Annual
Report
0 16
2 016
For the year ended March 31,2016

DAIKEN CORPORATIONHead Oﬃce
6-20, Dojima, 1-chome, Kita-ku, Osaka, Japan

Publication Date

August 2016

[175-10] CS2016.07 TA • KU/SI （P10.1-07）

DAIKEN CORPORATION

contents
Corporate Overview
02 contents
03 Message from the President
05 Process of Creating Value
07 Financial Indicators and Non-Financial Indicators

Co rp o ra t e Me s s a g e

Toward the future going
beyond the functions of yesterday

Vision and Strategies
09 Long-Term Vision GP25 andMedium-Term Management Plan

11 Interview with Mr. Masanori Okuda,
President

15 Feature: Comprehensive Use of Wood

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 haveaccrued to provide ﬁrst rate building materials and comfortable spaces forour 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.

̶Encouraging the Utilization of Cascaded Wood

Summary by B us i ne s s
17 Residential Space Business
19 Ecological based Materials Business
21 Engineering Business
CSR
23 The Daiken Group’s CSR
25 Governance
30 Commitment to Society
33 Environment
35 Medium-Term CSR Activity Plan
F inancial Se ct i o n
37 10-Year Summary of Consolidated Financial Data
39 Consolidated Balance Sheets
41 Consolidated Statements of Income
42 Consolidated Statements of Comprehensive Income
43 Consolidated Statements of Changes in Net Assets
44 Consolidated Statements of Cash FlowsCo rpo rate Info rm a t i o n
45 Corporate Proﬁle / Stock Information/

A housing material manufacturer
becomes an all-embracing
company for building materials

01

DAIKEN CORPORATION Annual Report 2016

Directors and Kansayaku【Disclaimer regarding future projections】

The forecasts and estimates shown in this report are basedon the information available at the time of the report’s
issuance. Plans and ﬁgures depicting the future do not
imply a guarantee of actual outcome.

DAIKEN CORPORATION Annual Report 2016

02

TOP MESSAGE

Working to enhance our corporate value as
an all-embracing company for building materials
Last year, Daiken Corporation celebrated the 70th anniversary of its founding. In that milestone year,
the Company formulated GP25 (Grow/Glow Plan 25), a long-term vision for its business in 2025.
In keeping with this vision, we aim to a housing material manufacturer becomes an all-embracing
company for building materials, and to grow and glow as an attractive enterprise that is
highly regarded by society. GP25 is also the Daiken Group’s promise to its stakeholders.
This makes ﬁscal 2017 all the more important for the Daiken Group, as the year to mark its ﬁrst step
toward realizing its vision of becoming an all-embracing company for building materials.
Recent years have seen dramatic changes in economic and social structures, with increasingly
intensifying international competition brought about by rapid globalization. Given these circumstances,I am well aware that we have to overcome many diﬃculties as we move toward the future.
Nevertheless, these adverse conditions also provide us with real opportunities to transform ourselves
into a company that is one step ahead of the competition.
What we need now is to create and oﬀer new values that are made possible only by Daiken, throughits strong commitment to “ecology” and “the qualitative improvement of spaces”̶the themes
we have steadfastly pursued since the Company’s founding. We should also respond to changes in society
quickly and bring together the power and courage of all individual employees to take on new challenges.
The Daiken Group will redouble its eﬀorts to become a corporate group capable of winning trust fromall its stakeholders and continuing sustainable growth.
I would like to ask your further support in this endeavor.

Representative Director, President

Masanori Okuda

03

DAIKEN CORPORATION Annual Report 2016

DAIKEN CORPORATION Annual Report 201604

P roce s s of Cr eatin g Va lue

Daiken Group’s process of creating value
We believe that the starting point of the Daiken Group’s business is to remain steadfastly committed
to “ecology” and “qualitative improvement of spaces,” thereby oﬀering new value to society. This isalso the reason for the existence of the Daiken Group.
By maximizing the technologies that Daiken has developed thus far, its wealth of human resources,
as well as the limited resources available, we will address social challenges through our businessactivities. In so doing, we will realize a sustainable improvement in corporate value.

Daiken’s diversiﬁed approach to creating spaces, covering from industrial materials,

building materials and construction work, has enabled us to oﬀer a unique value to society.
B uild ing ma ter ia ls bus ines s

I nd us tr ia l ma ter ia ls bus ines s

Engineering business

Daiken’s building materials businesssupports people’s lifestyles.

Daiken’s industrial materials businesshelps shape a better future.

Daiken’s engineering businessprovides comfortable living spaces.

Produces and sells a wide variety of building
materials, including ﬂooring materials, wallmaterials, ceiling materials, doors, cabinets
and acoustic products, all of which are
indispensable in the construction of private
housing and public and commercial
facilities.

Produces and sells various functional industrial
materials incorporating noninﬂammability,
earthquake resistance, thermal insulation,
sound insulation, humidity conditioning
and various other features, by making
eﬀective use of wood resources anduntapped resources from a sustainable
perspective.

Receives contracts for construction work tocreate spaces that maximizes the functionsof industrial materials and building
materials, primarily in the ﬁelds of publicand commercial buildings and thecondominium market, taking advantage ofprofessional expertise and technologies.

Sources for creating value

Technologicalcapabilities

Human resources

Natural resources

We have been quick to meet
diversifying needs for more than
70 years. Daiken will continue toreﬁne its technologies that haveenabled the Company to develop
outstanding industrial materials
and products as a pioneer in theindustry.
What supports Daiken is eachindividual employee. We nurture
human resources who will create
new values based on their diverse
individuality and diﬀerent ways ofthinking.

Daiken promotes the sustainable
use of natural resources, while
diﬀerentiating itself from othercompanies by exploring how to
use renewable wood resources
more eﬀectively.

Business activities that harness Daiken’s strength
Building materials businessIndustrial materials businessState-of-the-art industrial
materials and technologies

05

Our track record

BUSINESS MODEL
INPUT

Daiken’s uniqueness
Steadfast commitment to“ecology” and “qualitative
improvement of spaces”

OUTPUT

L o ng-t e r m vi si o n
A housing material
manufacturer becomesan all-embracing company
for building materials

Engineering business

Through highly-motivatedresearch and development
activities, Daiken constantly
develops state-of-the-art industrial
materials and technologies.

Manufacturing thatmakes eﬀective
use of resources
while avoiding waste

Our manufacturing makes
eﬀective use of wood resources aswell as untapped resources, while
minimizing waste.

Proposing a solution
using our tangible andintangible capabilities

We propose solutions to customers
with our expertise, which
integrates our “software” and“hardware” (tangible andintangible) capabilities in industrial
materials and building materials.

DAIKEN CORPORATION Annual Report 2016

Co-creation of newvalues with local communities
and governments
by utilizing domestic wood

In collaboration with people inlocal communities, we havecreated new values to makeeﬀective use of locally producedwood.

Eﬀorts focused on
new markets
and growth ﬁelds

We have deﬁned the ﬁelds ofpublic and commercial buildings
and the global market as ourprioritized areas, into which we are
actively channeling ourmanagement resources.

Carbon ﬁxationby harnessing wood

Through cyclic use of wood, we ﬁx
the carbon without returning it in
the air, thereby contributing topreventing global warming.

Creating common values with society

Building asustainable society

BUSINESSACTIVITYOUTCOME
Providing secure, safe,
and comfortable spaces

Comprehensive
use of wood building
materials and promoting
the use of cascading

To achieve sustainablecorporate growth, theDaiken Group believes that
it is essential to conductbusiness while helping toresolve the challenges that
confront society andcreating common values
with society.

DAIKEN CORPORATION Annual Report 201606

Financial Indicators (including Medium-term Management Plan Targets) and Non-Financial Indicators
Financial Indicators

Non-Financial Indicators

Net sales（Millions of yen）

200,000
150,000

180,392
151,209

158,153

168,833

168,141

5,000

2012

2013

2014

2015

2016（Fiscal year）

Net income

Return on equity (ROE)

9.8

3,988

3,000

7.0

7.0

2,500

2,546

2,736

2,000

150,000

8

120,000

500

874

0

2012

2013

2014

2015

2016 （Fiscal year）

2015

2016（Fiscal year）

Shareholder equity ratio

131,618

135,890

135,596130,315

0

2012

2013

2014

2015

2016 （Fiscal year）

26.8

27.4

27.3

890

2,327

2,283

2,250

2,301

829

400

2,231

300

200

2012

2013

2014

2015

2016（Fiscal year）

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

128

6.1
122

6.6
129

6.8
132

（%）

8

0

123

Emissions(1,000 tons-CO2)

6

2

4,036

4,000

25

3,000

20
15

2013

2014

2015

3,274

2,758

3,206

3,508

Input of woody biomass energy
Percentage of woody biomass energy in use
43.0

41.1

41.4

0
2016 （Fiscal year）

2,000
1,500

1,481

1,251

1,270

40.8

1,162

Percentage of use
（%）

42.3

50
40

1,140

0

2012

2013

2014

2015

2016（Fiscal year）

1,000

20

1,000

500

10

Overseas sales

Overseas sales as a percentage of total sales

10,000
8,000
6,000

4.4
6,600

4.6
4.0
6,400

5.5
9,300

8,300

5.7

9,600

2013

2014

2015

2016 （Fiscal year）

6

30,00023,941

5

26,87628,17427,97026,659

0

2

07

2013

2014

DAIKEN CORPORATION Annual Report 2016

2015

2014

2015

250

150

0
2016 （Fiscal year）

Sales per unit
(ton-CO2/100 million yen)

120

86.2

130.3

100
78.2

69.7

123.7

125.7

80

68.7

67.8

116.1

114.0

60

100

40

50

20

0

2012

2013

2014

2015

0
2016 （Fiscal year）

Amount of waste disposed of *2/
Percentage of waste disposed of in landﬁlls *5
Emissions(1,000 tons)

80

Amount of waste disposed ofPercentage of waste disposed of in landﬁlls
9.5
62.9

60

8.2

8.1

55.9

53.5

Percentage
（%）

10

8.2
8
42.2

5.7
47.5

6
4

20

0

2
2012

2013

2014

2015

0
2016 （Fiscal year）

0
2016（Fiscal year）*3: Greenhouse gas emissions as a percentage of net sales.

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

10,0000*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.

*5: Waste disposed of in landﬁlls as a percentage of the amount of waste disposed of.

1
2012

2013

Sales per unit

*4: Woody biomass energy input as a percentage of total energy input.

20,000

3

2,000

2012

0
2016 （Fiscal year）*1: Data for Fiscal 2016 is data after absorbing four subsidiaries. Data for Fiscal 2012 to Fiscal 2015 includes data for four absorbed subsidiaries.

（Millions of yen）

4

4,000

0

2015

Overseas handling volumes

Overseas sales/Overseas sales as a percentage of total sales（Millions of yen）

2012

Greenhouse gas emissions

40

2,000

0

2014

30

10
5

2013

300

200

50

2012

2012

Greenhouse gas emissions*2/Sales per unit*3

6.6

4

2,500

5,000

31.3

5

100

100

Input
（×1012J）

319

10

6.4

0

Number of female employees
Female employees as a percentage of total employees （%）
20
19.9
19.3
18.9
15.9
18.1
373
370
368
361
15

200

Input of woody biomass energy*2/Percentage of use*4（Millions of yen）

29.9

891

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

150

Capital investment

350（Persons）

30,000

1
0

（%）

911

60,000

2
2014

856

(Daiken Corporation’s non-consolidated basis*1)

3

1,318

2013

2012

90,000

4

500

500

7
5

（Persons）

1,000

125,469

6

Number of employees in overseas

1,500

Total assets

10
9

3,000

2,000

（%） （Millions of yen）

3.8
2.6

0

Number of employees in Japan(Daiken Corporation’s non-consolidated basis*1)

3,500

2,500

1,000

3,500

30

4,648

2,000

4,000

1,000

5,025

5,281

3,000

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

1,500

4,600

（Persons）

4,000

50,000（Millions of yen）

5,669

6,000

100,000

0

Number of employees in Japan and overseas

Ordinary income（Millions of yen）

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

2012

2013

2014

2015

2016 （Fiscal year）

Financial Indicators

h t t p : / / www. da i ke n . j p / i r /Non-Financial Indicators

h t t p : / / www. da i ke n . j p / c s r /DAIKEN CORPORATION Annual Report 201608

Vi s i on a n d Str a tegyLong-term vision GP25 and medium-term management plan
In 2015, on its 70th anniversary, the Daiken Group formulated GP25 (Grow/Glow Plan 25), a long-term vision for
its business in 2025.
In GP25, the Group declares that its aim is to explore further possibilities for expanding its existing businesses
and creating new markets and thus transform itself from a housing material manufacturer becomes anall-embracing company for building materials.
As a ﬁrst step in achieving these objectives, in April 2016 the Daiken Group started to implement its new
three-year medium-term management plan as the ﬁrst stage of GP25. The Group has been working hard to meet

Making a long-term vision GP25 a reality
Our vision for the Daiken Group in the long term is of atransformed group; one that not only aims to be proﬁtable, butthat is also committed to improving society. We seek to be an
enterprise that people rate highly for its attractive working
environment and as a place where employees can work
positively and enthusiastically. This vision is captured in thefollowing two words: GROW and GLOW.

