843

49,268Operating income
Operating income ratio (%)

10.2

13.3

13.8

Net income

2,503

3,403

3,011

Net cash provided by operating activities

2,793

4,576

3,127

34,061

Net cash (used in) provided by investing activities(1,343)758(70)(16,378)

Net cash used in financing activities(2,979)(3,697)(2,367)(36,329)

Research and development expenses

963

996

1,016

11,744

Number of employees

861

840

807

¥  40,703¥  42,851¥  43,705

30,524

At year-end:
Total assets$496,378

Return on equity (%)

7.5

9.9

8.7

Equity ratio (%)

81.1

78.2

80.1

33,47634,18735,686408,244¥   98.38¥  131.78¥  116.08$   1.20

90.00

115.00

90.00

1.10

1,297.18

1,316.53

1,349.61

15.82

Total equity
Per share data (Yen and U.S. Dollars):
Net income
Cash dividends
Net assets* The U.S. dollar amounts stated above and elsewhere in this report have been translated from yen, for convenience only, at the rate of ¥82 = US$1, which was the approximate
rate on the Tokyo Foreign Exchange Market on March 31, 2012.

Net Sales andOperating Income Ratio(Millions of Yen)
50,000Net Income andReturn on Equity(%)(Millions of Yen)

(%)(Millions of Yen)

(%)

10

75,000100

850,000645,0002,000

430,000

40

3

1,000

2

15,000

20

0

0

0

0

15

5,000

12

4,000

30,0009

3,000

20,000

6

10,00013.8

13.3
40,36640,000035,056

2010

9.9

8.7

39,797
10.2

2011

Total Assets andEquity Ratio

2012

7.5
3,403

80.1

3,011
2,503

2010

2011

2012

43,705

2010

78.2

42,851

2011(Years ended March 31)(Years ended March 31)(Years ended March 31)

n Net sales (left scale)Operating income ratio (right scale)n Net income (left scale)
Return on equity (right scale)n Total assets (left scale)
Equity ratio (right scale)

n

n

81.1
80

40,703

60

2012

0

n

TAIYO HOLDINGS CO., LTD. Annual Report 201205

Interview with the President

Q3
The TAIYO HOLDINGS GROUP is

Q2
What is your outlook for the fiscal year

projecting a turnaround in business

What were the market trends and yourending March 2013? Could you pleaseresults in the fiscal year ending Marchbusiness results like in the fiscal year

share your perspectives on market

2013. How is your medium-term

ended March 2012?

developments and future initiatives?

­business plan progressing?

Q1

Growth Foundations
for the Future
Although net sales and earnings in the fiscal year ended March 2012 fell short offorecasts, we have steadily laid growth foundations for the future. In the current fiscal
year and beyond, we will continue working to achieve sustained growth.

Q1— What were the market trends and yourdecreased from the previous year, while sales unit prices also­business results like in the fiscal year ended March 2012?

fell due to such factors as the yen’s persistent appreciationand changes in the product mix. On the other hand, however,We faced a far more difficult environment than initiallyflat-panel display (FPD) materials finished the year with higher

anticipated when we formulated our forecasts. As a result,sales year on year, mainly due to higher sales unit prices

sales and earnings both fell short of forecasts.

­resulting from the stabilization of the price of silver, a key raw

In the electronic components industry in which the Group
operates, small-sized information terminals such as smartphones

material, at a high level.
Operating income decreased 24.9% year on year to ¥4,040

and tablet PCs performed favorably despite the negative impact

million, mainly due to the decrease in sales volume and thefrom production cutbacks due to the slowdown in the European

impact of foreign exchange fluctuations. However, the decline

economy and the floods in Thailand. On the other hand, demand

was partly offset by a positive contribution of approximately ¥0.9

declined for PCs, which are being replaced by small-sized infor-

billion from changes in the product mix and other factors.

mation terminals, and for flat-panel TVs, whose replacement cycle
has already reached its peak.
Under these conditions, net sales in the fiscal year ended

Also, we decided to cancel the construction of the TAIYOINK (ZHONGSHAN) production site, which we had been preparing to operate as a second production facility in China. As a

March 2012 decreased 1.4% year on year to ¥39,797 million,

result, we recorded a loss on valuation of investment in capital of

mainly due to the following reasons. In the printed wiring board

subsidiaries and affiliates of ¥421 million. This loss had a large(PWB) materials market, the Group’s core field, sales volume

impact on our business results in the fiscal year ended March

06

TAIYO HOLDINGS CO., LTD. Annual Report 2012
2011

Q6
In closing, could you please share

Q5
Q4
What steps are you taking to develop

What is your approach to returninga message with shareholders andprofits to shareholders?

other investors?

human resources underpinning­corporate growth?
Also, what is your approach to CSR?

2012. The background is that in April 2008 we announced the

As I said earlier, although we finished the year with a lacklus-

construction of this production site with the aim of expanding

ter performance in terms of net sales and earnings, we believe

business in China over the medium and long terms. Shortlythat we have maximized net sales and earnings given thethereafter, however, we suspended part of the construction due­Company’s current market environment, while at the same timeto the impact of the Lehman Brothers bankruptcy. Subsequently,

laying solid foundations for long-term growth. For example, in

we restarted construction in 2010 and began rapidly making

PWB materials, the sales volume of low-end rigid board material

preparations for the production site. As we did so, we founditems for the Chinese market increased 20% year on year. The

that the business environment had changed drastically since thesales volume of FPD materials to China also increased.

start of the project. For example, personnel costs and con­anticipated. Consequently, our projected returns on investment

Q2

fell below those envisioned in our initial plans. Having determinedending March 2013? Could you please share your per-that it would be more feasible to meet future demand throughspectives on market developments and future initiatives?

struction costs in China had become much higher than initially— What is your outlook for the fiscal year

TAIYO INK (SUZHOU) CO., LTD., we decided to cancel ourconstruction plans.
As a result of the cancellation of the construction plans for
TAIYO INK (ZHONGSHAN) and other impacts including taxation,
net income decreased 26.5% to ¥2,503 million.

While working to capture a greater share of the Chinese
market, we will also focus on new product fields.
In the electronic component industry, the Chinese market
has deteriorated further over the past year than initially anticipated.

TAIYO HOLDINGS CO., LTD. Annual Report 201207

We believe that the main factors at play are the cooling of con-Moreover, we are currently focusing on new touch panel

sumer spending within China, and a considerable drop in con-materials. We are working to develop new products by applying

sumption of final manufactured goods such as home appliances,

technologies developed in FPD materials to smartphones andmobile phones and automobiles in Europe. The Company has

tablets. To this end, we launched a new organizational unit instriven to capture a greater share of the Chinese market, but

April 2012 to conduct integrated R&D, production and sales

has not achieved any large increase in its market share to date.

activities, with the aim of driving further expansion in sales.
As a result of the foregoing initiatives, we are projecting net

However, we are now able to see a clear path to a greater
market share. Since customers of rival companies have begun

sales of ¥40,500 million, operating income of ¥4,500 million andevaluating our products, we expect to generate a certain level ofnet income of ¥3,200 million in the fiscal year ending March 2013.

sales volume in the current fiscal year and beyond.
have found that for certain products other than SR (solder resist),

Q3

such as build-up board materials and marking ink, we have yet

a turnaround in business results in the fiscal year

to expand our share in the Chinese market as initially planned.

ending March 2013. How is your medium-term business

For this reason, we plan to ensure that we capture a greaterplan progressing?

Looking at specific product categories, in PWB materials, we— The TAIYO HOLDINGS GROUP is projecting

share by investigating the reasons why we have been unable toincrease the market share of these products. Furthermore, in

We now anticipate that it will be difficult to achieve the

PDP materials, despite some concerns about a contraction innumerical targets of our medium-term business plan.

the Japanese market, large PDP plants are in operation in China,

However, we will work to achieve further growth by

and our main customers have actively expanded operations inremaining focused on our management strategy, which

Korea, so we will continue working to maintain our current

we have positioned as a crucial strategy going forward.

market share in the current fiscal year and beyond.

The TAIYO HOLDINGS GROUP is currently implementing

Forecasts for FY2012/2013 (Consolidated)(Millions of Yen)

(Millions of Yen)

50,000FY2013
Forecasts

Medium-term
plan

¥40.5
billion¥29.5
billion¥11.0
billion¥4.5
billion¥48.0
billion¥38.5
billion¥9.5
billion¥7.7
billionOperating margin

11.1%

16.0%

Net sales of
new products/
in new fields¥3.8
billion¥4.0
billion

5,000

4,500
39,797 40,500

Difference Between Business Forecasts andMedium-term Plan

4,040

40,0004,000

Net sales

3,000

PWB, etc.

