Annual Report 2018
SRG TAKAMIYA CO., LTD.

Building on Success...

...to Drive Transformation
SRG TAKAYAMA announced
its new medium-term management plan in May 2018
and launched new initiatives
under the theme of“Transformation.”
Rather than imagining a future
as an extension of the present and the past,

we envision a future
focusing on what we hope to be and what we should be.
Based on such vision, we will develop and implement a new setof strategies.
We will be reborn as a completely new corporate groupby reviewing past initiatives and starting afresh.
This is what we mean by transformation.

During the three years of the Plan,
Tokyo will host the 2020 Olympic and Paralympic Games.
We see this as amajor turning point for our business.
Also, in June 2019, we will be celebrating our 50th anniversary.
To mark the occasion, in April 2019 the Company name will change to

TAKAMIYA.
As the dawn breaks on a new day for the Company,
we hope our customers also feelthe approach of this new future
as we produce concrete and visible results.
And with a company-wide effort,
we will achieve the transformation that converts the plan into reality.

Contents
SRG TAKAMIYA’s Journey So Far
Our History of Innovation, the Source of Corporate Values and Our Strengths
Key Preparations between FY3/15 and FY3/18 and Tasks Ahead
SRG TAKAMIYA’s Journey Ahead
The Transformation Begins with the New Medium-term Management Plan
Our Strategy for Growth and Commitment
Message from the President and Chairman
Message from the Executive Vice President
Message from the Director and Managing Executive Officer
Strategies by Business Segments
Rental Business
Sales Business
Overseas Business

2
2
4
6
6
8
8
14
16
18
18
20
22

Management Foundation that Supports Our Value
Response to ESG Issues and Value Creation
Corporate GovernanceDirectors, Corporate Auditors and Executive Officers
Consolidated Six-year Summary
Main Products
Strategic Products
Corporate Information

24
24
28
32
33
34
35
36

Forward-looking statements:
The business forecasts and other forward-looking statements presented in this report are based on
information available at the time of publication and certain assumptions that SRG TAKAMIYA regards
as reasonable. It is not the intention of SRG TAKAMIYA to guarantee that these forecasts will beachieved; actual results may differ materially from these statements due to a number of factors.

Annual Report 2018

1

SRG TAKAMIYA’s Journey So Far

Our History of Innovation,
the Source of Corporate Values and Our Strengths
In the course of our corporate history, SRG TAKAMIYA has
employed its strategic perspective to consistently stay ahead of
the times and made every effort for growth.
Here, we introduce the major turning points for the Company,
as well as the source of our corporate values and the key
strengths that we have cultivated.

2010

Moved into
manufacture andsales business

From 1970s

Actively expanded
fields of business•Acquired Hory Corporation

1974
1969

2010

Startedrental business

EstablishedStartedscaffolding set-up
business•Started selling
woodenscaffolding•Established theConstruction Department

2010

Started establishingoverseas network
Sales Business•Hory Korea Co., Ltd.
joined the SRG Group(Manufacturing and sales base)Rental Business
Overseas Business

1969

1974

2010

The source of our corporate values
Mission statement

2

SRG TAKAMIYA

Corporate culture (corporate mind)

Farsightedness

The ability to anticipate changes
in the business environment andcustomer needs from a long-term
perspective

Positive
attitudeTaking on challenges
with courage and innovative
thinking

Overseas Business
14.7%
RentalBusiness
54.5%

FY Mar.
2013

Sales
Business
45.5%

RentalBusiness
47.9%

Sales
Business
52.1%

FY Mar.
2015

RentalBusiness
53.9%

FY Mar.
2018

Sales
Business
31.4%*Graphs indicate the segment sales ratio of each fiscal year (including inter-segment sales or transfer).

2013

2015

2018

Started selling agricultural
greenhouses

Developed systems toenhance manufacturing
capabilities

2016

Started production
and sales ofⅠq System,
a next-generation scaffolding

Developed earthquakeresistant and seismic
damping frameworks•Absorbed Hory Corporation•Reorganized domestic production
infrastructure

2017

Finished replacing
domestic assets for lease2014

Launched rental service
forⅠq System, a next-generation
scaffolding

2013

2018

Started development andsales of products targeting
the Japanese and ASEAN markets

Enhanced managementfoundation at overseas
locations•Established Hory Korea Co., Ltd.
(Manufacturing base)2015

Acquired DIMENSION-ALL INC.,
an overseas leasing company•Hory Korea Co., Ltd. and
HORY VIETNAM Co., Ltd., which
had been sub-subsidiaries,
became subsidiaries(Sales base)

2013

2014

2015

2016

2017

2018

The key strengths we have cultivatedExpertise inscaffolding andhuman resources
Our strengths include our expertise in scaffolding
and human resources that offer this expertise. We
have developed these by operating in a wide rangeof business areas, including construction sites,
landslide prevention work, renovation of high-rise
condominiums, and bridges. Our list of products andservices is also rich in variety and is the industry'sfinest.

Synergies fromfive functions
By taking advantage of our five key functions—development and manufacturing, sales, rental,
construction, and creating CAD drawings—we canprovide comprehensive solutions and achieve acompetitive edge in terms of equipment andmaterials supply. In addition, by accumulating andsharing information and expertise gained at different
worksites, we create new high-value-added
products and services, as well as provide proposals.

High level oftechnical expertise
We have a team of technical experts specializing in
scaffolding. Their ability to accurately respond to abroad spectrum of situations and needs at various
worksites provides high value for our customers.
Also, our excellent metal processing technologies
and CAD drawing technology specific to scaffolding
can be applied to a wide range of industrial fields,
including structural equipment.

Annual Report 2018

3

SRG TAKAMIYA’s Journey So Far

Key Groundwork between FY3/15 andFY3/18 and Tasks Ahead
The medium- to long-term changes in our business environment that we anticipate include the boom in the domestic
market ahead of the Tokyo 2020 Olympic and Paralympic Games and a gradual contraction that will follow. To
respond to these changes, we focused on upfront investments and improving the earnings base during the previous
medium-term management plan period (FY3/15 to FY3/17) and the fiscal year ended March 2018. We steadily carriedout the groundwork and organized our business tasks, with aim to achieve long-term growth.
Based on the groundwork and the tasks we have identified, we will work to maximize returns on investments and tocreate new frameworks for growth, which is the theme of our new medium-term management plan.

Theme of the 2014 Medium-term Management Plan (the previous medium-term management plan)

Upfront Investments + Improving the Earnings BaseCreated a market for next-generation scaffolding

Entered the agriculture business

Taking the lead in the industry, we developed and launched thenext-generation scaffoldingⅠq System in 2013. TheⅠq System
is a scaffolding product whose floor height is 190 cm, which is
20 cm higher than conventional scaffolding. This provides
ample room for workers to stand so that they do not need tobend over while working, improving safety even further. In
addition, it has improved workability and efficiency as well as
helped reduce storage space and operating costs. With thelaunch of this product, which is groundbreaking in every aspect,
we have revolutionized the industry by creating a new market
for next-generation scaffolding.
We also implemented strategic investment to renew
domestic assets for lease, and we finished replacing all ourconventional scaffolding with next-generation scaffolding by theyear ended March 2017. This investment has enabled us tolead the industry and accelerate the widespread use ofnext-generation scaffolding.

