DAIKEN GROU PREPORT2017
Daiken Group Report

DAIKEN CORPORATIONCorporate Message

Toward the future going beyond
the functions of yesterday
Since its establishment, the Daiken Group has developed a multitude of
products by capitalizing on limited resources and listening to our customers’ needs.
Today we have evolved into a company where our efforts have accrued to provide
first rate building materials and comfortable spaces for our customers.
We will continue to strive towards a sustainable future where people can enjoy
pleasant living spaces and lead spiritually rich lifestyles.
In pursuit of new possibilities, we will transcend the past by developing
innovative functions towards a brighter tomorrow.

1

CONTENTS
Table of Contents .................................................................... 1-2

Foundation of Value Creation
Businesses and Characteristics ................................... 3-4
Product Development Uses Strengths ..................... 5-6
Process of Creating Value ................................................. 7-8

Vision of Value Creation and Strategy
Management Policy ............................................................ 9-10
Message from the President ......................................11-14

Practice of Value Creation
Financial and Non-financial Data ...........................15-16
Summary of Business ....................................................17-18
Initiatives for Priority Areas ........................................19-24

ESG Information
The Daiken Group’s CSR ...............................................25-26
Medium-Term CSR Activity Plan .............................27-28
Governance ............................................................................29-32
With the Society ..................................................................33-36
For the Environment ........................................................37-40

Financial Information
10-Year Summary of Consolidated
Financial Data ......................................................................41-42
Consolidated Balance Sheet ......................................43-44
Consolidated Statements of Income ............................ 45
Consolidated Statements ofComprehensive Income ........................................................ 46
Consolidated Statements of
Changes in Net Assets .......................................................... 47
Consolidated Statements of Cash Flows .................. 48

Company Information
Corporate Profile/Directors and Kansayaku/
Corporate History/Stock Information...................49-50

A housing material manufacturer
becomes an all-embracing company
for building materials■Editorial Policy
The Daiken Group previously issued the CSR Report to better
communicate with our stakeholders about the Group’s generalmanagement and corporate activities with a focus on its approachto corporate social responsibilities. The Group updated the CSR
Report in fiscal year 2016 and issued a Daiken Group Report. We
hope that the report clarifies the corporate value and growthpotential of the Daiken Group. In addition, the website offers theGroup’s initiative on CSR and environment data in detail.

■Eligible period:

Fiscal 2017 (April 1, 2016, to March 31, 2017)* Some contents include information other than therelevant fiscal year.

■The scope of report:

Daiken Corporation and Daiken Group* The performance data for safety, health, andenvironment differs in scope.

■Issued in September 2017
■Reference guidelines“The GRI Sustainability Reporting Guidelines 4”
ISO26000International Integrated Reporting Council (IIRC)“The International Integrated Reporting Framework”【Disclaimer regarding future projections】
The forecasts and estimates shown in this report are based on information
available at the time of the report’s issuance. Plans and figures depicting thefuture do not imply a guarantee of actual outcome.

2

Foundation of Value Creation

Businesses and Characteristics
Toward an all-embracing company for building
materials that support the social infrastructureof houses, buildings, and facilities.
Building materials are indispensable to the various buildings that shape our lives. The Daiken Group provides a wide
range of building materials that ensure safety in various buildings and create comfortable spaces. With unique ideas
and technologies, we create multifunctional building materials to realize safe, reliable, healthy, and comfortable
lives while developing and using materials originated from wood resources, mineral resources, and Japanese paper(washi). Furthermore, we also engage in installation work and the creation of spaces to maximize the functions ofour building materials. Aiming to be an all-embracing company for building materials and to play an active role inmore fields than homes, which has been our main business domain, to public spaces and commercial facilities, wewill continue our challenge to create the products and services needed by society.

Major market
New home market

Home renovation market→P23-24

Threebusiness domains

Building
materials
Industrial Engineering
materials

Global markets→P21-22

Public andcommercial buildings *1*1 Public and commercial facilities,
including Japanese inns, hospitals, stations,and schools.

→P19-20

Industrial materials *2*2 Supplies materials used for partition
and base materials of blackboards.

Our strengths
Capabilities todevelop uniqueindustrial materials

3

Capabilities to develop
building materials thatwere given high added
value

Capabilities topropose total plansfor interior spaces

Capabilities to perform
installation work by making
use of the functions ofbuilding materials

Building materials

business

51.7％

Developing and providing building
materials best suited for the interior ofvarious buildings
Provides a wide variety of highly functional building
materials that form safe, reliable, healthy, and comfortable
spaces, including floors, walls, and ceilings to doors,cabinets, stairs, and acoustic products for homes and public
spaces and commercial facilities.

Industrial materials

Flooring

business

Cabinet33.4％

Developing and providing highly
functional materials
Provides various functional industrial materials incorporating
non-combustibility, anti-seismic thermal insulation, soundinsulation, humidity conditioning, and various other featuresneeded in our daily life by making full use of wood and mineral
resources from a sustainable perspective.

Engineeringbusiness

Wood material

Inorganic material

Hotel Nikko Osaka

Nagano City Arts Center Recital Hall

8.1％

Total support for creation of spaces
from supply of building materials
through installation work
Mainly by providing interior finish work for a wide range ofbuildings, including public facilities, such as schools andhalls, and commercial facilities from office buildings
apartments, we are engaging in creating spaces where ourindustrial materials and building materials are maximized.

4

Foundation of Value Creation

Product Development Uses Strengths
Developing and providing a wide variety ofbuilding materials with added functionality
by making full use of industrial materials.
Industrial materials utilized in various fields
Making effective use of wood materials
Insulation
board

MDF

IB

MDF

A wood fiberboard usingwood waste materials
generated when buildings
are demolished as the main
raw material

A wood fiberboard using
residual wood offcuts as themain raw material

Wood chips

Wood chips

Major applications

Major applications

・Substrate (base material) of ・Flooringtatami mats

Insulation board
・Protection board

Tatami facing

Tatamifacing

Dai-Lotone

DL

Dai-Lite

DIL

Tatami facing that is
manufactured by twistingmachine-made Japanese
paper (washi) into strings,
coating resin, and weaving
it with a weaving machine

A rock wool sound-absorbing
board that is manufactured
using slag wool (fibered slag,
a byproduct produced inironmaking) as the main raw
material

An inorganic panel that is
manufactured by making
effective use of slag wool,a recycled material, andshirasu (volcanic soil), an
untapped resource

Machine-madeJapanese paper (strings)

Slag wool

Slag wool and shirasu

Major applications

・Tatami facing

Major applications

・Ceiling materials

Major applications

・Base material for external
walls
Wooden construction

For facilities

MDF
・Other
Doors, cabinets, shelves,window frames, tabletops,
and core material forchalkboard, etc.

Making effective use of mineral materials

・Color variation
Steel construction

For houses

・OtherBase material for external
walls, packaging material,
buffer material, etc.

5・Non-combustible wall material

Product range enabling us to propose total plans for interior spaces
For houses

For public spaces and commercial facilities
Anti-seismic ceiling

Ceiling that watches over
our lives

A complete line of ceiling materials
that are superior in not only design
but also sound absorption andhumidity conditioning features

CeilingDL

A wall that conditions humidity
Responding to diverse user
requirements, including wallmaterials that condition humidity
and reduce odors and those placinga premium on design and material’svisual impressions

A fire-resistant wall

Wall
IB

DL

DIL

A flooring of ultimate beauty

A complete line of flooring that canbe used with shoes on, including
those made of natural wood
resistant to damage, sound-proofing
materials, and those that reduce theimpact when a person falls.

Floor
MDF

Wide varieties of designs
and product variations

Doors that place apremium on safety

Interior doors that are easy to use,superior in functionality, and canbe coordinated flexiblyInterior doors that place apremium on safety andfunctionality to be usable in elderly
welfare facilities, kindergartens,
stores, etc.

Door
MDF

Solving storage issues

Cabinets inspired byconsideration to users

CabinetMDF

Space for enjoying sound

A complete line that responds tovarious needs for sound, including
a home theater, practice room for amusical instrument, and audio
room.

Maintaining the comfort oftatami matsRealizing a Japanese-style floor
environment especially made for you byoffering a wide variety of products, frommodern tatami mats that fit your current
lifestyle to genuine Japanese-stylerooms

A cabinet that can reduce various
risks in living spaces to be usedwith a peace of mind

Panel that absorbs sound

Sound
IB

MDF

DL

Tatamimats
IB

Tatamifacings

Anti-seismic boards

Dai-Lite contributes to creatinghouses with superior durability toprotect your house fromearthquakes and fire.

A non-combustible wall material
based on Dai-Lite realizing a solid
finish using Dai-Lite as the basematerial and labor-saving
installation

A floor that secures your steps

A complete line of products thatplace a premium on features,
including surface feel, resistanceto damage, long-lasting beauty,
design, and high functionality andperformance

A complete line of cabinets
equipped with abundant storage
capacity, space-saving and otherfeatures to fit for individual spaces.

A anti-seismic ceiling is therealization of a ceiling material
equipped with high functionalityand design while ensuring safe,
reliable, and labor-saving
installation

A sound-absorbing panel that canbe easily installed and used in
office environments where soundechoes making communicationdifficult.

Tatami mats equippedwith fire-resistant feature

Applicable to buildings requiring fire andflame protection, such as kindergartens,
nursery schools, and welfare facilities forthe elderly, with newly-added
fire-resistant features in addition tosuperior durability and maintainability.

Fire-resistant panel

Wall baseIB

DIL

A base material for fire-resistantexternal walls using Dai-Lite,
which is non-combustibility andlightweight, as the main material.

6Foundation of Value Creation

Process of Creating Value
Daiken Group capitalizes on
its business and unique strengths todeliver new value to society.
To make a sustainable society a reality, corporations must meet various social challenges andneeds. The Daiken Group capitalizes on its unique strengths to promote business activities inconsideration of social challenges and needs. The Group is striving to create new value that
responds to every need by contributing to solving problems.
In addition to catering to social challenges and needs, the Daiken Group aims to conductbusiness activities with CSR management as the foundation. The Group is aspiring to create newvalue and realize its long-term vision (the Daiken Group’s goal).

Low-carbon
society●

Recycling-oriented
society●

Safe andcomfortable living
environment●

Transparent
corporate
management●

Promotion ofdiversity●

Development ofregional andglobal society

●

●

7

Promotion of thework style change
Response tobiodiversity

Capabilities todevelop uniqueindustrial
materials

Capabilities todevelop building
materials thatwere given highadded value

Capabilities topropose total
plans for interior
spacesCapabilities toperform installation
work by making useof the functions ofbuilding materials

Business model

Industrial material
development●

Daiken Group’s strengths

Rawprocurement

Social challenges
and needs

Building
materialdevelopment

Production

Production

Sale

Sale

Industrial materials business
Building materials business

CSR management

Value creation
policyMedium-Term
Management Plan

CSR Basic Policy

Medium-Term
CSR Activity Plan

Medium-Term
Environmental Plan

Group conduct
guidelines

The values created

Procurementof members

Interior
projects andrenovations

The Daiken Group’s goal●

Added functions of products prevent
global warming.
→P37-40

Group Corporate Philosophy●

Waste wood is restored and reusedas products.
→P39-40

We will create a wonderful future with
our technology, ideas, and passion.

●

Products contribute to earthquake
resistance, fire prevention, fire resistanceand noise control.
→P5-6

●

Reorganization and reinforcementof the whistleblowing contact
points.
→P32●

Improved diversity awarenessamong managers through training
programs.
→P35

Engineering business●

Promotion of social studies forchildren through factory andshowroom tours.
→Web●

The workstyle change promotion
projects reduce long working hours.
→P35●

Contribution to biodiversity by
expanding rice paddies in the collection
areas of raw materials.
→P40

Our Mission
Our Vision

As a company respected by everyone,
we will give the highest priority toharmonizing an affluent society withthe environment by offering new valuethat exceeds people’s expectations.

Our Values
We pledge the following:
Ensure harmony between theenvironment, society, and people.
● Be careful of safety, security, health,and comfort.
● Courageously accept the challengesof new ideas.
● Promptly respond to changes andopportunities.
● Be sincere at all times.
●→P9Long-term vision「GP25」（GROW/GLOW PLAN 25）→P10

8

Vision of Value Creation and Strategy

Management Policy
Aiming to make the new group corporate
philosophy a reality, the Daiken Groupwill promote CSR management from along-term point of view.
Since the long-term vision GP25 was established in 2015, the Daiken Group has been promoting a growth strategy
aimed at becoming an all-embracing company for building materials according to the GP25 1st Stage in its
Medium-Term Management Plan from 2016. In April 2017, the new Group Corporate Philosophy was formulated toaddress stronger management toward sustainable improvements in our corporate value and philosophy.
The system of practicing the group corporate philosophy

Group corporate philosophy

Group corporate philosophy

Company mission

Company mission－Our Mission－－Our Mission－

Toward specific development－Our Vision－Company values－Our Values－

Business activities

CSR activities

Activities consistent with CSR

Realized through business activities

Long-term vision

CSR Basic Policy

Medium-Term Management Plan

Medium-Term CSR Activity Plan
Medium-Term Environmental Plan

Annual management policyGroup conduct guidelines

9

Toward realization of corporate philosophy

Company vision

We will create a wonderful future with
our technology, ideas, and passion.

Company vision－Our Vision－

As a company respected by everyone,
we will give the highest priority toharmonizing an affluent society with theenvironment by offering new value thatexceeds people’s expectations.

Company values－Our Values－

We pledge the following:
Ensure harmony between theenvironment, society, and people.
● Be careful of safety, security, health,and comfort.
● Courageously accept the challenges of
new ideas.
● Promptly respond to changes andopportunities.
● Be sincere at all times.
●

Key points of the long-term vision, GP25 (GROW/GLOW PLAN25)
The Daiken Group celebrated the 70th anniversary of its founding in

Daiken Group not only the pursuit of profit, but must also be

2015. In that milestone year, the Group formulated GP25

committed to improving society. We seek to be an enterprise that

(GROW/GLOW PLAN25 (GP25), the long-term vision for its

people value highly for an attractive working environment and as

business in 2015 to be achieved by 2025. The plan GP25 sets theaGroup’s vision for the future (corporate vision) of transforming

enthusiastically. We will work together to achieve our objectives by

from a housing materials manufacturer to an all-embracing

anticipating changes in the business environment and continuing

company for building materials. For us to grow and glow, The

to accept the challenge of offering new value to customers.