GP25 is also the Daiken Group’s promise to its stakeholders. The
current business environment has been changing drastically,
and the Group regards this as a transitional period for ourbusiness. We will work to achieve our objectives by anticipatingchanges in the business environment and continuing to face
the challenge of oﬀering new value to our customers.

Grow

Glow

GROW

The Group will work to transform itself into an enterprise thatmeets the expectations of customers and markets,
contributing to a better society.

its management targets̶an ordinary income of 7.0 billion yen on net sales of 180.0 billion yen̶by ﬁscal 2019,the ﬁnal year in the ﬁrst stage of the plan.

The Group will work to become an enterprise that people
rate highly for its attractive working environment and as aplace where employees can work positively andenthusiastically.

First stage of GP25̶the new three-year medium-term management plan〈for ﬁscal 2017-2019〉
The Daiken Group has formulated the ﬁrst stage of GP25, in its
new three-year medium-term management plan, which weregard as a ﬁrst step in achieving a long-term vision. One of theprincipal undertakings in the plan is to establish a base fromwhich we can transform ourselves from a housing material
manufacturer becomes an all-embracing company for building

Positioning the medium-term
management plan as part ofa long-term vision GP25

GLOW

Management
philosophy

materials.
As the ﬁrst step in establishing this base, the Group hascompletely reviewed its policies and activities, laid out a strategy
that includes both a market and a business point of view, andidentify major issues and determine resolutions.

The ﬁrst step toward an all-embracing company for building materials

Customer orientated

1 Explore further possibilities for our existing businesses while laying the basis for new businesses as the key to future growth.

management focusing

2 Actively develop environment-related technologies, such as those that use ecological based materials, energy-saving materials, anddomestic wood.

on the harmony between

3 Actively channel management resource into our prioritized areas, including the construction of public and commercial buildings andhumans, spaces, and the environment.

Basic policy

global markets.

4 Augment our capacity to generate earnings by maximizing the synergy eﬀect between the manufacturing and engineering businesses.
5 Create a working environment where employees can work positively and enthusiastically to foster human resources who will play

Signiﬁcance and resolution

leading roles in the future.

6 Position diversity as one of our management strategies and use the abilities of these diversiﬁed human resources as a growth engine.

１ Contribution to a sustainable society by using

7 Enhance corporate governance to improve our corporate value over the medium and long term.

limited resources.

2 Enrich people's lives by creating comfortable
and safe environments.

Long-term
vision, GP25

Vision for 2025
１ Become a global company operating in the ﬁeld of industrial materials, building
materials, and engineering and stay a step ahead of the competition.

2 Find a new area of business that can act as a fourth pillar for our operations.
3 Receive the overwhelming support of professionals for our skills of product development

through consumers’ eyes, proposals, and problem solving and for our organizational power.

4 Establish a corporate culture that will encourage employees totake on challenges and a system that can support them.

5 Strengthened governance underpins the continued growth and the improvementin mid/long-term corporate values.

Medium-term management plan

Market strategies
Public and commercial buildings●Exploit technologies that use wood and ﬁreproof materials indeveloping products.
●Develop our installation and construction capabilities.

Global markets●Develop industrial materials and building materials that meet 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.

Business strategies
Building materials business●Develop ﬂoor and wall materials that use domestic wood.
●Develop products that respond to changes in lifestyle.
●Develop energy-saving building materials.
●Exploit the workability and advantages of industrial materials.

Industrial materials business●Develop new industrial materials.
●Develop new applications that will bring new markets andcustomers.
●Secure stable supplies of wood chips and encourage thewidespread use of wood.

Home renovation market

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

●Expand the installation and construction work and prepare
order accepting structure.

New home market●Enhance our home improvement consulting service andexpand service areas.

●Propose new values suited to lifestyles and regions.
* The three companies TOTO Ltd., DAIKEN, and YKK AP Inc.

09

DAIKEN CORPORATION Annual Report 2016

DAIKEN CORPORATION Annual Report 201610

Vi s i on a n d Str a tegy- I nter view with Mr. Masano ri Okuda, President

Q
TOP INTERVIEWIn developing “Ecology” and”Improvements in the qualityof space”, our aim is
to share our values with society
and become an all-embracing
company for building materials.

A

Would you comment on the ﬁnancial results for the Daiken Groupfor ﬁscal 2016?
The Group has been engaged in reform, which included transforming its business structure.
As a result, the Group saw a decrease in net sales but an increase in proﬁts over the previous year.

Looking at the Japanese housing market environment in ﬁscal 2016,
housing starts increased to 910,000 units, up about 3.5% year-on-year.
However, they remained almost unchanged from the previous year ona ﬂoor space basis, because most of the growth was attributable tohousing rentals.
In these circumstances, the Daiken Group decided to transform its
business structure to make it less vulnerable to changes in the numberof domestic housing starts. Speciﬁcally, the Group consolidated its fourmain manufacturing subsidiaries in Japan to enhance their
management eﬃciency, revitalize their organization by rotation of staﬀ
to improve skill sets, and unify their development, manufacturing, andsales departments. We have also been working hard to improve
proﬁtability in a very diﬃcult environment in which raw material prices
soared due to the yen’s depreciation, drop in the costs for petroleum
products and energy because of a decrease in the price of crude oil. Our

QAeﬀorts included the sales division revising its sales prices, themanufacturing division streamlining its operations through cost
reductions and improvements in productivity, and the staﬃng division
implementing structural reform, including reforms in logistics andprocurement.
As a result, the Daiken Group posted net sales of 168,141 million yen(down 0.4% year-on-year), an operating income of 5,586 million yen (up61.8%), and an ordinary income of 5,281 million yen (up 13.6%) in its
100th business term (April 1, 2015 to March 31, 2016). Unfortunately,
although proﬁts increased, net sales decreased.
Even under such a diﬃcult environment, some of our competitors
increased their net sales. We have asked both the manufacturing andsales divisions to analyze the reasons for the decrease in net sales andpromptly implement the necessary countermeasures.

Could you summarize the key points in the medium-term
management plan that will start in ﬁscal 2017?
In the ﬁrst step in becoming an all-embracing company for building materials, the Daiken Group
must face the challenge of entering new markets and expanding its business domain.

The Daiken Group has worked out the ﬁrst stage in achieving the visionof GP25 (Grow/Glow Plan), the long-term vision it formulated in May
2015. This is a three-year medium-term management plan that will run
from ﬁscal 2017 to ﬁscal 2019.
It is evident that the demand for materials used in new homeconstruction will decrease in the future, since housing starts are forecast
to decline with the fall in the population and the subsequent decreasein the number of households. In these circumstances, the Daiken Group
must reduce its dependence on the number of housing starts andtransform itself from a housing material manufacturer becomes anall-embracing company for building materials. To that end, the Group iscommitted to facing the challenge presented by entering a new market
and a new business.
We believe that it is important for the Daiken Group to seek growth inmarkets other than the housing market in Japan, such as the public andcommercial buildings market (nonresidential buildings), home
improvements market, and global markets, and to expand its
engineering business (construction works) sharply.
At the same time, the DAIKEN Group has begun a full-scale search fora new business that could become a fourth pillar of the Group’s
activities. We are inviting anyone in the Group to propose ideas on a
new business and are examining if there is any idea that can bematerialized as a project. We have introduced a system that will give theGroup more opportunity to create new businesses in cooperation with
the Product Development Division on manufacturing division, using
new seeds generated from the various basic researches conducted
uniquely at the Research and Development Center has been
conducting.
We will leave the door wide open to the creation of new businesses
and will follow up all possibilities.

■Grow from a housing material manufacturer becomes anall-embracing company for building materials■Transition to a new business model

1
2 3
4

Into an all-embracing company for building materials【Business domains】【Markets and sectors】

Industrial materials businessHousing market

Create spaces Building materials business
Build athat enrichsustainablepeople’ s living Engineering businesssociety

GlobalPublic and commercial buildings
Industrial materials＋＋

New business

New markets

Japan●Prioritized markets: Public and commercial buildings market, global market●Prioritized business: Engineering business
11

DAIKEN CORPORATION Annual Report 2016

Expand into publicand commercial
buildings markets．

Innovate labor-saving
installation techniques thatwill solve labor shortage problems
and develop new industrial
materials that will enable
creation of spatial design.

Market environment-friendly industrial
materials globally.

Develop a global
engineering businessby combining high quality
building materials
with our installation
technology.

DAIKEN CORPORATION Annual Report 201612

Vi s i on a n d Str a tegy- I nter view with Mr. Masano ri Okuda, President

Q
A

Would you summarize the forecast of ﬁnancial results for ﬁscal 2017
and the Daiken Group’s strategy?
Even in this uncertain business environment, the Group will make aggressive capital investments
by prioritizing global and public and commercial buildings markets.
its priority.
In the public and commercial buildings market, we opened
Daiken Akihabara Technical Space in March 2016. Here, the Groupintends to show its technologies, industrial materials, and products
and develop products that will help to solve problems with thedesign of nonresidential buildings and satisfy market needs. Looking
at the global market, the Group has stated in its long-term vision
GP25 that it will expand business mainly in the Southeast Asian
region. In Indonesia in particular, where the housing market is
expected to progress rapidly on the back of strong economic
growth, the Daiken Group has established PT. Daiken DharmaIndonesia, a subsidiary that manufactures interior doors, jointly withlocal companies including PT. Dharma Satya Nusantara. PT. Daiken
Dharma Indonesia is scheduled to begin full-scale operation in
August 2016.
As ﬁscal 2017 is the ﬁrst year of our medium-term management
plan, the Daiken Group will combine forces for a large-scale eﬀort toaccomplish its targets.

In ﬁscal 2016, the ﬁnancial results of the main large Japanese
exporting companies recovered due to the yen’s depreciation andrising stock prices that started in the beginning of 2015. However, in2016 the tide has completely turned. The yen has appreciated andstock prices declined, making the outlook for the Japanese economy
unclear.
With ﬁscal 2017 starting under such economic conditions, I haveto say that it is quite diﬃcult to predict the future. And with the
Kumamoto Earthquake of April 2016 was an unprecedented
disaster, where the area experienced two big earthquakes with aseismic scale of 7, I suspect that consumers and businesses in Japanas a whole are taking a wait-and-see stance. However, since housing
loan interest rates are at a record low, I predict housing starts will
stay ﬂat or increase slightly from the previous year.
On the other hand, I think it is important for the Daiken Group totransform its business structure to reduce its dependence on
domestic housing starts, and the Group is making public andcommercial buildings (nonresidential buildings) and global markets

Fiscal 2016 (results)

Final year of the ﬁrst stage of GP25

168,141

172,000

180,000■ Operating income

5,586

6,000

7,000

■ Ordinary income

5,281

6,300

7,000

■ Proﬁt attributable to owners of parent

3,988

4,000

4,300

■ ROE (%)

9.8％

■ Net sales

Q
A

Would you comment on the Daiken Group’s
capital policy and shareholder returns?
The Group aims to enhance its sustainablecorporate value, with a target ROE of 8%
or higher and a 30% or higher payout ratio.

Basically, our capital policy is to enhance corporate value by seeking eﬃcient
operation with the emphasis on return on equity (ROE) and to optimize thebalance between improved returns to shareholders and strategic investment toensure the soundness of our ﬁnancial position and medium-and long-term
growth. ROE is one of the indexes that measures the proﬁtability of an enterpriseand shows the degree of proﬁt earned by an enterprise for its shareholders basedon the amount of equity invested by shareholders. Under its medium-term
management plan that starts in ﬁscal 2017, the Daiken Group will work totransform its business structure to maintain a stable ROE at 8% or higher.
Regarding its policy on shareholder returns, the Group aims to maintain its
payout ratio at 30% or higher; in other words, it will pay 30% or more of the proﬁt
attributable to owners of the parent to its shareholders as a dividend. It will
endeavor to continue paying dividends stably, while aiming at returning proﬁts toshareholders in accordance with ﬁnancial results.
The Daiken Group will carefully judge whether or not to purchase treasury stock
after considering its capital position and the stock market environment.
The Group will use its shareholder equity eﬀectively to upgrade production, sales,
and construction systems, develop new businesses and cultivate the global market
with the aim of achieving medium-and long-term growth and establishing a solid
business foundation to support that growth.
13

Fiscal 2019

Fiscal 2017 (forecast)（Millions of yen）

DAIKEN CORPORATION Annual Report 2016

8％ or higher

Q
A

Finally, would you summarize the Daiken Group’s management aims based on
its CSR activities and the future outlook for the Group?
We believe that CSR activities must form the basis of the Group’s management structure.
The Daiken Group will continue to develop by sharing our values with society.

The Group will endeavor to put its management philosophy into
practice through its CSR activities. We consider that CSR activities
should form the basis of our management. To continue to develop
as a company that receives the support of its customers andsociety, we believe it is important for us to fully understand the
aspect of management, society, and the environment in ourbusiness activities and promote CSR activities.
Daiken Corporation was founded in September 26, 1945, amidst
the devastation and confusion after the end of World War II. Ourpredecessors started manufacturing various wood products andﬂooring materials with a strong resolution to “contribute to thereconstruction of Japanese society and people’s lives by producing
wood and lumber products as materials to rebuild the country.”
This resolution forms the basis of our CSR activities. Since then, we
have been responding to the expectations and needs of society by
developing and providing environment-friendly ecological basedmaterials and products that are used to create an attractive andMedium-term
management plan
1st stage of GP25
Fiscal 2017

high-quality living environment.
“In developing “Ecology” and ”Improvements in the quality ofspace”, our aim is to create values that are shared with society andcontribute to the realization of a sustainable society.” This vision,
which we have stated as part of our basic CSR activities policy,
deﬁnes the management stance that the Group has maintainedsince its foundation̶If an enterprise prospers over a long period
and creates values for all its stakeholders, it must generate value
for society at the same time̶and shows the direction the Groupshould head in. Above all, the important thing is what iscontributed by each of our employees.
The Daiken Group will promote CSR activities through all its
business processes in a responsible and active way and thus growwith society, fulﬁlling its social responsibility as itachieves its vision for 2025.