3,200
30,0002,503

20,0002,000

10,0001,000

FPD
Operating income

0

Net
sales

(left scale)Operatingincome(right scale)(Years ended March 31)

2012

08

2013

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Net
income(right scale)0

Difference

Down ¥ 7.5
billion
Down ¥9.0
billionUp ¥1.5billion
Down ¥3.2
billionDown
4.9 %Down ¥ 0.2
billion“Group Business Plan 2010” (GBP) for the period from FY2010

contraction in the Chinese market. Initially, we projected that theto FY2012. Under this plan, we have clarified the Group’s position

sales volume for the Chinese SR market as a whole would

by stating our long-term vision of where we want the Group to

exceed 30,000 tons in the fiscal year ending March 2013. In

be in 10 years. Our goal is to remain the global leader in solder

actuality, however, the size of the market currently remains at

resist (SR), while also seeking to sustain growth based on thearound 22,000 tons in terms of sales volume, representing adevelopment of new business pillars.

shortfall of about 8,000 tons. Under these conditions, although

Under this policy, we defined the following four key strategies:

we have been unable to achieve our initial market share target,

the Chinese market strategy, the “local production for local

we have been able to increase our share of the Chinese market,

sales” strategy, the new product development strategy and thewhich had been continuously declining, to no small extent.

global personnel strategy. In addition, we established numerical­Looking ahead, we will continue to further expand our sales

targets of net sales of ¥48.0 billion and operating income ofareas by winning customers through the supply of low-priced¥7.7 billion.

products, and by positioning sales activities targeting customers

However, as I have just explained, we now expect thatover a certain sales area, not just focusing on individual custom-achieving these numerical targets will be difficult, taking into

ers as before. The goal is to further expand our market shareaccount our business forecasts for the fiscal year ending Marchgoing forward. Furthermore, we will strive to expand our range of2013, the plan’s final year. Business results for PWB materials

new and main products in China. Measures include strengthen-are projected to fall significantly below the plan’s targets. The

ing sales activities closely tied to customers through the launchmain factors behind this shortfall are a change in the size of theof a subsidiary in Shenzhen, China in September 2010 and an

Chinese market—the focus of our China market strategy—fromincrease in sales personnel, as well as considering entry into

what we had anticipated initially; and a lack of progress onparts of western China in the future.

­capturing a greater share of this market. As I touched on earlier,both of these factors were caused by a greater-than-anticipated

In regard to our “local production for local sales” strategy, we
have long implemented a policy of making products close tomarkets where they are sold. The Great East Japan Earthquake,
which struck in March 2011, has further increased customer

Trends in China’s Solder Resist Market

support for this policy and accelerated its implementation. Furthermore, the ratio of locally produced raw materials has( Tons )35,000

Divergence of about 8,000 tons

increased to about 50% at overseas subsidiaries on a full-yearbasis. Since these initiatives also help to mitigate the impact of

30,000the strong yen, we plan to continue implementing them. Ideally,

25,000we would like to raise the ratio of locally produced raw materials
to 100%. However, because external factors are also involved,

20,000European debt
crisis

15,000realistically we will do our utmost to increase this ratio as close
to 100% as possible.

10,0005,000
0Lehman’s fall
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012

Forecasts when medium-term plan formulated
Business results (FY2012 is a forecast)

TAIYO HOLDINGS CO., LTD. Annual Report 201209

In regard to our new product development strategy, we

Q4— What steps are you taking to develop humanposted new product sales of ¥2.5 billion, surpassing our target

resources underpinning corporate growth?

for the fiscal year ended March 2012 of ¥2.4 billion. This was

Also, what is your approach to CSR?

mainly due to increased sales of new products such as whiteSR, black SR and silver paste for through holes. Since we are

We are promoting the development of human resources,

targeting new product sales of ¥3.8 billion in the fiscal year

who will become the next generation of leaders, withending March 2013, we expect new product sales to be largely

emphasis on strengthening our employees’ core per-in line with the numerical target of our medium-term businesssonnel skills.

plan. One of the Group’s key priorities has been exploring how toFurthermore, we are promoting business activities indevelop future business pillars alongside PWB materials andthe belief that the essence of CSR is to continuously

FPD materials. I count the development of new products and theprovide ­products of value that are recognized as suchcultivation of new business fields as two of our key accomplish-by society.

ments in the fiscal year ended March 2012.
Our global personnel strategy calls for expanding the appoint-

The TAIYO HOLDINGS GROUP believes that the development of human resources is crucial to the Group’s further

ment of employees of overseas subsidiaries to executive andgrowth. In fact, our global human resources strategy has been

management posts of those companies, and appointing overseas

defined as a key management strategy in our medium-term

personnel as directors at Head Office. In the course of advancing

business plan. Recognizing this, we are striving to strengthen

these initiatives, our vision is to integrate the personnel system

our employees’ core personnel skills. To achieve this, roadmaps

throughout the Group. Accordingly, we will concentrate on thishave been presented to individuals at every level of the organiza-

priority to ensure that we become a truly global enterprise.

tion, from top management to managers and new recruits. By

In other areas, we plan to aggressively pursue M&As. In

setting goals for each individual and supporting his or her efforts

August 2012, we signed a memorandum of agreement regarding

to achieve them, we have put in place an environment thatthe acquisition of shares of Taiwan-based Onstatic Technology

allows every individual to steadily attain personal growth everyCo., Ltd. to convert this company into a subsidiary. Throughyear. In addition, we have conducted basic training and job

these sorts of initiatives, we will endeavor to achieve our numeri-rotations for young employees. In regard to managers, we arecal net sales target as early as possible.

developing and identifying human resources who will provide theIn this manner, we will continue to undertake a variety of
initiatives in the quest for further growth.

next generation of TAIYO HOLDINGS’s management leadership.
This is being achieved by utilizing our holding company structure
to hand authority to operating companies. We recognize thatthese sorts of initiatives will only produce results 5 to 10 years
from now. However, we are taking these initiatives in the belief
that they will steadily contribute to an expansion in our market
share and an improvement in our business performance.
The TAIYO HOLDINGS GROUP conducts various CSR
activities. We believe that the essence of CSR is to continuously provide products that earn recognition from society andgenerate employment. We will create jobs by growing as acompany through the supply of products that society

10

TAIYO HOLDINGS CO., LTD. Annual Report 2012

recognizes as having value. Ultimately, this will also lead to theimplemented to date. I believe that these efforts to cement

advancement of regional communities. Accordingly, rather thanstrong foundations will start to produce results in the fiscal year

considering our CSR activities individually and as separate fromending March 2013 and beyond.

our business activities, we view CSR activities as being closely

In addition, we are currently formulating a new medium-term

tied to our business operations. Based on this approach, going

business plan running through to the fiscal year ending Marchforward we will continue to conduct CSR activities through our2017. Faced with a difficult business environment, we will accel-

core businesses.

erate our product development and customer responses to gain
the lead on our competitors, while formulating a new growth

Q5

strategy premised on the keywords of “Speed & Communication,”shareholders?

other topics across the entire Group.

Our basic policy is to return a continuous, steady andress toward growth. Therefore, I am confident that we will put

high level of profits to shareholders. We have declared

the Group on a new growth path.

— What is your approach to returning profits toaiming to swiftly share information about customer needs andIn this manner, the Group is making steady continuous prog-an annual dividend of ¥90 per share for the fiscal year
under review.
In regard to shareholder returns, we have positioned returning profits to shareholders through cash dividends as a key

I wish to express my heartfelt appreciation to all shareholders
and other investors for their ongoing assistance. And I lookforward to your continued understanding and support for theGroup as we endeavor to reach our goals.

policy. Within this, our basic policy is to return a continuous,
steady and high level of profits to shareholders. In addition, weare targeting a dividend on equity ratio of at least 5% over the
medium and long terms.
Based on these policies, we have declared an annual­dividend of ¥90 per share for the fiscal year under review. In linewith our basic policy, we plan to pay an annual dividend of ¥90
per share also for the fiscal year ending March 31, 2013.
Looking ahead, we will use internal reserves to prepare for
future business expansion and to fund R&D expenses.

Q6

Returns to Shareholders(Yen)(%)
150

10

8.1
115
120

90

55

— In closing, could you please share a mes-sage with shareholders and other investors?

Although achievement of the medium-term business plan’stions for future growth through the strategies we have

6.8

90

90

45

45

25

6.9

8

90
6

45

45

4
30

30

targets has become difficult, we have steadily laid the founda-

115
6.5

60

We will take various initiatives to put the Group on a new
growth track, as we continue our journey toward growth.

8.6

30

0

2008

45

45

45

45

2009

2010

2011

2012

2

0

(Years ended March 31)

Interim ordinary dividend (left scale)Special commemorative dividend (left scale)Year-end ordinary dividend (left scale)
Ratio of dividend to net assets (right scale)

TAIYO HOLDINGS CO., LTD. Annual Report 201211

Feature

Global Strategy Underpinning
Development of Global Human Resources to
Be in Charge of Sustainable Growth
The medium-term business plan that TAIYO HOLDINGS is currently implementing describes thedevelopment of global human resources as one of our important management strategies. In linewith this, we are now strengthening our initiatives related to human resources. In this feature, wewould like to introduce the TAIYO HOLDINGS GROUP’s human resources initiatives.

Initiatives to strengthen our employees’ corepersonnel skills

variety of departments and divisions who do not normally meet

As one of the policies for implementing our global strategy, theinclude initiatives that are aimed at developing global humanGroup aims to enhance its corporate collective power by raisingresources. Executive officers who have experience in the busi-

the level of employees’ mindset and abilities. We recognize thatness operations of overseas subsidiaries participate in someour human resources are the very thing that is the source of ourcourses, thereby giving employees the opportunity to broaden

competitive power. Since TAIYO HOLDINGS became a holding

their global vision by listening to explanations about the current

company, the Group has been focusing on strengthening thebusiness situation at overseas subsidiaries and suchlike.

core personnel skills of its employees and thereby enriching andeach other to communicate freely. In addition, these courses

TAIYO HOLDINGS also offers training courses for newly

strengthening the education of its human resources, based on

recruited employees about how to interact with people fromthe thinking that it is absolutely necessary for us to ensure thatdiverse cultural backgrounds, and also provides courses thatevery single one of our employees has a high market value.

teach the Chinese language.