The Group will work to transform into
an enterprise that meets the
expectations of customers and markets
while contributing to a better society.

GROW

place

where

employees

GLOW

can

work

confidently

and

The Group will work to become anenterprise that people rate highly for its
attractive working environment and asa place where employees can work
positively and enthusiastically.

Key points of the Medium-Term Management Plan, GP25 1st Stage (for fiscal 2017-2019)
The Daiken Group began the GP25 1st Stage in April 2016, in its

The largest mission in the GP25 1st Stage is to lay the foundation

Medium-Term Management Plan, which we regard as a first stepfor transforming into a housing material manufacturer to anin achieving a long-term vision GP25. Under this plan, the Group

all-embracing company for building materials. To make these a

has set the management target an ordinary income of ¥7.0 billion

reality, the Group has completely reviewed its policies andon net sales of ¥180.0 billion, operating profits of ¥7.0 billion, ¥4.3

activities, laid out a strategy that includes both a business and abillion for profit attributable to owners of parent and 8% or higher

market point of view, and identify major issues and determineof ROE by fiscal 2019, the final year in the first stage of the plan.

resolutions. We have been carrying out these approaches steadily.

The first step toward an all-embracing company for building materials【Business domains】＋
New business

Key business: Engineering business

Public and commercial buildings
Industrial materials

Japan

Engineering businessHousing market
GlobalBuilding materials business

Becoming a sustainable society

Creating the environmentthat enriches people’s lives.

Industrial materials business【Markets and sectors】＋
New markets

Prioritized markets: Public andcommercial buildings, global markets

10Vision of Value Creation and Strategy

Message from the President

Masanori Okuda

Representative Director,
President

11

Aiming to become an all-embracing
company for building materials, theDaiken Group is up for the challenge fornew markets and business sectors.
General overview of business results and key initiatives for fiscal 2017

Under the Medium-Term Management Plan, GP25 1st Stage, the Group embarked on
new challenges in a variety of sectors.
While the house construction sector for fiscal 2017 lost
momentum in the second half of the fiscal year, therental-housing sector sustained strong performance. The
owner-occupied houses, including built-for-sale houses,
also maintained high-level growth. For the public andcommercial buildings, private construction contracts, mainly
lodging facilities and retained premises, increased steadily.
Under such business circumstances, our Groupembarked on a three-year Medium-Term Management Plan,
titled GP25 1st Stage, from 2016, with the goal of achieving
the vision for 2025 as a first step toward realizing thelong-term vision of GP25.
In the home renovation market, the Daiken Group
opened two new showrooms jointly with TOTO Ltd., and YKKAP Inc., to expand the platform for showcasing products, aswell as to improve the lineup of renovation products. In
addition, the Group entry into the condominium renovation
market.
In the public and commercial buildings market, welaunched new products that highlight Daiken’s strengths ofsound insulation and local Japanese wood, building a trackrecord in the domestic market. As for global markets, theGroup expanded distribution of MDF in North America andSoutheast Asia. In addition, the interior door plant inIndonesia went into full operation as a supply system for thecountry and surrounding countries.
To further renew our efforts, Daiken began reviewing thecomprehensive commercial use of wood building materials,
encouraging the use of cascading. Additionally, the Okayama
plant began full-scale operation of a wood biomass boiler,
which uses wood chips as fuel. This reduces theenvironmental load and energy costs while increasing
productivity.
Consequently, net sales for fiscal 2017 increased to¥168,848 million (up 0.4% year-on-year), operating income
was ¥8,515 million (up 52.4% year-on-year), and ordinary
income was ¥9,021 million (up 70.8% year-on-year) withprofit attributable to owners of the parent at ¥5,116 million(up 28.3% year-on-year). The Daiken Group achieved record
net profits since consolidation.

Forecast for the market environment and financial results for fiscal 2018

The Daiken Group will capitalize on its unique technologies and expertise to expand
profits with high-value added products.
The Japanese housing market in fiscal 2018 is expected tocome to a temporary standstill because of the
postponement of an increase in the consumption tax andongoing low-interest mortgage rates, causing consumers
no rush into home buying and renovations.
Based on these market environment, the Daiken
Group will continue to inject corporate resources into thehome renovation market, public and commercial buildings
market, and the global markets, which are prioritized in
the first stage of GP25. The Group will further promote

initiatives in each sector in order to strengthen
management practices and not rely solely on housing
starts. The task for the moment is to further promotestreamlining and focus on sales of high-value added
products by capitalizing on the Group’s unique
technologies and expertise to increase profits.
As for the forecast of financial results for fiscal 2018,
we anticipate net sales of ¥173.0 billion, operating incomeof ¥8.7 billion, ordinary income of ¥9.2 billion, and the profit
attributable to owners of the parent of ¥5.6 billion.

12Medium-Term Policy and Strategy

The Daiken Group is transforming its business structure in preparation for decreased
domestic housing starts in the future.
expand sales of new commercial products designed for easyrenovation over existing flooring without nails and adhesive. By
maximizing the synergy effect with Mansion Renovation Company,
Daiken will develop laborsaving installation products.
In the public and commercial buildings market, Daiken will
actively propose our uniquely developed, easy-to-maintain tatami
mats with excellent durability to lodging facilities and Japaneserestaurants to meet the expansion of domestic demand. For
high-end hotels, we propose wooden floors with durability andexcellent sound insulation developed to reduce footstep sounds.
On the other hand, the Daiken Group will promote the use of
local domestic wood as part of a national policy and propose theuse of domestic wood to local governments to meet their needs.
Daiken products made with local domestic wood have been widely
introduced at Toyama Station on the Hokuriku Shinkansen Lineand Kurobe-Unazuki Onsen Station, as well as libraries andschools in many areas. The application has been expanding acrossIn the home renovation market and amidst the increased
importance of stock homes, we aim to further strengthen
comprehensive proposal services of eight showrooms across thecountry, which we jointly operate with our business partners, TOTO
Ltd. and YKK AP Inc., in the renovation sector. In addition, we will
Management goals of the Medium-Term Management Plan(¥million)

Fiscal 2019
Fiscal 2017 Fiscal 2018
(forecast) GP25 1st Stage Final year
(results)
168,848

173,000

180,000

Net sales

8,515

8,700

7,000

Operatingincome

9,021

9,200

7,000

Profit attributableto owners ofparent

5,116

5,600

4,300

ROE (%)

11.7％

Sales

8% or higher

Strategy of the Medium-Term Management Plan, GP25 1st Stage (for fiscal 2017-2019)

Business strategies

Market strategies
Public and commercial buildings

Building materials business
Develop floor and wall materials that use domesticwood.
● Develop products that respond to changes in lifestyle.
● Develop energy-saving building materials.
● Expoilt the workability and advantages of industrial
materials.
●

Industrial materials business
Develop new industrial materials.
Develop new applications that will bring newmarkets and customers.
● Secure stable supplies of wood chips andencourage the widespread use of wood.
●●Engineering business
Expand the installation and construction work andprepare an order-accepting structure.
● Enhance our home improvement consulting service
and expand service areas.
●

Exploit technologies that use wood and fireproof materials
in developing products.
● Develop our installation and construction capabilities.
●

Global markets
Develop industrial materials and building materials thatmeet local needs.
● Establish a framework to manufacture, market, and install
products locally.
●

Industrial materials
Develop a wide range of industrial materials technologies
that exploit untapped resources effectively.
● Promote development of products for the next stage of GP25.
●

Home renovation market●●

Propose new living styles for the future in cooperation with TDY.*
Expand the renovation business.

New home market●

Propose new values suited to lifestyles and regions.

* The three companies TOTO Ltd., Daiken, and YKK AP Inc.

Medium-Term Management Plan
GP25 1st Stage
Fiscal 201713

Fiscal 2020

Making GP25
a reality

3rd Stage

2nd Stage
Fiscal 2023

Fiscal 2026

the country. The Group set up a supply structure for 29 prefectureswith a plan for expansion into more locations.
For global markets, Daiken intends to expand the structure of
local production and sales. For the Southeast Asian market with
its ongoing economic progress, we will proceed with an expanded
production and supply system at a fast pace to meet the needs forboth quantity and quality. For Indonesia, in particular, theinstallation and sales company established earlier will beenhanced by a Japanese quality production, sales, and installation
system in its new interior door plant, which went into fulloperation in fiscal 2017, with the aim of expanding operations in
the country.

Our approach and efforts in CSR

The Daiken Group will enhance its environmental efforts and focus on creating
a fulfilling work environment.
The Daiken Group considers CSR as the foundation of business. For
Daiken to continuously develop into a corporation supported bycustomers and society, it is essential to address CSR strategically bycomprehensively capturing the aspects of ESG. Through efforts forthe basic policy of ecology and qualitative improvement of spaces,
Daiken is pledged to create common value with society. As part ofthe efforts to realize a sustainable society, Daiken is committed to
products made from eco-friendly, ecological based materials
designed for high-quality space from the viewpoint of consumers tomeet social expectations and demand.
Daiken believes that the source of corporate growth is humanresources. As part of its corporate responsibility, the basic policy of

the Medium-Term Management Plan includes the creation of afulfilling work environment and the use of the skills of diverse
human resources, including non-Japanese, women, and skilledemployees. In particular, Daiken considers the change in workstyles
an urgent issue. We will crystalize company-wide measures bycentering on the company-wide workstyle change project. In
addition, to reduce working hours, each employee needs to become
more creative and skillful. To that end, the Daiken Group will grantself-improvement incentives to all employees with a summer bonus
for fiscal 2018. Daiken will boost self-investment for each employee
by encouraging personal growth for the future.

Message to stakeholders

Under the new group corporate philosophy, the Daiken Group is pledged to improving
corporate value with employees as a whole.
The Daiken Group established its group corporate philosophy in
April 2017.
With the advancement of globalization and diversifying
human resources in recent years, the Daiken Group needs toshare a common mission, vision, and values as a corporation tomatch the direction for further growth. We established the group
corporate philosophy by evolving the management philosophy
with the wish to making it a reality with all group employees. The
Group Corporate philosophy consists of three elements of “Our
Mission,” “Our Vision,” and “Our Values” to indicate the direction of

the Group in the future.
While our long-term vision GP25 is a milestone toward 2025,
the group corporate philosophy anticipates the 100th anniversary,of its founding in 30 years later. The Daiken Group will remain an
appreciated corporation that contributes to future happiness evenafter 30 years. Group employees are committed to working as one
to make efforts that will result in sustainable improvements incorporate value. Daiken appreciates its stakeholders’ continued
understanding and support of the Group.

Representative Director, President

14

Practice of Value Creation

Financial and Non-financial Data
Net sales/Gross profit margin
Net sales Up(¥million)

200,000

0.4% period-over-period
180,392

158,153

168,833

168,141

Operating profit/Operating profit ratio
Operating profit Up(%)(¥million)

100

10,000

75

10.0

8,000

7.5

6,000

24.7

23.7

22.0

24.2

4,000

25.8
25

0

0

2013

2014

2015

2016

2017

5,586

4,703

50

100,000

3,577

3,452

2.0

2.0

2014

2015

0

0

2013

2016

Ordinary profit /Ordinary profit rate
Ordinary profit Up

70.8% period-over-period
9,021

9,000

5,669

5,025

4,648

3.6

3,000

2.8

2.8

Operating profit ratio

Profit attributable to owners of parent/ROE (Return on equity)

12,0006,000

2017(Fiscal year)

Operating profit

Gross profit margin(¥million)

5.0

2.5

3.3

3.0

2,000

5.0

(Fiscal year)

Net sales

(%)

8,515

168,848

150,000

50,00052.4% period-over-period

5,281

5.3

ROE
(%)

(¥million)

10.0

8,000

1.9 points period-over-period

7.5

5.0

(%)

12

9.8

11.7

6,000

9

7.0

7.0

5,116

4,000

3,988

3.8
2.5

3.1

Up

2,000

2,546

2,736

2014

2015

6

3

1,318
0

2013

Ordinary profit

2014

2015

2016

2017
(Fiscal year)

Ordinary profit rateUp

2.9 points period-over-period

131,618

135,5962017

130,315132,171

12,000Up

6.9

4.0 points period-over-period(¥million)(%)

60,00010.0

7.5

46,61340,00036,00237,15440,57340,789

45

4.4

3.8

6,000

3.4

5.0

4.0

20,000
2.5

3,000

2013

Total assets

2014

2015

2016

2017

Up ¥
(¥)

0

0

27.4

27.3

2013

2014

29.9

31.3

2015

2016

2017
(Fiscal year)

Shareholder equity

14 period-over-period

35.3

Shareholder equity ratio

Capital investment

Up35.6％ period-over-period(¥million)

5,000

80

64
60

4,000

4,757

4,036

50

3,274

3,206

2014

2015

3,508

3,000

37.5

37.5

37.5
2,000

20

0

1,000

2013

2014

2015

Aiming at dividend payout ratio of 30% or more

15

2016

2017
(Fiscal year)

0

2013

30
15

(Fiscal year)

ROA (Return on assets)

Cash dividends per share

40

75
60

9,000

0

0

(Fiscal year)

Return on equity (ROE)

Shareholder equity ratio(%)

135,890

2016

Shareholder equity/Shareholder equity ratio(¥million)

15,0002013

ProfitTotal assets/ROA (Return on assets)
ROA

0

0

2016

2017
(Fiscal year)0Number of female employees/Female employees asa percentage of total employees(Daiken Corporation’s non-consolidated basis*1)

Number of employees in Japan and overseas(Persons)(Persons)

4,000

600

3,194

3,141

3,191

3,060

3,071
450

3,000

911

891

890

829

826

2,283

2,250

2,301

2,231

2,245

2,000

1,000

0

2013

2014

2015

2016

(Fiscal year)

Number of employees in Japan
Number of overseas employees

(%)

200

6.1
150

122

6.6

6.8

129

132

8

6.6

361

368

373

370

380

150

5

2013

2014

2015

2016

Down

Emissions(1,000 tons-CO2)

Sales per unit
(ton-CO2/¥100 million)

300

120

78.2

69.7
125.7

123.7

90

68.7

67.8

60.9

116.1

114.0

102.8

100

2015

2016

2017

0

(Fiscal year)