2nd stage of GP25
Fiscal 2020

3rd stage of GP25

Fiscal 2023

Achieve GP25

Fiscal 2026
DAIKEN CORPORATION Annual Report 2016

14

Vision and Strategy Feature Comprehensive Use of Wood̶Encouraging the Utilization of Cascaded Wood

Attempt to expand the useof domestic wood in public
facilities with our unique
technologies.
The Minato Model adopts WPC ﬂooring materials
Rev i t ali z a t i o n of t he dome st i c fore st r y in d us try
is a n ur g en t i ssu e for J apan, w he re fo r e s ts c o v e r
aro un d 7 0 % o f t he land.
In 2 0 0 9 , t h e J apane se g ov e rnme nt form ul a te d its
Fo r es t an d F o re st ry Re v i t ali zat i on Pla n a n dann o un ced i t s i nt e nt i on t o rai se t he wo o ds elf - s uﬃci en c y rat e t o 50% or hi g he r by 2 0 2 0 .
In 2 0 1 0 , t h e g ov e rnme nt passe d t he A c t to
P r o mo t e t h e Use of W ood i n Pu b li c B uil d in gs ,e t c. t o en co urag e t he u se of w ood i n p ubl ic
bui ld i n g s . F o l low i ng t he e nact me nt ,mun i ci pali t i es across J apan act i v e ly sta rte d tou se d o m es t i c w oods.

Daiken contributes to the adoption of wood for interior ﬁnishing,using its WPCtechnology with domestic woods.
After World War II, artiﬁcial forests were rapidly planted, while
the use of wood in buildings was decreased to make buildings
more ﬁreproof. After the import of wood products was fully
liberalized in 1964, the amount of wood imported from overseas
increased sharply. Consequently, the use of domestically grownwood decreased signiﬁcantly, sending the wood self-suﬃciency
rate below 30%.
In response to this situation, the Japanese government passed
the Act to Promote the Use of Wood in Public Buildings, etc. in2010, aimed at not only encouraging the use of wood in publicbuildings (the rate of wooden buildings is very low) but also
revitalizing the forestry industry in the regions. Following theAct, municipalities across Japan stepped up their eﬀorts actively
to use domestically grown wood. However, in public facilities
used by large numbers of the public, products with excellent
scratch resistance and easy maintenance are in demand. Most
forests in Japan comprise softwood trees, such as Japanesecedar and cypress. The wood from these trees has been widelyused as a structural material, but has generally not been

considered suitable for applications that require good surface
hardness. This has been a major barrier to the adoption of woodfor interior ﬁnishing.
We believe that the Group can contribute to the adoption ofwood for interior ﬁnishing by applying the technology it hasdeveloped for its housing-related materials business to turnwood of region into WPC ﬂooring materials and building
materials. Daiken’s original WPC technology can give softwoodtrees, such as Japanese cedar and cypress, a surface hardness
that is higher than broad-leaved trees, making it possible to use
it for decorative ﬂooring materials. The technology has enabled
us to provide ﬂooring materials that are excellent in durability,
and that have a natural feel and still retain the beauty of wood.
Since wood of region could be used more widely in wherever in
eyesight use frequently, municipalities and users of publicbuildings believe the adoption of wood for interior ﬁnishing willencourage people to feel an attachment to their region andhence reﬂect on environmental problems.

WPC ﬂooring materials made from domestic woods●Conceptual illustration of WPC
WPC is the acronym for Wood Plastic Combination.
WPC is a wood processing technology to reduce
problems such as a scratching and marking by injecting
plastic into each cell in the grain of the wood to provide
wood with a good surface hardness, while retaining thefeel of the wood.

Coated surfaces (UV antibacterial and anti-wear paint)
Decorative ﬂooring materials(WPC processed veneer using domestic material)

Plastic

Filled with plastic
and hardened

Empty cells

Wood

20kg

20kg

Solid natural Japanese cedar

WPC processed Japanese cedar

10kg

10kg

Substrate plywood
Polyurethane resin foam

Test that reproduces the conditions produced by scraping
a table or a chair along the ﬂoor

The Daiken Group wants to encourage municipalities to build public facilities
using wood grown and harvested in that region.

Outline of the Minato Model
Under the program, the Minato Ward Oﬃce in Tokyo asks builders who wish to construct buildings
with a total ﬂoor space of 5,000 m 2 or greater in the ward to use a certain amount of wood
produced under an agreement* or legal domestic woods and gives building owners a certiﬁcate
outlining the amount of CO2 ﬁxation that corresponds to the amount of wood used in constructing
their buildings.
The program is designed to contribute to the prevention of global warming by encouraging theuse of domestically grown and harvested wood by increasing both the level of CO2 ﬁxation in theCity and the amount of CO2 absorbed through the increased use of domestic lumber.
※ Wood produced under an agreement refers to wood products grown and harvested in municipalities that have signed theagreement for promoting the use of domestic wood logged to thin the forest with Minato Ward Oﬃce.

15

DAIKEN CORPORATION Annual Report 2016

Inﬂuenced by the increase in the adoption of domestic woodsby municipalities, Minato Park Shibaura, a multi-purpose
public facility in Minato Ward in Tokyo that oﬀers
administrative services, life-long education, health promotion
programs and the like, adopted Daiken’s WPC ﬂooringmaterials made from domestic woods. The Minato Ward Oﬃce
in Tokyo has been promoting the Minato Model, a program toencourage the use of wood produced under the agreement orlegal domestic woods and issue CO2 ﬁxation certiﬁcates to thebuilding owners. The Group has participated in this programfrom its early stages with successful results and is working to
spread the move to other regions.
In procuring wood from diﬀerent regions, a mechanism isneeded that enables users to purchase the materials theyneed from individual forestry associations. Our network helps
users procure materials from a particular region and turn theminto building materials that can easily be used for the designs
they require.
Producing industrial products with wood harvested fromthe abundant forests in the regions will expand the amount ofwood grown and harvested in those regions, one step further
towards increasing the use of domestically grown andharvested wood. We will continue with our proposals forbuilding public facilities from wood grown and harvested in
the regions and to which people from those regions can feelan attachment.

DAIKEN CORPORATION Annual Report 201616

Summary by business Residential space businessResidential space“Aspire to the number one
share in the industry bycreating new markets anddeveloping products fromthe perspective of
the consumer.”
The Daiken Group manufactures and markets ﬂooring,ﬁttings, ﬁxtures, and storage for its residential spacebusiness. As housing starts are forecast to decline,
demand for these products is expected to decrease in
the medium-and long-term period. In addition tocultivating new markets (public and commercial
buildings) and developing new products that create
new value and satisfy consumer demand, we arecommitted to strengthening our manufacturing
capabilities as we seek to increase our market shareand become a leading company in the industry.

Summary of business results for ﬁscal 2016
In ﬁscal 2016, the residential space business recorded an
ordinary income of 4,114 million yen (up 43.9% year-on-year) on
net sales of 86,256 million yen (up 0.6%) in a businessenvironment where sales of owner-occupied houses including
built-for-sale houses recovered from the slump following the
spike in demand ahead of the consumption tax rate hike. We
have maintained the leading market share in the ﬂooringmaterials market, and sales of ﬂooring materials account for
about 50% of our residential space business.
As ﬁscal 2016 marked our 70th anniversary, the Daiken Group
actively developed and launched new products. We received
high evaluations for our new products, which employ
industry-ﬁrst technologies such as our Trinity series, a highquality ﬂooring materials with a three three-dimensional stylingand our Thermoplus series, overlay ﬂooring materials thatenable users to easily upgrade to heating ﬂoor. We also worked
hard to increase our share of the market for new builds andexpand sales in the home improvements market by carrying out
a drastic revamping of our Hapia series, one of our leadinginterior ﬁnishing products, including improvements to theperformance of our surface sheets, and expanding the lineup of
our outset products to oﬀset the shortage of craftsmen.
With the growing demand to reduce unwelcome sounds
from upstairs or from the neighbors in the rental housing
market, the Daiken Group proposed that its customers start touse products featuring sound insulation. In the public andcommercial buildings market, the Group proposed using

relatively soft wood from trees such as the Japanese cedar,
which is hardened using our original WPC technology(hardening wood by injecting plastic into the grain), as ﬂooringmaterials, enabling people to walk around on the ﬂoor with
their shoes on. Our eﬀorts to achieve results in this ﬁeld havecontributed to the increased use of domestically grown andharvested wood. It is also possible to expand the products we
can oﬀer in this ﬁeld by expanding our Omoiyari (Caring) series
lineup, comprising mainly ﬁttings for the aged persons welfare
facilities market. We have invested in our plants and facilities toenhance our manufacturing capabilities, increasing productivity
for our ﬂoor materials, ﬁttings, and storage furniture.
Although raw material costs rose, mainly for imported goods,
we improved our proﬁtability by streamlining, increasing theyield, functional procurement including changing basematerials, and having customers accept revised sales prices.

Changes in net sales（Millions of yen）

100,000
93,55290,00083,19280,00070,00085,75386,2562015

2016（Fiscal year）

80,257

2012

2013

2014

Changes in ordinary income
6,000（Millions of yen）

5,314
4,114

4,000
2,915
2,000

Trinity series of sheet type decorative ﬂooring materials

0

2,858

1,959

2012

2013

2014

2015

2016（Fiscal year）

Breakdown of sales by business segment
Fiscal 2016

Engineering business 8.3%
Other 6.9%

33.5%
Ecological
basedmaterials
business

Residential
spacebusiness
51.3%

Executive Officer,
Division Manager
of Residential space division

Tomoaki Iinuma

Forecast of ﬁnancial results and strategy for ﬁscal 2017
In ﬁscal 2017, the residential space business is forecast to post
net sales of 88,050 million yen (up 2.1%). We will explore further
possibilities for our existing markets and also actively cultivate
new markets.
To strengthen our ﬁnancial position, we will continueenhancing our capabilities in procurement and manufacturing
by reducing raw materials costs and ﬁxed costs and work totransform our plant into the leading factory in the industry.
As we have stated in long-term vision GP25 (policy for theentire Group) and medium-term management plan that started
in ﬁscal 2017, we intend to transform our business structure to
make it less vulnerable to changes in the number of housing
starts.

The Group will work to increase its market share in the wallmaterials business. To that end, we will introduce a wider range
of options in the housing and public and commercial buildings
markets by expanding our product lineups through the use ofboth domestic woods with its high designability and theindustrial materials that we have developed ourselves (Dai-Liteand MDF). In particular, since in many cases Dai-Lite is used forthe substrates of veneer incombustible wall materials madefrom domestic woods, we will promote it as one of our bestproducts.

Flooring and ﬁttings

We believe that there is growing demand for storage furniture,
because storage problems always rank high on the list of
problems with people who plan to build their own house or
carry out home improvements. In the storage furniturebusiness, sales of the MiSEL and Fit Shelf series, both integrated
storage furniture ranges, and the Relaclo and Kantana series,
storage units for bedrooms or entrances, have been growing
steadily. We will enhance the competitiveness of our products,
particularly these products, and improve our service by
upgrading our installation service and planning software.

In ﬂooring materials and ﬁttings, our mainstay businesses, theDaiken Group will expand the production capacity of its
factories and work to increase sales by focusing on oﬀering
products for public and commercial buildings. Speciﬁcally, inthe ﬂooring materials business we will concentrate on the useof domestically grown and harvested wood processed using our
WPC technology, while in the ﬁttings business we will work to
expand sales to a wider range of markets, including public
facilities, educational facilities, and lodging facilities in addition
to stepping up our marketing eﬀorts directed at aged welfare
facilities.
17

DAIKEN CORPORATION Annual Report 2016

Wall materials

Storage furniture

MiSEL series, integrated storage furniture

Fit Shelf series, integrated storage furniture

DAIKEN CORPORATION Annual Report 201618

Summary by business Ecological based materials business

Ecological based materials“Continue to develop theuse of ecological basedmaterials to provide extra
value in the new markets
and customers.”
The Daiken Group produces a wide assortment of
ecological based materials. The Group hascommercialized ecological based materials by processing
various industrial materials, basically untappedresources, into a ﬁbrous or granular state, and thenforming them into boards. We will apply our board
manufacturing technology, which has been mainly
developed to produce housing-related materials, to the
production of construction materials for public andcommercial buildings, such as plywood substitutes andlightweight incombustible panel. To help increase theuse of domestically grown and harvested wood, we will
also extend our target for technological development
related to the use of wood ﬁber to forestry andagriculture and explore further possibilities for
ecological based materials.
Breakdown of sales by business segment
Fiscal 2016

Other 6.9%

Engineering business
8.3%

Ecological
basedmaterials
business
33.5%

Residential
spacebusiness
51.3%

Division Manager
of Ecological based material
division

Masaru Iseda

19

DAIKEN CORPORATION Annual Report 2016

Summary of business results for ﬁscal 2016

Dai-Lotone rock wool sound-absorbing board

In ﬁscal 2016, sales volumes in the ecological based materials
business increased due to robust sales of products for industrial
applications and in global markets, despite sluggish sales in thedomestic housing market because of the slump following the spikein demand ahead of the consumption tax rate hike.The Groupfocused on developing new products for the next ﬁscal year andalso started to oﬀer existing products for new applications, including
public and commercial buildings. Consequently, the ecologicalbased materials business recorded an ordinary income of 812
million yen (down 46.0% year-on-year) on net sales of 56,345 million
yen (up 1.2%).