In more detail, as part of basic business skills training, we

TAIYO HOLDINGS’ President Sato holds meetings with eachtrain our employees in the fundamental skills and knowledge of a

individual employee of the Group, and these encourage further

businessperson, primarily through the provision of fundamental

personal growth in the employees by providing each individual

courses and practical training. Themes include how to writewith the opportunity to speak about what they want to do in thebusiness documents, project management, strategic accounting,company in the future and how they think the company shouldmarketing, finance, corporate law, labor-related laws, and statis-

act to achieve its goals.

tics. Furthermore, the courses also provide the opportunity forthe president himself to explain TAIYO HOLDINGS’ corporate
policies together with his own thinking, with the result that ourmanagement policies become well understood throughout
TAIYO HOLDINGS. These courses have been designed to teachabout 100 employees who are divided between senior and juniorclasses, and they provide a venue for employees drawn from a

12

TAIYO HOLDINGS CO., LTD. Annual Report 2012Growth

Employees receiving training in basic business skills

Training in manufacturing processes

Working toward the development of the next
generation of managers

improve its global management system going forward. As a

In addition to giving training in these kinds of basic businessresult, we will be able to implement our policy of unifying theskills, we provide training for selected management-classmanagement of all our employees, including as regards theiremployees, with the aim of developing the human resources thatgeneral suitability, their job careers, and TAIYO HOLDINGS’

will be in charge of the next generation of management. In 2012,

evaluation of them, and of allocating the right person to thethere are some personnel transfers in which department-manager

right job in the right place. In turn, we will be able to further

level personnel are becoming executive officers, and also a

improve our collective capabilities as a company and achieve

person from overseas subsidiary TAIYO INK CO., (KOREA) LTD.

sustained growth.

TAIYO HOLDINGS will build a global p­ ersonnel system andis being chosen to become a director of TAIYO HOLDINGS. In
these and other cases, we do not take the nationality of theperson involved into account during the process of actively
deploying and promoting talented employees.
Looking ahead, TAIYO HOLDINGS recognizes the need offurther developing global leaders, and we are currently coaching
our directors over an approximate 8-month period to support
them in their formulation of our corporate vision. Moreover, wehave conducted 1-month training courses for the executives
from our subsidiaries around the topic of management strategies
for top management.
These initiatives are encouraging all employees to voluntarilytransform their consciousness and to become highly motivatedYasumasa AndoManager
Human Resources &General Affairs Dept.

in their work activities. In turn, these changes will steadily contribute to an increase in sales and an expansion in the market
share of the TAIYO HOLDINGS GROUP.

TAIYO HOLDINGS CO., LTD. Annual Report 201213

Review of Operations

Geographical Segment Review
Breakdown of Net Sales

Net Sales (Millions of Yen)

20,379Japan

18,491
11,788

26.0%
2010

2011

2012
(Years ended March 31)

11,916

China(including Hong Kong)

10,362

10,637

23.4%
2010

2011

2012
(Years ended March 31)

Taiwan

4,083

4,414
3,707

8.2%
2010

2011

2012
(Years ended March 31)

16,668

Korea

13,743
10,241

36.7%
2010

2011

2012
(Years ended March 31)

Other Regions

2,972

3,061

2010

2011

2,619

5.8%
2012
(Years ended March 31)

14

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Operating Income (Millions of yen)

1,014

990

600

2010

2011

2012
(Years ended March 31)

2,463

2,814
1,751

2010

2011

Performance Overview

Consolidated Group Subsidiaries

In the fiscal year ended March 2012, sales in the domestic
market were firm as demand increased for smartphones
and there was continued good performance of products
related to vehicles and amusement. However, sales toexports remained subdued due to the lingering appreciationof the yen and a slowdown in the global economy.
As a result, net sales in Japan declined 36.3% comparedwith the previous year to ¥11,788 million. Operating income
decreased 2.4% to ¥990 million.

TAIYO INK MFG. CO., LTD.

The sales volume declined compared with the previous
fiscal year due to the deceleration of economic growth inChina and a decrease in exports bound for Europe due tothe European debt crisis.
Consequently, net sales in the region declined 10.7%
compared with the previous year to ¥10,637 million. Operating income decreased 37.7% to ¥1,751 million.

TAIYO INK (SUZHOU) CO., LTD.
TAIYO INK INTERNATIONAL

The sales volume decreased compared with the previous
fiscal year because in “rigid board materials” sales of both
high function products and regular products were sluggish,
due to the slowing economic growth in China and the dropin exports to Europe as a result of the European debt crisis.
Therefore, net sales in the region declined 16.0% compared with the previous year to ¥3,707 million. Operating
income decreased 7.9% to ¥470 million.

TAIWAN TAIYO INK CO., LTD.

Sales on a monetary basis rose significantly compared withthe previous fiscal year because the price of silver, a key raw
material for “FPD materials” stabilized at a high level. However, earnings were negatively impacted by a rise in silver
procurement costs.
As a result, net sales in the region increased 21.3%
compared with the previous year to ¥16,668 million. Operating income decreased 33.7% to ¥650 million.

TAIYO INK CO., (KOREA) LTD.

In the ASEAN region, overall sales remained weak becauseof the lingering economic slump in Europe and the U.S.,
despite the signs of a recovery in demand for products
related to vehicles mainly in Thailand after the flood damage.
Consequently, net sales in the region declined 14.5%
compared with the previous year to ¥2,619 million. Operating income increased 14.3% to ¥273 million.

TAIYO AMERICA, INC.
TAIYO INK INTERNATIONAL­(SINGAPORE) PTE LTD(HK) LIMITEDTAIYO INK TRADING (SHENZHEN)
CO., LTD

2012(Years ended March 31)

645
511

2010

2011

470

2012
(Years ended March 31)

989

979
650

2010

2011

2012
(Years ended March 31)

238

273

129

2010

2011

2012
(Years ended March 31)

TAIYO HOLDINGS CO., LTD. Annual Report 201215

Review of Operations

Product Description and Performance Overview
The Group’s products divide principally into the two categories of printed wiring board (PWB) materials and flat panel display (FPD)
materials. The Group is also utilizing the elemental technologies cultivated in these existing segments to develop new fields and products targeting the electronic components industry.
PWB materials are grouped into the three categories of (1) rigid board materials, (2) package and flexible board materials, and (3)build-up board materials. The key contributor is solder resist (SR), the Group’s mainstay product (see chart below).

TAIYO HOLDINGS GROUP Product Segments
Printed Wiring Board(PWB) Materials

Flat Panel Display(FPD) Materials

Package Board
Materials

Rigid Board Materials

Flexible Board
Materials
Build-up Board
Materials

Plasma Display Panel(PDP) Materials

Development of
New Product Lines

PWB Materials
Liquid Photoimageable (LPI)
Photoimageable (PI)
Solder Resist

Printed Wiring
Board Materials

Dry Film (DFR)
Others(Thermally- and UV– curable)

Others(Hole Plugging Ink, Innerlayer Dielectrics, Etching Resist, etc.)

PWB materials are chemicals used in PWB manufacturing pro-

Solder resist generates a large proportion of Group sales.

cesses. They have been the traditional mainstay of the Group’s

The Group was the pioneering inventor of alkaline developablebusiness. PWB materials are further classified into SR and

SR, a major variant of photoimageable SR (the current main-

non-SR products.

stream type), and commands the leading share of the global

SR is masking ink applied over the surface of a PWB. It

SR market.

forms an insulating layer to protect the underlying board circuit

In the year ended March 2012, the sales volume of low-pattern. SR can be divided into “photoimageable” and otherpriced rigid board materials for the Chinese market increased

types. Other important SR categories are LPI (liquid photoimage-

20% year on year. The sales volume for the Korean market wasable) and DFR (dry film).

relatively strong, but the overall sales volume declined year on

Non-SR products include (1) hole plugging ink, used toyear. In addition, unit prices also dropped year on year, mainly

provide an insulating in-fill for the through-holes that connect

due to the protracted appreciation of the yen and changes in theelectronic circuits in various PWB layers, (2) legend (or marking)product mix. As a result, total sales of PWB materials dropped

ink, which is used on PWB surfaces to indicate names, num-

10.7% compared with the previous year to ¥26,729 million.

bers, positions or other information that relates to mounted
electronic components, and (3) interlayer insulation materials,
which are used in build-up substrates to separate the various
layers of mounted components.

16

TAIYO HOLDINGS CO., LTD. Annual Report 2012*	For more detailed information about solder resist, please refer to our
web site.
http://www.taiyoink.co.jp/english/Profile/soldarregest01.html

FPD Materials
Front Glass Panel

Display Electrode ( Transparent Electrode)Black PatternDielectric
Layer

Within FPD materials, plasma display panel (PDP) materials foruse in flat-screen TV panels account for the majority of sales.
The Group manufactures and sells conductive pastes, whichfunction as the electrodes in plasma TV sets, and black pattern
pastes to create the black patterns for generating image con-Protective
Coating

trast. FPD materials now constitute the Group’s second-largest
product segment behind PWB materials. The sector is expanding rapidly due to the growth of the plasma TV market.
In the year ended March 2012, segment sales rose to a newrecord high due to the stable high price of silver, a key raw material. Segment performance was also boosted by greater sales
Display Electrode(Bus Electrode)

Fluorescent
Material

Rear Glass
Panel

Address
Electrodevolume for the Chinese market. As a result, total sales of FPD
materials grew 30.2% year on year to ¥12,307 million.