Number of employees 60 years old and above
Employees 60 years old and above as a percentage of total employees

Input of woody biomass energy*2/Percentage of use*4

Input
(×10

12

Up

20.2％ period-over-period

Percentage of use

J)

48.2

2,500

41.1

41.4

40.8

(％)

50
40

1,251

1,270

1,370
1,162

0

2013

Amount of waste disposed ofUp

Emissions(1,000 tons)

2013

2014

Input of woody biomass energy
Percentage of use

2015

2016

2017
(Fiscal year)

0

Sales per unit

2017

0

(Fiscal year)

80

8.2

60

55.9

5.7

53.5
42.2

47.5

7.2

8

49.6

6
4

20

0

Percentage
(％)

10

8.1

20
10

2016

4.4％ period-over-period

40

500

2015

Amount of waste disposed of*2/Percentage of waste
disposed of in landfills*5

30

1,140

2014

Greenhouse gas emissions

8.2

1,000

0

60

30

42.3

2,000
1,500

(Fiscal year)

2

2014

0

9.8％ period-over-period

200

114

50

Input of woody
biomass energy

2017Greenhouse gas emissions*2/Sales per unit*3
Greenhouse gas emissions,

4

2013

15

6.1

100

0

20

10

6

123

20.5

Number of female employees
Female employees as a percentage of total employees

Number of employees 60 years old and above/Employees 60
years old and above as a percentage of total employees(Daiken Corporation’s non-consolidated basis*1)(Persons)

19.3

19.9

18.1

18.9

300

0

2017

(%)

2

2013

2014

2015

Amount of waste disposed ofPercentage of waste disposed of in landfills

2016

2017

0

(Fiscal year)*1: Data for fiscal 2016 is data after absorbing four subsidiaries. Data for fiscal 2013-2015 includes data for four absorbed subsidiaries.
*2: Total value at the Daiken Group’s production bases in Japan. CO2 emissions are calculated in accordance with the Act on the Rational Use of Energy and the Act on the
Promotion of Global Warming Countermeasures.
*3: Greenhouse gas emissions as a percentage of net sales.
*4: Woody biomass energy input as a percentage of total energy input.
*5: Waste disposed of in landfills as a percentage of the amount of waste disposed of.

■For more detailed information, please visit the following websites. (Japanese only)

Financial Indicators https://www.daiken.jp/company/ir/

Nonfinancial Indicators https://www.daiken.jp/company/csr/

16

Practice of Value Creation

Summary of Business

Building Materials

Achieved an increase in profits by penetrating
Business the effect of new products.

(Note) It is in the segment of residential space business in the summary of financial results.

Breakdown of sales bybusiness segment

Changes in net salesUp(¥million)

1.2％ period-over-period

120,000

51.7％

Changes in ordinary profitUp(¥million)

10.6％ period-over-period

6,000

83,19293,5525,314

85,753 86,256 87,268

80,000

4,114

4,000

2,915
40,000

0

4,551

2,858

2,000

0

2013 2014 2015 2016 20172013 2014 2015 2016 2017

(Fiscal year)

Industrial materials(Fiscal year)

A significant increase in profits of more thanfour times year on year due to the reduction in
Business costs, production efficiency, etc.

(Note) It is in the segment of ecological based business in the summary of financial results.

Breakdown of sales bybusiness segment

Changes in net salesUp(¥million)

0.1％ period-over-period

80,00033.4％

Changes in ordinary profitUp(¥million)

4,000

60,18460,00055,699 56,345 56,410

47,402

3,000

3,726
2,569

2,000

1,505

40,000812

1,000
20,000002013 2014 2015 2016 2017

-1,000(Fiscal year)-544

2013 2014 2015 2016 2017

(Fiscal year)

Engineering

Achieved a two-digit increase in profits by improving profitability
Business through the enhancement of the management system.

Breakdown of sales bybusiness segment

Changes in net sales
Down(¥million)

20,0008.1％

15,0002.6％ period-over-period

18,049 17,714

Changes in ordinary profitUp(¥million)

44.4％ period-over-period

400

16,486
13,978 13,612

302

300

335
285
232

10,000

200

5,000

100

0

2013 2014 2015 2016 2017

(Fiscal year)*Besides the above, other businesses account for 6.8%.

17358.4％ period-over-period01912013 2014 2015 2016 2017

(Fiscal year)

Summary of business results for fiscal 2017

Forecast, targets, and policy for fiscal 2018

We developed a new construction method for flooring and storage
that featured labor-saving installation and started proposing this in
the home renovation market. For the public and commercial
buildings, we proceeded with proposals on products that suited theneeds in the buildings, such as flooring for lodging facilities like
hotels and doors for nursery schools and day-care centers forchildren.
Consequently, we increased profits as we recorded net sales of¥87,268 million (up 1.2% year-on-year). In the aspect of profit, as we
steadily proceeded with the switch to our leading interior finishingproducts that we drastically revamped in 2015, in addition to various
kinds of streamlining to maintain our profitability in the second half ofthe previous period, we recorded ordinary profit of ¥4,551 million (up10.6% year-on-year).

In fiscal 2018, the building materials business is forecasted to post
¥89,400 million. While further penetrating into the existing market,
we will also focus on the expansion of sales volumes in the public andcommercial buildings, which is our prioritized market. We will
enhance propositions on a new product that we launched in themarket in June 2017 and expand it in a wide variety of markets, suchas welfare facilities for the elderly, public facilities, educational
facilities, and lodging facilities.

Summary of business results for fiscal 2017

Forecast, targets, and policy for fiscal 2018

Shipments of our original tatami facings using machine-madeJapanese paper to hotels and Japanese inns increased and the saleof MDF expanded because of the development of covering flooring
surface by decoration sheets. We also released non-combustible
decorative wall materials and eave soffit materials by making use of
the characteristics of our original inorganic material Dai-Lite.
Consequently, net sales slightly increased to ¥56,410 million (up0.1% year-on-year). On the other hand, we achieved a significant
increase in profit as ordinary profit was ¥3,726 million (up 358.4%
year-on-year), which was four or more times larger than a year
earlier due to the effects of our efforts made in optimizing production
efficiency, such as reviews on the production items in each base, in
addition to raw material and energy-related cost reductions andposting of the repair cost for the partial product deficiency in theprevious period.

In fiscal 2018, the industrial materials business is forecasted to post
net sales of ¥55,700 million. As for housing starts, although weassume it will be in the same level as that of two fiscal years ago, wewill proceed with the transformation of our business structure to beless affected by changes in the number of housing starts by
expanding and strengthening our response to public and commercial
buildings and focusing on the development of functional anddistinguished products in the global markets.

Summary of business results for fiscal 2017

Forecast, targets, and policy for fiscal 2018

In the engineering business, domestic construction work steadily
grew but we had a hard time because the demand for interior
work centered on the condominium market did not increase.
Consequently, the engineering business saw a decrease in
net sales and recorded net sales of ¥13,612 million (down 2.6%
year-on-year) in this period. On the other hand, in terms of profit,
we saw an increase in profit and recorded an ordinary profit of ¥335
million (up 44.4% year-on-year) as we worked to improve
profitability by securing skilled workers and enhancing themanagement system at each site as the countermeasures forsoaring construction cost due to the shortage of skilled workers.

In fiscal 2018, the engineering business is forecasted to post net
sales of ¥16,900 million. We will continuously expand our interior
work in the metropolitan area, which has strong demand forconstruction, and begin full-fledged development in thecondominium renovation business.

18

Practice of Value Creation

Initiatives for Priority Areas
Public and commercial
buildings

Sales planUp(¥million)

17.8％ year-on-year

20,00019,80015,00016,80410,000We offer a wide range of products from flooring, wall materials, ceilingmaterials, doors, and tatami mats, which are intended for office buildings,
public and commercial facilities, educational facilities, and lodging facilities.

5,000
0

2017

Strengthening wall material businesses
We propose wall materials using Dai-Lite, our unique non-combustible
base material, to be applied to spaces in various public and commercial
facilities such as lodging facilities, offices, stores, kindergartens, andnursing schools. We also develop and propose products intended for
public facilities that make effective use of domestically or regionallyproduced woods as surface material, as well as office products for
improving the sound environment in conference rooms.
Non-combustible wall material Gravio

Increasing the choice of doors for use in various facilities
We are expanding the Daiken Omoiyari (or Caring) series, a series of door
products implementing universal design, such as barrier-free andantivirus features. The Omoiyari kids’ door is intended for kindergartensand nursing schools where safety is a consideration by incorporating amechanism for preventing fingers from being caught and where corners
are rounded by machining. We offer a wide variety of products intended
not only for above facilities but also for welfare facilities for the elderly andcommercial facilities.

Omoiyari kids’ door

Expanding flooring with superior durability
Using our unique WPC technology that injects a plastic into the cavities
of wood material for hardening, we developed flooring that can be usedwith shoes on and are equipped with resistance to damage and water
while maintaining the beauty and texture of natural woods. We havereceived many inquiries for general-use type “Communication Tough “and sound-proof type “Communication Tough Soundproof “ from lodging
facilities, stores, kindergartens, as well as public facilities.
“Communication Tough”

19

2018

(Fiscal year)

Proposing spaces that utilize domestically or regionallyproduced woods
From February 2017, we are selling the “Wood cube”, a wooden space thatcan be installed without the need for complicated work for fixation to secure
the construction body and that makes effective use of domestically or
regionally produced woods in limited large urban areas. We are actively
proposing this product as a method of using domestically or regionallyproduced woods, whose promotion of use is required.
“Wood cube”

Expanding sales of tatami facing that is resistant todamage and dirt
Our uniquely developed “Sukoyaka omote”, which uses machine-manufactured
Japanese paper (washi) as raw material, is resistant to water and thegeneration of mites and mold. The tatami facing has also high scratch
resistance. It has earned a high reputation from hotels and Japanese inns for
its easiness of creating a relaxing Japanese-style environment suited for
inbound. We also offer a model with fireproof feature and a model that can beeasily placed in a part of wood flooring.

Topics“Kokochiwaza”

Placement-type

Seiryu (fireproof)

Supporting the use of domestically produced woods using technologies■ Increasing the durability of domestically produced
woods with unique wood-processing technology■ ”Dai-Lite”, non-combustible base material madefrom Shirasu

By increasing the hardness of soft domestically produced woods
with Daiken’s unique WPC processing technology that enable touse them as flooring even in facilities where shoes are put on
without worrying about damages and dirt.

“Dai-Lite” which is light in weight and has superior fire
resistance and workability is used in a wide range of facilities asa non-combustible wall material with domestically produced
woods for its surface material.

<Comparison of a flooring made by WPC and general flooring><Characteristics of Dai-Lite>

General flooring

WPC flooring

Non-combustibility
The non-combustibility that hascertified by the Minister of Land,
Infrastructure, Transport andTourism can be safely used inwood environments where there
are limitations for interior design.

CavityThe surface is easily damaged.

Plastic

The surface is hard andresistant to damages.

Lightweight

The weight of Dai-Lite is two-thirdsof general melamine board. It
contributes to reducing the burden
on workers installing the producteven in work at height.

Workability

The lightweight and flexible basematerial can be easily cut by ahandsaw or cutter knife, thereby
realizing labor-saving installation.

20

Practice of Value Creation

Initiatives for Priority Areas
Sales planUp

Global markets(¥million)

4.7％ year-on-year

16,00012,000We will continue to develop industrial materials and building materials thatmatch local needs in Asia while building systems for on-site production,
sales, and installation.

10,982

11,500

8,000
4,000
0

2017

2018

(Fiscal year)

Expanding door business with a new factory in Indonesia
In August 2016, the newly established production base for interior
doors in Indonesia started operation. In Indonesia, where we put
particular emphasis in ASEAN region, we built a base in Jakarta in2012 and started marketing activities. In January 2014, weestablished a joint venture specialized in installation and sales ofinterior building materials. From then on, we formed a sales basewhile making efforts to be differentiated from competitors
through high-quality installation control.

TopicsWith the launch of new factory, we will actively makeproposals not only to Japanese developers and house makers
expanding businesses in the Indonesian markets but also local
developers, aiming to expand operations in the area by providing a
total business from product supply through installation.

Global network of the Daiken GroupOur global production factories are located in China, Malaysia, Indonesia, and New Zealand. Our sales
operations sites are mainly located in Asia (China, Singapore, Malaysia, and Indonesia) where economic
growth has been remarkable.
Under thorough quality control systems, each site realizes a stable supply of wood products tooverseas destinations including China, Southeast Asia, Europe, and the United States, in addition to Japan.

Daiken Industries (Ningbo) Corporation (China)

21

DAIKEN MIRI SDN.BHD

DAIKEN SARAWAK SDN.BHD

Appearance of the factory of
PT. Daiken Dharma Indonesia

Production line in
PT. Daiken Dharma Indonesia

MDF

Expanding sales of MDF
The MDF wood fiberboard is manufactured by processing woodchips into fibers, adding adhesive, and then processing it into
board-shaped products. Tropical broadleaf trees and theneedleleaf Pinus radiata are used for raw materials. We produce
MDF with various characteristics by using different trees andadhesives.

Our lightweight MDF is superior in quality stability and water
resistance compared with other wooden base boards
manufactured overseas (plywood, particleboard, and OSB). By
taking advantage of these features, we continue to promote theproduct and expand sales not only in Southeast Asia but also inNorth America and other regions.

Shanghai ●▲Daiken Industries (Ningbo) Corporation (China)
Interior doors, wood flooring, etc.

Daiken Miri Sdn. Bhd. (Malaysia)
MDF

Miri
Singapore

●

●▲
▲

●▲

Indonesia

Daiken Sarawak Sdn. Bhd. (Malaysia)
MDF

PT. Daiken Dharma Indonesia (Indonesia)
Interior doors

Daiken New Zealand Limited(New Zealand)
MDF

DAIKEN NEW ZEALAND LIMITED▲ Production sites (upper line: company name)(lower line: products)▲● Overseas sales sites

22Practice of Value Creation

Initiatives for Priority Areas
Sales plan

Home renovation market
We will continue to propose new living styles for the future throughcooperation among TDY, while developing products dedicated for apartment
renovation for the expanding home renovation market.