In 2015, we entered the agriculture business and started
manufacturing, selling and building agricultural racks andagricultural greenhouses. Our expertise and metal processing
technologies cultivated through scaffolding can be utilized tothe agriculture business. There are also great benefits for us
entering this business in terms of costs and productivity,
because we can leverage our procurement and product supply
systems for temporary equipment and materials. Furthermore,a shortage of builders specializing in agricultural greenhouses,
among other reasons, has been causing people to abandon
farming. We believe that we can help address this issue by
taking advantage of the construction network we havedeveloped. We contribute to strengthen Japanese agriculture,
which faces problems such as the aging population of farmers
and high costs compared to other countries. We have been
striving to boost this business into a stable generator of
earnings.

4

SRG TAKAMIYA

190cm

170cm

Ⅰq System: Next-generation scaffolding

G-Castle pro2: Weather-resistant steel-framed agricultural
greenhouses

Theme of the 2018
Medium-term Management Plan(the new medium-term
management plan)

Maximize Returns
on Investments ＋
Creating New
Frameworks

Improved the business foundation at overseas bases
We have actively engaged in overseas operations. For
example, in 2013, we built a new plant in Vietnam and in 2015,
we acquired DIMENSION-ALL INC., a scaffolding company in
the Philippines. In the meantime, we have improved ourbusiness foundation, which had been an ongoing challenge forsome time. We have also clarified the role of each overseas
location, and been promoting organic cooperation between
those locations through new initiatives. Some of thoseinitiatives include people-to-people exchanges and providing
products manufactured in Vietnam as assets for lease in therental business in the Philippines. With these changes, we
expect our overseas business to become long-term growth
drivers as we expand our overseas operations on a full-scalebasis.
Korea

Key Issues andTasks toward
Further Growth
Key issues•Labor shortages•Competitors launching next-generation scaffolding•Responding to the increase in maintenanceand repair projects•Establishing a new stable earnings base•Responding to the strong demand in Asia andachieving profitability in overseas operations
on a full-scale basis•Diversifying risksMarketing Manufacturing

Hory Korea Co., Ltd.
The company produces temporary equipment andmaterials such as theⅠq System, strengthening
sales in the South Korean and ASEAN markets.

VietnamOur major tasks

Manufacturing• Improve productivity

HORY VIETNAM Co., Ltd.
The company produces clamps and otherproducts, supplying these to Japan andSoutheast Asian countries.

• Establish new frameworks including theutilizing of IT
Philippines

Marketing

DIMENSION-ALL INC.
Expanding sales and rentals of
temporary equipment andmaterials in the Philippine
market, the company has large
construction companies ascustomers, and is building astrong position in the market.

Vietnam

Marketing Designing

Cadian Vietnam Co., Ltd.
ThailandMarketing

SRG Global Holdings Co., Ltd.

• Escalate investments in new businesses andoverseas operations• Hire, develop and leverage human resourcesto achieve transformation• Promote work-style reform and diversity• Reinforce governance and risk control

Manufacturing
Marketing
Designing
Consolidated

MyanmarMarketing Designing

Cadian Myanmar Co., Ltd.

Non-consolidated

Annual Report 2018

5

SRG TAKAMIYA’s Journey Ahead

The Transformation Begins with
the New Medium-term Management Plan
In May 2018, SRG TAKAMIYA announced and launched the 2018 Medium-term Management Plan, whichspans three years, with the fiscal year ending March 2021 as its final year. The slogan of the new medium-term
management plan is “Transformation.”
Since the early days of our business, we have continued to take on challenges with the future in mind.
However, moving forward, we believe that simply extending past initiatives alone will not sufficiently improve
our corporate value on a long-term, sustainable basis. In the new medium-term management plan, we will
respond to the brisk domestic demand. At the same time, we will start developing new frameworks andcontinue other investments to achieve success, as well as proceed with preparations for the next step in
attaining growth.
We will approach change by taking advantage of our accomplishments and groundwork already in place, butwill not let past successes and preconceptions limit our vision. “Transformation,” after all, begins now, as we
seize change to be reborn as a completely new corporate group.

2018 Medium-term Management Plan
VisionCreate new value through transformation andaim to become a corporate group that drives
qualitative development of the industry
Earnings targets for the fiscal year ending March 2021 (the final year of the Medium-term Management Plan)
Net sales

Operating income

¥50

¥4

billionUp 38% from FY3/18

Operating profit margin

8.0

billionUp 137% from FY3/18%

Up 3.3 percentage points from FY3/18

Financial policy for the fiscal year ending March 2021 (the final year of the medium-term management plan)
ROE

Equity ratio

30% or more

Up 5.0 percentage points from FY3/18

ROA*

10

% or more

Up 0.3 percentage points from FY3/18

5.0% or more

Up 2.0 or more percentage points from FY3/18*Return on equity=ordinary income / average total assets

6

SRG TAKAMIYA

Vision of our future growth

What wehope to beTransform
Improvingproductivity

Creating newframeworks

What weshould be
Backcasting fromwhat we hope to be

The future
as an extensionof the pastThe
present

Improvements
2019/32020/32021/3[Business environment outlook]

Domestic
marketBrisk demand for construction
ahead of the Tokyo 2020 Olympic
and Paralympic Games

Overseas
marketBasic policies• Strengthen the business infrastructure• Make innovations in the earnings base
• Accelerate overseas operations• Create new growth businesses

Gradual contraction of
the market after the Games

Brisk demand for construction
will continue due to economic
growth in ASEAN nations

Investment policies• Curb investments in domestic assets for lease andactively invest overseas• Strengthen the overseas production bases• Invest in increasing the efficiency of equipment
and materials centers• Invest in human resource development andwork-style reform• Invest in enhancing technological development capabilities

Annual Report 20187

Our Strategy for Growth and Commitment:
Message from the President and Chairman

New Challenges to “Transform”—
Aiming for a Group that Can CreateLong-term Value
Kazumasa Takamiya
Representative Director,
President and Chairman

8

SRG TAKAMIYA

“Transforming” oriented
toward the future

now have a clear long-term vision and a clear view ofbusiness tasks, boiling down to the detailed strategy of the
new medium-term management plan as a first step.

In May 2018, we announced a new three-year medium-term

During the fiscal year ended March 2018, we weremanagement strategy. “Transform” is the slogan for the

not in a situation to make a commitment by presenting

Medium-term Management Plan through the fiscal year

specific targets due to the uncertain business environment.

ending March 2021. This slogan conveys our determination

However, it is starting to look more positive as seen in theand will to transform to a completely new group oriented

steadily increasing operating rate in the rental business,toward the future, not limited to just “change.”

indicating that demand bottomed out.