Barrier Rib

TAIYO HD GROUP Products

New Fields and Products
The Group is actively engaged in developing and selling new

gained a related patent in 2009. Product sales have been grow-products, and in developing new fields and selling in them. In

ing steadily and white SR sales are forecast to grow further in thethis manner, we aim to achieve sales of ¥3.8 billion in the fiscal

future. Sales for the year ended March 2012 also increased fromyear ending March 2013, the final year of our medium-term

the previous year.

management plan.

The second new product is black SR, which offers another

Two of our new products were created by adding value toalternative to the standard green or blue SR colors. In recent

our existing solder resist (SR) products. The first is white SR.

years, more products have started to feature black PWBs that

Demand for such an SR variant has grown in recent years due

use a black solder resist. The Group has applied its expertise into the emergence of light-emitting diode (LED) lights and LED-

photolithography to develop this new product range. The higher

backlit LCD TV sets, which have energy-saving and eco-friendly

component density and increased circuit resolution in the chips

features. White solder resist helps boost the luminance of LEDs

fitted to smartphones and other mobile devices have madeor LED backlighting due to high light reflectance. The Group

conventional photo-irradiation methods obsolete due to theneed for more resolution. New SR variants are required for novel
direct etching methods that do not utilize a negative film. We
have developed black SR that copes with the contradictory
requirements of being sufficiently light absorbent but also allowing enough light to penetrate to enable hardening of the highresolution circuit patterns. This product is suitable for laser direct
imaging and can also be used within a developable photo-pastethat contains high concentrations of light-blocking silver particles, which are applied using photolithographic printing techniques. The resulting product combines a deep black hue withWhite SRthe required sensitivity and precision for high-resolution etching.

TAIYO HOLDINGS CO., LTD. Annual Report 201217

Research and Development
We are engaged in continual R&D activities to develop new

silver paste for use in through-holes that has lower silver content

products for new markets.

(making it cheaper), but offers equivalent conductivity.

In the field of PWB materials, our R&D is mainly focused on

Conductive pastes are materials that are used in plasma

adhesives, heat dissipation, eco-regulatory compliance anddisplay panel (PDP) electrodes and flat-panel displays such as

electrical conductors. We are also actively applying the experi-

touch screens. We are developing conductive pastes for use inence and technical expertise that we have built up over many

new applications such as connections to solar cells or electro-

years to materials besides solder resist.

magnetic shielding. We are also researching the use of metals

In interlayer insulation materials, we are focusing our R&D

other than silver or nano-metals in such materials.

efforts toward pattern etching process technology which can be

In terms of technical trends, growing demand to conserveused in combination with new interlayer insulation materials toresources and energy is focusing attention on printed (printable)facilitate higher resolution patterns and better reliability. We areelectronics as the pattern-etching solution of choice. Our in-housealso developing adhesives for use with metallic substrates thatR&D programs are focused on the production of next-generation

can offer superior heat-dissipation characteristics and materials

lighting or flexible electrodes based on inkjet printing or gravure

with pre-embedded components.

offset printing (which is excellent for high resolution and mass

Inkjet marking requires a production process capable ofthroughput). We are also participating in research collaborations

applying ink-based patterns to specified parts of substrates whilewith other firms and academic institutions to develop technologies

using minimal amounts of ink. This requires low-viscosity ink thatfor the next generation of printed electronics, and looking todries instantly. Conventional ink can suffer from poor adhesion

develop technologies for flexible device applications.

characteristics. We have developed ink that delivers superior

In terms of our approach to R&D, we try to make the mostadhesion by adding a thermosetting ingredient. The product isefficient use of our resources by entering technical research

now in commercial development following patent acquisition.

partnerships and participating in joint development with universi-

Conductive materials for PWB applications fall into the twoties and public research institutions. Internally, we focus our R&D

varieties of carbon paste and silver paste for through-holes.

on a limited number of projects and use joint development proj-

Carbon paste has garnered attention in recent years as an alter-

ects between the Group companies. This approach helps us tonative to metal electroplating because it helps reduce costs

develop innovative technologies promptly to enable rapid com-compared with using high-priced precious metals. We havemercialization of superior products.

created a material with good printing characteristics and low

In intellectual property, we are seeking to boost efficiency byresistance variability that leaves less phenol-formaldehyde resi-

emphasizing the quality of patent submissions rather than thedue, an issue with conventional products. We are developing a

number of applications filed.

Research andDevelopment Expenses

Number of Patents Ownedby the TAIYO GROUP(only registered patents)(Millions of yen)

(Cases)

1,200

600

1,016

996

963

521
500

428

900
400
600

342

300
200

300
100
0

2010

2011

2012

(Years ended March 31)

0

2010

2011

2012

(Years ended March 31)* The above number indicates the number of patents
registered by the TAIYO GROUP for each fiscal year, forwhich the patent rights continue to be valid as of the fiscal
year under review.

18

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Corporate GovernanceConstruction of Sound Management Structures

outside auditors. Meetings of the Board of Directors are held

We have a holding company structure. Having group manage-

regularly each month, but the Board can also hold extraordinary

ment and strategic functions, the holding company aims tomeetings if necessary. The Board discusses and resolves impor-develop and improve our strategies while optimizing the alloca-

tant matters, and also oversees the execution of duties by thetion of resources. The operating subsidiaries under the holding

Representative Director. Corporate Auditors, including outsidecompany can act promptly and autonomously. This system

auditors, attend most meetings of the Board and Executive

enables us to respond better to customers across various mar-Committee, which convene on a number of occasions eachkets while also speeding up decision-making and boosting oper-

year, to engage in discussions and to monitor proceedings inational efficiency. Its aim is to increase profits and help us build

detail. Two of the Corporate Auditors are full-time auditors withcorporate value.

the power to submit questions to the Group employees. The
system enables the Corporate Auditors to conduct adequate

Basic Thinking on Corporate Governancemonitoring of the execution of duties by Directors.

In line with our Management Philosophy and Basic Management

The Internal Audit Dept., which has a staff of two employees,

Policy, we aim to prosper together with our customers, regional

is fully independent of other Group operations. It undertakes ancommunities, shareholders, employees, business partners andaudit of all departments of the holding company and operatingother stakeholders. We also believe it is necessary for us tosubsidiaries based on the annual audit plan approved by theembrace social responsibilities as well as seeking to generate

Board of Directors. Results of these audits are reported to the

profits. To this end, we seek to promote management transpar-

Board of Directors and Board of Corporate Auditors.

ency and to fulfill our disclosure obligations to support the Com-Internal Controls

pany’s continued prosperity.

We regard the construction of a system of internal controls as a

Corporate Governance Structures

critical part of corporate governance. These controls include the

Our corporate governance system is centered on the Board of

five components described below.

Directors and the Board of Corporate Auditors, whose members(1) Keep all Directors and employees informed about our CSR

are both approved by resolutions at the Shareholders’ Meeting.

(Corporate Social Responsibility) Philosophy and the CodeWe have also adopted a system of Executive Officers to sepa-of Conduct.
(2) The appointment of one Director as Chief Compliance Officer

rate management oversight from operational execution. The
Executive Officers appointed to serve on the Executive Committee are General Managers of divisions of TAIYO HOLDINGS andto chair the Ethics Committee and lead a team promotinginternal business ethics.
(3) An internal hotline to enable employees to report compliance

representatives of overseas subsidiaries. This set-up aims toviolations or any related concerns to an external lawyer.

promote faster operational execution as well as right strategic(4) Regular reports by the Chief Compliance Officer to thedecision-making.
The Board of Directors is composed of seven Directors, oneof whom is an outside director. The Board of Corporate Auditors

Board of Directors concerning the ethics and complianceframework status.
(5) Establishment of an independent Internal Audit Dept. thatis composed of four Corporate Auditors, two of whom are

Shareholders’ Meeting
Reports to

Appoints and dismisses

Board of Directors
Reports to

Appoints anddismisses

President and CEO
Executive Officers
Reports toReports to
AuditsInstructs

Reports to

Appoints and dismisses

Board of Corporate Auditors
Cooperation

Appoints and dismisses
Cooperation

Audits

Accounting Auditors
AuditsReports to

Office of Internal Audits

Cooperation

Internal audits

Instructs

Departments and Subsidiaries

TAIYO HOLDINGS CO., LTD. Annual Report 201219

reports audit findings to the Board of Directors and the Board

Executive Compensationof Corporate Auditors, and where necessary to the account-

The Group policy on executive compensation is to set in an

ing auditors as well.

objective and transparent way executive compensation levels
that provide incentives to executives to increase corporate value

To maintain the reliability of our financial reporting, we haveand shareholder value, while also being properly justifiable.

also developed a system of internal controls to ensure that effec-­Executive compensation is deliberated by the Compensation

tive and appropriate internal control reports are produced, based

Committee, a body that includes an outside auditor. The Directors’

on the provisions of the Financial Instruments and Exchange Law.

compensation is decided by the Board of Directors and the
Corporate Auditors’ compensation is decided in collaboration

Risk Managementwith the Board of Corporate Auditors, after the aforementioned

The Group has studied and instituted ways of mitigating, or of

deliberation by the Compensation Committee.

taking appropriate steps in response to, a variety of risks associated with business activities.
One Director is appointed as “the Director in charge of risk
management.” Moreover, the department in charge of risks
occurring in the course of natural work operations, evaluates andresponds to these risks. Furthermore, the Risk Management
Committee conducts risk management in a cross-departmentalmanner over the entire Group.

Directors’ compensation is made up of a base salary plus
performance-based components linked to the Group earnings
and the share price. The Corporate Auditors only receive abase salary.
Executive compensation for the year ended March 2012 isshown below.