Up(¥million)

8.3％ year-on-year

40,00030,00028,80931,20020,00010,000
0

2017

2018

(Fiscal year)

Strengthening connections with customers through expansion of TDY collaboration showrooms
On July 3, 2017, we will open the TDY Sapporo Collaboration

TDY Collaboration Showroom

Showroom in cooperation with TOTO Ltd. and YKK AP Inc. in thearea adjacent to Sapporo Factory, a large commercial facility
located in Sapporo. This is the eighth showroom jointly operated
by the three companies (TDY) in Japan and the first in Hokkaido.
Although we have jointly operated showrooms with TOTO Ltd.
in the Sapporo district since August 2009, with YKK AP Inc. newly
participating the project, the showroom jointly operated by threecompanies will have a larger scale.
From now on, we will continue to strengthen the showroom’s
capabilities of exhibiting of spaces and consultation, and propose
more comfortable and enjoyable lifestyles to our customers.

Appearance of TDY Sapporo collaboration showroom (image)23

TDY Osaka

TDY Sapporo

TDY Takamatsu
TDY Hiroshima
TDY Fukuoka

TDY Kanazawa
TDY Tokyo
TDY Nagoya

Full-scale development of apartment renovation businessIn October 2016, through the acquisition of Pac System Co., Ltd.,

Daiken Corporation

which operates the apartment renovation business in the Kanto
region, we entered the apartment renovation business. While
Daiken Home & Service Corporation, our affiliated company, hadconventionally undertaken relatively small-scale renovation work

Engineering business

Building material business

Expansion of business domains

Advancement to developmentof products and methods forrenovation

for detached houses and apartments, with the participation of Pac
System, which specializes in relatively large-scale repair projects,
and members of the group, we
will endeavor to expand ourrenovation

Provision of expertise for installationand construction work

Second-Apartment
handapartment
owner
(of
Buy
individual
house)

engineering business in thehome

Equity stake 66.7%(Subsidiaries part of the Group)

market,while developing products and

Pac System Co., Ltd.

Renovated Apartment
apartment purchaser

Apartment renovation work

Sell

(of
individual
house)

methods used for renovationin building materials business.
Partner real estate agent, etc.
Web site of Pac System Co., Ltd.

TopicsDeveloping industry’s first flooring that can be installed by sticking on the floor

Daiken Corporation developed self-adhering flooring, the industry’s
first flooring for the renovation of houses that can be stuck on thefloor. The product has been available on the market since June
2016. Unlike conventional flooring, you can easily install it byplacing and sticking onto the floor without using nails or adhesives.
It enables to reduce the construction period and the total costs but

also allow users to perform installation by themselves.
Moreover, as it is stuck onto the existing wood flooring or
cushion floor, restoration of the original state is also easy. Anotherkey feature is that it can be employed in the renovation regardlessof leasehold properties, owned houses or housing complexes,
which makes the product suited for various renovation needs.

You can easily fix the self-adsorption
surface onto the base material by
peeling the clear film from the backand pressing down onto the surface.

The product is compact
with dimensions 150 mm
x 900 mm and can beinstalled even in a single
sheet.
Image of installing adsorption flooring24

ESG Information

The Daiken Group’s CSR

CSR Basic Policy

VisionContribute to the realization of a sustainable society
by creating values shared with society through activities for“Ecology” and ”Improvements in the quality of space”

Policies
With CSR and CSV* as the key axes, we will improve our corporate value

1 and enhance our competitiveness to realize GP25.

Using CSR as an activity to enhance our ability to respond to and earn the
2 trust of society, we will systematically pursue CSR with our responses tothe environment, society, and governance as key axes.
Positioning CSV* as one of our management strategies, we encourage

3 activities voluntarily and actively through the whole business process.

*Daiken’s CSV is defined as finding solutions to social issues through the provision of common values capitalizing on Daiken’s uniqueness.

CSV Theme

1 Building a sustainable society
2 Providing secure, safe, and comfortable spaces
Comprehensive use of wood building materials—

3 encouraging the use of cascading25

The Daiken Group formulated its Medium-Term CSR Activity Plan (for fiscal 2017-2019), as a medium-term plan topush forward with the long-term vision GP25 in stages.
We incorporate the concept of creating shared value (CSV) into our conventional CSR activities, apply specificinitiatives in the Medium-Term Management Plan and management policy for the fiscal year as the CSV activity
themes, and promote them on a group-wide basis.

Medium-Term CSR Activity Plan (for fiscal 2017-2019)● This action plan stipulates activities to promote compliance and other basic CSR activities on a group-wide basis.
● Based on the core subjects of ISO 26000, key items and initiatives to be addressed are extracted for each of the following

six themes: (1) organizational governance, (2) human rights, (3) labor practices, (4) fair operating practices, (5)consumer issues, and (6) community involvement and development.
● Our flexibility is enhanced by just expressing the medium-term targets in broad and qualitative terms.
● Based on this plan, each CSR promotion department will design and implement its own plan for specific activities.
● In the environmental area, we need to set out more technical and specific contents in an activity plan. We have therefore
formulated our Medium-Term Environmental Plan separately.

The 5th Medium-Term Environmental Plan (for fiscal 2017-2019)● This activity plan is specifically designed for the environment. The 1st Medium-Term Environmental Plan was formulated

in 2002.
● Before determining activity themes, their priorities were defined based on the results of evaluating the impact these

activities have on the global environment, society, and management (risks and opportunities).
● Based on this action plan, each department will establish and implement its own targets and specific plans for eachperiod.

CSR Activity Promotion System
CSR Committee
Determines and approves the policy.

CSR Activity Promotion
Promotes the Medium-Term CSR Activity Plan
Submits reports to the CSR Committee.
(Disseminates information group-wide.)

CSR promotion
departments

CSR promotion
departments

CSR promotion
departments

Chairperson:
Representative Director & President

CSR promotion departments:
Audit Department, General Affairs and Personnel
Department, Legal Affairs Department, Quality
Assurance Department, Comprehensive Researchand Development Center, Marketing Department,
Domestic Operation Planning Department, Domestic
Sales Planning Department, and Overseas Operation
Planning Department
Secretarial affairs division:
Management Planning Department

Daiken Group26

ESG Information

Medium-Term CSR Activity Plan
Status of the Medium-Term CSR Activity Plan (for fiscal 2017-2019)

Major CSR activity plan and its results in fiscal 2017 and the major activiy plan in fiscal 2018
Key items
Management
area・Promote company-wide CSR activities led by the
CSR Committee.

・Confirm progress in CSR activities.
・Maintain management philosophy and disseminate it group-wide.

Risk management

・Develop, update and manage business continuity
plans (BCPs).

・Confirm progress.

Governance・Establish optimal corporate governance.

・Evaluate the effectiveness of the board and disclose the results externally.

Compliance・Reinforce the compliance system.
・Strengthen the management system with the cooperation of the Legal Affairs Department andAudit Department.
・Further improve compliance education.
・Develop and implement the whistle-blowing system. ・Reform and expand the Company's compliance site.
・Thoroughly disseminate the use of the whistle-blowing system.

Improving product quality
・Reinforce the quality management system based onand ensuring product safety quality ISO standards.
・Reinforce the system to reduce quality-related
problems and continue taking measures to prevent
reoccurrence of similar problems.
・Strengthen the quality traceability system.

・Respond to the 2015 version of ISO 9001.

Providing products andservices that give highcustomer satisfaction

・Reinforce our ability to collect information bystrengthening contact points with consumers.
・Reinforce the system to encourage
consumer-centric new product development.

・Implement training sessions given by outside lecturers.
・Collect opinions using a Web questionnaire.
・Strengthen the input of consumer information in the meetings such as product planning,
promotion, etc.

Enhancing communication
with customers

・Enhance face-to-face communication withcustomers at showrooms and exhibitions.

・Implement promotional measures connected with the strategy to capture the market.
・Enhance appeal of the TDY* collaborated showrooms *TDY: The three companies of TOTO Ltd.,DAIKEN, and YKK AP Inc.

・Enhance communication with customers throughsales activities.

・Promote the Company's understanding through information transmission to customers.
・Appeal the Company's technologies and product quality.

・Enhance communication with customers throughwebsites, etc.

・Enhance information transmission by the official site.

・Enhance communication with shareholders andinvestors.

・Systematically hold presentations of financial results to investors (continue).

・Ensure strict management of personal information.

・Confirm the status of the retention and management of personal information.

・Ban all transactions with antisocial forces.

・Thoroughly conclude the said contract with a new business partner.

Protecting intellectual
property

・Continue to provide education on intellectual
property.

・Hold the intellectual property operation promotion meeting with the development department.
・Hold e-learning programs.

Promoting CSR
procurement

・Develop and implement CSR procurement rules.

・Carry out the actual condition survey on CSR procurement on a group-wide basis and promote
the initiatives.

Promoting life-workbalance・Encourage employees to reduce overwork and cut
long working hours.

・Consider the new workstyles that will lead to reduce overwork and cut long working hours.

Promoting diversity

・Implement human resources development
・Implement the provision of information and training toward the empowerment of female
programs intended to promote the empowerment of
employees.
female employees and develop a working
・Implement activities toward the achievement of the action plan for the Act on Promotion ofenvironment that meets this purpose.
Women's Participation and Advancement in the Workplace.
・Revise, streamline, and promote the in-house system toward the acquisition of "Kurumin."Reinforcing humanresources development

・Develop global human resources.

Improving the safety andhealth system

・Encourage and strengthen efforts to create a safer
working environment.

・Implement and strengthen the mutual safety diagnosis.

Respect forhuman rights

Raising awareness ofhuman rights

・Continue education to raise awareness of humanrights.

・Provide information in the training at the time of promotion, training for new employees, and atother times.

Community
involvement
anddevelopment

Community involvement

・Participate in local communities.

・Implement communication activities in each region.
・Implement regional exchanges through the events at showrooms.
・Contribute funding for the Malaysia scholarship.

Social contribution

・Continue tree-planting activities in Malaysia.

・Implement a secondary forestation program and develop an additional forestation area.

・Promote the comprehensive use of domestic wood.

・Develop and crystallize initiatives across the country.

ConsumerissuesProtecting personal
information

Fair operating Ensuring fair competition
and transactions
practicesLabor
practices

・Formulate human resource development programs
that facilitate career development and capacity
building for employees.

For environmental initiatives, please see the Medium-Term Environmental Plan (p. 37).

27

Plan for fiscal 2017

CSR management

・Strengthen the quality review system.
・Implement training sessions given by experts.
・Manage registrations by the user registrants (continue).

・Employ foreign students, those who have linguistic talents, and those who wish to work abroad.
・Continue to hold training programs for language training, study abroad, and global communication.
・Consider revising the contents of the training currently held.
・Hold training to the job levels to which the training has not been held.
・Consider and provide training to improve skills by job type.

◎The level significantly exeeded the target ○Achieved the target △Did not achieve the target ×The level significantly below the target

Fiscal 2017 Results

Selfassessment

Plan for fiscal 2018

・Confirmed that CSR activities were properly conducted.
・Formulated the group's corporate philosophy and disseminated it group-wide using various tools.

○

・Confirm progress of the CSR activities.
・Formulate and implement the group's corporate philosophy and CSR.

・Confirmed that BCPs were operating properly.

○

・Confirm progress (continue).

・Evaluated the effectiveness of the board, analyzed the result, and disclosed it externally.

○

・Evaluate the effectiveness of the board and disclose the result externally (continue).

○

・The Legal Affairs Department and Audit Department cooperate with each other andstrengthen the management system (continue).
・Revamp the Company's compliance site.
・Expand the information to be provided in line with the amendment of the Personal Information Protection Law.
・Thoroughly disseminate the use of the whistle-blowing system (continue).
・Systematize the anonymous whistle-blowing.

・The Legal Affairs Department and Audit Department cooperated with each other andenhanced the management system.
・Prepared to respond to the amendment of the Personal Information Protection Law.
(Revision of the regulations, etc., posting in the in-house site, etc.)
・Added the whistle-blowing contact point and disseminated it group-wide.
・Revised and started to operate the company regulations that correspond to the 2015 version of
ISO 9001.
・Confirmed the implementation status by the internal audits.
・Strengthened the review system by adding advisors and others.
・Implemented seminars given by the external experts.
・Number of user registrants: 9,133
・Implemented the basic training on making responses and training on complaints by inviting
outside lecturers.
・Conducted a web questionnaire surveys (eight times).
・Held meetings and prototype evaluation meetings which widely incorporated consumer
information, market researches, etc.
・Posted in the architecture magazines (4 magazines) (25 times).
・Made a presentation at the exhibitions for public and commercial buildings (JAPAN SHOP,etc.).
・Opened showrooms in Nagoya, Kanazawa, and Takamatsu.
・Improve the web reservation system, implemented a questionnaire survey, etc.

○

○

○

・Held policy briefing sessions (8 locations and 731 participants).
・TDY* held a collaborated grand prix awarding ceremony "Kansha no Tsudoi" (About 370 participants).
*TDY: The three companies of TOTO Ltd., Daiken, and YKK AP Inc.

○

・Strengthened the information transmission to the customers such as public and commercial
buildings, etc.

○

・Held presentations for financial results to investors (continued).
・Confirmed that management of personal information was operated properly.
・Maintained the situation where the said contract is concluded with all business partners.

○○○

・Receive the review on the transfer to the 2015 version of ISO by an external institution.
・Hold an operation training for the division managers.
・Enhancement of the quality review system (continue).
・Hold training programs, etc. given by experts (continue).
・Manage registrations by the user registrants (continue).
・Analyze the registrant information and consider its method of use.
・Review entries in the inquiry recording system.
・Individually disseminate to the development department.
・Consider the method for marketing review which promptly incorporates the customers' opinions.
・Implement processes from the establishment of promotion and release themes to theimprovement of tools.
・Place an advertisement in architecture magazines (four magazines) (continue).
・Make a presentation at exhibitions for public and commercial buildings (continue).
・Enhance the use of Akihabara Technical Space.

・Promote the Company's understanding through the information transmission to customers(continue).
・Appeal the Company's technologies and product quality (continue).
・Completely revamp the external website and strengthen the information transmission.
・Systematically hold presentations of financial results to investors (continue).
・Confirm the status of the retention and management of personal information (continue).
・Respond to the amendment of the Personal Information Protection Law.
・Thoroughly conclude the said contract with a new business partner (continue).

・Held the intellectual property operation promotion meeting for the development department
and explained the cases.
・Held e-learning training programs for second to fifth-year employees.