Demand for construction work in the domestic market

Concerning the Iq System, a next-generation scaffolding

is expected to remain high until the Tokyo Olympic andthat we pioneered in the industry, the overall market was

Paralympic Games (Tokyo 2020); thus, the businessboosted by competitors’ entry, which works favorably for us.

environment is considered favorable. However, we will not

We believe that sales will steadily expand as the transition

be able to sustainably increase corporate value and achievefrom conventional products to innovative products (meaning

further growth simply by catering to the high demand andnext-generation scaffolding) is fully in progress. In addition,with conventional strategies. With such a sense of crisis,

to accelerate business development, in January 2018, we

we spent one year considering what needs to be done toabsorbed Hory Corporation, while conducting organizational

achieve growth and created a vision of the future.

transition by introducing a divisionalized organization system.

Under the previous medium-term management plan, weWith these initiatives, the foundation to link all functions

had to revise our targets downward due to the deteriorating

including rental, manufacturing, construction, and others has

business environment and other factors. We deeply regret

been established.

that we failed to achieve targets again the fiscal year under

Although the new medium-term management plan

review. (For the results of the year ended March 2018,

started a year later than originally planned, we believe thatplease refer to pages 16 to 17–Message from the Director

we can show clear achievements during the three years

and Managing Executive Officer) On the other hand, we

by full-fledged recovery of investments we have madeCreate new value with “Transform”• Transforming businessframeworks

Transform
frameworks
Transform
human
resources
Transform
revenuemodels

Improveproductivity• Transforming supply andmanagement frameworks• Enhancing the human resources
the Company needs• Reinforcing recruitment andtraining of our human resources• Improving the ability to develop
new technology

Add high value
to products
and services

Establish the next
pillars of growth

Createnew value
anda new future• Evolving investment targets

From products to software and frameworks
From existing business to new andgrowth businesses•From domestic to overseas••• Building a sustainable andstable earnings structure

Strengthen
the managementfoundation

Annual Report 20189

Our Strategy for Growth and Commitment: Message from the President and Chairmanof safety and efficiency, and eventually the qualitative
development of the industry as a whole.
By taking advantage of one of our key strengths in theConstruction Department, we will focus on developing
the market for our next-generation scaffolding to boost
both our domestic rental and sales businesses. In theprevious medium-term management plan, we completed
replacement of conventional scaffolding with the nextgeneration product for domestic assets for lease. In otherwords, we completed the investment in products, meaning
we will be able to maximize our use of the assets currently
owned and at the same time build frameworks to transform
our business models.
and by capturing robust demand expected to continue until

As the market matures, we cannot sustain growth overaround 2020. Also, we will invest to achieve sustainable

the long term with the conventional rental business model

growth while thoroughly improving productivity, thereby

where we maintain products as inventories and recoverstrengthening profitability. To achieve sustainable growth,

investments in inventories by renting them to customers.

we will establish and grow an earnings model that combines

For example, in the sale of products, it is important to create

a stock-type business generating stable earnings, and a flow-

new frameworks that customers recognize as valuable, such

type business that fluctuates by demands but with prospects

as providing additional services instead of just delivering ourfor growth.

products.

Shift from investing in products to improving
productivity and creating new frameworks

to our factories and equipment and materials centers. One

For that purpose, we plan to provide various functionsof the initiatives is unmanned operations. While unmanned
operations enable us to improve the operational efficiency
The domestic market is expected to enjoy strong demandand leverage human resources, we recognize the need totowards 2020 while fundamental problems such as labor

adopt robot and AI technologies as well as set up initiatives

shortages, overconcentration in the Tokyo metropolitan area,

to control operations after production in the manufacturing

and regional disparities will remain. With technology andprocess, such as quantity control. In the new medium-

innovation progressing, we cannot grow without striving toterm management plan, we will establish a system that

constantly offer products and services with high added value.

takes advantage of IT to break away from labor-intensive

To grow further and dramatically from 2020 and beyond,operations.

we need to secure stable earnings in the mature domestic

In the sales business, we will strengthen costmarket and establish the agriculture business, the overseas

management capabilities, taking into account development

business, and others as next-generation growth drivers.

capacity and production costs as a manufacturer. We

Over the next three years, we will intensively increase

also need to evolve the Ⅰq System, our next-generation

productivity in all aspects to address strong demand, andscaffolding, agricultural greenhouses and structural

also adopt new approaches and build new businesses,

equipment including seismic dampers to products with

implementing measures to realize our objectives. By steadily

higher added value. We must work to improve productivity

rolling out those measures, we are confident of achieving

including reviewing production activities at factories toa high level of profitability and generating strong growthprovide reasonable-priced and more competitive products.

after 2020, as well as tapping into the next major business

After absorbing Hory Corporation, we successfully united

opportunities.

the corporate cultures and organized a working environment

To raise productivity, we need to completely rethink allthat is ideal for both work and human resources development.

our existing frameworks, from manufacturing through toUnder the divisionalized organization system, we will

management.

accelerate business development.

The rental business can offer new added-value by

Further linking the rental business and the sales business,changing the frameworks in particular. Essentially, we

and transforming business models making full use of IT,

aspire to change the frameworks, lead the industry in terms

will enable us to connect with customers as well as others

10

SRG TAKAMIYA

Basic strategy: business model combining stock and flow

SRG TAKAMIYA aims to combine a stock-type business generating stable earnings (focused on the rental business), a flow-typebusiness that fluctuates but with prospects for growth (mainly manufacturing and sales), and the overseas business offering growthpotential, in order to establish a corporate group able to generate high earnings and growth over the medium- to long-term.

New productmanufacturing
and sales

GrowthAgriculturebusiness

Flow-type business
Overseas rentals

Stock-type businessStability
Domestic rentals

within the Group. By these measures, we aim to evolve into

phase expansion for the factory in Vietnam to boost its

a company that can provide superior frameworks, instead offunctions as a mother factory. Over and above establishingsimply providing quality products.

new equipment and materials centers in Vietnam and thePhilippines, we plan to expand overseas bases as necessary.

Full-scale expansion of the overseas
business and new business as growth
drivers

We have been receiving rapidly increasing inquiries
from overseas companies that are interested in our
active overseas business development. We expect that
opportunities for new alliances will increase.

We have actively pursued expansion of our overseas bases,

In the agriculture business, which we predict to be a

but at the same time encountered challenges such as apromising market, we will take advantage of our experiencelack of smooth communication and collaboration among thein scaffolding to further advance the agricultural greenhousebases. However, in the past few years we have focused on

business. In addition to in-house human resource

improving the management structure and supply systems

development and marketing, the Company is considering

at the overseas bases; each function is now connected toanother option to acquire know-how and human resources

the others, leading to smooth communication among bases.

through M&A. In April 2018, we concluded a contract

Under the leadership of the Overseas Business Department,

to transfer the agricultural greenhouse business fromwe have been promoting personnel exchanges amongan agricultural-related manufacture. We will continue tobases, and we are also establishing a framework to promote

aggressively develop the agriculture business while securing

overseas business development while strengthening

skilled human resources to expand it.

collaboration among bases in Korea, the Philippines, andVietnam.
The new medium-term management plan will include

Human resources are the key to create
a new future

making necessary investments to expand business, such as
in production bases and equipment and materials centers,

We will proceed with transformation in every aspect, but

so that overseas business becomes an earnings pillar. As

there is nothing more critical than personnel to make itpart of the initiative, we are promoting work on the third-

succeed. What we need is human resources who can

Annual Report 201811

Our Strategy for Growth and Commitment—Message from the President and Chairman

G-Castle series: Weather-resistant steel-framed agricultural greenhouses

HORY VIETNAM Co., Ltd.