Sales of Dai-Lotone, a rockwool sound-absorbing board, forhousing applications decreased by 5.0% from the previous year.
Their sales for ceiling materials used in public and commercial
buildings, a main application, did not increase, although new
products that were put on the market in the fall sold well. Salesof various substrates for industrial applications other thanceiling materials were ﬂat, while sales volumes in overseas
markets grew by 10.0%.

Wood ﬁberboard̶Insulation Board (IB)and Medium Density Fiberboard (MDF)

Sales volumes of Dai-Lite, an inorganic panel made fromrockwool and Shirasu (volcanic soil) for bearing surface members,
its main application, decreased from the previous year. We
started to oﬀer a new application for the panel as a ﬁreproof
outer wall foundation materials for warehouses and stores, withthe aim of expanding sales in a new market.

Insulation boards (IBs), wood ﬁberboard that is manufactured using
woody waste materials from demolished houses and residual woodoﬀcuts discharged from sawmills as the main ingredients, are usedin the substrate (base material) of tatami mats and as curing
materials for the ﬂoors of houses. In Japan, sales volumes of IBs
decreased from the previous year due to a decline in the number ofJapanese-style rooms caused by changing lifestyles and the eﬀects
of the consumption tax rate hike, but sales volumes of various
substrates for industrial applications remained unchanged from theprevious year. Sales of MDF decreased in Japan. However, overseas
sales grew, covering the decrease in domestic sales, because wewere able to avoid intensiﬁed competition by adopting ahigh-quality product strategy and meeting our promised delivery
dates.

Forecast of ﬁnancial results andstrategy for ﬁscal 2017
In ﬁscal 2017, the ecological based materials business is forecasted
to post net sales of 58,200 million yen (up 3.3%). As housing starts
are expected to decrease in the future, we predict that it will bediﬃcult to expand sales volumes for housing applications. We will
focus on transforming our business structure to reduce ourdependence on shipments to the domestic housing market byincreasing sales of and exploring new applications for new
products developed in ﬁscal 2016 and expanding global sales.

Wood ﬁberboard̶Insulation Board (IB)and Medium Density Fiberboard (MDF)
We will endeavor to increase sales of IB, a wood ﬁberboard, for
new applications such as forestry and agriculture. We will also
begin selling Techwood-A, an MDF highly strengthened using
residual wood pieces from our planted trees, as a thin plywood
substitute. We will also continue to develop high value-added
MDF products with the aim of steadily increasing sales of MDF
by meeting the demand for plywood and thin plywood for
replacement ﬂoors, and strengthen sales to the United States,
where the economy is estimated to expand.

Dai-Lite inorganic panel

Tatami facing and thin tatami mats
Shipments of tatami facing using machine-made Japanese paper tohotels and Japanese inns increased, but shipments to residential
houses decreased. Consequently, sales volumes decreased by 1.0%
from the previous year. Sales volumes of thin tatami mats, which had
increased every year since their launch, grew by 12.0% from theprevious year. This was mainly due to progress in the standardizationof installation work for laying mats over the entire surface of the ﬂoor.

Changes in net sales（Millions of yen）

80,00060,18460,00046,54447,402

2012

2013

55,69956,3452015

2016（Fiscal year）

40,00020,00002014

Changes in ordinary income
3,000
2,482

（Millions of yen）

2,569

2,000

1,505

1,000

812
-544

0

-1,000

2012

2013

2014

2015

2016（Fiscal year）

Dai-Lotone rock wool sound-absorbing board
We plan to expand sales of Dai-Lotone, a sound-absorbing
board, mainly for our Daiken hybrid ceilings, which we havebeen designing and oﬀering for its earthquake resistance andlabor-saving installation in the domestic market over theprevious year, as a ceiling material for public and commercial
buildings.

Dai-Lite inorganic panels
We propose to adopt Dai-Lite, an inorganic panel, as a ﬁreproof
outer wall foundation materials and incombustible interior
substrate for public and commercial buildings using its basic
characteristics, including its incombustibility and light weight.
We also propose to use the panel as an incombustible
decorative board and as an interior material in residential houses
and eave soﬃt board for residential houses, and cultivate
demand for the panel as a substrate for industrial applications.

Techwood-A MDF

Dai-Lotone rockwool sound-absorbing board

Dai-Lite inorganic panel

Zipang Kokochiwaza

Tatami facing and thin tatami mats
We will continue oﬀering our tatami facing, which we haveproduced since ﬁscal 2016, centering on lodging facilities suchas hotels and Japanese inns. We will also begin cultivating new
applications for machine-made woven paper as a industrial
material. We will also strengthen our product lineups of thintatami mats with new designs and functions and develop newsales channels.

DAIKEN CORPORATION Annual Report 201620

Summary by business Engineering businessEngineering“Ensured executionof the two policies willplay the role of the
Daiken Group’s
driving force.”
The engineering business consists of interior work andhome improvements. We have been providing ourcustomers with Daiken quality services, oﬀering reliable
work through cooperation between the Group’s
manufacturing and engineering sections. We announced
two policies in ﬁscal 2017̶increasing sales in themetropolitan area and expanding the scope of installationand construction work̶and are working to upgrade ourhuman resources and strengthen internal and external
collaboration through organizational restructuring. Under
our three-year medium-term management plan that started
in ﬁscal 2017 as the ﬁrst stage of a long-term vision GP25,
the Group plans to increase the composition ratio of theengineering business from 8.0% to 12.0%. We arecommitted to acting as a driving force that provides anopportunity for growth of the Group.

Breakdown of sales by business segment
Fiscal 2016

Engineering business
Other 6.9%
8.3%

Ecological
basedmaterials
business

33.5%

Residential
spacebusiness
51.3%

Director, Managing
Excecutive Officer,
General Managerof the Engineering division

Tetsuo Harima

21

DAIKEN CORPORATION Annual Report 2016

Summary of business results for ﬁscal 2016
In ﬁscal 2016, we operated the engineering business under two
management policies̶increasing sales in the metropolitan
area and expanding the scope of installation and construction
work.
Consequently, the engineering business recorded an ordinary
income of 232 million yen (down 18.7% year-on-year) on net
sales of 13,978 million yen (down 15.2%).

Interior work
In ﬁscal 2016, sales for the interior work business decreased
from the previous year due to a decrease in ﬂoor space for new
non-residential building construction starts. Although we
introduced planning for accepting orders for the interior workbusiness to make it easier to generate proﬁts, ordinary income
decreased from the previous year. Planning for accepting orders
includes sharing information on the operation rate of skilledworkers throughout our oﬃces across the nation so that we canplace personnel eﬃciently. To strengthen our business in themetropolitan area (one of our management policies), we
transferred personnel to Tokyo and enhanced and extended
internal and external collaboration through organizational
restructuring. However, we struggled to expand earnings,
because the increase in demand for interior work in the Kinki
area was less than anticipated.

Forecast of ﬁnancial results
and strategy for ﬁscal 2017
In ﬁscal 2016, we were able to expand our business in themetropolitan area as we had laid out in our management
policies. In ﬁscal 2017, we plan to increase sales of theengineering business to 14,400 million yen (up 3.0%) byworking to grow our business under the new policies. We will
also continue to focus on strengthening internal and external
collaboration.

Interior work
People are continuing to ﬂow into the metropolitan area, mainlyTokyo, which will be host to the Summer Olympic Games in 2020.
In addition, many large companies in rural areas have relocatedtheir headquarters to Tokyo, which is the center of Japan’s
economy and information. As these moves are expected toaccelerate the extreme concentration of population in Tokyo in
the future, we will work to increase sales for the interior workbusiness by continuing to focus on obtaining more orders in themetropolitan area in ﬁscal 2017. Our other management policy is
to expand the scope of installation and construction work. While
growing light steel ceiling and board attaching work, we will
work hard at obtaining general contracts for interior work. Thisshould result in us receiving a wide range of orders for products
such as ﬂoors and ﬁttings, and including installation andconstruction work.

Home improvements
As lifestyles have changed and the number of older houses has
increased over the recent 20 years, demand for home
improvements has increased steadily. The government has
been examining a variety of measures to expand the demand
for remodeling, mainly through revitalization of the existing
housing market including active distribution. Under thesecircumstances, we have drastically shifted our resources forhousing construction from the new house building business tothe home improvement business over six years.
In ﬁscal 2016, in cooperation with the sales division forbuilding materials, we increased the number of personnel,
especially in the metropolitan area, through organizational
restructuring and concentrated on interior work andsound-prooﬁng, our specialty, of small-and medium-sized
non-residential buildings, such as aged welfare facilities andnursery schools. However, we fought an uphill battle, because
demand for home improvements recovered slowly, as did
housing starts.
Consequently, net sales for the home improvement businessin ﬁscal 2016 decreased from the previous year.

Changes in net sales
20,00015,000（Millions of yen）

18,04917,714

16,486

14,58013,97810,000

5,000

0

2012

2013

2014

2015

Changes in ordinary income

2016（Fiscal year）（Millions of yen）

400
302

300

285
232

191

200
100
0
-100

-54
2012

2013

2014

2015

2016（Fiscal year）

To cope with the shortage of skilled workers for interior work,
which is expected to become signiﬁcant in the future, we will not
only work harder to solve the issue of workers with no social
insurance, but also consider inviting trainees from overseas. We
would like to solve the shortage of craftsmen to expand sales,
and to this end, we will increase the number of manageable sites
by employing qualiﬁed persons or craftsmen who haveexperience in the ﬁeld to work as an on-site managers incooperation with our partner companies.

Home improvements
In the home improvements business, we will enhancecollaboration among our Group companies and deepen our
relationships with house manufacturers, developers, andbuilders to boost sales across our entire business̶sales not
only of materials, but also of installation and construction work.
In addition, we will examine both obtaining orders under a
new scheme with companies in diﬀerent industries andrenovation (purchase for the purpose of re-sale), two new
businesses that have grown sharply in the metropolitan area.

Recital Hall, Nagano City Arts Center

A lecture room, Ritsumeikan University Osaka Ibaraki Campus

DAIKEN CORPORATION Annual Report 2016

22

The D aik en Group’s CSR

The Daiken Group’s CSR
The Daiken Group formulated its Medium-Term CSR Activity Plan (for ﬁscal 2017-2019), as a
medium-term plan to push forward with a long-term vision GP25 in stages.
We set up the CSR Activity Promotion Subcommittee, which will take the lead in introducing concretemeasures to promote CSR, incorporating the concept of creating shared value (CSV) into our conventional
CSR initiatives.

Medium-Term CSR Activity Plan (for ﬁscal 2017-2019)（See p. 36.）

This action plan stipulates activities to promote compliance and other basic CSR initiatives 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 thefollowing 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.
● A CSR Activity Promotion Subcommittee will be set up, with membership consisting of the persons in charge of
CSR activities in the respective promotion departments. The subcommittee will report on progress in CSR
activities and hold discussions on related issues and problems, to ensure that eﬀective CSR activities can be
implemented.
● In the environmental area, we need to set out more technical and speciﬁc contents in an activity plan. We havetherefore formulated our Medium-Term Environment Plan separately.
●●

The Daiken Group’s CSR

The 5th Medium-Term Environment Plan (for ﬁscal 2017-2019)

Policy for CSR Activities（See p. 34）

This activity plan is speciﬁcally designed for the environment. The 1st Medium-Term Environment Plan wasformulated in 2000.
● 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 foreach period.
●

VisionContribute to the realization ofa sustainable society bycreating values shared with society
through activities for “Ecology”
and ”Improvements in the quality of space.”

Policies
１ With CSR and CSV(*) as our key axes, we will improve our corporate
value and enhance our competitiveness to realize GP25.
2 Using CSR as an activity to enhance our ability to respond to and earn
the trust of society, we will systematically pursue CSR, with our responses tothe environment, society, and governance as the key axes.
3 Positioning CSV(*) as one of our management strategies, we encourage
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.”

Themes１ Building a sustainable society

CSR Activity Promotion System
C SR C o mmitte e

De te r m ine s a nd a p p r o ve s the p o lic y .