○

・Hold intellectual property operation promotion meetings with the development department(continue).
・Hold e-learning programs (continue).

・Completed in building the CSR survey system and conducted the actual condition survey (237companies).

○

・Carry out the actual condition survey on CSR procurement (continue).
・Promote the initiatives with suppliers based on the survey results.

・Established the New Workstyle Reform Promotion Project.
・Introduced the automatic PC shut-down on a trial basis.

△

・Establish and promote the Preparation Office to Promote the Realization of New Workstyle Reform.
・Analyze the overtime work results and consider new work styles.

△

・Provide information and hold training programs toward the empowerment of female
employees (continue).
・Conduct activities toward the achievement of the action plan for the Act on Promotion of
Women's Participation and Advancement in the Workplace (continue).
・Collect information on various evaluations on the empowerment of female employees/Makenecessary applications, etc.

･Held a management training program for those in the managerial position under the theme ofthe promotion of the empowerment of female employees (41 participants).
・Held a skill improvement training program for female employees (35 participants).
・Received the award of excellence as a leading company for women's participation in workplacefrom Osaka City.
・Submitted an application to acquire "Kurumin."・Employed foreign students.
・Continued to hold language training programs for new employees.
・Promoted for newly appointed directors and directors serving their terms to taken theseminars (Number of seminars: 31).
・Introduced a new training program to be taken at the time of promotion and built the training
system at the time of being promoted to each job level.

○○

・Employ foreign students, those who have linguistic talents, and those who wish to work abroad.
・Hold language training programs (continue) (review eligible persons).
・Hold various training programs (continue).
・Hold sales human resource development programs that place emphasis on skills.

・Strengthened the safety activities by implementing the diagnostic schedule according to thecharacteristics of the plants.
・Increased the number of those who conduct the safety diagnosis and strengthened the own
department's safety activities through the diagnosis of other plants.

○

・Raise the level of the mutual safety diagnosis and enhance safety education.
・Raise the level of those who conduct the diagnosis and consider starting the safety andcultural diagnosis (overseas).

・Invited outside lecturers when providing a training program for new employees and provided
information on the overall human rights.
・Provided information on harassment in the training at the time of promotion.

○

・Provide information in the training programs at the time of promotion and training programsfor new employees (continue).

･Held programs of exchange with local governments and local residents, cleanup events, plant
tours, etc. in individual regions.
・Held regional exchanges through the events at showrooms.
・Two local companies in Malaysia (Daiken Sarawak Sdn Bhd. and Daiken Miri Sdn Bhd.).
Contributed funding to the Malaysia scholarship.

○

・Conduct communication activities in each region (continue).
・Hold regional exchanges through the events at showrooms (continue).
・Contribute funding for the Malaysia scholarship (planned to be continued).

・Felled trees (262 ha) and implemented a secondary forestation program (262 ha) and aforestation program (290 ha) in the additional forestation area.

○

・Fell trees in the forestation area, implement a secondary forestation program, and develop an
additional forestation area.

・Proposed the use of locally grown wood across the country.
・Released “Wood cube” for which locally grown wood can be used.

○

・Develop and crystallize initiatives across the country (continue).
・Test out the soil improvement material, agriculture, and livestock raising in the areas around Nichinan City.

28

ESG Information

G
Governance ●Basic Approach

In pursuit of optimal corporate governance that will result in sustainable improvements
in our corporate value.
Under the group corporate philosophy, we are committed tosustainable improvements in corporate value for all shareholders
and stakeholders.
In order to achieve efficient, sound, and transparent
management, we take the basic approach that always seeks tooptimize corporate governance and constantly works to improve it.
Based on the basic policy on corporate governance established in2015, we are making constant improvement to respond to everchanging business environment surrounding the group in ceaselesspursuit of optimal corporate governance system.

Key initiatives for the reinforcement of corporate governance.
2002: Made the shift to the chief executive officer system.

2015: Outside directors increased from one to two.

2003: The Compliance Committee was established.

The Basic Policy on Corporate Governance was

2008: Reorganized to the Risk & Compliance Management

established.

Committee for reinforcement.

The Nomination and Remuneration Committee and the2010: Reduced the number of directors from 11 to 9.

Corporate Governance Committee were established.

2011: Outside directors are selected.

2016: The effectiveness evaluation of the Board was

2012: The term for the Board is reduced from two years to one year.

implemented.

Governance System

Governance System aims for sustainable improvements in our corporate value.
The Daiken Group’s Corporate governance framework
Shareholders (General meeting of shareholders)Commission andselection/dismissal

Disclosure and dialog

Consultation
Nine directors*1(including two outside directors)

Nomination and remunerationcommittee*2

Audit(majority of the members are independent directors)

The Board

Corporate governance committee*2

ReportFour Kansayaku(including two outside Kansayaku)

Reporting

Reporting

Chief Executive Ofﬁcer & President, Executive Senior Managing Directors
Executive Managing Directors, Senior Corporate Ofﬁcer, Executive Ofﬁcers

Approval and instruction

Reporting

Department
responsible forinternal control

Executive Directors Meeting

Auditors

Supervision, selection/dismissal, and instruction

Monitoring, supervising, and important decision-making

Board of Auditors

Proposal for
selection dismissal(majority of the members are
independent outside executive ofﬁcers)

Representative director

Headquarters, respective departments,
and afﬁliated companies

Selection dismissal

Selection dismissal

Accounting audit*3

Cooperation

Audit
Auditing

Business execution and decision-making

Business execution*1 The term for directors is one year.
*2 The nomination and remuneration committee and the Corporate Governance Committee are set up as an arbitrary advisory committee for the Board.
The nomination and remuneration committee nominates directors, executive officers, and Kansayaku candidates and discusses remuneration for directors
and chief executive officer.
The corporate governance committee implements effectiveness evaluation of the governance system and the Board and discusses related items.
*3 Auditors are Gyosei & Co.

29

Selection of independent directors
Based on the independence standards Daiken Corporation has established for judging whether an outside director or Kansayaku is
independent or not, we report our independent directors to the Tokyo Stock Exchange to ensure transparent and fair company
management. We have selected two independent directors (out of a total of nine directors) and two independent outside Kansayaku (out ofa total of four Kansayaku.)

Independence Standards*The eligible term of office: The term of office for the below No. 1 is current or in the past without
term of office, and the term of office the below No. 2 to 6 is current or the past five years.

1. Relevant persons of the Daiken GroupThe persons shall not be a director (excluding its outside director), Kansayaku (excluding its outside Kansayaku), accounting
advisor, executive officer, corporate office, or employee (hereinafter collectively referred to as “directors, etc.”) of the Daiken
Group, its subsidiaries and affiliates (hereinafter referred to as “the Group, etc.”)
2. Relevant persons with voting power
I. The persons shall not be a shareholder or director, etc., with 10% or higher voting power for the Group.
II. The persons shall not be a director, etc., of a company in which the Group possesses 10% or higher voting power.
3. Relevant persons of business partners
I. The persons shall not be a director, etc., of a business partner, which the Group does business with for the equivalent amountof 2% or higher consolidated net sales or purchase for either of the companies.
II. The persons shall not be a director, etc., of a primary financial institution, which the Group borrows the equivalent amount of
2% or higher of the Group’s consolidated assets.
III. The persons shall not be a director, etc., of the Group’s lead brokerage.
4. Experts (lawyer, certified public accountant, consultant, etc.)
I. The persons shall not be a certified public accountant who is the Group’s auditor, an employee, partner, or personnel of anauditing company.
II. The persons shall not be a person who receives remuneration of more than ¥10 million annually as a certified public
accountant, licensed tax accountant, lawyer, or other consultants besides the remuneration as a director or Kansayaku fromthe Group.
5. Charitable donation
The persons shall not be a person who receives a donation exceeding ¥10 million annually from the Group or an executing
person.
6. OtherI. The persons shall not be a family member within the second degree of those listed the above No. 1 to 5 (excluding those who
do not hold a key position).
II. The persons shall not be a director, etc., of the company where the Group’s officers are mutually in place.

Convention of the Board and the attendance rate ofindependent directors

Executive remuneration

Fiscal 2016 Fiscal 2017
Number of the board convened
Attendance rate of independent outside directors

13 times

12 times

Number of
persons

Amount ofpayment

10¥227 million

Directors

96%

100%

Takashi Aihara

100%

100%

Koji Mizuno

90%

100%

2

¥9 million

Attendance rate of independent outside Kansayaku 100%

100%

Total

14

¥274 million

Of them, independent outside directors
and independent outside Kansayaku

4¥22 million

Akio Hasunuma

100%

100%

Masafumi Inoue

100%

100%

Convention of Kansayaku and the attendance rate ofindependent outside Kansayaku
Fiscal 2016 Fiscal 2017
Number of Board of Auditors convened

14 times

14 times

Attendance rate of independent outside Kansayaku 100%100%

Akio Hasunuma

100%

100%

Masafumi Inoue

100%

100%

Of them, independent outside directors
Kansayaku
Of them, independent outside Kansayaku

2¥13 million

4¥47 million

The board has formulated detailed rules for determining the remunerationof executive officers. The Representative Director submits a plan to theNomination and Remuneration Committee, which examines the plan andmakes recommendations, based on which results the remuneration isdetermined. There are two types of standard remuneration for directors:
remuneration reflecting their role as directors based on their individual
duties (fixed part), and remuneration for their performance based on the
Company’s performance and each director’s achievements in the field forwhich they are responsible (variable part). The maximum limit for executive
remuneration is decided within the range set at the general meeting ofshareholders (up to ¥35 million per month for directors, and up to ¥4 million
per month for Kansayaku). The total remuneration for executive officers isdisclosed to the public.

30

ESG Information

G
Governance ●Assessment results for the effectiveness of the Board
To increase the effectiveness of the Board and to improve corporate value, the Daiken Group implemented the analysis and assessmentof the effectiveness of the Board in March 2017.
Assessment
procedure

Questionnaires were distributed to nine directors and four Kansayaku to survey the effectiveness of the Board, and theanswers were collected.
The board and the corporate governance committee, in which outside directors and outside Kansayaku make up a majority,
conducts analysis and assessment.

Large categoriesof the questionnairea. Roles and responsibilities of the Board
b. The composition of the Board
c. Deliberation of the Board
d. System for promoting dialog with shareholderse. Overall governance system

A summary of
the analysis andassessment results

The results confirmed that each director and Kansayaku of the Board are committed to presenting and deliberating theiropinions actively while ensuring the fairness and transparency with diverse perspectives and four independent outside
directors. The Board maintains the effectiveness of important decision-making in management and supervision ofbusiness execution properly.
In addition, the assessment revealed that the Board is involved effectively in determining important policies by reviewing
the corporate philosophy and conduct guidelines.
On the other hand, it also confirmed points to be improved, such as the penetration of management strategy and other key
policies within the company, monitoring and supervision of the progress level of key challenges, deepening of discussions
about key projects and active information collection of each director and Kansayaku.

Message fromthe outside director

Message fromthe outside Kansayaku

The Daiken Group iscommitted totransparent
management and themaintenance ofsoundness.

My goal is to reinforce
the governancestructure to increase
corporate value.

Koji Mizuno

Masafumi Inoue
Outside Kansayaku

Outside Director

The Daiken Group contributes to creating safe, sound, andThe Daiken Group has established the group corporate

comfortable spaces as a corporation that directly connects tophilosophy consisting of Our Mission, Our Vision, and Our Values.

people’s daily lives. Since its founding, Daiken has worked to

All Group employees share the philosophy based on conduct

develop products in harmony with the environment as a

guidelines. The Group is working as one under the Medium-Term

corporation handling wood materials. I am attracted to Daiken’s

Management Plan to achieve the mission to make the long-termbusiness that contributes to the environmental conservation. My

vision GP25 a reality.

wish is that Daiken will make a leap forward as an all- embracing

The Medium-Term Management Plan sets the Group’s

company for building materials that makes a social contribution.

goals to exploit the public and commercial buildings market andIn order to make the long-term vision GP25 a reality, it is

the global markets, as well as to expand the new businesscrucial to execute customer-orientated management without

domain through investments. Because the new agenda requires

being sidetracked. In addition, while it is necessary to further

the formulation of a better governance system, the Daiken Group

strengthen corporate governance to ensure transparency andaims to further increase corporate value to meet social

making rapid decisions, I believe the governance system of the

expectations by monitoring a system where stakeholders can

Daiken Group is becoming stronger year after year.

mutually check the key audit items.

As an outside director, I am committed to understanding theIn addition, the Daiken Group will focus on the promotion ofenvironment of the Daiken Group more than ever to actively andworkstyle changes for employees, which is necessary to achieve

freely offer comments to contribute to the sustainable

these goals.

improvement of its corporate value.

31

Compliance/Risk management

Promotion of Compliance/Risk management.
The Daiken Group has established a Risk & Compliance

Compliance/Risk management Promotion System

Management Committee (RCM Committee). With the executive
The Board

officer in charge of risk management serving as its chairperson,
membership includes executive officers in charge of the businessadministration, sales, and operational and legal compliancefields. The RCM Committee formulates various rules and manuals
that enable the management system to function effectively toidentify, evaluate and respond to potential risks. It also promotes
compliance and risk management throughout the Daiken Group,
deliberates on problems, and determines the measures to be
implemented to resolve them.
Meanwhile, each subsidiary has assigned a person topromote RCM as part of our compliance and risk management

Risk & Compliance Management Committee (RCM Committee)
Chairman: Executive Ofﬁcer in charge of risk management
・Establish and control the compliance system across the entire Group.
・Discuss policies for addressing important themes, such as business continuity plans(BCPs), and apply these policies group-wide.
・Formulate rules and manuals, including Risk Management Rules, Risk Response
Manual, and Disaster Response Manual and Business Continuity Plan (BCP) Guidelines.

Department in charge of compliancesubsidiaries.

・Provide instruction and education in
specialized ﬁelds.

Headquarters, departments and plants

system. The departments in charge of compliance manage
compliance measures across the entire Daiken Group, includingSpecialized committees
on various themes

・Provide in-house education anddisseminate compliance awareness.
・Promote concrete compliancemeasures, take precautionary
measures, and provide education.