design a fresh future, seize the initiative by themselves,continue to proactively disclose information while improving

plan, and create new frameworks. We will promote thethe accuracy of information to convey, such as industry

hiring, training and leveraging human resources who willreports. We have steadily strengthened our corporatetake on the future as their most important managerial task.

governance as a company with a Board of Corporate

Our turnover rate is as low as 8.2% (in the fiscal year

Auditors, including appointment of all Outside Directors andended March 2018), but there are still many work-style

Outside Corporate Auditors to Independent Officers, and wereform needed to keep our employees motivated andwill continue with these efforts into the future.

meet their expectations. We are responsible for promoting

Furthermore, from the standpoint of preparing fordiversity to make use of the spectrum of qualities

various business risks such as a rapid deterioration in

our employees possess regardless of age, gender, or

the business environment, sharp increases in materials

nationality, and to improve the work environment to reward

and component costs, and tighter monetary policies, wetheir motivation.

also need to emphasize the importance of cash flows for

In October 2017, we reformed our personnel systemfinancial health. Also on the list to promote is establishingin which we have established a framework whereby

a risk management system and training human resources

female employees can play leading roles in the Company.

engaged in such operations on a global basis to address

Examples include setting up the Building Estimation Section

risks such as collective risk associated with proactivethat supports the sales force, recruiting female sales

investment overseas.

engineers, and a work-at-home scheme for employees
while they take childcare leave.

With the adoption of a divisionalized organization
system, we are promoting delegation of authority to eachBy promoting diversity, we expect the workplace tobusiness division manager. Business division managers

become more comfortable by having people with diverseshould demonstrate the same leadership and sense ofindividuality, who accept each other, thereby improving

responsibility as a company president. Due to this reform,

profitability and other corporate value.

we expect to have more human resources who canFurthermore, we will promote management reforms to
improve productivity. Such reforms include an evaluation

manage a company as managers seeking “growth based on
efficiency.”

system that raises awareness of sales and earnings per

We are also promoting initiatives such as introducing

capita and responds to the results, and the introduction ofoverseas training programs for local staff to be trained in

IT systems to improve efficiency. We are also endeavoring

Japan in order to realize management diversity at an early

to improve workplace environments and institutions where

stage.

all employees can work with a sense of fulfillment.

The scaffolding-related business, the Company’s current
core business, is indispensable for building and improving

ESG as a management foundationsocial infrastructure; essentially our business activities
themselves provide social value.

We recognize that corporate governance is becoming

Recognizing that we have already offered high-value-

ever more crucial as we transform business models andadded products and services to date, this idea now needs

accelerate overseas business development. We will

to extend to emphasizing added value especially from an

12

SRG TAKAMIYA

environmental perspective. And there will be additionalsocial expectations to add environmental value to productdevelopment as a manufacturer.
We will continue to strive to respond to social issues
and reduce our environmental impact through our businessactivities.

Aiming at a corporate group that strives
to create new added value
The Company will celebrate its 50th anniversary in June
2019. To mark the occasion, we will change the company
name to “Takamiya Co., Ltd.” from April 2019. As a super

To nurture and reinforce our foundation as a business,rental group (SRG), SRG TAKAMIYA Group’s business up

we will keep on making prudent investments. As forto now has centered on rental of temporary equipment

shareholder returns, the policy of paying stable dividends inand materials to the construction industry. Meanwhile,line with business results will remain in place. We will alsowith a view to long-term growth, we have strived toconsider other profit distribution options besides dividends.

expand into areas other than the rental business, including

We will never stop working hard to deliver higher

manufacturing and sales business, overseas business,

corporate value such as profitability and brand power by not

and agriculture business. The corporate name change isonly developing and marketing high-value-added products,

also the first step towards further advancing this initiative

but also by establishing new frameworks to support them.

and transforming into a corporate group that is completely

I would like to thank all stakeholders for their support inreborn in every aspect.

taking a longer-term perspective toward our strategies.

It is not possible to achieve sustainable growth without
practicing the management vision of “aiming to be a

July 2018

corporate group that drives the qualitative development of
the industry.” Our future direction is the group which candiscover the potential in new businesses, and create andestablish new frameworks based on them. To that end,
we must build a foundation and structure from a long-term

Kazumasa Takamiya

perspective. In addition to promoting new initiatives, we will

Representative Director, President and Chairman

also focus on earnings.
Change of corporate name and logo

Left: Corporate logo for Takamiya Co., Ltd.
Right: Group logo common to group companies

Along with the new medium-term management plan, we established the vision of “Create new value by transformation and aim
to become a corporate group that drives the qualitative development of the industry.” We also decided to change our corporatename and logo.
The new design uses a Japanese kanji character motif and possesses the same elegance on display in a Japanese ancient coat ofarms. It also has a refined simplicity, as well as a universal and sophisticated impression. In addition, its symmetrical design (linesymmetry) expresses harmony with society and nature, as well as a sublime sense of balance. The logo represents the Group
that aims to change itself completely, in other words, to transform, with an orientation toward the future.

Annual Report 201813

Our Strategy for Growth and Commitment:
Message from the Executive Vice President

Consolidating the Sales Structure and Continually
Providing Added Value Unique to the Group
Further expanding market sharefor next-generation scaffolding
As history has demonstrated when smartphones
transformed the communications market, the data showsthat if a product’s market share exceeds 16%, the existingproduct is rapidly replaced with a new product in the market.
Currently, the market share of next-generation scaffolding
has grown to account for about 20% of the overall
scaffolding market.
In the scaffolding industry, companies tend to keepusing the same products for decades while continuing tomaintain them once purchased, due to their durability. We
reevaluated this custom in order to respond to issues suchas an increase in accidents and evolving customer needs.
The result was that in 2013, we introduced a completely
new next-generation scaffolding, the Iq System, that excels
in safety, workability, efficiency and other aspects. Fromthe very start, we have been earnestly expanding the nextgeneration scaffolding business from each aspect: rental,
sales and set-up. Competitors have begun to enter themarket and the foundation for full-scale expansion has now
been established. The next three years will be the period
where we ride the wave of this innovation that we ourselves
created and recover our investment.
We have completed the replacement of our assets forlease from conventional scaffolding to the Ⅰq System. The
Company has also reorganized the manufacturing system

14

SRG TAKAMIYA

and is well prepared to increase market share. We will further
strengthen our sales capabilities and work to expand profitability.

Rental company + Manufacturer:
Unique competitive advantage
In January 2018, we absorbed Hory Corporation, a subsidiarycompany. We believe that this will present opportunities
for new businesses by integrating a rental company anda manufacturer. In fact, we are already receiving more
inquiries from customers relating to product development
also in the rental business, and we are sensitive to the
expectations they hold for us as a company with both rental
and manufacturing functions.
One of our strengths as a manufacturer is that we work
closely with construction sites. In addition to having a broadcustomer base in both the rental and sales businesses, wehave a Construction Department involved in scaffolding
set-ups, and we can collect data and requests direct fromconstruction sites. Furthermore, our rental sales force talks
with customers to assess their needs, and we can use thisinformation to develop the next products and create newframeworks. These are our competitive advantages.
Hory, the company we absorbed, has a long history andadvanced technical capabilities. Since Hory joined the Group,
it has been actively hiring engineers, and we are confident
that the merger will further lift our technological anddevelopment capabilities and accelerate manufacturing.