Executive compensation

As regards the detailed activities conducted during the fiscal
year ended March 2012, the Group completely reviewed the
Risk Management Manual, and also focused activities on issues
related to the aftermath of the Great East Japan Earthquake that
occurred in March 2011. As part of our responses in the period
after the earthquake, we established an earthquake countermea-

Executive category

Aggregate
remuneration(Millions of yen)

Director

Aggregate remuneration by component(Millions of yen)BasesalaryEarnings-based
performance

Retirement
benefits

Total
number of
executives

233

134

47

52

7

Corporate Auditor

5

5

–

0

1

Outside Corporate
Auditor

38

38

–

0

4

sure conference framework, and arranged for domestic bases tohold frequent television conferences. As a result, the Group

Board of Directors(As of July 1, 2012)

confirmed that it could respond rapidly in the event of an earthquake. We also verified that we had secured a method of com-President and CEO

Outside Director

munication to use immediately after an earthquake, and that

Eiji Sato

Masayuki Hizume

Directors

Outside Corporate Auditors

Masahisa Kakinuma
Seiki Kashima
Takayuki Morita
Jong Tae Kim
Takato Kawahara

Toshio Nemoto
Akihito Sakaitime is needed to confirm the safety status of those employees
who are on leave when an earthquake occurs.
In this context, the Risk Management Committee used thispost-earthquake information as a basis to review a manual
describing the emergency situation caused by a fire or earthquake, and how to respond afterwards. This manual forms partof the Risk Management Manual, and is meant to be used insuch an emergency. We ensured that the manual is simply written and clearly lists what must be done. We also combined theantidisaster drills that had been conducted at each base hitherto, and performed a joint drill at three domestic bases.

20

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Corporate Auditors

Masuhiro Omori
Si Bum Yoo

A Word from the Corporate Auditors

In general, a company’s full-time corporate auditors are appointed from within the company, and the parttime auditors are from outside.
In our case however, we at Taiyo Holdings are different. Our full-time auditors (Nemoto and Sakai) wereappointed from outside the Company and our part-time auditors (Omori and Yoo) come from inside theCompany. From a purely legal point of view, both Omori and Yoo are certainly in-house auditors. However,both of them can be said to be in-house auditors who possess the “outside the Company” viewpoints thatcome from their backgrounds of having both joined this Company some years ago from other companies.
In this manner, Taiyo Holdings’ auditors have been chosen in response to the requirement for the­auditor’s ,”Independence.” In addition, I am of the opinion that in combination with the extensive management experiences of all the auditors, our auditors team can contribute to building the Company’s effective
Full-time Corporate Auditor

Toshio Nemoto
CareerMr. Nemoto worked for a total of 16 years as
Director and Managing Director of Akai ElectricCompany Ltd. (1988–1996), which is listed on theFirst Section of the Tokyo Stock Exchange, andDirector, Managing Director and Senior Corporate
Auditor of DAINIPPON SCREEN MFG. CO., LTD.
(1998–2006). Thereafter, he held the following posts:
External Corporate Auditor of es Holdings(2006–2010);
Representative Director and President of IFS Japan
K.K. (2007–2009);
External Director of LaOX Co., Ltd. (2008–2011)
External Director of BOBSON CO., LTD (2009–2011)
Director of Milestone Turnaround Management Co.,
LTD. (2010 to present)
Following these posts, Mr. Nemoto was appointed
as Part-time Corporate Auditor (External) of theCompany in 2010 and Full-time Corporate Auditor(External) of the Company in 2011, his current post.

system of corporate governance.
When conducting actual audit activities, I personally am mindful of the principles of “the three-eyedhobgoblin” and “the three actuals.” In other words, I adopt the three viewpoints of “the eyes of shareholders,”“the eyes of the public” and “the eyes of laws” and I conduct my audits on the basis of three “actuals,” i.e.
“actual spots,” “actual facts” and “actual things.”
In addition to these principles, I refer to the “five guidelines for judging a management decision” set
down by the Japan Corporate Auditors Association.
Namely, 1) Are the directors prioritizing the interests of the company? 2) Are there any infringements oflaws or the Articles of Association? 3) Is the decision making process rational? 4) Is there anything irrationalin the decision when viewed by the ordinary management? 5) Are there no serious errors in the understanding of facts?
One of the Taiyo’s management policies is to accelerate the Company’s globalization. In tandem with
this, we need to ensure that our corporate governance possesses a global effectiveness. To accomplish this,I believe we need to improve our audit quality further, strengthen the coordination with the auditors of our
subsidiaries and increase the frequency of audit visit to the subsidiaries.
I would like each auditor to cooperate in the building of a full-fledged audit structure that transcends
national boundaries and plays a part in securing the global effectiveness of Taiyo’s corporate governance.

The corporate auditors at TAIYO HOLDINGS comprise the two full-time external corporate auditors of Mr.
Nemoto and myself. In general, external corporate auditors are usually part-time corporate auditors, but thereverse is true in the case of Taiyo. As a result, the auditing system at Taiyo can conduct its checks from amuch more multisided “outside the company” viewpoint. Moreover, it means there are many opportunities
for corporate auditors to make remarks at meetings of the Board of Directors, and in this sense it alsomeans that Taiyo’s corporate governance system is functioning very well.
It is natural that in their daily work activities corporate auditors monitor the directors’ execution of theirduties. However, recently in Japan attention has been drawn to the internal controls that companies are
putting in place in response to J-SOX, and as a result I myself have had to make use of my past experienceto focus on and audit the building and operating of an internal control system. As regards the internal control
Full-time Corporate Auditor

Akihito Sakai
CareerMr. Sakai joined Tokio Marine & Fire Insurance Co.,
Ltd. (currently Tokio Marine & Nichido Fire InsuranceCo., Ltd.) in April 1975 and was assigned to Tokio
Marine Life Insurance Company Limited (currently
Tokio Marine & Nichido Life Insurance Co., Ltd.) in
July 2003.
Thereafter, he was appointed to the following posts:
Chief J-SOX Counselor, Human Resources andGeneral Affairs (in July 2007)
Chief J-SOX Counselor, Legal Compliance Department(in July 2008)
Advisor to TAIYO HOLDINGS (in January 2011)
Full-time Corporate Auditor at TAIYO HOLDINGS(June 2011 to present)
Auditor at TAIYO INK CO., (KOREA) LTD. (May 2012
to present)
During his work in a non-life insurance company, Mr.
Sakai was in charge of accounting, finance, investments, marketing, personnel; during his work in a life
insurance company, he was in charge of policy
management and accounting; since July 2007 hehas presided over J-SOX matters.

system currently in place in Taiyo, both the system-related and operational aspects are functioning smoothly,
but it is still important to constantly carry out timely revisions. On the basis of these, I want to carefully­examine the operational effectiveness of the system.
Taiyo is a company that develops its business activities globally and as such we must not only comply
with the laws and accommodate revisions to the laws in all relevant countries, we must also envisage andprepare for a variety of risks, including our responses to environmental concerns. Accordingly, in the courseof Taiyo conducting audits, I will constantly remain mindful of whether or not there are deficiencies in oursystem from the viewpoint of the various relevant countries.
Taiyo seeks to further enhance its corporate value and establish itself as a truly global company, withthe aim of becoming an enterprise that is admired by society. I expect each of its subsidiaries to achieveadvancement going forward. Furthermore, while taking care not to miss out on the timing of various opportunities overseas, I expect each subsidiary to become an enterprise that can contribute to the world throughbusiness activities.

TAIYO HOLDINGS CO., LTD. Annual Report 2012

21

CSR
The Group has prospered by earning the trust of shareholders,

conducting business, we are committed to fulfilling our corporate

customers, business partners and other stakeholders. To remainsocial responsibilities as an enterprise.

worthy of such trust and support the Group’s continued devel-

In addition, various management structures and committees

opment, we have formulated our CSR Philosophy and a Code ofprovide the infrastructure needed to support appropriate promo-

Conduct based on our Management Philosophy and Basiction of the CSR-related activities that we undertake.

Management Policy to guide all of our business activities. In

CSR Philosophy
We will promote our corporate social responsibility, including complying with the law, protecting the environment,
ensuring thorough quality management, and contributing to society.

Code of Conduct
We will observe the following code to put the Group’s CSR Philosophy into practice.
1. Ethical and Legal Compliance

We will observe laws and other social norms, and understanding the spirit thereof, will act openly and fairly.

2. Workplace Environment

We will respect employees’ human rights, and create a workplace that is fair and free of discrimination.

3. Fair Business Dealings

We will deal with all our business partners in an honest manner and conduct business with them basedon impartial and fair business conditions.

4. Respect for Stakeholders

We will always conduct business activities with respect for the viewpoints of all our stakeholders,and disclose information in a timely and appropriate manner.

5. Ensuring Confidentiality

We will work to ensure the protection of confidential information related to our business partners,
the company itself, and any individual.

6. Ensuring Quality (Quality Policy)

We will ensure that we always provide safe, quality products that satisfy our customers.

7. Protecting the Environment
We will endeavor to protect the environment as part of the performance of our social responsibility,(Basic Environmental Philosophy) and will engage in business activities that are in harmony with the environment.
8. Social Contribution

As members of society, we will engage in activities that contribute to society.

9. Respect for Intellectual Property

We will take appropriate precautions to protect our intellectual property rights, and those of third parties.

10. Exclusion of Anti-social Forces

We will take a resolute stance towards anti-social forces and will not respond in any way toillegal or improper demands.