Person in chargeof promoting CRM

Person in chargeof promoting CRM

Person in chargeof promoting CRM

Person in chargeof promoting CRM

Group companies
・Establish the compliance system and the risk management system.
Person in chargeof promoting CRM

Person in chargeof promoting CRM

Person in chargeof promoting CRM

Establishing various routes as the whistleblowing contact points

Enhanced whistleblowing contact points for various harassments.
To prevent the violation of laws and company rules in advance andCompliance hotline flow

ensure early detection, the Daiken Group has whistleblowing
President

contact points as a direct reporting route in cases where it isdifficult to report through regular office organization. In addition,
the

Group

implements

measurestoensurethatthereporting.
The following contact points have been added:

Executive ofﬁcer in chargeof risk management

LawyerCorporateadvisor to the
Daiken Group

Whistleblowing contact point
Department
in chargeof complianceⒶ. Department in charge of complianceⒷ. Executive Officer in charge of risk managementⒸ. Kansayaku, who can respond to items at the director level.

Kansayaku

whistle-blowers will not receive detrimental treatment after

Human Resources
Management
Department

A Supervisor E B

DPrevention
and early
detectionFCⒹ. Corporate advisor who serves as an outside contact point.
employeeⒺ. Department in charge of human resources designed to makereporting easier in cases of harassment starting fiscal 2017.
Ⓕ. The president starting from May 2017, allowing employees toanonymously blow a whistle.
The direct phone numbers and email addresses are listed under

A

B C

D

E and F

indicate the compliance hotlines.
Ordinary route is reporting
through their supervisor.

Occurrenceof a problem

the hotline menu on the top page of the internal website to further
make the initiative widely known.

32

ESG Information

S
With the Society ●Customers
Improving customer satisfaction

Information utilization system in response to customer voices.
We have customer service centers that listen directly to the opinions of
our customers to gather feedback on what they think of our products.

Flow showing how our customers’ suggestions are
reﬂected back into our products and services

We would like to improve the trust customers place in us by responding
quickly and sincerely to their honest opinions.

Inquiries
Requests

Information obtained through our customer service centers andback to the departments concerned. This system has proved effectivein improving our website and catalogs and developing new products,
thus resulting in even better manufacturing and services that answer

Reception and response
WebsiteImproving customer satisfaction

Catalogs
Products and services

the needs of our customers.

Information

Analysis and discussion
Picking up
themesto be improved

Proposal for
improvements

We extract the essential information from the database and feed it

Customers

showrooms is automatically collected and compiled into a database.

Customer service centersand showrooms

Database (datacollection andcompilation)

Quality Control

Enhancing quality through quality auditing and education.
We are working to strengthen our quality assurance system andensure product quality and safety through quality auditing andeducation. We carry out internal audits for each department in the
Daiken Group, product audits, and second-party audits for our OEM
clients. These audits provide instructions on how to improve our quality
management system (QMS). To disseminate the QMS, mutual internal
audits are conducted by audit teams whose members include internal
auditors from other departments.
In January 2017, external experts were invited to hold a lecture on
the theme of adhesives, which are essential for building materials. Nearly
100 employees including those in charge of development joined to deepen
their understanding about characteristics and assessment procedure.

The fourth lecture for the Quality Assurance Department

Communication with customers

Active participation in exhibitions with an aim of increasing the awareness of
our products for public spaces and commercial facilities.
In fiscal 2017, Daiken Corporation actively took part in exhibitions withthe aim of increasing the awareness of our products for public spaces
and commercial facilities. In addition to joining the Second Retail
Premises and Facilities Exhibition held in Tokyo Big Site for the firsttime in October, our products were exhibited at the 45th International
Hotel and Restaurant Show (Tokyo Big Sight) in February 2017, as wellas the Japan Shop 2017 (Tokyo International Exhibition Center) in
March. Daiken’s products for hotels, inns, retail premises and offices,
including noise-proof flooring with excellent design, wall materials
with superior workability and easy-to-maintain tatami mats, wereshowcased at the exhibitions.
Moving forward, we will continue to actively propose products
designed for public spaces and commercial facilities through exhibitions.

33

The Second Retail Premises and Facilities ExhibitionSuppliers
CSR Procurement Policy and Standards

Procurement Policy
1. Compliance with laws andregulations
2. Fair and even-handed
dealings
3. Sharing excellent value
4. Promotion of green
procurement
5. Promotion of CSR
procurement
6. Relationship of trust andco-prosperity

Purchase Control Rules
1. Quality
2. Prices
3. Delivery time
4. Capabilities fortechnologicaldevelopment
5. Services
6. Management conditions

Green Procurement
Standards
1. Environmental
management system
2. Chemical substancemanagement
3. Wood from legitimate
sources

CSR Procurement
Standards
1. Respect for human rights
2. Compliance with laws andregulation
3. Occupational safety andhealth
4. Fair transactions
5. Information management
6. Coexistence with society

Communication with suppliers

Management policy briefing session for our business partners and suppliers.
Daiken Corporation holds management policy briefing session forbusiness partners, suppliers, and logistics companies every year. For
fiscal 2017, the briefing session was held on July 7 at Hilton Tokyo
Odaiba by inviting 114 participants from 80 companies. President
Okuda explained the corporation’s directionality of the Medium-Term
Management Plan, management policy for the fiscal year andprioritized measures. Other departments also shared theirinformation to deepen cooperation.
In addition, on July 13, 33 companies were invited to the
management policy briefing session at Hotel Granvia Okayama. The
policy briefing sessions were also held by other departments allaround the country.

Management policy briefing session for fiscal 2017

CSR Procurement

Survey for domestic plants and suppliers.
Starting March 2016, an online survey was launched on the status of
CSR implementation by our business partners and suppliers. For
fiscal 2017, the questionnaire was distributed to four domestic plants
and 237 suppliers.
The survey results will be provided to the respondents. We will ask
our suppliers to correct problems, or make necessary improvements ifthey continue to score low. Where necessary, we will ask them tosubmit a corrective action report where necessary.
We will continue to implement the survey to understand theactual condition to make improvements as part of our efforts to further
promote CSR procurement.

Sample of CSR questionnaire

Example of feedback to
the CSR questionnaire results

34

ESG Information

S
With the Society ●Employees
Reduced long working hours

Self-improvement incentives are offered to promote the workstyle change.
At Daiken Corporation, the president declared a ban on working before
7 a.m. and overtime working after 8 p.m.* Starting March 2017, theworkstyle change project was launched and in May, the workstylechange promotion preparatory office was set by the General Affairs
and Personnel Department with the goals of reinforcing theorganizational structure and accelerating the effort toward realization.
For the summer bonus, full-time employees, contract employees,
temporary employees, and full-time non-employees received ¥30,000
across the board as self-improvement incentives. This helps to give aboost to improved skills among personnel, consequently leading to the
reduction of long working hours.
*Personnel working directly for the plant department and shift workers are excluded.

Work-life balance

A review meeting for promoting women’s active participation(Office: Workstyle change promotion preparatory office)

Daiken Group acquired the “Kurumin” certification.
In May 2017, Daiken Group obtained the “Kurumin” certification,
which the Ministry of Health, Labour and Welfare recognizes
corporations supporting employees who are raising children. The
Group has been making efforts to create a fulfilling work
environment where each employee can work actively in good
health, as well as to enhance the systems.

It is Daiken’s commitment to continuously
promote work-life balance and actively makeefforts to create a work environment where
employees can balance work with childraising.

Occupational safety and health

Mutual safety diagnosis is implemented to improve the worksite capabilities.
On the premise of prioritizing safety above all, Daiken Group is
working to maintain and improve a workplace environment that
ensures safety without work-related injuries. With an aim of raising
the level especially in production sites, the Daiken Group mutualsafety diagnosis is implemented in four plants in Japan, sevengroup manufacturers and three overseas companies every year.
For fiscal 2017, Daiken sets key agendas of ensuring
compliance with rules and improved worksite capabilities. The
safety diagnosis was joined by worksite leaders, including unit
head, shift leader and group leader, to focus on creating thestructure of compliance with rules. For the future, Daiken ispledged to continue safety diagnosis according to challenges inworksites to create a safe workplace.

Worksite diagnosis for mutual safety checks

Human resource development

Managers received training for promoting active participation of female employees.
To further promote active participation, Daiken Corporation
believes it is important to change the awareness of managers whoare supervisors for female employees besides themselves. To that
end, for fiscal 2017, in addition to providing skill improvement
training for female employees, managers who supervise female
employees received diversity management training.

35

For future, Daiken Corporation is pledged to deepen theawareness and understanding of the necessity for all managers topromote diversity by continuing follow-ups for managers throughtraining. We will aim to form a work culture that supports active
participation of female employees,

Shareholders and investors
IR communication

Building a trustworthy relationship through IR activities, results briefing,
and individual meetings.
In addition to holding annual meetings of shareholders (the end ofJune), Daiken Group holds presentations for financial results forinvestment analysts and institutional investors on a regular basis
to explain about the outline of financial results and businessplans. In addition, individual meetings are held quarterly byinviting institutional investors in consideration of mutualcommunication. Through direct dialog, we aim to reflect their
expectations in our management.

Presentations for financial results

Proper information disclosure

A renewed corporate website for better communication.
A new corporate website of Daiken Corporation was launched inJune 2017. The updated page design helps various stakeholders tohave a better understanding of the Daiken Group for better
usability.
In addition, as an informative tool for IR, the businessperformance information is highlighted to offer enhanced stock
information. We will continue to actively utilize the website todisclose unbiased information to shareholders, investors andother stakeholders.
IR website page

Local community
Sports promotion

By supporting the Soccer J1 Gamba Osaka, Daiken will contribute to promotion andactivation of sports.
Daiken Corporation is an official partner of Gamba Osaka in the
Soccer J1 League. We take part in sponsorship program for×

Gamba Osaka Academy aimed at nurturing soccer players for the
next generation to support their activities.
In November 2016, we held a rally to encourage Gamba
Osaka Youth (U-18) and Junior Youth (U-15) in cooperation withcorporations and schools supporting the academy to boost
exchanges with players and staff.
We will continue to support youth’s dreams for the future
through our sponsorship of the academy.

36

ESG informationE
For the Environment ●Medium-Term Environmental Plan

As part of our effort for realizing a recycling-oriented and low-carbon society,
we are following goals to take actions towards them.
5th Medium-Term Environmental Plan (from fiscal 2017-2019)
Theme and content

Goal

ResultFiscal 2019 (Indicator BM: Fiscal 2015)

Fiscal 2017

Eco-friendly
products

Contribution for achieving sales
targets in the final year of themedium-term plan (fiscal 2019) byexpanding eco-friendly products andtheir sales.

Development of eco-friendly productsthat contribute to reducing theenvironmental burden

Number of new products five items/year

6 items

Contribution
for building
a low-carbon
society

Introduce carbon fixation by usingwood.

Fixation through the supply ofrecycled wood boards

Volume of carbon fixation (CO2 equivalent)
800,000 t-CO2/year

777,000 t-CO2/year(breakdown)
MDF: 633,000 t-CO2/year
IB: 144,000 t-CO2/year

BM: 794,000 t-CO2/year(breakdown) MDF: 630,000 t-CO2/year
IB: 164,000 t-CO2/year
Reduce CO2* emissions from energy
sources.

Reduction of emissions by thedomestic production sites

Discharge rate 62.5 (t-CO2/¥100 million) or below
BM:69.7 (t-CO2/¥100 million)

62.2 (t-CO2/¥100 million)

Promotion of energy savings throughthe introduction of energy-saving
equipment and improvement ofefficiency in equipment operation

Total emissions 110,000 t-CO2 or below/year(CO2 emission factor for electric power is fixed atthe value of fiscal 2014)
BM: 125,700 t-CO2/year (BM is the result in fiscal
2014)

105,100t-CO2(CO2 emission factor forelectric power is fixed atthe value of fiscal 2014)

Reduction of emissions from logistics
and transport divisions

Unit of energy use
44.7 kl/1 million ton-kilo or below (reduction bymore than 1% in annual average)
BM: 46.6 kl/million ton-kilo (Reference: CO2
emissions 23,700t-CO2/year)

48.4 kl/million ton-kilo

Reduction of emissions from sales
and administrative divisions
Thorough implementation ofenergy-saving measures

CO2 emissions 1,500 t-CO2 or below (reduction by
10%)
BM: 1,690 t-CO2

1,600 t-CO2

Promote the 3Rs* to reduce thevolume of waste destined for final
disposal.

Promotion of recycle and conversionof waste into valuables

Final disposal rate (ratio of volume disposed of in
landfill outside the company) 5% or below
BM: 8.2%

7.2%

Introduce the cascading use of wood

Material recycle of construction waste Ratio of old material/virgin material: 90%(Ratio of old material/virgin material BM: 86%)wood

* CO emitted by the combustion of fuels or
the use of electricity or heat supplied by athird party
2

Contribution
for creatinga recyclingoriented
society*Reduce, Reuse, and Recycle

Input amount of wood biomass energy
1,350TJ (116% compared to fiscal 2015)
BM: 1,162TJ
Use of fuel chip
95,000 t/year
BM: 82,000 t/year

1,370TJ(118% compared to fiscal
2015)

Promotion of shift to biomass energy
and other eco-friendly energy fromheavy oil, LNG, etc.

Reduction of heavy oil (heat quantity equivalent)
35,000 kl/year
BM: 30,000 kl/year

35,000 kl/year

Improvement in the rate of use ofcertified wood, domestically produced
wood, planted trees, and recycled
board, etc.

Use rate of non-certified natural plywood: 15% or
below
BM: 18.2%

15.1%

Strengthen cooperation with supply
chainsDissemination and proper
management of green procurementin the supply chain

Coverage of applicable companies (consent
acquisition rate) 100%

99%

Identify, prevent, and minimize
environmental risks

Operation and continuous
improvement of environment
management system

Environmental accident/violation 00

System operation

Introduced a management
system and started
operation with a new
system.

Use of wood biomass energy (internaluse)

Procure wood in a biodiversity
Contribution
for biodiversity friendly way

Strengthen
environmentalrisk
management

97,000 t/year

Environmental education
Improve our ability to satisfy
regulations governing chemical
substances

37

92%

Establishment and operation of asystem for appropriate managementof chemical substances (alsoconsidering introduction of amanagement system)

Reducing waste and recycling

Current rate of recycling waste 91%
Daiken Group is striving to reduce and recycle waste in an effort toBreakdown of waste processing

realize a sustainable society.