Creating frameworks to enhance efficiency

Strategic direction after 2020

During the three-year of the 2018 Medium-term Management
Plan, we will improve productivity to fully operate the assets
for lease and production facilities that we have invested in,as preparation.
To this end, it is imperative that we review existing
operations from all aspects and emphasize better
productivity more than ever. The key to this is IT.
For example, we are promoting efforts to exceed theusual marginal operating rate* for equipment and materials
centers. The goal is to minimize manual intervention byintroducing IT such as AI, which can be applied to the
management approach, inventory control, delivery and othertasks. Such measures will help to raise productivity andrelocate our human resources, leading to the creation of
new value by revitalizing our people.

There is a view that the market after 2020 will continue
to expand as demand for infrastructure development
continues. However, issues such as the labor shortage
and the aging population remain, so we cannot keep
implementing the same strategy as before. As for domestic
business growth in particular, measures that take into
account efficiency and profit margin will be crucial.
The new medium-term management plan period is
also the preparation term to create frameworks for us tocontinue to grow beyond 2020. When considering thepossibility that the domestic market may shrink, this may
sound extreme, yet we think it is necessary to take the boldstep of creating mechanisms and frameworks to further
improve safety, even including eliminating scaffolding itself.
We will also promote initiatives to support the qualitative
development of the industry in various fields, such as
agriculture, seismic damping, and earthquake resistance, as
well as scaffolding and construction that has been our corebusiness to date.

*Marginal operating rate: a marginal point beyond which there will be ashortage of equipment

Cultivating businesses that generate
stable earnings
The creation and development of businesses thatgenerate stable earnings is also a pillar of the Mediumterm Management Plan, and the agriculture business is
at its core. Currently, the average age of farmers in Japan
is 66 years old, and it is said that 30% of farmers will beout of business in ten years’ time. In 2015, we launched
the agriculture business with the conviction that we canhelp solve this social issue by applying our expertise andtechnological capabilities cultivated in the scaffolding
business.
The motivation behind developing the agriculturebusiness is to reinforce Japanese agriculture. There arechallenges to address since we are a latecomer to theindustry and hail from a different sector. However, ourentry has created new trends in the industry, such as adrop in product prices. Looking ahead, we aim to develop
products with higher added value than ever, further enhance
profitability, and cultivate the business to be a pillar of
stable earnings during the period of the new medium-term
management plan.
Structural equipment, especially seismic dampers, isalso a field in which we can exercise our metal processing
technologies. In Japan, where earthquakes frequently occur,safety is a basic function of buildings. We aim to increase
sales mainly to small and medium-sized building contractors
by appealing to the superiority of our products, which can
reduce vibration by about 60%, toward standardizing thevibration damping function for housing.

Becoming a company that can createa clear vision for the future
Based on the information we have collected ourselves,
we have continually pursued with conviction what wethought to be right. This attitude of "facing the futurehead-on" personifies our corporate culture. We are alsobuilding a future-oriented strategy in the new medium-term
management plan.
It is our belief that we will transform into a corporategroup that can create a clear vision for the industry’s future
through altering various frameworks. To create strategies
unbound by convention and staying ahead of others, and byextension leading qualitative development in the industry,
we need to first transform ourselves.
My responsibilities include consolidating the current sales
structure during the next three years, as well as making it
possible to consistently offer unique added value, such as
proposal-based marketing and sales, development of highvalue-added products, and establishment of the agriculturebusiness as the next business pillar. We will continueenhancing our value to remain our customers’ first choice.
July 2018

Akiyoshi Takamiya
Representative Director and Executive Vice President

Annual Report 201815

Our Strategy for Growth and Commitment:
Message from the Director and Managing Executive Officer
DIMENSION-ALL INC. (Philippines) and Hory Korea Co., Ltd. (South Korea),
which had been a pending issue. We identified the roles and strengthsof each company, deepened collaboration and exchanges of resources
such as personnel, products and equipment between them, and laid thefoundation for the full-scale development of the overseas business. In
the Philippines, we continue to actively develop sales activities against
the backdrop of vigorous construction demand, particularly in and around
Manila, and the operations rate has been higher than ever before. In South
Korea, the temporary equipment rental business in that local market grew,
and the production output at the factory in Vietnam also remained solid.

Developing the new medium-term management plan

Changing Investment Policies
and Management Base,
Preparing to Transform
Review of the fiscal year ended March 2018
In the fiscal year ended March 2018, net sales were ¥36,114 million (down
1.8% year on year), operating income was ¥1,690 million (down 30.4%),
ordinary income was ¥1,610 million (down 31.1%) and profit attributable toowners of parent was ¥1,252 million (down 17.4%).
In the rental business, while the operating rate remained highfor building construction in the private sector due to strong demand,
particularly for the next-generation scaffolding Iq System, sales declined
due to the fall in shipments in the civil engineering and bridge construction
field. In addition, the increase in depreciation and amortization due to thefrequent renewal and expansion of temporary equipment and materials up
until the previous fiscal year was a factor driving down profits.
In the sales business, the number of inquiries related to the Iq System
has been increasing due to the proactive proposal-based marketing efforts
and other efforts to meet the diverse needs of customers. However,sales were sluggish due to the stagnation in demand lasting longer than
expected as a result of the delays in construction work projects andother factors. The low number of large-scale projects also contributed tothe decline in sales year on year. Furthermore, inter-segment sales also
declined sharply due to the merger with Hory Corporation, a consolidated
subsidiary, in January 2018.
Meanwhile, in the overseas business, we completed the strengtheningof the internal management systems at overseas group companies, mainly

16

SRG TAKAMIYAIn the previous medium-term management plan, we invested about¥10 billion and completed the transition of domestic assets for leasefrom conventional scaffolding to the next-generation scaffolding Iq
System, as originally planned. Initially, we intended to spread the useof the Iq System in the rental business and to accelerate sales at thesame time, while offsetting the burden of depreciation through sales of
the used conventional scaffolding. However, the business results were
unsatisfactory because the next-generation scaffolding did not penetrate
the market as expected.
The Iq System has revolutionized the industry by offering high safety
and workability, and has gained an excellent reputation among customers
through rental services. However, unlike consumer goods, scaffolding
as a product is a highly durable, long-lasting asset. Because of thosecharacteristics, customers are extremely cautious about replacing existing
assets with new ones. Also, for us as a manufacturer, this Iq System was
our first undertaking in developing and selling a new product. Our lackof experience meant that some parts of the project did not proceed asplanned. Other external factors also contributed to disappointing businessresults, such as delays in civil engineering projects. However, competitors
also faced the same tough business environment.
Although the Company announced its basic policy in May 2017 in themedium-term management plan, that did not include specific numericaltargets and strategies because of the uncertain outlook in the businessenvironment. However, in the second half of the year ended March 2018,
construction work related to civil engineering and bridges re-started, and webegan receiving an increasing number of inquiries for large orders for the
Ⅰq System. Therefore, we once again revised the medium-term management
plan, which we are now advancing. The business environment is expected
to improve over the next three years. I believe that we will have a broad
spectrum of strategy options and will be able to steadily expand ourcompetitive advantages as we have already completed investment in leased
assets and we can start to yield full-scale returns on them.