C SR Ac tiv ity P ro mo tio n Su b c o mmitte e
P r o m o te s the M e diu m -T e r m C S R A c tivity P la n.
S u b m its r e p o r ts to the C S R C o m m itte e .
(Dis s e m ina te s info r m a tio n g r o u p -wide . )CSR promotion
departments

Member in charge ofpromoting CSR activities

CSR promotion
departments

Member in charge ofpromoting CSR activities

CSR promotion
departments

Member in charge ofpromoting CSR activities

Chairperson: Representative Director & President

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

2 Providing secure, safe, and comfortable spaces

3 Comprehensive use of wood building materials̶encouraging the use of cascading

Daik e n Gro u p

23

DAIKEN CORPORATION Annual Report 2016

DAIKEN CORPORATION Annual Report 201624

GovernanceInitiatives to increase transparency
In line with its management philosophy―Customer orientated management focusing on the harmony

The board

The Kansayaku board

between humans, spaces, and the environment―the aim of the Daiken Group is to enhance its corporate

The board comprises nine directors (including two outside
directors). Its duties and roles are to ensure fair and transparent
management by supervising overall management, and to makeimportant decisions on the execution of the Group’s business.
The board has established mechanisms (including the
Corporate Governance Committee and the Nomination andRemuneration Committee) in which independent directors play
central roles. These mechanisms have enhanced theeﬀectiveness with which the Board can supervise the executionof business decisions.
The board makes decisions on the Company’s management
policies, management strategies, business plans, acquisition anddisposal of important assets, and important organizational andpersonal aﬀairs in compliance with laws and regulations, theArticles of Incorporation, resolutions adopted at generalshareholders meetings, the Regulations of the board, theCompany’s management philosophy and the Code of Corporate
Conduct, and supervises the way that Daiken Corporation and its
subsidiaries execute business.

The Kansayaku board consists of four Kansayaku (including two
outside Kansayaku). They carry out audits following the audit plan
formulated by the Kansayaku board. As part of their statutory
authority, the Board audits the directors to ensure that they
perform their duties appropriately in collaboration with auditors
and the department responsible for internal control. The
Kansayaku board also submits reports on the validity andeﬀectiveness of the Group’s business activities as a whole and thestatus of compliance with laws, regulations and the Articles of
Association to the Kansayaku board.
In addition, Kansayaku exchange views with the Representative
Director & President on a regular basis while seeking to improve
the quality of audits through attendance at importantmanagement meetings and examining important documents.

value for all stakeholders in a sustainable way.

Basic approach to corporate governance and initiatives for its reinforcement
In order to achieve eﬃcient, sound and transparent
management, we take a basic approach that always seeks tooptimize corporate governance and constantly works to improve
it. We are committed to developing our management system,
organizational structure and internal control system andimplementing the measures necessary to achieve this. Our aim is

to strengthen the Group’s governance to bring sustainablegrowth and achieve medium and long-term increases incorporate value, and the measures we are implementing to do
this include establishing our Basic Policy on Corporate
Governance.

1 Establishing a Basic Policy on Corporate Governance2 Establishing advisory committees

We have laid down the Company’s basic approach in our Basic
Policy on Corporate Governance, which summarizes the key
items of corporate governance into ﬁve categories. This policy
statement commits us to pursuing optimal corporate
governance that will result in permanent improvements in our
corporate value.

We set up a Corporate Governance Committee under the board
to deliberate on matters relating to establishing a framework forcorporate governance, and a Nomination and Remuneration
Committee to discuss personnel aﬀairs and the remuneration of
directors and other executives. Both committees are headed bychairpersons appointed from among the independent directors,
with outside executive oﬃcers making up a majority of themembers of each committee. These committees discuss theselection and remuneration of directors, and the ideal
governance system that will ensure continuous improvements in
our corporate value objectively from the viewpoint of our
stakeholders. the board uses the contents of the reports
submitted by these advisory committees in making the required
decisions.

Basic Policy on Corporate Governance〈Five key items〉
1. Securing the Rights and Equal Treatment of Shareholders
2. Safeguarding the interests of our stakeholders
and collaborating appropriately with them
3. Ensuring Appropriate Information Disclosure and Transparency
4. Responsibilities of the Board
5. Dialogue with shareholders* For details, please refer to this page on our website:
http://www.daiken.jp/d/governance/basis/(Japanese only)

3 Improving information communication tooutside executive oﬃcers andreinforcing cooperation
Currently, Daiken Corporation has two independent directors(quorum for the board: 9), and two independent outside
Kansayaku (quorum for Kansayaku : 4). We will improve

25

DAIKEN CORPORATION Annual Report 2016

In June 2002, the Company introduced an executive oﬃcer system
under Kansayaku system to expedite decision-making and improve
its eﬃciency and soundness. The current management system has
20 members, comprising nine directors (including two outside
directors and ﬁve directors who also serve as executive oﬃcers), andeleven executive oﬃcers. -Directors, executive oﬃcers andemployees fulﬁll their duties in keeping with the Code of Corporate
Conduct as well as Daiken’s management philosophy, both of whichplay pivotal roles in compliance management.

■ The Daiken Group’s Corporate governance framework
Shareholders (General meeting of shareholders)Commission and selection/dismissal

Disclosure and dialogue

The board

Consultation

Nine directors(including two outside directors)

Reportand improving information communication to outside executiveoﬃcers and reinforcing cooperation.

Nomination and remuneration committee(majority of the members are
independent directors)

Audit

Corporate governance committee

The Kansayaku board
Four Kansayaku(including two outside Kansayaku)

Selection
dismissal
Proposalfor selection
dismissal
Reporting(majority of the members are independent outside executive oﬃcers)
Reporting

Representative director

Reporting

Supervision, selection/
dismissal and instruction

Executive directors meeting

Approval and instruction

Headquarters, respective departments,
and aﬃliated companies
Monitoring, supervisingand important decision-making

Selection dismissal

Audit

Auditing

Business execution anddecision-making

Auditors

The measures that the Group has implemented to strengthen its
corporate governance include establishing a basic policy, setting
up new advisory committees (the Corporate GovernanceCommittee and the Nomination and Remuneration Committee),Business execution

Chief executive oﬃcer & President,
Senior managing executive oﬃcers,
Managing executive oﬃcers,
and Executive oﬃcers

Overview of the governance framework

Daiken Corporation has established two voluntaryorganizations―the Nomination and Remuneration Committee
and the Corporate Governance Committee―as advisory bodies
to the board. The purpose was to obtain the involvement of andadvice from independent outside executive oﬃcers in discussing
matters of particular importance, including evaluation of theCompany’s governance framework and the eﬀectiveness of theboard, and the nomination and remuneration of executiveoﬃcers. These new committees have proved eﬀective insupervising business execution by the board. Independent
outside executive oﬃcers constitute a majority of themembership of both committees, and chairpersons areappointed from among the independent directors.

Department responsible forinternal control

information communication to these outside executive oﬃcers,
and reinforce cooperation between them in order to create anenvironment that allows executive oﬃcers to discuss, raisequestions and exchange views in a freer and more constructive
manner and to make prompt decisions that are transparent, fairand bold.

Nomination and remuneration committee andCorporate governance committee (newly established bodies)

Accounting audit

Cooperation

Business execution

DAIKEN CORPORATION Annual Report 201626

GovernanceSelection of independent directors
In response to the requirements of the Tokyo Stock Exchange,
Daiken Corporation has appointed independent outside
executive oﬃcers to ensure transparent and fair company
management. Based on the independence standards* we haveestablished for judging whether an outside director or Kansayaku

Policy for determining executive remuneration
is independent or not, we have selected two independent
directors (out of a total of nine directors) and two independent
outside Kansayaku (out of a total of four Kansayaku).
* Details of the independence standards are available on the following page of our
website:http://www.daiken.jp/d/governance/independence_standards.html (Japanese only)

Independent outside executive oﬃcers and attendance at meetings
Outside executive oﬃcer

Name and title(s)Takashi Aihara

Professor at the School of Law and Politics and the
Law School of Kwansei Gakuin University, and lawyer

Outside directors

Akio Hasunuma

Outside Kansayaku

Masafumi Inoue

Professor at The University of Tokyo(Asian Natural Environmental Science Center)27

Activities

We anticipate the broad range of views andhigh level of expertise he has accumulated as auniversity professor and as a lawyer being
reﬂected positively in directing our Company’sbusiness management.

Number ofattendancesat meetings ofthe board
13 / 13

Koji Mizuno

Professor at the Faculty of Management and the
Graduate School of Business Administration, Otemon
Gakuin University
Director of the Venture Business Research Institute,
Otemon Gakuin University
Strategic Partnerships Advisor at the Organization for
Small & Medium Enterprises and Regional Innovation,
Japan

Corporate advisor to Toto Ltd.

Outside director

Reason for selection

Takashi Aihara

DAIKEN CORPORATION Annual Report 2016

We anticipate the broad range of views andhigh level of expertise he has accumulated as auniversity professor being positively reﬂected inpromoting our Company’s business
management.

Number ofattendancesat meetings ofthe board
9 / 10We anticipate the wealth of experience andextensive insight accumulated through his
long-term career as a corporate manager
being reﬂected positively in his work as a
Kansayaku of our Company.

Number ofattendances atmeetings of the board
13 / 13
Number ofattendances atmeetings ofthe Kansayaku board
14 / 14

In addition to his extensive insight and highlevel of expertise accumulated as a university
professor,we anticipate the broad knowledge
he has developed through his experience
working as an investigator for the Cabinet
Oﬃce and as a researcher for the Ministry of
Education, Culture, Sports, Science andTechnology being reﬂected positively in his
work as a Kansayaku of our Company.

Number of attendancesat meetings of the board
10 / 10
Number of attendancesat meetings ofthe Kansayaku board
11 /11The board has formulated detailed rules for determining the
remuneration of executive oﬃcers. The Representative Director
submits a plan to the Nomination and Remuneration Committee,
which examines the plan and make recommendations, based on
which results the remuneration is determined.
There are two types of standard remuneration for directors:
remuneration reﬂecting their role as directors based on theirindividual duties (ﬁxed part), and remuneration for theirperformance based on the Company’s performance and eachdirector’s achievements in the ﬁeld for which they are
responsible (variable part). The maximum limit for executive
remuneration is decided within the range ﬁxed at the general
meeting of shareholders (up to 35 million yen per month fordirectors, and up to 4 million yen per month for Kansayaku). The【Executive remuneration】
Executive remuneration for ﬁscal 2016
Figures in parentheses indicate the number ofamount paid to outside executive oﬃcers.
Number of persons
receiving payments

Amount of payment(million yen)

Directors

11（2）

233（10）Kansayaku

6
（3）

44（6）

total remuneration for executive oﬃcers is disclosed to the
public.

Internal control system
To ensure sustainable improvements in corporate value, theDaiken Group has established a management system,
management structure and internal control system.
The department in responsible for internal control, which isunder the direct jurisdiction of the Representative Director andPresident, regularly carries out internal audits and reports theresults to the President and Kansayaku. Follow-up audits are also
conducted to ensure that the appropriate improvements arecarried out in response to the ﬁndings and advice given during
the latest audit. The internal control department also consultswith Kansayaku on the internal audit plans for each ﬁscal year.
These two parties also hold periodic meetings in which they
discuss the audit results and the ﬁndings and advice given during

the audit. This cooperation results in a comprehensive exchange
of information between the internal control division andKansayaku.
The department responsible for internal control works with theKansayaku from its independent standpoint to monitor businessexecution and ensure that a timely disclosure system isestablished and works eﬀectively so that business operations arecarried out in compliance with laws. This allows us to maintainand improve an appropriate level of information disclosure.
We hold constant reviews and make continuous
improvements as we work to establish a more appropriate andeﬃcient internal control system.

I am committed to working towards a healthy company andtransparent management as we realize a long-term vision GP25.

I feel that my responsibility as a Kansayaku is to assist the
Daiken Group in capitalizing on its corporate culture and strength.

The Daiken Group’s reason for being and resolution is to “contribute to the realization of asustainable society through the eﬀective use of limited resources” and to “enrich people's
lives by creating more comfortable and safer spaces.” We achieve this aim through increasing
sales by developing new industrial materials, functions and applications.
The Daiken Group’s long-term vision, GP25 (Grow/Glow Plan 25), was drawn up precisely toachieve this aim, making it imperative to establish a governance system that enablestransparent, fair, speedy and bold decision-making. The Group’s governance is now sound,and I give this a high evaluation.
As an outside director, I am always reﬂecting on how to protect the interests of all
stakeholders of the Daiken Group and improve their trust, and I am known for speaking out
when it comes to implementing sound and transparent company management.

The foundations of governance lie in linking the company’s management philosophy and the
direction of activities conducted by its executive oﬃcers and employees.
To make its management philosophy, “customer orientated management focusing on theharmony between humans, spaces, and the environment,” a reality, the corporate activitiesof the Daiken Group involve producing and providing ecological based materials, and theseeﬀorts will be accelerated by the medium-term management plan that begins this ﬁscal year.
Rather than relying on an accumulation of diﬀerent technologies, we make more eﬀective
use of speciﬁc technologies, and all members of the Daiken Group are highly motivated andare working in concert to develop technologies and markets to this end. Lively discussions
are held at meetings of the board, where decisions on a host of issues are made speedily.
Thus expectations are running high for the achievement of our growth strategy.
As an outside executive oﬃcer, I will make the most of my own experience and theexperience of others in discharging my responsibility to assist the Daiken Group in
capitalizing on its corporate culture and strength.

Outside Kansayaku Akio Hasunuma

DAIKEN CORPORATION Annual Report 201628

GovernanceCommitment to Society

Improving customer satisfaction
Compliance/Risk management

end, the Daiken Group is committed to not only improving product safety and quality, but also to■Compliance/Risk management

increasing communication with customers and developing products from a consumer’s point of view.
The board

Information utilization system in response to customer voices

Risk & Compliance Management (RCM) Committee
Chairman: Executive Oﬃcer in chargeof risk management

Establishing the compliancesystem and auditing

・Establish and control thec o mp l i a n c e s y s te m a c r o s s t h eentire 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, Disaster
Response Manual and BusinessContinuity Plan (BCP) Guidelines.