CSR Philosophy

Requirements/expectations
Share price, environmental protection,
high-functionality products

Code of Conduct
Provision
Social contribution, dividends, fairbusiness dealings, tax payment

Management
Internal controls

Information disclosure
Website, CSR report, business report

Evaluation
Rating, awards, degree of customer
satisfaction

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Green procurement
Environmentallyfriendly products

Risk management
Information security
Compliance

Environment

Society

Environment management
substance reduction
Prevention of global warming

Employment,

Social contribution

human rights,
occupational safety

Sustained development/stabilizationof management

Stakeholders(Shareholders, customers, business partners,
regional communities, employees)

22Management Philosophy

Communication
with stakeholders

Relationship with Shareholders

Relationship with Local Communities and Society

Performing IR Activities

Social Contribution

TAIYO HOLDINGS maintains a basic policy of ensuring accuracy,

As part of its social contribution activities, the TAIYO HOLDINGS

fairness, and promptness in the performance of IR activities. On

GROUP makes monetary donations to support relief efforts inthe basis of this policy, we deliver to shareholders and investors

the event of major disasters causing significant damage.

information effective for making investment decisions.

Although over a year has elapsed since the Great East Japan

In terms of specific IR activities, we publish an annual report,

Earthquake struck Japan in March 2011, much damage remains

offer IR information on our website, hold financial results briefings

in the afflicted region. Looking ahead, we will provide as muchfor analysts and institutional investors, and meet individually withsupport as possible in our role of people living in the same society.

institutional investors, among other activities. We are also proactive
in providing information to overseas institutional investors. In theyear under review, for example, we held IR meetings in Singapore.

Innovating Quality Management and Utilizing Complaints
The TAIYO HOLDINGS GROUP carries out initiatives to ensurehigh levels of quality and safety that satisfy our customers. In theyear under review, we focused on improving the effectiveness of
our quality management system, and on the fundamental
streamlining of our system after mainly reconfirming the workflow.
In the current fiscal year, we will build an easy-to-understandclear-cut quality system after clarifying the objectives and roles ofeach process, and the connections between processes, thereby
further streamlining the system for efficiency.
We consider customer complaints as opportunities toimprove quality. After receiving a complaint, we identify the rootsof the problem andtake effective response
measures that will leadto the manufacturing

Actionand provision of prod-

Plan
ActionCheck
Sharing information
with customers
Check
Do

Do

The TAIYO HOLDINGS GROUP conducts various community
beautification programs as part of its environmental protection
activities. At our Ranzan Facility, about 10 management-level

Relationship with Customers

Quality improvement based on
customer complaints

Environmental Protection Activities

ucts with more stable
quality.

Planemployees are split into two teams which take turns picking up
garbage from roads around the site on a monthly basis. In addition, TAIYO INK is registered with a road beautification program in
Saitama Prefecture, and employees contribute their time once amonth to clean up the roads, focusing on national road No. 254.
We also participate in programs to protect the great purple
emperor, designated as Japan’s national butterfly.

Relationships with Employees
Development and Use of Global Human Resources
Amid ongoing globalization, the TAIYO HOLDINGS GROUP
actively utilizes global human resources, including considering
the deployment within the Group as a whole of employees who
have been hired locally at overseas affiliates, and promoting
excellent employees as far as becoming executives of TAIYOHOLDINGS. In the year under review, we arranged for local­managers at overseas affiliate to come and give lectures to young
employees about the market situation and cross-cultural background of various countries, thereby enabling the training to begiven in a fresh and authentic manner.

Occupational Health and Safety
Every month we convene a Health and Safety Committee at

Relationship with Suppliers
Carry Out Supplier Assessments and On-site Audits

which discussions are conducted based on reports from various
managers. The Committee works to ensure adherence withIn order to conduct business transactions with suppliers in alaws, regulations, agreements, and company rules in the field of

relationship of trust, the TAIYO HOLDINGS GROUP carries out

health and safety. Furthermore, our plants are visited andsupplier assessments, clarifies anything necessary, and pro-inspected every month by various managers, and once a year all

ceeds with the cooperation of the supplier.

members of the Committee conduct risk assessment activities.

We carry out on-site audits of our suppliers of raw materials

As a result, we prescribe improvements for risk areas, and hori-and products, with the understanding and approval of our sup-zontal development for similar areas. Overall, the entire company

pliers, as a way to maintain and improve the quality, environmen-

is united in implementing continuous improvements in health andtal friendliness and delivery of procured goods.

safety. Moreover, we take working-environment measurements
every year, and actively endeavor to create a comfortable workplaceenvironment, as well as fully implementing fire-prevention andevacuation drills, and health and safety education.
TAIYO HOLDINGS CO., LTD. Annual Report 201223

Domestic and Global Network
TAIYO HOLDINGS CO., LTD.
Head Office2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan
PHONE: 81-3-5999-1511 FAX: 81-3-5999-1501

TAIYO HOLDINGS CO., LTD.
Ranzan Facility
388 Ohkura, Ranzan-machi, Hiki-gun,
Saitama 355-0222, Japan
PHONE: 81-493-62-7777 FAX: 81-493-62-2330

TAIYO INK MFG. CO., LTD.

Production and Marketing Subsidiaries
Marketing or Technical Support Subsidiaries

900 Hirasawa, Ranzan-machi,
Hiki-gun, Saitama 355-0215, Japan
PHONE: 81-493-61-2711 FAX: 81-493-61-2701

Company

TAIWAN TAIYO INK CO., LTD.

Voting Shares HeldBusiness Description

99.8%

Manufacture and marketing of PWB materials

TAIYO INK CO., (KOREA) LTD.

89.8%

Manufacture and marketing of PWB and FPD materials

TAIYO INK (SUZHOU) CO., LTD.

100.0%

Manufacture and marketing of PWB materials

TAIYO AMERICA, INC.

100.0%

Manufacture and marketing of PWB materials

TAIYO INK INTERNATIONAL (SINGAPORE) PTE LTD

100.0%

Marketing of PWB materials

TAIYO INK (THAILAND) CO., LTD.

100.0%

Technical support for PWB materials

TAIYO INK INTERNATIONAL (HK) LIMITED

100.0%

Marketing of PWB materials

TAIYO INK TRADING (SHENZHEN) CO., LTD

100.0%

Marketing of PWB materials

Production and Marketing
Subsidiaries

Marketing or Technical Support
Subsidiaries

TaiwanTAIWAN TAIYO INK CO., LTD.

Singapore
TAIYO INK INTERNATIONAL(SINGAPORE) PTE LTD

No.7 Ta Tung 2nd Road. Kuan-Yin Industry Park,
Taoyuan, Taiwan, R.O.C.
PHONE: 886-3-483-3230 FAX: 886-3-483-3240
http://www.taiyoink.com.tw

Korea
TAIYO INK CO., (KOREA) LTD.
1058-8, Singil-dong, Danwon-gu, Ansan City,
Gyeonggi-do, Korea
PHONE: 82-31-491-9250 FAX: 82-31-491-7671
http://www.taiyoink.co.kr

China - Suzhou
TAIYO INK (SUZHOU) CO., LTD.
No. 26 Taishan Road, Suzhou New District,Suzhou City, Jiangsu, P.R. China
PHONE: 86-512-6665-5550
FAX: 86-512-6665-5011
http://www.taiyoink.com.cn

USA - Nevada
TAIYO AMERICA, INC.
2675 Antler Drive, Carson City, NV 89701, U.S.A.
PHONE: 1-775-885-9959 FAX: 1-775-885-9972
http://www.taiyo-america.com

171 Chin Swee Road #11-07/08 San Centre
Singapore 169877
PHONE: 65-6372-1141 FAX: 65-6372-1151

ThailandTAIYO INK (THAILAND) CO., LTD.
408/122 Phaholyothin Place, 28/F Phaholyothin
Road, Samsen-Nai, Phayathai, Bangkok 10400,
Thailand
PHONE: 66-2-619-0506 FAX: 66-2-619-0799

Head OfficeHong Kong
TAIYO INK INTERNATIONAL (HK) LIMITED
Room 703, 7/F, Silvercord, Tower 2, 30 CantonRoad, Tsim Sha Tsui, Kowloon, Hong Kong
PHONE: 852-2735-0636 FAX: 852-2375-7332

China - Shenzhen
TAIYO INK TRADING (SHENZHEN) CO., LTD

TAIWAN TAIYO INK CO., LTD.

Rm 1506, Office Tower, Shun Hing Square Di Wang
Comm. Centre, 5002 Shun Nan Dong Road,
Shenzhen City, Guangdong, PRC
PHONE: 755-2583-4787 FAX: 755-8207-0989

TAIYO INK (SUZHOU) CO., LTD.