Key management indicators and investment policy
With capital efficiency in mind, we will proceed with management reforms
with an aim to restore the levels of ROE and ROA, focusing on sales,
operating income, and the operating profit margin. We also believe that theConsolidated financial highlights and targets for the Medium-term Management Plan
2018.3(Results)

2019.3(Forecasts)(¥ million)[Medium-term Management Plan]
2021.3 (Targets)

Net sales

36,11441,00050,000 (Up 38% from FY3/18)

Operating income (1)

1,690

2,500

4,000 (Up 137% from FY3/18)

4.7

6.1

Ordinary income

1,610

2,230

–

Profit attributable to owners of parent

1,252

1,333

–

Depreciation (2)

4,662

4,900

–

EBITDA (1+2)

6,353

7,400

–

Earnings per share (yen)

29.26

31.11

–

Dividend per share (yen)

11.0

11.0

Equity ratio (%)

25.0

–

34.0 (Up 9.0 percentage points from FY3/18)

ROE (%)

9.8–

14.0 (Up 4.3 percentage points from FY3/18)

ROA (%)

3.1–

6.0 (Up 3.0 percentage points from FY3/18)

Operating profit margin (%)

equity ratio can be raised to the target of 30% or more over the next three
years by accumulating retained earnings.
The Company views EBITDA as an important indicator of profitability
and expects an increase from about ¥6 billion to nearly ¥9 billion overthe next three years. Instead of investments in domestic assets for lease,which we will significantly reduce, we plan to invest proactively in new
growth businesses, such as the overseas business and the agriculturebusiness, and make capital investments to improve productivity, among
other purposes. We will change investment targets and prepare totransform the business model on the financial end as well.
For our overseas strategy, we are aiming to build a system with inhouse production capabilities at overseas bases. The first step will involve
expanding the factory in Vietnam as a measure to enhance the production
base, shifting production from South Korea where labor costs are rising.
Then, South Korea, in turn, will become a marketing base to expand therental business in South Korea and Southeast Asia. We also plan to invest
about ¥3 billion in the Philippines over the next three years, as well as
seize upon prospective M&A opportunities.
Furthermore, we are looking into a common ERP system that will
centralize management at domestic and overseas bases. In addition toinvesting in IoT and IT technologies to reduce the burden of administrative
tasks and improve production efficiency, we will also invest in humanresources, such as research and development personnel and engineers,
mainly in the agriculture business.

Further strengthening management control functions
Based on a long-term perspective, we will work to strengthen the Group’s
management control functions by way of improving productivity and workstyle reforms, which will take place simultaneously, as well as reinforcing
our corporate governance system.
We will also advance personnel system reforms that will link incentives
with performance appraisals, based on clear goal-setting. Through such
reforms, we will hire and develop personnel who are future oriented andindependent, regardless of age, gender, nationality, or other attributes.
To move ahead with these initiatives, we have already begun to leverage
more potential from our female employees and overseas personnel. We
also intend to continue improving our approach to corporate governance

8.0 (Up 3.3 percentage points from FY 3/18)–

in anticipation of global-scale growth and to reach new heights as acorporate group.
The next three years will become a major turning point
We cannot create new value just by making changes based on the past.
Transformation, which constitutes the core of our vision in the new
medium-term management plan, indicates an orientation toward thefuture. First, we picture an ideal outcome, which we then break down into
concrete strategies and goals to achieve, including promoting financial
strategies, improving productivity, and implementing work-style reform.
I am confident that by adopting these principles, we can transform theCompany dramatically.
It may be difficult for the entire company to completely transform in
the next three years in a uniform manner. However, a key signal of thetransformation will be when we change our corporate name to mark theCompany’s 50th anniversary in 2019. Our task is clear: to make every effort
so that the Group’s employees understand the significance of the groupwide transformation and feel the coming of change.
In order for a company to thrive over the long term, it must navigate
through and around the hazards it encounters over time that represent
the need for drastic change. We will make the next three years a periodof positive transformation in all the ways possible, so that when we lookback at this period decades from now, we will be able to say that this wasindeed a key turning point.
We would like to thank you, our shareholders and investors, for yourcontinued support. We hope to surpass your expectations as the Company
transforms to achieve sustainable growth.
July 2018

Hideki Yasuda
Director and Managing Executive Officer
Division General Manager of Business Management Division

Annual Report 201817

Strategies by Business Segments

Rental Business

Competitive
advantages
The rental business was establishedearly in our history. Currently, thebusiness covers a variety of construction
sites, such as underground, ultra-highrise buildings, highways, bridges, andsites implementing natural disastercountermeasures. In cooperation with
the Construction Department and ourGroup companies, we have developeda system to provide a one-stop service,
available throughout Japan, in which we
do everything from planning, creating
blueprints, making arrangements forequipment and materials of temporary
construction projects, and through to the
execution of construction projects andsafety control.
Most of our leading lease equipment
and materials are manufactured in-house,
including scaffolding for construction
sites, keeping procurement costs low.
Developing products such as the
Ⅰq System, that are not only safe but also
light and versatile, makes this possible.
Due to these efforts, we support worksites
by reducing management costs.

Net sales and operating income (¥ million)
30,00020,00010,0006,000

20,513

2,711

22,213

21,382

4,000

2,000
2,267
1,705

0

0
2016.32017.32018.3

Net sales (left scale)Operating income (right scale)*Net sales and operating income include inter-segment sales
or transfer.

18

SRG TAKAMIYA

Enhancing profitability by improving
operating rates and by establishingframeworks for growth
We provide rental services for light-duty temporary equipment and materials
for all types of construction sites, such as building sites, bridges, ultra-highrise building renovation, tunnels and underground construction. Our strength
is the ability to accurately respond to a variety of needs by combining ourrental services with our Group’s capabilities, which include developing andmanufacturing products, construction, and design. We also ensure quality controlof equipment and materials, thereby contributing to creating safe and efficient
worksites.
In order to keep up with the brisk demand for domestic construction, we arethoroughly improving efficiency and establishing measures for further growth toenhance profitability.

Results for the year ended March 31, 2018
In the rental segment, net sales decreased to ¥21,382 million (down 3.7% year on year), while
operating income fell to ¥1,705 million (down 24.8%).
The number of orders received decreased in the Kansai area due to delays in large-scale
projects while remaining solid in the Chubu area. The percentage of sales in the Kanto area isslowly rising, mainly due to the demand being generated by the upcoming Tokyo 2020 Olympic
and Paralympic Games and restoration projects for aging infrastructure.
In temporary materials for civil engineering and bridge construction, shipments of materials
for received project orders had stalled due to a slowdown in construction and delays in the startof construction projects. During the second half of the fiscal year, the shipping volume of overalltemporary equipment and materials finally exceeded the previous year’s level, but the increase
was not large enough to compensate for the decline in shipments during the first half of the
fiscal year. As a result, the overall operating rate of assets for lease dipped to a record low of
45.1%, compared to approximately 50% in the previous fiscal year. An increase in depreciation
and amortization costs due to active efforts to increase temporary equipment and materials as
part of the former medium-term management plan also contributed to the decline in profits.
Collaboration with the Health and Safety Partner Association, our nationwide network ofscaffolding companies, successfully allowed us to leverage the safety and the workability of
temporary equipment and materials and propose added value services that included setting up
of scaffolding. Due to these efforts, the operating rates of the next-generation scaffolding
Ⅰq System remained high, especially in private-sector building construction.