Specialized committees on
various themes

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

・Provide instruction and education in
specialized ﬁelds.

Headquarters, departments and plants
Person in chargeof promoting CRM

Person in chargeof promoting CRM

Person in chargeof promoting CRM

Person in chargeof promoting CRM

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

Person in chargeof promoting CRM

Person in chargeof promoting CRM

Making the whistleblowing contact points (hotlines) known to all employees■Compliance hotline ﬂow

LawyerCorporate adviser
to the Daiken GroupD

Executive oﬃcer in charge ofrisk management
Whistleblowing contact point(department in charge of compliance)

Ordinary route isreporting throughtheir supervisor.

Supervisor
Employees

A , B , C , and D
indicate the compliance hotlines.

29

DAIKEN CORPORATION Annual Report 2016

Customer service centersand showrooms

Inquiries
Requests

Analysis and discussion
Reception and response

WebsiteImprovingcustomersatisfaction

Catalogs
Products and services

Information

Picking up themes
to be improved

Database(data collection
and compilation)

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 otherdepartments.
In ﬁscal 2016, we organized three lectures by external experts
geared to persons in charge of the design, development andpurchasing departments to increase their knowledge of risk
avoidance in their daily operations.

Lecture delivered by an external expert

President

Kansayaku

As a way of enabling employees to provide information on
suspected compliance issues, we have established acompliance hotline ﬂow to help detect and prevent potential
risks at an early stage.
In ﬁscal 2016, we began to post the direct telephone
numbers and the email addresses for the hotlines on the top
page of D-Portal, our in-house intranet. The purpose is toensure that all employees are aware that they can use thehotline as a direct reporting route when they ﬁnd it diﬃcult toprovide information on a suspected problem using theordinary route, i.e., reporting through their supervisor.

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

Proposal for improvement

Department in charge ofcompliance

We have customer service centers that listen directly to theopinions of our customers and gather feedback on what they
think of our products. We want to improve the trust customers
place in us by responding quickly and sincerely to their honest
opinions.
Information obtained through our customer service centersand showrooms is automatically collected and compiled into a
database. We extract the essential information from the databaseand feed it back to the departments concerned. This system has
proved eﬀective in improving our website and catalogs anddeveloping new products, thus resulting in even better
manufacturing and services that answer the needs of ourcustomers.

Customers

The Daiken Group has established a Risk & ComplianceManagement Committee (RCM Committee). With the executiveoﬃcer in charge of risk management serving as its chairman,
membership includes executive oﬃcers in charge of the businessadministration, sales, operational and legal compliance ﬁelds.
The RCM Committee formulates various rules and manuals thatenable 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 betaken to resolve them.
Meanwhile, each subsidiary has assigned a person to promote
RCM as part of our compliance and risk management system. The
departments in charge of compliance manage compliancemeasures across the entire Daiken Group, including subsidiaries.

We work to provide products that satisfy our customers and that they can use with peace of mind. To thisOccurrenceofa problem

A

B

Prevention
and early
detection

C

Providing continuous information to customers
Thus far, the Daiken Group has been vigorous in providing
information to its customers. Notably, in November of ﬁscal
2016, a milestone year that marked the 70th anniversary of theCompany, we held the Manufactuing Plant Anniversary Fair,
which exhibited and showcased all the technologies that theCompany has developed throughout its history. Attracting
particularly high attention were our raw materials
tec h n ologies, W P C tec h n ologies a n d ou r u tiliz a tion ofmaterials made from local and domestic wood.
Also, Plant Anniversary Fairs were held between Octoberand November 2015 at four plants in Japan. The fairs oﬀered
plant tours, exhibition areas where new products released tocommemorate the 70th anniversary were shown, and various
other events. These programs gave us opportunities tocommunicate directly with members of the local communities.

Daiken Techno Business Fair

Plant tour (Inami Plant)

DAIKEN CORPORATION Annual Report 201630

Com m i t ment to Society

Creating a fulﬁlling work environment

Promoting CSR procurement

The Daiken Group believes that creating a work environment where each individual employee can exhibit theirabilities and work enjoyably with peace of mind will lead to the revitalization of the Company. Based on thisidea, we strive to implement various measures, some of which are described below.

As part of the eﬀorts under its medium-term management plan, the Daiken Group will “shift up to CSR
procurement, aiming for full implementation of green procurement.”
We have established a Procurement Policy and CSR Procurement Standards, and these will form the base for
CSR activities to be implemented throughout the entire supply chain.

Encouraging female employees to play a greater role by cultivating a workplace in which women can work comfortably
We developed our Training and Empowerment Projectfor Female Employees to maximize the capabilities offemale employees and boost the power of theCompany. The aim is to increase the ratio of female
managers on the administrative track to 20% by 2020,
and to that end a number of measures are being put inplace to enable female employees to exhibit theircapabilities. Chief among these measures are putting
the right persons in the right places, giving
management training to female employees, anddeveloping various systems to make it easy for female
employees to continue working after having andrearing their children.
In January 2016, as a further step towards diversity, ameeting was held for President Okuda to exchange
opinions with seven employees (three males and four
females) in diﬀerent age brackets and job categories on
the theme “What we need to do to create a work
environment where all employees can fulﬁll theirpotential.”

Systems to support female employees with childbirth and childcare
・Maternity leave・Child-rearing leave・Leave for child nursing care・Shorter working hours for childcare
・Introduction of vouchers for childcare support services

CSR Procurement Policy (newly established)
１ Compliance with laws and regulations
4 Promotion of green procurement

Purchase Control Rules

2 Fair and even-handed dealings

5 Promotion of CSR procurement

１ Quality

2 Prices 3 Delivery time

4 Capabilities for technological development

１ Environmental management system
2 Chemical substance management
3 Wood from legitimate sources

CSR Procurement Standards (newly established)

１ Respect for human rights 2 Compliance with laws and regulation

3 Occupational safety and health 4 Fair transactions 5 Information management 6 Coexistence with society

Round-table talk on diversity between President Okuda and employees

Questionnaire on CSR Procurement Standards (newly introduced)

Reducing the accident rate by raising the safety diagnosis level

Brieﬁng session for our business partners

We are working to maintain a safe work environment free ofwork-related and traﬃc accidents and to improve safety, inline with the basic principle, “make safety the ﬁrst priority.” To
continuously raise the level of safety diagnosis at our
production plants, the Daiken Group Mutual Safety Diagnosis
is carried out once a year at four plants and seven Group
production companies in Japan, as well as at three overseas
subsidiaries.
In ﬁscal 2016, a night safety diagnosis was conducted at theInami Plant. During the diagnosis, inspectors used a checklist
to identify problems with the working environment at night orwith ﬁre precautions, and to monitor the inﬂuence of light andsound emitted from the plant on the neighboring area. The
issues highlighted by the diagnosis will be shared with all theother plants to make them eﬀective in preventing accidents
and achieving a safer workplace.

In June 2015, we held a joint management policy brieﬁng
session at the Grand Paciﬁc Le Daiba (Tokyo), inviting 114
persons from 119 of our business partners and suppliers.
President Ok u da explained the bu siness clim ate
surrounding the industry and Daiken’s future
management policy, and the objectives of our new
procurement policy andCSR procurement standards.
He asked participating
business partners andsuppliers to continue
working together with
Daiken to promote CSR
activities.

Safety diagnosis during the night

Brieﬁng session geared to Daiken business partners and suppliers

Starting the CSR procurement survey

Seminars on Mental Healthcare and Line Care designed
for managers were held in Tokyo (in October) and Osaka(in December), attracting 25 and 35 participants
respectively, mainly at management level. At theseminars, an industrial physician explained how to treat
employees suﬀering from depression and other mental
health disorders and how to prevent these conditions,with a particular focus on line care.
Seminar on Mental Healthcare and Line Care (in Osaka)

DAIKEN CORPORATION Annual Report 2016

3 Sharing excellent value

6 Relationship of trust and co-prosperity

5 Services 6 Management conditions

Green Procurement Standards

Mental healthcare

31

CSR Procurement Policy and Standards

In March 2016, an online survey was launched on thestatus of CSR implementation by our business partners
and suppliers. As a trial, the questionnaire was distributed
to business partners involved in production at our Inami
Plant. We then intend to expand the scope of the survey
to cover business partners involved in all the production
plants in the Daiken Group.
The survey results will be fed back to the respondents.
Where necessary, we will request our business partners tocorrect problems or make necessary improvements aspart of our eﬀorts to promote CSR activities.

Example of feedback from the
CSR questionnaire
Sample CSR questionnaire

DAIKEN CORPORATION Annual Report 201632

En vi ro n men t

Initiatives to protect the environment
The Daiken Group considers environmental management to be one of the key themes in CSR management.
Group-wide eﬀorts for environmental preservation and pollution control are currently underway, based on
the 5th Medium-Term Environment Plan.

Contributing to creating a recycling-oriented society

Contributing to creating a low-carbon society

As part of its eﬀorts to realize a sustainable society, the Daiken Group is committed to the eﬀective use of recycledmaterials in producing its products, as well as to reducing waste and recycling.

■Using recycled resources in producing products

65％(Ratio of recycled resources actually used in ﬁscal 2016)■Recycling waste

In ﬁscal 2016, the Daiken Group’s total resource input was
318,000 tons, with the ratio of recycled resources used
standing at 65.4%. *1 We will continue to maintain andimprove this ratio.

92％(Ratio of waste actually recycled in ﬁscal 2016)

In ﬁscal 2016, the Daiken Group produced 475,000 tons ofwaste, with the waste recycling ratio*2 standing at 92.5%.
We will continue our eﬀorts to improve this ratio.

*1 Ratio of recycled resources = Recycled resources used in producing products/ total resources used × 100(%)
Recycled resources used in producing products = Recycled resources + unused resources*2 Waste recycling ratio = Volume of waste recycled /total volume of waste produced × 100(%)
Volume of waste recycled = Volume of valuables + volume of waste used as raw
materials + volume of waste used for thermal energy■Ratio of recycled resources used

■Breakdown of waste treated/disposed of

（%）

100
80

40

32.0

31.4

4.9

4.4

63.2

64.1

32.4
4.2

63.4

33.1
4.7

62.2

34.6
4.6

60.8

20
0

2012

2013

2014

2015

Recycled resources, etc.

60

OthersUnutilized resources (Shirasu)
Recycled resources (wood chips, rockwool, etc.)

Total productionof waste
47,500 tons

The Daiken Group is expanding its use of renewable energies
and increasing modal shift as it works to promote the eﬃcientuse of energy and reduces CO2 emissions from its production
and logistics activities.
In June 2015, a modal shift program was introduced tochange the method used to transport its housing
components from trucks to railways along a speciﬁc section of
track between Kuki City in Saitama Prefecture and Sapporo
City in Hokkaido Prefecture. This modal shift program was

implemented by the Daiken Corporation Trunk Line Modal
Shift Promotion Council (comprising Daiken Corporation,
Senko Co., Ltd., and Nippon Express Co., Ltd.) who use Daiken
Corporation as their consignor. In October 2015, the Ministry ofLand, Infrastructure and Transport authorized this program as a“modal shift promotion project,” in recognition of its
contribution to reducing greenhouse gas emissions. Thismodal shift program improved the modal shift ratio*3 of all
Daiken Group companies in Japan up to 27.5%.

■Modal shift ratio（in Japan）■CO2 emissions generated by product transportation（in Japan）

Volume of valuables 10%
Volume of waste usedas raw materials 59%
Volume of waste used
for thermal energy 23%
Volume of waste simply
incinerated 2%
Final volume disposedof in landﬁll 6%

Transportation volume（million t-km）

300
250
200

20.8
212.1

27.5％
(ﬁscal 2016 result)

Total transportation volume
Modal shift ratio

22.4
207.3

23.7
219.6

25.1
195.8

２．Reduce environmental
impact３．Contribute to biodiversity

33

30

194.2

20

2016 （ﬁscal year）

0

50

122

40

10

50
Recycling

Emissions（1,000 t-CO2）

CO2 emissions
CO2 emissions per unit of transportation volume*4
124

121

121

Emissions per unit oftransportation volume（t-CO2/1,000 t-km）

150

126

100

30

25.8

25.7

26.6

23.7

24.5

20

100

2012

2013

2014

2015

0

2016 （ﬁscal year）

50

10
0

2012

2013

2014

2015

0
2016（ﬁscal year）*4 CO2 emissions per unit of transportation volume = CO2 emissions /total transportation volume (t-CO2/1,000 t-km)

The 5th Medium-Term Environment Plan（for ﬁscal 2017-2019）

Fiscal 2016 Targets

Fiscal 2016 results① Develop and promote products using
domestic wood

Draft a plan for the active use of domestic wood, including eﬀective use of
raw materials from the Shinshu F-Power Project.

Developed a future procurement scheme for unutilized
wood in the Takahagi area

① Reduce greenhouse gas emissions

Reduce CO2 emissions per unit of transportation volume by at least an
average of 1% per year.

Reduced CO2 emissions per unit of transportation volume
by an average of 6.4% per year

② Reduce waste production

Reduce the amount of external landﬁll waste by 30% over ﬁscal 2011 levels.