Final volume disposed of in landﬁll

The waste emissions in the Daiken Group were 49,600 tons infiscal 2017, and its recycling rate*1 was 91.1%. We continue toAmount ofresources for
simple incineration%

improve the recycling rate.
*1 Recycling rate = Amount of recycled resources/Total emission of waste x 100(%),
Amount of recycled resources = Valuable + Use of materials + Use of heat7%

Volume ofvaluables

RecycleWaste, etc.
Total emissions
49,600 t

2

10%

91％

Use of heat22%

Use of materials

59%(reused as energy)(reused as ingredients)

Contribution for realization of low-carbon society

Launched a project of total cascading of woods
In November 2016, we launched a project of total cascading of

Non-organized forest

Currently

woods and started detailed discussion with Nichinan-cho in Tottori
Prefecture, a forest owner’s cooperative, and local companies.

Small mountain owner
Untapped material

This project is a new initiative for fully using local wood

Untapped material

Transport of materials A and B

resources. It is part of an effort to realize total use of woods, which

Storage placeis one of the key measures of the Medium-Term Management Plan.

Boile

Oroch

Aging

i

As the first business project, we developed a soil improvement

Reduction of population

additive DW fiber in collaboration with JCE Co., Ltd., and started

LVL

making proposals since May 2017. The DW fiber is a soil

Futureimprovement additive created by spreading domestically produced

Operation and managementby the forest owner’s cooperative

wood chips and adding fluvic acid*, which facilitates the growth ofplants. We will propose the product at a nationwide level toTree trimming/planting

Tree trimming/planting

municipalities and contractors engaging in civil engineering work

Tree trimming/planting
Industrial complex of woods

for additional soil needed for forming windbreak forest or greening
slopes by spraying work.

Boiler*Fulvic acid: A humic acid existing in forests and soils. It activates and promotes
photosynthesis of plants. JCE Co., Ltd. is the owner of patents for technology toartificially generate fulvic acid.

Increase in the population

Orochi

選木場

・Development of tree trimming andplanting techniques and humanresources
・Utilization development
Research institute ・Development of products withhighly added value

Materials C, D Materials A, B

Incombusti
ble LVL plant

Chipmanufact
uring
plant

Business base for total
cascading of wood

Wood fiber
plant

Returning a portion of profits

Conceptual image of commercializing total cascading of woods

Wood chip

Conceptual image of greening

Soil improvement additive DW fiber

Formation of additional soil

Greening by spraying
work

Aerial greening work

38

ESG informationE
For the Environment ●Pick Up

Effective utilization of recycled resources

Current rate of using recycled resources on products*Ratio of recycled resources = Recycled resources used in producing
products / total resources used x 100(%), recycled resources used in
producing products = Recycled resources + unused resources

Recycled resources (wood chip, rock wool, etc.)
Other（％） Untapped resources (shirasu)
100

80

60

31.4

32.4

33.1

34.6

35.8

4.4

4.2

4.7

4.6

4.6

64.1

63.4

62.2

60.8

59.6

2013

2014

2015

2016

40

20

Recycled resources, etc.

The Daiken Group is committed to the effective useof wood resources and untapped resources indeveloping and producing its products, as part of its
efforts to realize a recycle-oriented society,In fiscal 2017, the Daiken Group’s total resource
input was 323,000 tons with the ratio of recycledresources used standing at 64.2%.*
We will continue to maintain and improve thisratio.

64.2％

0

1. Recycle of woods

2017(Fiscal year)

Fully using wood resources by refining its manufacturing technologies
The Daiken Group promotes the recycling of woods by promoting
wood planting, appropriate use of forest trees, and recycling
products that have been used once.
In particular, we have been working on the effective use ofwood resources for more than 50 years. As a result, we developed
manufacturing technologies to use chips and residual wood
offcuts generated by demolishing buildings, which had been
wasted before. The recycling rate of insulation board wasincreased to 90%. The product is lightweight and superior in heatinsulation, moisture absorption-desorption, and cushioning
properties, and its quality is also highly evaluated by the market.

Insulation board
Wood fiberboard uses waste wood
generated from the demolition of buildings
as ingredients, which is a procurement item
specified in the Green Purchasing Law.

MDF
Wood fiberboard uses residual wood offcuts
generated from the demolition of buildings
as ingredients, which is a procurement item
specified in the Act on Promotion of
Procurement of Eco-Friendly Goods andServices by the State and Other Entities.

Shifting the energy source in the manufacturing process to a wood biomass boiler
Daiken Corporation additionally installed a wood biomass boiler,
which uses wood chips generated from construction wood waste,
in its Okayama factory, which started operation from July 2016.
In the Okayama factory, there was a problem where theenergy consumption of boiler used for generating heating steam

39

in the drying process was high. To address the problem, measures
included the installation of a wood biomass boiler in 2007, andenergy sources used for drying process using steam are now fully
shifted to biomass energy. This will reduce annual CO2 emissions
by approximately 40,000 tons compared to that of 2006.

Amount ofcarbon fixation

Shift to biomass fuels(thermal recycle)

633,000

Wood chip

GrowthFelled trees

Promoting tree
planting and using trees
Residual woodin the forests that are From p
offcutsof pl lywoo
appropriatelydante
d tre madecontrolled

tons

Fully using evenresidual wood
offcuts
MDF (Medium Density Fiberboard)es

Biomass boiler

Tree planting

Product

House

What is carbon fixation?
With intake of CO2 in the air as a carbon

Shift to biomass fuels(thermal recycle)

compound by plants and somemicroorganism in the air as a carbon
compound, CO2 in the atmosphere is reduced.

Amount ofcarbon fixation

Insulation board

144,000

Demolished old material

Recycling wood waste
generated indemolition

tons

Wood chip

2. Effective use of untapped resources
Commercializing mineral resources that were not used before with unique technologies
The Daiken Group commercializes byproducts produced inironmaking, such as slag and shirasu (volcanic ash), which were
not used before, with special processing to use them as
ingredients. We are working towards a recyclable society bysuppressing consumption of natural resources.
Further research is conducted to enable the product todemonstrate superior performance not only from anenvironmental perspective but also from a functional perspective,
including non-combustibility and durability. It offers wide
applications from the home domain to the industry domain,
thereby contributing to society even more.

Dai-Lotone
The rock wool sound-absorbing board ismanufactured using slag wool (fibered slag,
which is a by-product produced inironmaking) as raw material.

Dai-Lite
The inorganic panel is manufactured bymaking effective use of slag wool, a recycledmaterial, and shirasu (volcanic soil), an
untapped resource.

Contribution for the promotion of earthquake resistance and local revitalizationby ecological based materials
Daiken Corporation released Dai-Lite, the world’s first materialusing shirasu as the main raw material, in 1997. It has grown andcome to be renowned as a leading brand of inorganic bearing
surface members intended for wooden houses and promoted
anti-seismic houses.

Increasing the share of products using shirasu not only
suppresses the consumption of natural resources but also
contributes to local revitalization. For example, in the area in
Kyushu where we collected shirasu, which is also a cause of debris
flow, soil was improved, and now the area is filled with paddy
fields. This is how we help revitalize local areas.

40

Financial Information

10-Year Summary of Consolidated Financial Datayear
｜ endedFiscal
March 2008 ｜Fiscal year
ended March 2009

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

166,588

150,325

140,936

141,506

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,896

1,830

3,010

4,349

Ordinary profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,613

1,331

2,819

4,373

Profit attributable to owners of parent . . . . . . . . . . . . .

791

598

511

1,375

Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,490

2,934

2,785

3,765

Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,927

4,054

4,197

4,574

R&D expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,657

1,526

1,471

1,464

Cash flows from operating activities . . . . . . . . . . . . . . . .

(3,776)

1,805

3,141

4,438

Cash flows from investing activities . . . . . . . . . . . . . . . .

(4,566)(2,897)(3,286)(2,618)Cash flows from financing activities . . . . . . . . . . . . . . . .

3,699(1,793)

1,135(7,095)

Free cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8,343)(1,091)

(145)

1,819

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

132,875

125,080

123,862

115,969

Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37,05334,562

36,66336,839....................

1,329.29

1,233.28

1,302.61

1,327.08........................

30.37

23.18

20.04

54.41

..................................

37.50

31.25

25.00

31.25

Dividend payout ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123.6%

134.7%

124.8%

57.4%

Equity ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26.0%

25.2%

26.8%

28.7%

Return on equity (ROE) (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.2%

1.8%

1.6%

4.1%

Return on assets (ROA) (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.9%

1.0%

2.3%

3.6%

Operating profit ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.7%

1.2%

2.1%

3.1%

Employees (Consolidated) (Persons) . . . . . . . . . . . . . . .

3,414

3,252

3,255

3,189

Book value per share (BPS) (¥)
Earnings per share (EPS) (¥)
Dividend per share (¥)｜

Fiscal year
ended March 2010｜

Fiscal year
ended March 2011

* As we consolidated shares at a rate of one share per five ordinary shares as of October 1, 2016, we conducted retroactive adjustment calculations to make it easy to compare figures.
* For more information about our financial statements, please refer to our securities report posted on our website.

41

https://www.daiken.jp/company/ir/document/｜

Fiscal year
ended March 2012｜

Fiscal year
ended March 2013｜

Fiscal year
ended March 2014｜

Fiscal year
ended March 2015｜(¥million)

Fiscal year
ended March 2016

Fiscal year
ended March 2017

151,209

158,153

180,392

168,833

168,141

168,848

4,542

4,703

3,577

3,452

5,586

8,515

4,600

5,669

5,025

4,648

5,281

9,021

874

1,318

2,546

2,736

3,988

5,116

2,758

4,036

3,274

3,206

3,508

4,757

4,217

4,107

3,990

4,093

4,068

3,506

1,470

1,453

1,342

1,349

1,430

1,477

9,074

2,624

9,663

9,299

6,016

10,547(3,218)(2,033)(5,168)(4,072)(5,972)(4,231)(1,929)224(1,054)(2,635)(5,486)(6,741)

5,856

591

4,494

5,227

43

6,316

125,469

131,618

135,890

135,596130,315132,171

36,94939,87041,41944,984

43,83349,086

1,337.57

1,434.53

1,480.47

1,669.47

1,692.28

1,933.96

34.83

52.53

101.46111.70164.67212.26

37.50

37.50

37.50

37.50

50.00

64.00

107.7%

71.4%

37.0%

33.6%

30.4%

30.2%

26.8%

27.4%

27.3%

29.9%

31.3%

35.3%

2.6%

3.8%

7.0%

7.0%

9.8%

11.7%

3.8%

4.4%

3.8%

3.4%

4.0%

6.9%

3.0%

3.0%

2.0%

2.0%

3.3%

5.0%

3,183

3,194

3,141

3,191

3,060

3,071

42

Financial Information

Consolidated Balance Sheet(¥million)

Previous consolidated fiscal year

Current consolidated fiscal year

(March 31, 2016)(March 31, 2017)

AssetsCurrent assets
Cash and deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,134

10,474.....................................

37,372

37,772..................

-

4,223

Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

-19

Merchandise and finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,018

7,455

Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,188

3,546

Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,727

4,339

................................................................

1,953

2,425

....................................................................................

2,086

2,209

............................................

(229)

(110)

...............................................................

69,252

72,356

Buildings and structures, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,823

8,497

Machinery, equipment and vehicles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,884

10,982Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,621

14,254.............................................................

180

148

....................................................

2,119

451

..........................................................................

1,784

1,768

....................................

38,41336,103

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

195

Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,093

2,229

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

326

312

Total intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,432

2,738

Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,286

16,471...................................................

1,373

1,776

............................................................

1,440

207

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,081

2,505

Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(46)

(41)

Total investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,135

20,919Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60,98059,760Bond issuance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

82

54.............................................................

8254

130,315132,171

Notes and accounts receivable-trade

Electronically recorded monetary claims-operating

Deferred tax assets
Other

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

Leased assets, net

Construction in progress
Other, net

Total property, plant and equipment
Intangible assets

Investments and other assets

Net defined benefit asset
Deferred tax assets

Deferred assets

Total deferred assets
Total assets

43(¥million)

Previous consolidated fiscal year

Current consolidated fiscal year

(March 31, 2016)(March 31, 2017)

Liabilities
Current liabilities

23,81921,000..........................

-

3,405

Short-term loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,078

6,232

........................................................

-

5,000

Current portion of long-term loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,730

4,143

Lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4143.........................................................

17,742

17,829

Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

643

1,088

Notes and accounts payable-trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Electronically recorded obligations-operating
Current portion of bonds

Accounts payable-other...................................................

527

707

Provision for bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,749

2,153

Provision for product warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

988

1,108

Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45-

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,010

2,856

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61,37865,569Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,4005,400

Long-term loans payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,015

5,378

Lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

172

139

.............................................................

933

1,634

Provision for product warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,080

1,316

......................................................

3,228

3,401

Negative goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53

43

Accrued consumption taxes

Non-current liabilities

Deferred tax liabilities

Net defined benefit liability.....................................................................................

219

201

Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,103

17,515

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

86,482

83,084

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,15013,150......................................................................

11,655

11,943Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,14319,084

Treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,429)(1,430)Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38,51942,747

Valuation difference on available-for-sale securities . . . . . . . . . . . . . . . . . .

3,413

4,762

Deferred gains or losses on hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

163

97

Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

257

(384)

Remeasurements of defined benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,563)(609)

Total accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . .

2,269

3,865

Other

Net assets
Shareholders’ equity
Capital surplus

Accumulated other comprehensive income

Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,043

2,472

Total net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43,83349,086

Total liabilities and net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

130,315132,171

44

Financial Information

Consolidated Statements of Income(¥million)

Previous consolidated fiscal year
1, 2015 to（ AprilMarch 31, 2016 ）Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Current consolidated fiscal year
1, 2016 to（ AprilMarch 31, 2017 ）

168,141
127,452
40,68935,102
5,586

168,848
125,224
43,62335,107
8,515

64
318
173
57
11
44
52
515
1,239

69
374
188
46
10
46
2
459
1,196

351
143
55
909
84
1,544
5,281

246
138
35
169
100
689
9,021

8
7
2,601
109
2,726

30
95
412
90
628

441
686
4
1,133
6,875
726
2,000
2,727
4,148
159
3,988

11
516
412
1,181
1
204
87
2,415
7,235
1,234
463
1,698
5,536
420
5,116

Non-operating profit
Interest profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent income............................................................................