24

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Financial Section
26
30
32
33
34
35
36
50

Management Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

TAIYO HOLDINGS CO., LTD. Annual Report 201225

Management Discussion and Analysis
Overview of the Consolidated Results

Net sales

During the fiscal year ended March 31, 2012, the pace of eco-

Sales of PWB (printed wiring board) materials were ¥26,729

nomic recovery in developed countries that had continued sincemillion (down 10.7% year on year). This reflected lower year-on-

the global financial market crisis slowed down, as the sovereign

year sales volume and a decline in unit sales prices due to suchdebt crisis triggered by the financial problems in Greece spreadfactors as the lingering appreciation of the Japanese yen andthroughout Europe. At the same time, with the shrinking invest-

changes in the product mix.

ment in and trade with emerging economies, economic growth

Sales of FPD materials, which are comprised mainly of PDP

in emerging countries also decelerated. In China, which is thematerials, grew 30.2% year on year to ¥12,307 million, despite

primary market for the Group, exports to Europe slowed down

flat sales volume. The main reason for the increase was higher

and consumer spending was restrained due to a rise in com-sales unit prices resulting from the stabilization of silver, a major

modity prices and termination of financial assistance. The

raw material, at a high price.
As a result, consolidated net sales for the year under review­Japanese economy also had a difficult time with the impact ofamounted to ¥39,797 million (down 1.4% year on year).

the Great East Japan Earthquake and record-high yen as well as
deflation, but it started to show a slight recovery toward the endof the fiscal year on the back of a monetary easing policy and

Gross profit and operating income

correction in the Japanese yen’s appreciation. Nonetheless, theGross profit declined 16.5% year on year to ¥9,974 million due

pace of recovery is still slow due to a number of risk factors,

mainly to a 4.9% increase in the cost of sales to ¥29,823 million.

such as a recurrence of the European debt crisis and geopolitical

Selling, general and administrative expenses declined 9.5% totension that affects the crude oil market.

¥5,934 million, reflecting mainly decreases in sales commission

In the electronics components industry, small-sized informa-

expenses in addition to commission fees and depreciation

tion terminals such as smartphones and tablet PCs performed

expenses. As a result, operating income declined by 24.9%

favorably despite the negative impact from production cutbacks

year on year to ¥4,040 million.

due to the slowdown in the European economy and the floods in

The operating income ratio declined 3.1 percentage points

Thailand. On the other hand, demand was sluggish for PCs,

from 13.3% to 10.2%.

which are being replaced by small-sized information terminals,
and for flat-screen TVs, whose replacement cycle had already

Net income

reached its peak.

Income before income taxes and minority interests and net
income both decreased year on year to ¥3,561 million (downNet Sales

Operating Income
and Operating Income Ratio(Millions of Yen)

(Millions of Yen)

50,00040,000(%)

6,000

40,366Net Income and
Net Income Per Share(Millions of Yen)

5,381

39,797

13.8

13.3

200

3,403

4,843

35,056

(Yen)

4,000

18

3,011
4,040

4,000

3,000

131.7812

30,000

10.2

2,503

150

116.082,000

98.38 100

1,000

50

20,0002,000

610,000

0

2010

2011

2012

(Years ended March 31)

0

TAIYO HOLDINGS CO., LTD. Annual Report 2012

2011

2012

0

0

2010

2011

2012

(Years ended March 31)(Years ended March 31)

n Operating income (left scale)Operating income ratio (right scale)n Net income (left scale)
Net income per share (right scale)

n

26

2010

n

0

31.6%) and ¥2,503 million (down 26.4%), respectively. These

Taiwandecreases were due mainly to incurring a devaluation loss on

Sales volume declined year on year, due to sluggish sales of bothinvestments in subsidiaries as well as declines in interest income

high-performance and general-purpose products of “rigid board

and gains on sales of noncurrent assets, despite an increase inmaterials,” resulting from slowing economic growth in China anddividend income and a decrease in loss on sales and retirement

lower exports to Europe due to the European debt crisis.

of noncurrent assets.

As a result, net sales in Taiwan decreased 16.0% in year-on-

Net income per share decreased by 25.3% year on year
from ¥131.78 to ¥98.38.

year terms to ¥3,706 million, and segment profit declined 7.9%
to ¥470 million.

Results by Segment

Korea
In the Korea market, the price of silver, a key raw material forJapan
In the Japan market, sales continued to perform strongly, thanks“FPD materials,” hovered at a high level, pushing up sales on ato stronger demand for smartphones and the good performancemonetary basis significantly compared with the previous fiscal

of products related to vehicles and amusement. However, sales

year. However, procurement costs for silver also jumped,for export remained subdued due to the lingering appreciation of­negatively affecting earnings.

the yen and the global economic slowdown.
Overall, net sales in Japan declined 36.3% compared withthe previous year to ¥11,788 million. Segment profit declined

As a result, net sales in Korea grew 21.3% in year-on-year
terms to ¥16,668 million, but segment profit fell 33.7% to¥650 million.

2.4% to ¥990 million.
Other markets
China (including Hong Kong)

As regards other markets, in the ASEAN region, while there were

In the China market, sales volume declined year on year, due tosigns of recovery in demand mainly for products related to vehi-

the deceleration of economic growth in China, and a decrease incles in Thailand after the flood damage, overall sales remained

exports bound for Europe due to the European debt crisis.

weak, owing to the protracted economic slump in Europe andAs a result, net sales in the China market dropped 10.7% in
year-on-year terms to ¥10,637 million. Segment profit declined

the U.S.
As a result, net sales in other markets amounted to ¥2,619
million, a decrease of 14.5% in year-on-year terms. Operating

37.7% to ¥1,751 million.

income increased 14.3% to ¥273 million.

Analysis of Financial Position
AssetsCurrent assets decreased by 4.7% to ¥26,381 million. Thisdecrease was mainly attributable to a ¥341 million decrease in

Return on Equity

notes and accounts receivable-trade (down 3.9% year on year),and a ¥219 million decrease in deferred tax assets (down 77.5%
year on year).

(%)

Total property, plant and equipment declined 3.9% to

12¥12,546 million. This decline was mainly due to a ¥305 million

9.9
8.7
7.5

8

decrease in buildings and structures-net (down 4.3% year onyear), and a ¥148 million decrease in machinery, equipment,
and vehicles-net (down 11.0% year on year).
Investments and other assets declined 16.5% to ¥1,776
million. This decline was mainly attributable to a ¥32 million

4decrease in investment securities (down 6.1% year on year), a¥32 million decrease in deferred tax assets (down 36.5% year on
0

2010(Years ended March 31)

2011

2012

year), and a ¥15 million increase in allowance for doubtful
accounts (up 4.1% year on year).
As a result, total assets stood at ¥40,703 million at March
31, 2012, 5% lower than the previous fiscal year-end.

TAIYO HOLDINGS CO., LTD. Annual Report 201227

Liabilities

Research and Development Expenses

Current liabilities decreased by 16.8% to ¥6,393 million. ThisThe TAIYO HOLDINGS GROUP conducts research and develop-

decrease was mainly due to a ¥474 million decrease in notes

ment activities centered on the fields of insulation materials,

and accounts payable-trade (down 8.9% year on year), a ¥345

conductive materials and adhesive materials for the fast-evolving

million decrease in accounts payable-other (down 35.4% year

electronics industry.

on year), and a ¥419 million decline in income taxes payable(down 68.8% year on year).
Long-term liabilities decreased by 15.2% year on year to

Research and development expenses for the year ended
March 31, 2012 totaled ¥963 million, ¥33 million lower than theprevious fiscal year.

¥834 million. This was mainly due to a ¥168 million decrease indeferred tax liabilities (down 28.1% year on year) and a ¥11

Risk Factors

million decrease in liability for retirement benefits (down 3.4%

(1) Technological innovation risks

year on year).

1. Risks related to PWBs
Our Group is reliant on the manufacturing and selling of PWB

Total equity

materials, and SR in particular, as a major source of our income.

Total equity, after adding minority interests, was ¥33,476 million

If radical technological developments, such as electronic parts

as of March 31, 2012, a 2.1% decrease from the previous fiscalthat do not use PWBs or PWBs that do not use SR, were to be

year-end. This was mainly due to a ¥58 million decrease inwidely adopted, this would result in a significant decrease in­foreign currency translation adjustments, and a ¥218 million

demand for our products.

decrease in minority interests.
As a result, the equity ratio increased 2.9 percentage points
from 78.2% to 81.1%. ROE was 7.5%.

From the viewpoint of product characteristics, operability,and economic viability, there is little possibility that such tech­
nological innovations will be widely adopted in the near future.
However, the Company considers it to be an important issue inAnalysis of Cash Flows
Cash flows from operating activities

the field of research and development to investigate possible
new manufacturing methods in relation to PWBs.

Net cash provided by operating activities for the fiscal year
decreased by 38.9% year on year to ¥2,793 million. The main

2. Risks related to PDP materials

cash inflows were depreciation of ¥1,046 million and a devalua-

Our PDP materials customers are restricted to a few paneltion loss of ¥421 million on investments in subsidiaries. The main

­manufacturers. As we rely heavily on certain customers, thecash outflows were an increase in accounts payable—trade andperformance of these customers could significantly impact ourother current liabilities of ¥807 million and income taxes—paid

own sales.

amounting to ¥1,591 million.

As PDPs compete with LCDs and other technologies in
the FPD market, the future demand for PDPs necessarily

Cash flows from investing activities

involves uncertainty.

Net cash used in investing activities for the fiscal year amounted
to ¥1,343 million, a decline of 277.1% from the net cash pro-(2) Risks associated with patents

vided by investing activities in the previous year. This was mainly

In order for our Group to maintain a superior competitive position,

due to ¥536 million used for deposits into time deposits, ¥494

efforts are being made to protect the products and technology

million for the purchase of property, plant and equipment, andwe develop through patents and intellectual property. However,¥201 million for purchases primarily of subsidiaries’ stock.

if a patent application, etc. were not to result in the granting ofrights, or a third party successfully were to requests an invalida-

Cash flows from financing activities

tion, insufficient protection of our rights as a Group might result.