Acquiring strong demand and accelerating the industry standardizationof next-generation scaffolding
Stalled shipments on equipment and materials negatively impacted operating rates in theprevious year. In the fiscal year ending March 2019, shipments for previously ordered projects incivil engineering and bridge construction-related projects have begun, and operating rates in thisarea are expected to improve significantly.
As investments in construction are expected to begin in earnest, especially in the Tokyo
metropolitan area, we anticipate further growth in demand for the next-generation scaffolding
Ⅰq System. As an increasing number of competitors are entering the market for next-generation
scaffolding, we see the trend as advantageous for us. Because we have already completed
replacing our assets for lease with theⅠq System ahead of our competitors, we will be able
to meet the strong demand for next-generation scaffolding. As the number of projects inwhich customers specify next-generation scaffolding steadily increases, we plan to enhance
profitability while making adjustments toward offering reasonable prices.

Message from the Officer in Charge

Driving transformation through human resource development
and qualitative growth in the rental business

Tsutomu Abe
Director and Executive Officer
Division General Manager of Sales & Marketing Division
General Manager of Rental Department

The rental business recorded declines in net sales and profits for the fiscal
year ended March 31, 2018. We must take to heart these disappointing results
and move forward with making improvements. Lower profit margins indicatethat there are still obstacles in attaining efficiency in asset management andimproving productivity, the latter of which is an especially important challenge
for the Group. Additionally, after the merger with our regional subsidiaries,
reestablishing local operating structures required more time than we had
anticipated, which also affected sales and profits. With an aim to resolve theseissues, we launched the new medium-term management plan. Under the plan,
we have set two major objectives for the rental business: attaining qualitative
growth and contributing to the growth of the Group.
As we have completed investments for asset renewal and have entered thephase where we yield returns from investments, additional investments in assets
will be limited. In order to efficiently create profits using assets we currently
own, controls that reach beyond the sales and marketing domains are required.
Those controls include overseeing the operation of equipment and materials,

such as the reduction of the downtime between when equipment and materials
are returned and the next delivery and optimizing allocation of equipment
and materials according to regions or project types. In the meantime, we areleveraging technologies and product appeal from our conventional sales styles,
as well as making use of those technical capabilities and improving our proposal
processes to make the Company more attractive to clients. The rental businesshas more personnel compared with other business segments, and is therefore
more responsible for making profits, which is foundational to the growth of theGroup.
As I serve in a position that oversees sales activities, I am aware that my
mission is to work in high-level coordination with the sales business and theConstruction Department and to also work closely with other departments
as a Director to achieve a high degree of growth in the rental business. We
will drive transformation, which is the company’s vision in the new mediumterm management plan, through human resource development and achieving
qualitative growth in the rental business.

In the civil engineering and bridge construction area, the operating rates of equipment
and materials are expected to improve due to the launch of previously delayed construction
projects for the Hokuriku Shinkansen Line and infrastructure repair projects. Owing to those
improvements, we expect to easily achieve an operating rate of 50% or higher with the assets
for lease currently owned alone during the Medium-term Management Plan period. We aim tofurther enhance operating rates and profitability by making significant changes to frameworks
through promoting the use of IT and AI technologies to improve efficiency in the medium tolong term.
Additionally, we will capture the strong demand through proposal-based rental services, inwhich we make suggestions to customers about what equipment and materials are suitable forwhich worksites, choosing from our wide range of products.

Key strategies（％）

Further improving
the operating rates
of equipment
45.1
and materials

51.3

55.5

Net sales

55.7+¥5,818 million(+27.2%)¥27,200 million
Utilizing
AI and IT

Operationalizing
unused inventories

2018.3(Result)

Numerical targets under the 2018
Medium-term Management Plan

2019.3(Target)2020.3(Target)2021.3(Target)¥21,382 million

2018.3(Result)

2021.3(Target)Annual Report 201819

Strategies by Business Segments

Honing our strengths as a manufacturer
and promoting the development ofhigh-value-added products

Sales Business

Competitive
advantages
We, as a rental company with
manufacturing capabilities, have uniquecompetitive advantages in the industry inwhich manufacturers often provide rental
services. One of our advantages is that
we are able to listen to customers directly
about their many different needs andmake use of this information to improve ordevelop products. Another of our strengths
is that we are able to promote our newly
developed products through rental
services and set-up services, contributing
to the expansion of sales. Furthermore,
our rental segment purchases a certain
amount of those manufactured products
as assets for lease. This leads to stableproduction, giving us a competitive edgein terms of cost as well.
In addition to developing, manufacturing
and sales of original products thatleverage our metal processing expertise,
we sell highly profitable merchandise,including depreciated assets for leasethat we own, as well as used products.

By utilizing the metal processing technologies and expertise in scaffoldingthat we have cultivated, we are able to cover a broad range of operations inour business, including the development, manufacturing and sales of original
products, such as the next-generation scaffoldingⅠq System and other light-duty
temporary equipment and materials. We also provide clamps, as well as seismic
dampers, solar panel frames, and agricultural greenhouses.
Development and manufacturing capabilities are at the core of the services
and strengths that our Group provides, enabling us to meet a variety of needs inworksites and create new value.

Results for the year ended March 31, 2018
Net sales in the sales segment decreased to ¥12,449 million (down 24.5% year on year). The
decline was partially due to the absorption merger with Hory Corporation in January 2018.
Because of the merger, inter-segment sales fell 54.9%, while sales from external customers
dropped 14.9%. Along with the decline in net sales, operating income also decreased to ¥1,192
million (down 49.4%).
In the construction-related area, there were many inquiries from customers for the nextgeneration scaffolding Iq System and we proactively proposed solutions to meet a variety ofclients’ needs. Due to such efforts, the total area in which Ⅰq System was used increased to4.55 million m2 (up 24.7%), and the market share of theⅠq System is now approximately 5.5%*.
However, despite an increase in the number of companies selling the system, we were unable
to achieve our target due to a lack of large-scale projects and rush demand near the end of the
fiscal year.
In the environment-related area, sales of solar panel frames were unexpectedly robust. On
the other hand, in the agriculture business, despite increases in inquiries and orders received,
we failed to achieve our target as they did not sufficiently contribute to performance. Net sales
from sales of used products increased compared to the previous fiscal year, but the grossmargin ratio declined due to a decrease in sales of depreciated assets.
*The ratio was determined using the total area using Iq System (4.55 million m2) against the total area of
conventional scaffolding (scaffolding frames) (82.1 million m2). Calculated by SRG TAKAMIYA in accordancewith the “Survey on Construction-related Businesses” (Ministry of Land, Infrastructure, Transport and Tourism,
March 2018).