③ Reduce emissions of chemical substances

Reduce the use of methylene chloride to zero by the end of ﬁscal 2016.

① Promote procurement of wood materials topreserve biodiversity

Changed the speciﬁcations for three of the ﬁve productionlines to stop using methylene chloride.
Reduced the use of methylene chloride by 48% overﬁscal 2011 levels

Continue to procure wood from conﬁrmed legitimate sources.

Ongoing② Introduce cascading use of wood

② Establish Green Purchase Standards

Manage procurement in coordination with the Daiken Procurement Policy.

Formulated new Daiken Procurement Policy and CSR
Procurement Standards, and made these policies public① Procure wood in a way that preserves biodiversity

Reduced the volume of waste sent to external landﬁll by
42% compared with ﬁscal 2011 levels.

Integrated ISO 14001 certiﬁcation obtained by individual domestic sites
and expanded the application range(completed in February 2013).
Obtained ISO 14001 certiﬁcation at overseas subsidiaries (completed in March 2014)① Expand and improve the environmental
management system (EMS)
４．Environmental management

27.5

150

Medium-Term Environmental Plan（for ﬁscal 2012-2016）
１．Expand environmentallyfriendly product lineup

Modal shift ratio（％）*3 Modal shift ratio ＝ (Ships + railways) transportation volume /total transportation volume × 100 (%)② Ensure full compliance with environmental
laws and regulations

Comply with ﬂuorocarbon control regulations.

Identiﬁed applicable equipment and conducted a simple inspection.
(752 units across the Group)③ Provide and disseminate environmental
education across the Company

Provide employees with education according to their job level and job type.

Held training sessions for new employees and for newly appointed
division managers, and implemented e-learning and othereducational programs

DAIKEN CORPORATION Annual Report 2016

１．Eco-friendly products

２．Contribute to building
a low-carbon society

３．Contribute to creatinga recycling-oriented society① Expand eco-friendly product lineups and their sales① Introduce carbon ﬁxation using wood
② Reduce CO2 emissions from energy sources① Promote the 3Rs (Reuse, Reduce, and Recycle) to
reduce the volume of waste destined for ﬁnal disposal

４．Contribute to biodiversity② Strengthen cooperation with supply chains

５．Expand eco-friendly productlineups and their sales① Identify, prevent and minimize environmental risks② Improve our ability to satisfy regulations on
chemical substances

DAIKEN CORPORATION Annual Report 201634

Medium-Term CSR Activity Plan

Status of CSR Initiatives and Key Items addressed

under the Medium-Term CSR Activity Plan

The following table shows the major results of CSR activities carried out in ﬁscal 2016, and the key items
to be addressed under the Medium-Term CSR Activity Plan beginning in ﬁscal 2017.

Medium-Term CSR Activity Plan（for ﬁscal 2012-2016）

Risk management

Management
area

Governanceand compliance

Communication
with stakeholders

Communication
with customers
and consumers,
and customer satisfaction

Social area

Promoting and ensuring
fair transactions

Developing and protecting
human resources
and creating a favorable
working environment

Enhancing exchangewith local communities
and local contribution
activities
Environmental
area

35

Medium-Term
Environmental Plan

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

Theme

Plan for ﬁscal 2016

Fiscal 2016 results

Key items

Promoting business continuity
management (BCM)•Maintain and update BCPs of domestic sites.

・Conﬁrmed that BCPs were operating properly
at domestic sites.

CSR management

Promote company-wide CSR activities led by the CSR Committee.

Risk management

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

Governance

Establish optimal corporate governance.

ComplianceReinforce the compliance system.
Further improve compliance education.
Develop and implement the whistle-blowing system.

Establishing a risk management systemat global sites•Maintain and update BCPs of global sites.

・Conﬁrmed that BCPs were operating properlyat global sites.

•Base our actions on the corporate governance code with appropriate
information disclosure.

・Decided on the Company’s policy for the corporate
governance code, and established a framework tocheck and manage the operation status.

・Strengthen and maintain the group governance system, and improvetransparency.

・Improved the transparency and fairness of group
governance by setting up a
Corporate Governance Committee and a
Nomination and Remuneration Committee.

Communicating with stakeholders
and society•Continue to hold presentations for ﬁnancial results and give in-person
explanations to institutional investors.
•Disclose business performance data promptly and put essential information on
the website when necessary.

・Continued to systematically hold presentationsof ﬁnancial results to investors.
・Disclosed 49 items of current information,
including hot topics, on the website.

Quality management•Raise the level of internal audits.

Improving quality control ability•Implement training sessions given by experts.

Promoting product developmentfrom the viewpoint of customers•Strengthen the provision of information to business departments.
•Improve the system (make eﬀective use of the textual information analysis system).

Enhancing communication
with customers•Showcase new products in a well-planned way, and promote new products.
•Continue to conduct analyses to determine actual conditions and to design arenewal plan.

Ensuring appropriate transactions•Continue to conduct document investigations and check the order forms that are
actually used.
•Hold e-learning training programs for ﬁrst to ﬁfth-year employees.

Protecting intellectual property rights
and risk management•Continue to conduct activities to raise awareness of risks and the protection of
intellectual property rights, and hold training sessions for the departments involved.
•Continue to hold e-learning training programs regarding protection of
intellectual property rights for ﬁrst to ﬁfth-year employees.

Introducing eﬃcient and highly
transparent management

・Continued to hold training programs forinternal auditors.
・Held training on risk prediction during designand development.
・Held seminars on the themes “Problems andPoints to be Improved Found from Legal Cases”
and “Assessing Risk for Chemical Substances.”
・Shared data for promoting customer-centric
product development (about 900 cases in ﬁscal 2016)
within the Company, using the new databaseon customer feedback.
・Created a website on public and commercial
buildings using a design that is easy to use
for customers.
・Carried out a third-party analysis of theCompany’s current website.
・Carried out the document investigations requestedby the Japan Fair Trade Commission.
Found a minor violation on an order from,and immediately corrected the problem.
・Conducted an e-learning program on the Act on Subcontracting.
Forty-four trainees participated in the program.

Management
area

Improving product quality
and ensuring
product safety
Providing products andservices that give highcustomer satisfaction

Reinforce the quality management system based onquality
ISO standards.
Reinforce the system to reduce quality-related problems
and continue taking measures to prevent reoccurrenceof similar problems.
Strengthen the quality traceability system.
Reinforce our ability to collect information by strengthening
contact points with consumers.
Strengthen the in-house system to translate consumer
information into product development andproduct and service improvement.
Reinforce the system to encourage consumer-centric
new product development.

Enhance face-to-face communication with customers
at showrooms and exhibitions.

ConsumerissuesEnhancing communication
with customers

Enhance communication with customers through sales activities.
Enhance communication with customers through websites, etc.
Enhance communication with shareholders and investors.

・Continued to conduct these activities.
Fair operating
practices

Protecting personal
information

Ensure strict management of personal information.

Ensuring fair competition
and transactions

Ban all transactions with antisocial forces.

Protecting intellectual
property

Continue to provide education on intellectual property.

Promoting CSR
procurement

Develop and implement CSR procurement rules.

Progressing from green procurement
to CSR procurement•Continue to implement Green Purchase Standards and promote CSR procurement.

・Completed the public announcement of our CSR
Procurement Policy and the CSR Procurement Standards.
・Completed the online survey system, andconducted a survey of 109 companies.

Promoting work-life balance•Strictly reinforce the No-Overtime Day.

・Launched the new Work Style Change PJ.

Promoting life-work balance

Encourage employees to reduce overwork and cut long working hours.

Diversity•Encourage employees to take childcare leave.
•Achieve the legally required percentage of employees with special needs.

・Implemented an e-learning program on diversity.
・Employed male and female employees in equal ratios.

Promoting diversity

Implement human resources development programs intended
to promote the empowerment of female employees anddevelop a working environment that meets this purpose.

Human resources development

・Increase the number of employees who take correspondence courses.
・Plan and implement work experience programs.

・Announced various correspondence courses
on the web and by other means to motivate
employees, and 482 employees took these courses.
・Organized six work experience courses, in which 71 people participated.

Occupational safety•Encourage production sites to raise the level of safety diagnosis.

・Held a seminar on establishing a culture of safety.

Human rights•Continue to provide human rights education through e-learning programs, etc.

・Held a training program for newly appointed managers.

Exchanges with the local community

・Hold communication activities with the involvement of local government.

・Held programs of exchange with local governments
and local residents, cleanup events, plant tours,
etc. in individual regions.

Earthquake disaster reconstruction•Continue activities at local oﬃces/production sites to supply goods to disastervictims.

・Supplied goods for disaster recovery housing as planned.

Forest cultivation and promotion of theforest industry（See p.37-38.）

DAIKEN CORPORATION Annual Report 2016

•Continue tree-planting activities in Malaysia.

・Felled trees (over an area of 285 ha) and implemented
a secondary forestation program (185 ha.).

Labor practices

Reinforcing humanresources development
Improving the safety andhealth system

Respect forhuman rights
Community
involvement
anddevelopment

Develop global human resources.
Formulate human resource development programs thatfacilitate career development and capacity building
for employees.
Encourage and strengthen eﬀorts to create asafer working environment.

Raising awarenessof human rights

Continue education to raise awareness of human rights.

Community involvement

Participate in local communities.

Social contribution

Continue tree-planting activities in Malaysia.
Promote the comprehensive use of domestic wood.

DAIKEN CORPORATION Annual Report 201636

Financial Section

10-Year Summary of Consolidated Financial Data
Daiken Corporation and Consolidated Subsidiaries
Years ended March 31(Millions of Yen)

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

168,258

166,588

150,325

140,936

141,506

151,209

158,153

180,392

168,833

168,141

Operating income

5,063

2,896

1,830

3,010

4,542

4,703

3,577

3,452

5,586

Ordinary income

4,771

2,613

1,331

2,819

4,600

5,669

5,025

4,648

5,281

△ 4,337

791

598

511

1,375

874

1,318

2,546

2,736

3,988

Capital expenditures

3,643

4,490

2,934

2,785

3,765

2,758

4,036

3,274

3,206

3,508

Depreciation and amortization

3,258

3,927

4,054

4,197

4,574

4,217

4,107

3,990

4,093

4,068

R&D expenses

1,684

1,657

1,526

1,471

1,464

1,470

1,453

1,342

1,349

1,430

9,074

2,624

9,663

9,299

6,016

FOR THE YEAR:
Net sales

Net income attributable to owners of parent

4,349
4,373

CASH FLOWS:
Cash flows from operating activities

7,442△ 3,776

1,805

3,141

4,438

Cash flows from investing activities△ 4,492△ 4,566△ 2,897△ 3,286△ 2,618△ 3,218△ 2,033△ 5,168△ 4,072△ 5,972

Cash flows from financing activities△ 1,263

3,699△ 1,793

1,135△ 7,095△ 1,929224△ 1,054△ 2,635△ 5,486

2,950△ 8,343△ 1,091

△ 145

1,819

5,856

591

4,494

5,227

43

Total assets

144,559

132,875

125,080

123,862

115,969

131,618

135,890

135,596130,315

41,51837,05334,562

36,66336,839125,469

Net assets

36,94939,87041,41944,984

43,833

Net assets (Yen)

298.36265.86

246.66260.52265.42267.51286.91296.09333.89338.46

Net income (Yen)△ 33.16

6.07

4.64

4.01

10.88

6.97

10.51

20.29

22.34

32.93

7.50

7.50

6.25

5.00

6.25

7.50

7.50

7.50

7.50

10.00

-

123.6

134.8

124.8

57.4

107.7

71.4

37.0

33.6

30.4

27.0

26.0

25.2

26.8

28.7

26.8

27.4

27.3

29.9

31.3

Return on equity (%)△ 10.7

2.2

1.8

1.6

4.1

2.6

3.8

7.0

7.0

9.8

Return on assets (%)

3.4

1.9

1.0

2.3

3.6

3.8

4.4

3.8

3.4

4.0

Operating income ratio (%)

3.0

1.7

1.2

2.1

3.1

3.0

3.0

2.0

2.0

3.3

3,330

3,414

3,252

3,255

3,189

3,183

3,194

3,141

3,191

3,060

Free cash flows

AT YEAR-END:

PER SHARE DATA:Cash dividend (Yen)Dividend payout ratio (%)

KEY FINANCIAL RATIOS:
Equity ratio (%)

Employees (number)

37

DAIKEN CORPORATION Annual Report 2016

DAIKEN CORPORATION Annual Report 201638

Financial Section

Consolidated Balance Sheets
Daiken Corporation and Consolidated Subsidiaries
As of March 31, 2016 and 2015

2015

(Millions of Yen)