Net cash used in financing activities for the fiscal year increased

Moreover, infringing the intellectual property rights owned by a

by 19.4% to ¥2,979 million. The main usage of cash was forthird party could impact on the performance of our Group as adividends paid of ¥2,925 million.

result of the subsequent payment of royalties or large amounts

As a result, cash and cash equivalents as of March 31, 2012
stood at ¥11,564 million, ¥1,589 million lower than the previous
fiscal year-end.

28

TAIYO HOLDINGS CO., LTD. Annual Report 2012of damages.

(3) Risk of major production facilities being affectedby a disaster(8) Risk of price fluctuations in key products
PWB manufacturing is shifting to other Asian countries,

Our Group has manufacturing bases in Japan, Taiwan, Korea,­especially China, and we are engaged in continuing price wars

China and the United States. In the event that any of our manu-

over SR with local companies as well as other Japanese firms.

facturing bases are damaged by a natural disaster and their

There is also pressure to lower SR prices which has resulted

manufacturing functions are obstructed, manufacturing andfrom price competition in the PWB market. Because of this,

supply functions would then be switched to another manufactur-

there is a possibility that the price of our main product, SR,ing base as an emergency measure. However, this would require

may drop, thus affecting the performance of our Group.

some preparation and adjustment and our business would be
negatively affected in the interim.

(9) Risks related to fluctuations in product demand
Demand for our Group’s main products is influenced by(4) Risk related to procurement of raw materials­electronic components market trends, which may affect the

The Group procures many of its raw materials from external raw

performance of our Group.

material manufacturers. The occurrence of problems at these
raw material manufacturers or a lack of supplies that hinders the(10) Credit risks related to receivables

Group’s production activities may negatively affect the business

The Group has many customers and, although we do not

performance of the Group.

concentrate an excessive amount of receivables on specificcustomers, the deterioration of the financial position of custom-(5) Risk related to higher prices of raw materials

ers and the resulting bad debt may affect the performance of

The occurrence of rises in the prices of some of the raw materials

our Group.

that the Group procures due to the impact of conditions in the
petroleum market, or suchlike, may negatively affect the business(11) Risk of recoverability of deferred tax assets

performance of the Group. In the case of PDP materials inWith respect to deductible temporary differences and tax-loss­particular, fluctuations in the price of silver, one of the key raw

carryforward, the Group determines recoverability after reason-­materials, may negatively impact on the earnings of the Group.

ably estimating future taxable income when recording deferred
tax assets. However, if deferred tax assets were to be deemed(6) Country-specific risks related to business deployment
overseas

unrecoverable in whole or in part as actual taxable income
may differ from estimates due to changes in the business

Our Group conducts manufacturing activities in Japan, Taiwan,­environment and other factors, or if changes in tax rates or

Korea, China, and the United States. Sales of our Group’s

revisions in tax systems were to occur in various countries, a­products particularly in China, Taiwan, Korea, ASEAN countries,

recalculation of deferred tax assets would become necessary.

and other Asian markets are expanding. Accordingly, terrorist

If, as a result of the above, a reversal of deferred tax assets

activities, destabilization of the political situation, economic

became n­ ecessary, it could impact on our operating results­fluctuations, the outbreak of earthquakes and contagion, unfore-and ­financial position.

seen changes to legal, regulatory or tax systems, labor-relatedindustrial disputes and other country-specific risks could impact
on the business strategies and performance of our Group.
(7) Risk of exchange rate fluctuations
Our ratio of overseas sales to net sales is approximately 80%,and in the majority of cases we calculate our overseas net sales
figures in foreign currencies. Accordingly, our business performance is affected by fluctuations in exchange rates, with a highly
appreciated yen normally leading to reduced income and profits.

TAIYO HOLDINGS CO., LTD. Annual Report 201229

Consolidated Balance Sheets
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
March 31, 2012 and 201130

TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD. Annual Report 201231

Consolidated Statements of Income
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 201132

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Consolidated Statements of Comprehensive Income
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 2011TAIYO HOLDINGS CO., LTD. Annual Report 201233

Consolidated Statements of Changes in Equity
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 201134

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Consolidated Statements of Cash Flows
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2012 and 2011TAIYO HOLDINGS CO., LTD. Annual Report 201235

Notes to Consolidated Financial Statements
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Year Ended March 31, 201236

TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD. Annual Report 2012

37

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TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD. Annual Report 2012

39

40

TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD. Annual Report 2012

41

42

TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD. Annual Report 2012

43

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TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD. Annual Report 2012

45

46

TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD. Annual Report 2012

47

48

TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD. Annual Report 201249

Independent Auditor’s Report50

TAIYO HOLDINGS CO., LTD. Annual Report 2012

Opening Feature

Corporate Information(As of March 31, 2011)

Company Overview

Accessing Our Investor
Information Online

Name: TAIYO HOLDINGS CO., LTD.
Head office: 2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan
Phone: 81-3-5999-1511
Established: September 29, 1953
Capital: ¥6,134 million
Shares authorized: 50,000,000
Total number of issued shares: 27,464,000
Stock listings: Tokyo
Number of shareholders: 8,003
Major shareholders:Shares(thousands)

Shareholding as apercentage of total
shares issued (%)

Kowa Co., Ltd.

6,554

23.86

Japan Trustee Services Bank, Ltd.

2,906

10.58

Company’s Treasury Stock

Name

No.

The Global Leader
in Solder Resist

The ink, typically green, that is applied
to the surfaces of printed wiring boards(PWBs) is in fact solder resist (known in
the U.S. and elsewhere as solder mask),
the mainstay product of the TAIYOHOLDINGS GROUP. Solder resist is an
essential material in the production of
PWBs used in electronics equipment,from mobile phones and PCs to digitalappliances and automotive electronic
devices. The TAIYO HOLDINGS GROUP
commands a global market share forsolder resist of approximately 50%,
making it the No. 1 specialty chemical
manufacturer in this field.

For details on business domains,

2,025

7.37

State Street Bank and Trust Company 505223(Standing proxy: Mizuho Corporate Bank, Ltd.)

979

3.56

The Master Trust Bank of Japan, Ltd.

801

2.91

SHIKOKU CHEMICALS CORPORATION

631

2.29

Toshin Yushi Co., Ltd.

538

1.96

NORTHERN TRUST COMPANY (AVFC) SUB A/C
AMERICAN CLIENTS (Standing proxy: The Hongkong andShanghai Banking Corporation Limited Tokyo Branch)

528

1.92

Mellon Bank, N.A. as Agent for its Client Mellon Omnibus
US Pension (Standing proxy: Mizuho Corporate Bank, Ltd.)

525

1.91

Mitsuo Kawahara
Total

500

1.82

15,992

58.22

The TAIYO GROUP is committed to providing
our shareholders and investors with up-to-date
information on a regular basis. To this end, we
have devoted a section of our corporate website(see link below) to a wide range of information
aimed at investors and other stakeholders suchas messages from the President, financial data,
annual reports as well as an overview of midterm management strategy and policies.
http://www.taiyo-hd.co.jp/English/Ir/index/(Notes) 1.	The number of shares indicated as held by Japan Trustee Services Bank, Ltd. includes 2,889 thousand shares held as part of trust banking services. This includes 1,116 thousand
shares entrusted to the Sumitomo Mitsui Banking Corporation Retirement Benefit Trust Account.
2. The number of shares indicated as held by The Master Trust Bank of Japan, Ltd. includes 623 thousand shares held as part of trust banking services.
3. We received a change report for the large shareholding report submitted by Harris Associates L.P. dated November 30, 2010 (date of the change: November 24, 2010) in which said
company claims a shareholding of 1,780 thousand shares of TAIYO stock as of the date of submission. As the Company was unable to verify the effective shareholdings listed in thischange report regarding its shares as of the end of the fiscal year, Harris Associates L.P. has not been included in the above list of major shareholders.
The change report for the large shareholding report submitted by Harris Associates L.P. contained the following information:
Shareholder: Harris Associates L.P.
Address: Two North LaSalle Street, Suite 500, Chicago, IL 60602, USA
Shares: 1,780,700
Shareholding as a percentage of total shares issued: 6.48%
4. We received a change report for the large shareholding report submitted by Mondrian Investment Partners Limited dated November 16, 2011 (date of the change: November 10,2011) in which said company claims a shareholding of 1,380 thousand shares of TAIYO stock as of the date of submission. As the Company was unable to verify the effective
shareholdings listed in this change report regarding its shares as of the end of the fiscal year, Mondrian Investment Partners Limited has not been included in the above list ofmajor shareholders.
The change report for the large shareholding report submitted by Mondrian Investment Partners Limited contained the following information:
Shareholder: Mondrian Investment Partners Limited
Address: 5th Floor, 10 Gresham Street, London, EC2V 7JD, U.K.
Shares: 1,380,000
Shareholding as a percentage of total shares issued: 5.02

Stock Price and Trading Volume(Yen)
18,000(Thousands of shares)
6,000

15,0005,000

12,000

4,000

9,000

3,000

6,000

2,000

3,000

1,000

please refer to“ Review of Operations”
on pages 16 and 17.

0

2007
n

2008

Nikkei Stock Average ( left scale)2009nStock Price ( left scale)

2010

2011

2012

0

n Trading Volume (right scale)
TAIYO HOLDINGS CO., LTD. Annual Report 201251

2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan
Phone: 81-3-5999-1511

http://www.taiyo-hd.co.jp/English

TAIYO HOLDINGS CO., LTD. Annual Report 2012TAIYO HOLDINGS CO., LTD.

Commitment
to Strong Growth
Annual Report 2012
Year Ended March 31, 2012

Printed in Japan