Dividend income of life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of negative goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of profit of entities accounted for using equity method . . . . . .
Reversal of allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total non-operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-operating expenses
Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales discounts.........................................................................

Loss on sales of accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total non-operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary income
Gain on sales of non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State subsidy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total extraordinary profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary losses
Loss on sale of non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on retirement of non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on reduction of non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on valuation of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total extraordinary losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes – current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes – deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit attributable to non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . .
Profit attributable to owners of parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45

Consolidated Statements of Comprehensive Income(¥million)

Previous consolidated fiscal year
1, 2015 to（ AprilMarch 31, 2016 ）Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Current consolidated fiscal year
1, 2016 to（ AprilMarch 31, 2017 ）

4,148

5,536

254
111
(1,348)(1,415)(0)(2,398)
1,750

1,350
(111)
(873)
954
0
1,319
6,856

1,861
(111)

6,712
144

Other comprehensive profit
Valuation difference on available-for-sale securities . . . . . . . . . . . . . . . . . .
Deferred gains or losses on hedges........................................

Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurements of defined benefit plans, net of tax . . . . . . . . . . . . . . .
Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income attributable toComprehensive income attributable to owners of parent . . . . . . . . . . . . .
Comprehensive income attributable to non-controlling interests . .

46

Financial Information

Consolidated Statements of Changes in Net Assets(¥million)

Previous consolidated fiscal year
1, 2015 to（ AprilMarch 31, 2016 ）Current consolidated fiscal year
1, 2016 to（ AprilMarch 31, 2017 ）Shareholders’ equity
Capital stock
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,15013,15013,15013,15011,850(195)
11,655

11,655288
11,943

13,478(1,093)
3,988(1,229)15,143

15,143(1,175)
5,116(2,302)(357)
1,229(1,429)(1,429)(1)

36,177(1,093)
3,988
(357)
(195)
38,51938,519(1,175)
5,116
(1)
288
42,747

3,158
254
3,413

3,413
1,349
4,762

83
80
163

163
(66)
97

1,303
(1,046)
257

257
(641)
(384)

(148)
(1,415)(1,563)(1,563)
954
(609)

4,396
(2,126)
2,269

2,269
1,595
3,865

4,410
(1,367)
3,043

3,043
(571)
2,472

44,984(1,093)
3,988
(357)
(195)
(3,493)
43,833

43,833(1,175)
5,116
(1)
288
1,024
49,086

Capital surplus
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends of surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit attributable to owners of parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement of treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,084

Treasury shares
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement of treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,430)Total shareholders’ equity
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends of surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit attributable to owners of parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net changes of items other than shareholders’ equity, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred gains or losses on hedges
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net changes of items other than shareholders’ equity, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustment
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net changes of items other than shareholders’ equity, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurements of defined benefit plans
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net changes of items other than shareholders’ equity, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accumulated other comprehensive income
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net changes of items other than shareholders’ equity, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-controlling interests
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net changes of items other than shareholders’ equity, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total net assets
Balance at beginning of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends of surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit attributable to owners of parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change of scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net changes of items other than shareholders’ equity, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47

Consolidated Statements of Cash Flows(¥million)

Previous consolidated fiscal year
1, 2015 to（ AprilMarch 31, 2016 ）Current consolidated fiscal year
1, 2016 to（ AprilMarch 31, 2017 ）Cash flows from operating activities
Profit before income taxes ...............................................................................................
Depreciation ...........................................................................................................................
Impairment loss ....................................................................................................................
Amortization of bond issuance cost ............................................................................
Loss on retirement of non-current assets .................................................................
Loss (gain) on sales of non-current assets ...............................................................
Loss (gain) on sales of investment securities ...........................................................
Loss (gain) on valuation of investment securities ....................................................
Amortization of goodwill ....................................................................................................
Increase (decrease) in allowance for doubtful accounts ......................................
Increase (decrease) in provision for bonuses ...........................................................
Increase (decrease) in provision for product warranties .......................................
Increase (decrease) in net defined benefit liability ...................................................
Interest and dividend income ..........................................................................................
Interest expenses .................................................................................................................
Foreign exchange losses (gains)Share of (profit) loss of entities accounted for using equity method ...............
Insurance income ................................................................................................................
Decrease (increase) in notes and accounts receivable-trade .............................
Decrease (increase) in inventories .................................................................................
Increase (decrease) in notes and accounts payable-trade ..................................
Decrease (increase) in consumption taxes refund receivable ............................
Increase (decrease) in accrued consumption taxes ...............................................
Other, net ................................................................................................................................
Subtotal ...................................................................................................................................
Interest and dividend income received .......................................................................
Interest expenses paid ......................................................................................................
Income taxes paid ...............................................................................................................
Proceeds from insurance income .................................................................................
Net cash provided by (used in) operating activities ...............................................

6,875
4,068
31
441
(8)
(7)
719
(53)
(112)
625
2,327
(383)
351
219
(44)
(2,601)(4,814)
26
(907)
(65)
(210)
(2,591)
3,887
383
(360)
(495)
2,601
6,016

7,235
3,506
1,181
28
516
(18)
(94)
204
14
(124)
411
(645)
(230)
(443)
246
49
(46)
(4,598)
1,351
384
(103)
176
2,281
11,280
443
(249)
(927)
10,547(5,453)
10
(191)
518
(857)
(5,972)(3,921)
375
(1)
485
(157)
(1,010)(4,231)

(966)
4,958
(5,000)1,500(3,033)
(43)
234
(357)
(1,093)(42)(1,642)(5,486)(196)(5,640)16,774
11,134(1,810)1,600(4,883)(44)(1)(1,175)
(18)
(408)
0
(6,741)(234)(660)
11,134
10,474

Cash flows from investing activities
Purchase of property, plant and equipment ..............................................................
Proceeds from sales of property, plant and equipment .......................................
Purchase of investment securities ................................................................................
Proceeds from sales and redemption of investment securities .........................
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Other, net ................................................................................................................................
Net cash provided by(used in) investing activities ..................................................
Cash flows from financing activities
Net increase (decrease) in short-term loans payable ............................................
Proceeds from issuance of bonds ................................................................................
Redemption of bonds ........................................................................................................
Proceeds from long-term loans payable ....................................................................
Repayments of long-term loans payable ...................................................................
Repayments of finance lease obligations ...................................................................
Proceeds from share issuance to non-controlling shareholders .......................
Purchase of treasury shares ............................................................................................
Cash dividends paid ...........................................................................................................
Dividends paid to non-controlling interest .................................................................
Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation
Other, net ................................................................................................................................
Net cash provided by(used in) financing activities ..................................................
Effect of exchange rate change on cash and cash equivalents ................
Net increase (decrease) in cash and cash equivalents ...................................
Cash and cash equivalents at beginning of period ..........................................
Cash and cash equivalents at end of period ........................................................

48

Company Information
Corporate Profile
Company NameFounding
Paid-in capital

Subsidiaries part of the GroupDAIKEN CORPORATION
September 26, 1945
¥13,150,039,080<In Japan>
Daifit Co., Ltd. (Kurashiki City, Tottori Prefecture)

Registered Head Office and Operational Locations

Dai-wood Corporation (Iga City, Mie Prefecture)

Registered Head
Office:Operational
Headquarters:
Tokyo Office:Setouchi Kakoh Co., Ltd. (Minami-ku, Okayama City)

Major Sales
Offices:

1-1, Inami, Nanto City, Toyama, Japan
3-2-4, Nakanoshima, Kita-ku, Osaka, Japan(Nakanoshima Festival Tower West 14F)
12-8, Sotokanda 3-chome, Chiyoda-ku, Tokyo,
Japan
Sapporo, Sendai, Tokyo, Kanazawa, Nagano,
Nagoya, Osaka, Hiroshima, Takamatsu,
Fukuoka and Singapore

Production Plants

Toyama Juki Co., Ltd. (Tonami City, Toyama Prefecture)
Dai-tac Corporation (Minami-ku, Okayama City)
Aizu Daiken Kako K.K. (Aizuwakamatsu City, Fukushima Prefecture)
C&H Co., Ltd. (Kishiwada City, Osaka Prefecture)
Eco Techno Co., Ltd. (Chiyoda-ku, Tokyo)
Daiken Engineering Corporation (Kita-ku, Osaka City)
Koukou Sangyo Corporation (Chiyoda-ku, Tokyo)
Sankei Corporation (Higashiosaka City, Osaka Prefecture)

Mie Plant(Tsu City, Mie Prefecture)
Inami Plant(Nanto City, Toyama
Prefecture)
Okayama Plant(Minami-ku, Okayama City)
Takahagi Plant(Takahagi City, Ibaraki
Prefecture)

Daiken Home & Service Corporation (Kita-ku, Osaka City)
Smile-Up Corporation (Kita-ku, Osaka City)
Pac System Co., Ltd. (Shinagawa-ku, Tokyo)<Overseas>
Daiken Industries (Ningbo) Corporation (Zhejiang Province, China)
Daiken (Shanghai) Corporation (Shanghai City, China)
PT. Daiken Dharma Indonesia (Jawa Timur Province, Indonesia)
Daiken New Zealand Limited (Rangiora City, New Zealand)
Daiken Sarawak Sdn Bhd. (Sarawak State, Malaysia)
Nakanoshima Festival Tower West

Daiken Miri Sdn Bhd. (Sarawak State, Malaysia)

Directors and Kansayaku (as of June 23, 2017)

Masanori Okuda

Representative Director,
President

Tatsuo Shibuya
Director

Kikuo Imamura

Kansayaku

49

Takashi Aihara

Representative Director,
Senior Managing Director

Tetsuo Harima

Director

Toshio Fuyuki

Kansayaku

Tomoaki Kato

Representative Director,
Senior Managing Director

Ken Suzuki

Director

Akio Hasunuma

Outside Kansayaku

Takashi Terubayashi
Representative Director,
Senior Managing Director

Koji Mizuno

Outside Director

Masafumi Inoue

Outside Kansayaku

Kiyoshi Furube

Outside Director

Corporate History
1945: Founded (Succeeded all business of the Forestry Department at
Daiken Sangyo Co., Ltd. and established as Daiken Mokuzai
Kogyo Co., Ltd.)
1949: Listed in Osaka Stock Exchange
1957: Founded Daiken Wall Board Kogyo Co., Ltd., which is anaffiliated company aimed at manufacturing wood fiberboard
1958: Started manufacturing wood fiberboard Insulation Board at
Okayama Plant
1964: Started manufacturing rock wool sound-absorbing board
Dai-Lotone at Okayama Plant
1967: Merged with Daiken Wall Board Co., Ltd., and established as
Daiken Corporation
1970: Started manufacturing WPC products at the Nagoya plant
1971: Listed on the First Section of Tokyo Stock Exchange
1973: Started manufacturing boards for tatami mats at the Okayama
plant
1977: Newly constructed the Takahagi plant aimed at manufacturing
wood fiberboard
1984: Established Daiken Engineering Corporation aimed at theinterior work business for buildings, etc.
1990: Started manufacturing housing equipment at the Inami plant
1994: Established Daiken Sarawak Sdn Bhd. in Malaysia as a
production base for MDF
Installed a production line in Okayama for tatami facings using
Japanese paper as a substitute for rush grass

1995: Construction of the new door plant at the Inami plant completed
1996: Constructed the Dai-Lite Plant in Okayama
2000: Comprehensive business ties with TOTO Ltd.
2002: Cooperated with TOTO Ltd. and YKK AP Inc. in the home
improvement field
Established Daiken Industries (Ningbo) Corporation
2005: Established the flooring substrate technology using planted
trees
Purchased an MDF manufacturer in Malaysia and established
Daiken Miri Sdn Bhd.
2008: Established Daiken (Shanghai) Corporation aimed at developing
and strengthening the Chinese market
2009: Founded Daiken New Zealand Limited as the third MDF
production base
2010: Business cooperation with Panasonic Electric Works (currently,
Panasonic Corporation) in production and procurement
2012: Integrated quality and environmental ISO in the groupcompanies in Japan
2013: Purchased and acquired 100% ownership of C&H Co., Ltd.,
including the MDF selling business2015: Established PT. Daiken Dharma Indonesia in Indonesia aimed at
manufacturing and selling interior doors
2016: Acquired 100% ownership of Pac System Co., Ltd.

Stock Information
Breakdown of shares by type of shareholder

Stock Information (as of March 31, 2017)
Total number of authorized shares

79,643,600

Total number of shares issued

25,175,043

Number of shareholders

4,251

Major shareholders (as of March 31, 2017)
Number of
SharesOwnership
ratio (%)

6,389,600

26.5

Sumitomo Mitsui Banking Corporation

986,980

4.1

Sumitomo Life Insurance Company

931,200

3.9

Daiken Corporation Trading-Partner
Shareholding Association

717,700

3.0

Sumitomo Mitsui Trust Bank, Limited

688,000

2.9

Sumitomo Forestry Co., Ltd.

638,200

2.6

Marubeni Corporation

564,388

2.3

The Master Trust Bank of Japan, Ltd.
(Trust Account)

560,500

2.3

Nippon Life Insurance Company

545,669

2.3

Japan Trustee Services Bank Ltd.
(Trust Account)526,900

2.2

Name
ITOCHU Corporation(Note) 1. Daiken Corporation is in possession of 1,072,288 treasury shares. However,
the Company is excluded from the above list of major shareholders.
2. The ownership ratio is calculated excluding the treasury stock.
3. The Company consolidated shares at a rate of one share per five ordinary
shares as of October 1, 2016.

(as of March 31, 2017)

Treasury stock
1,072,288
1 shareholder(4.26%)
Securities companies
172,582
30 shareholders(0.69％)

Foreign institutions
and others
1,700,182
119 shareholders(6.75％)

Number ofshares by typeof shareholder
Individuals
and others
3,914,779
3,942 shareholders(15.55％)

Other Japanesecompanies
10,000,937
119 shareholders(39.72％)Financial institutions
8,314,275
40 shareholders(33.03％)50

DAIKEN CORPORATIONHead Office: 14F Nakanoshima Festival Tower West,3-2-4 Nakanoshima, Kita-ku, Osaka 530-8210

https://www.daiken.jp/

Issued in September 2017.
BC・GL/SI