2016

Assets2015

2016

Liabilities

Current assets

Current liabilities

Cash and deposits

16,774

11,134

Notes and accounts payable - trade24,104

23,819Notes and accounts receivable - trade32,72237,372

Short-term loans payable

9,267

8,078

Merchandise and finished goods

9,163

9,018

Current portion of bonds

5,000

－

3,013

4,730

43

41

18,693

17,742Work in process

3,153

3,188

Current portion of long-term loans payable

Raw materials and supplies

5,061

4,727

Lease obligations

Deferred tax assets

2,511

1,953

Accounts payable - other

Other

1,825

2,086

Income taxes payable

406

643

Allowance for doubtful accounts

△ 281

△ 229

Accrued consumption taxes

738

527

Total current assets

70,931

69,252

Provision for bonuses

1,869

1,749

Provision for product warranties

1,058

988

－

45

Other

3,090

3,010

Total current liabilities

67,286

61,378Non-current assets
Property, plant and equipment

Deferred tax liabilities

Buildings and structures, net

9,454

Machinery, equipment and vehicles, net

10,338

9,884

Land

15,682

15,621

Non-current liabilities

224

180

Bonds payable

5,400

10,40011,266

8,015

213

172

Leased assets, net
Construction in progress

8,823

844

2,119

Long-term loans payable

Other, net

2,022

1,784

Lease obligations

Total property, plant and equipment

38,56538,413

Deferred tax liabilities

1,890

933

Provision for product warranties

1,384

2,080

Net defined benefit liability

Intangible assets
Goodwill

750

12Software

1,170

2,093

458

326

2,378

2,432

Other
Total intangible assets
Investments and other assets

2,910

3,228

Negative goodwill

72

53

Other

186

219

Total non-current liabilities
Total liabilities

23,325

25,10390,611

86,482

Investment securities

15,303

15,286

Net defined benefit asset

3,382

1,373

Shareholders' equity

Deferred tax assets

3,104

1,440

Capital stock

13,15013,150

Other

1,905

2,081

Capital surplus

11,85011,655

Net assets

Allowance for doubtful accounts

△ 47

△ 46

Retained earnings

13,47815,143

Total investments and other assets

23,64820,135

Treasury shares△ 2,302△ 1,429

64,59260,980Total shareholders' equity

36,17738,519Bond issuance cost

72

82

Valuation difference on available-for-sale securities

3,158

3,413

Total deferred assets

72

82

Deferred gains or losses on hedges

83

163

135,596130,315

Total non-current assets
Deferred assets

Total assets

Accumulated other comprehensive income

Foreign currency translation adjustment

1,303

257

Remeasurements of defined benefit plans△ 148△ 1,563

Total accumulated other comprehensive income

4,396

2,269

4,410

3,043

Non-controlling interests
Total net assets
Total liabilities and net assets

39(Millions of Yen)

DAIKEN CORPORATION Annual Report 2016

44,984

43,833

135,596130,315DAIKEN CORPORATION Annual Report 201640

Financial Section

Financial Section

Daiken Corporation and Consolidated Subsidiaries

Daiken Corporation and Consolidated Subsidiaries

Consolidated Statements of Comprehensive Income

Consolidated Statements of Income

Years ended March 31, 2016 and 2015

Years ended March 31, 2016 and 2015

(Millions of Yen)

2015

2016

Net sales

168,833

168,141

ProfitCost of sales

131,657

127,452

Other comprehensive income(Millions of Yen)

2015

2016

3,018

4,148

Gross profit

37,17540,689Valuation difference on available-for-sale securities

1,625

254

Selling, general and administrative expenses

33,72235,102

Deferred gains or losses on hedges

△ 295

111

Operating income

3,452

5,586

Foreign currency translation adjustment344△ 1,348

1,016△ 1,415Interest income

66

64

Dividend income

268

318

0

△0

Rent income

193

173

2,691

△ 2,398

Dividend income of life insurance

59

57

5,709

1,750

Amortization of negative goodwill

10

11

Share of profit of entities accounted for using equity method

41

44

5,477

1,861

Foreign exchange gains

632

－

232

△ 111

Reversal of allowance for doubtful accounts－

52

Non-operating income

Miscellaneous income
Total non-operating income

Remeasurements of defined benefit plans, net of tax

640

515

1,911

1,239

Share of other comprehensive income of entities accounted forusing 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

Non-operating expenses
Interest expenses

378

351

Sales discounts

159

143

Loss on sales of accounts receivable76

55

Foreign exchange losses－

909

Miscellaneous expenses

101

84

Total non-operating expenses

716

1,544

4,648

5,281

Gain on sales of non-current assets

108Gain on sales of investment securities

5

7

1,000

2,601

－

109

1,016

2,726

Loss on retirement of non-current assets

401

441

Impairment loss

140－

Ordinary income
Extraordinary income

Insurance income
Other
Total extraordinary income
Extraordinary losses

Amortization of goodwill
Loss on business withdrawal
Loss on valuation of golf club membership
Other

686
－

5

－

184

4

4,291

1,133

1,373

6,875

Income taxes - current

520

726

Income taxes - deferred△ 2,165

2,000

Total income taxes△ 1,645

2,727

3,018

4,148

Total extraordinary losses
Profit before income taxes

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent
41

－
3,559

DAIKEN CORPORATION Annual Report 2016

281

159

2,736

3,988

DAIKEN CORPORATION Annual Report 201642

Financial Section

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Cash Flows

Years ended March 31, 2016 and 2015

Years ended March 31, 2016 and 2015

Daiken Corporation and Consolidated Subsidiaries

Shareholders' equity
Capital stock
Balance at beginning of current period
Balance at end of current period
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
Change of scope of consolidation
Balance at end of current period
Treasury shares
Balance at beginning of current period
Purchase of treasury shares
Retirement of treasury shares
Balance at end of current period
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
Balance at end of current period
Deffered gains or losses on hedges
Balance at beginning of current period
Net changes of items other than shareholders' equity
Balance at end of current period
Foreign currency translation adjustment
Balance at beginning of current period
Net changes of items other than shareholders' equity
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
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
Balance at end of current period
Non-controlling interests
Balance at beginning of current period
Net changes of items other than shareholders' equity
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
Balance at end of current period

43

DAIKEN CORPORATION Annual Report 2016

(Millions of Yen)

2015

2016

13,15013,15013,15013,15011,85011,85011,679
△ 929
2,736
△6
13,478△ 1,180△ 1,121

11,850△ 195
11,655
13,478△ 1,093
3,988△ 1,229
15,143△ 2,302△ 2,302△ 357
1,229△ 1,429

35,499△ 929
2,736△ 1,121△6
36,17736,177△ 1,093
3,988
△ 357
△ 195
38,519

Daiken Corporation and Consolidated Subsidiaries

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 on valuation of golf club memberships
Amortization of goodwill

3,158
254
3,413

241
△ 157
83

83
80
163

1,055
247
1,303

1,303
△ 1,046257△ 1,165
1,016
△ 148

△ 148
△ 1,415△ 1,563

1,655
2,741
4,396

4,396
△ 2,126
2,269

4,264
146
4,410

4,410
△ 1,367
3,043

41,419△ 929
2,736△ 1,121△6
2,887
44,98444,984△ 1,093
3,988
△ 357
△ 195
△ 3,493
43,833

1,373

6,875

4,093
140
33

401

△ 10
△5
5

75

△ 70

Increase (decrease) in provision for product warranties△ 1,627

Increase (decrease) in net defined benefit liability△ 1,812

Increase (decrease) in provision for business structure improvement

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

△ 65
△4

△ 41

△ 1,000
4,079

3,960

－

719

△ 53

△ 112

625
－

2,327
351

△ 44

△ 2,601△ 4,81426△ 2,158

△ 907

309

△ 210

6

1,362

Proceeds from insurance income

1,000

Purchase of property, plant and equipment

△7

219

△ 381

Cash flows from investing activities

441

△8

△ 100

Interest expenses paid

Net cash provided by (used in) operating activities

－

31

△ 383

378

8,987

Income taxes paid

4,068

△ 335

SubtotalInterest and dividend income received
1,524
1,634
3,158

2016

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses(Millions of Yen)

2015

335

△ 65

△ 2,591
3,887
383

△ 360

△ 642

△ 495

9,299

6,016

2,601

△ 3,629△ 5,453

Purchase of investment securities

△ 235

△ 191

Other, net

△ 630

△ 857

Proceeds from sales of property, plant and equipment
Proceeds from sales and redemption of investment securities

40

382

10

518

Net cash provided by (used in) investing activities△ 4,072△ 5,972

Net increase (decrease) in short-term loans payable

△ 129

△ 966

－

△ 5,000△ 3,318△ 3,033

Cash flows from financing activities

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 interests
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
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

393

2,600
△ 43
－

△ 1,121

1,500
△ 43
234

△ 357

△ 929

△ 1,093－△ 1,642△ 2,635△ 5,486

2,665△ 5,640△ 86

74

Cash and cash equivalents at beginning of period

14,096

Cash and cash equivalents at end of period

16,774

Increase in cash and cash equivalents from newly consolidated subsidiary

4,958

12

△ 42

△ 196

16,774－

11,134DAIKEN CORPORATION Annual Report 201644

C o r po r a te Proﬁl e

S toc k In f or m ati on■Stock Information（as of March 31, 2016）■Subsidiaries part of the GroupDAIKEN CORPORATIONFounding

September 26, 1945

<In Japan>

Paid-in capital

13,150,039,080 yen

Total number of authorized shares

398,218,000

Daiﬁt Co., Ltd. (Kurashiki City, Tottori Prefecture)

Total number of shares issued

125,875,219

Dai-wood Corporation (Iga City, Mie Prefecture)

Number of shareholders■Registered Head Oﬃce and Operational Locations

5,004

Setouchi Kakoh Co., Ltd. (Minami-ku, Okayama City)
Toyama Juki Co., Ltd. (Tonami City, Toyama Prefecture)

Registered Head Oﬃce

Dai-tac Corporation (Minami-ku, Okayama City)

1-1, Inami, Nanto City, Toyama, Japan

Aizu Daiken Kako K.K. (Aizuwakamatsu City, Fukushima Prefecture)

Operational Headquarters

C&H Co., Ltd. (Kishiwada City, Osaka Prefecture)

6-20, Dojima 1-chome, Kita-ku, Osaka, Japan

Sapporo, Sendai, Tokyo, Kanazawa, Nagoya, Osaka, Hiroshima,
Fukuoka and Singapore

Sumitomo Mitsui Banking Corporation

4,934,903

4.1

Sumitomo Life Insurance Company

4,656,000

3.9

Sankei Corporation (Higashiosaka City, Osaka Prefecture)

Daiken Corporation Trading-Partner Shareholding Association

3,529,000

2.9

Daiken Home& Service Corporation (Kita-ku, Osaka City)

Sumitomo Mitsui Trust Bank, Limited

3,440,000

2.9

Sumitomo Forestry Co., Ltd.

3,191,000

2.6Japan Trustee Services Bank Ltd. (Trust Account)

3,118,000

2.6

Marubeni Corporation

2,821,942

2.3

Nippon Life Insurance Company

2,728,346

2.3

Mitsui Sumitomo Insurance Company, Limited

2,608,000

2.2

Smile-Up Corporation (Kita-ku, Osaka City)
Daiken Logistics Corporation (Kita-ku, Osaka City)■ Production Plants
Mie Plant (Tsu City, Mie Prefecture)
Inami Plant (Nanto City, Toyama Prefecture)<Overseas>

Okayama Plant (Minami-ku, Okayama City)

Daiken Industries (Ningbo) Corporation (Zhejiang Province, China)
Daiken (Shanghai) Corporation (Shanghai City, China)

Takahagi Plant (Takahagi City, Ibaraki Prefecture)

PT. Daiken Dharma Indonesia (Jawa Timur Province, Indonesia)
Daiken New Zealand Limited (Rangiora City, New Zealand)
Daiken Sarawak Sdn Bhd. (Sarawak State, Malaysia)

D i r e c to r s a n d K ansayak u（as of June 24, 2016）

Number of shares Ownership ratio (%)
26.5

Koukou Sangyo Corporation (Chiyoda-ku, Tokyo)

Major Sales Oﬃces

Name

31,948,000

Daiken Engineering Corporation (Kita-ku, Osaka City)

12-8, Sotokanda 3-chome, Chiyoda-ku, Tokyo, Japan■Major shareholders（ as of March 31, 2016）

ITOCHU Corporation

Eco Techno Co., Ltd. (Chiyoda-ku, Tokyo)

Tokyo Oﬃce

45

■Breakdown of shares by type of shareholder

Company Name

(Note) 1. Daiken Corporation is in possession of 5,358,365 treasury shares.
However, the Company is excluded from the above list of major
shareholders.
2. The ownership ratio is calculated excluding the treasury stock.

（as of March 31, 2016）

Treasury stock
5,358,365
1shareholder (4.26%)

Securities companies
717,132
32 shareholders (0.57%)

Foreigninstitutions
and others
8,236,412
119 shareholders(6.54%)

Number of sharesby type of shareholder

Individuals
and others
21,847,635
4,687 shareholders(17.36%)

Other Japanesecompanies
50,178,282
126 shareholders(39.86%)

Financial institutions
39,537,393
39 shareholders (31.41%)

Number of shares by type of shareholder

Daiken Miri Sdn Bhd. (Sarawak State, Malaysia)

Masafumi Inoue

Mutsuhiro Shimada

Koji Mizuno

Ken Suzuki

Takashi Terubayashi

Tatsuo Shibuya

Ryoji Sawaki

Masanori Okuda

Tomoaki Kato

Tetsuo Harima

Takashi Aihara

Kikuo Imamura

Akio Hasunuma

Outside Kansayaku

Kansayaku

Outside Director

Director

Director

Representative Director,
Senior Managing Director

Director, Chairmanof the Board

Representative Director,
President

Representative Director,
Senior Managing Director

Director

Outside Director

Kansayaku

Outside Kansayaku

DAIKEN CORPORATION Annual Report 2016

DAIKEN CORPORATION Annual Report 201646