Strengthening our unique competitive advantages as a manufacturer
Net sales and operating income (¥ million)
20,0004,000
15,865

16,48912,44910,000

2,000

2,357
1,531
1,192

0

0
2016.32017.32018.3

Net sales (left scale)Operating income (right scale)*Net sales and operating income include inter-segment sales
or transfer.

20

SRG TAKAMIYAAs the transition to next-generation scaffolding progresses in the industry, we will promote moredetailed proposal-based marketing for temporary equipment and materials and aim to expand
the sales of theⅠq System. We will also continue to enhance sales of our strategic products,
Spider Panel, an advanced system of hanging-type scaffolding, and Lift Climber, a mast climbing
work platform.
For environment-related areas, we plan to promote product development for the agriculturebusiness and to accelerate its growth as a stable key earnings driver, also with an eye towards
partnerships and mergers and acquisitions to acquire expertise and human resources.
Additionally, we will continue to develop and provide high-added-value products, such as
structural equipment products, including the seismic dampers WUTEC-SF and Oct-brace.
We also plan to restructure production items at each plant in Japan and overseas andestablish manufacturing and procurement systems that focus on cost reductions. We will
cultivate the merged Hory Corporation’s technological and development capabilities and hone
our unique strength of providing both rental and sales services.

Message from the Officer in Charge

Aiming to make theⅠq System the de facto standard
in the next-generation scaffolding market

Hidehiko Yamashita
Executive Officer
General Manager of Sales Department
Sales & Marketing Division

TheⅠq System has been the growth driver for the sales business. Sales of the
Ⅰq System for the fiscal year ended March 31, 2018 totaled approximately¥1.9 billion, which was lower than the previous fiscal year. This, however, wasbecause of a large project that we received during the fourth quarter of thepreceding fiscal year. If this factor was excluded, sales of theⅠq System havebeen on the rise. One of the goals set in the new medium-term managementcompetition between next-generation scaffolding products and have created abusiness environment to further promote this innovation industry-wide.
We have great advantages over other companies as we have alreadybeen promoting the use of next-generation scaffolding through the rental
business ahead of our competitors, as well as having over 200 clients buying
theⅠq System. In addition, the operating rate of theⅠq System we own hasplan is to achieve three-year total sales of approximately ¥11 billion, nearly twice
as much as the cumulative sales for the past four years. However, the businessenvironment is projected to be significantly different.
When we launched theⅠq System into the market, our clients would ask
why they have to purchase new scaffolding with new specifications when they
already have depreciated assets. Under those challenging circumstances, wehave continued to hold theⅠq System as assets for lease, allowing our clients toexperience 190-cm-tall scaffolding. As a result, next-generation scaffolding has
finally been recognized and accepted in the industry and the term “next-generation
scaffolding” has started to be widely used by our competitors. Although we see
this as a threat to us, we also believe that we have set the stage for positive

significantly exceeded the operating rate of conventional scaffolding and weeven recognize a shortage in the number ofⅠq Systems. In other words, our caseserves as an example for other rental companies which will be investing in asset
replacements.
Our expertise in maintenance, use and storage of scaffolding is our best
sales tool, which only the leading company in the industry can attain. Throughcooperation with our rental business, which includes mainstay scaffolding
construction, we can choose original sales strategies unavailable to any othercompanies. By leveraging these advantages, we will aim to make theⅠq System
the de facto standard in the next-generation scaffolding market.

Key strategies

Gaining market share in
next-generation scaffolding
2018.3(Result)

16
million m2

Total area ofnext-generation
scaffolding
2021.3(Forecast)

Ⅰq System
sales target

30
million m2*

Ⅰq System: Next-generation
scaffolding

Numerical targets under the 2018
Medium-term Management Plan
Net sales+¥3,251 million

Increase by
14 million m2
in three years**Source: SRG TAKAMIYA(+26.1%)¥15,700 million¥12,449 million

Aiming to acquire 20% of the increase
Cumulative three-year total: 2.8 million m2(Cumulative total sales: Approx. ¥11 billion)
2018.3(Result)

2021.3(Target)Annual Report 201821

Strategies by Business Segments

Overseas Business

Overseas business shifts into high gear
as a long-term growth driver
In order to make the overseas business a next generation growth driver, we havebeen proactively expanding our global operations while continuing to invest in
improving and expanding our facilities aiming at further growth. We are looking
to strengthen the earnings structure for both the rental and sales businesses
through organic cooperation between the production base in Vietnam, themarketing base for rental services in the Philippines, and the manufacturing andmarketing base in South Korea.

Competitive
advantages
One of the features of our overseas
business is that each subsidiary operates
its business mainly through transactions
with local construction companies. In
South Korea, Hory Korea manufacturesand sells temporary equipment andmaterials, as well as solar panel frames. In
the Philippines, DIMENSION-ALL leases
support system to major local construction
companies for building construction
and civil engineering projects. The
production base in Vietnam has adopted
Japan’s manufacturing techniques andthe latest equipment, and it is achieving
price competitiveness by manufacturing
products that meet local demand in orderto reduce costs. We are proactively
promoting overseas operations while
making use of each location’s strengths
and also reinforcing people-to-people
exchanges and cooperation between
businesses.

Net sales and operating income (¥ million)
5,832

6,000

600

4,806
4,198

4,000

2,000

179

300

149

0

-189
0

-300
2016.32017.32018.3

Net sales (left scale)Operating income (right scale)*Net sales and operating income include inter-segment sales
or transfer.

22

SRG TAKAMIYA

Results for the year ended March 31, 2018
In the overseas segment, net sales increased to ¥5,832 million (up 38.9% year on year), while
operating income totaled ¥149 million, recovering from the previous year’s operating loss. The
overseas sales ratio was 14.7%.
The Philippines subsidiary DIMENSION-ALL INC., and the South Korea subsidiary Hory Korea
Co., Ltd., have completed reinforcing the foundation of internal control systems for sales andinventory management, which had been a challenge for both companies. Due to the subsequent
proactive sales activities, operating rates continued to improve. Especially in the Philippines,
mainly in Manila and its vicinity, the brisk demand for construction has led to an increase both insales and rental businesses. In South Korea, demand for solar-related products remained solid,
and net sales for DIMENSION-ALL increased, contributing to the growth in the rental businessfor temporary equipment and materials.
The performance of HORY VIETNAM Co., Ltd., which continues to be reinforced as a
production base, exceeded the previous year’s level due to increased shipments of aluminumproducts (AL-SPEEDER, aluminum stairs, aluminum step stools) and clamps.

Meeting brisk demand in the ASEAN region and aiming for high rates
of growth
In order to ensure that the overseas business becomes a growth business after the Tokyo 2020
Olympic and Paralympic Games, we have been working to establish supply systems overseas,
especially in ASEAN nations. Expansion projects are under way to consolidate overseas
production bases in Vietnam. Additionally, we will add new equipment and materials centers in
Vietnam and the Philippines, and also increase the number of overseas bases as necessary tocapture the brisk demand in Southeast Asia.
In the Philippines, we have seen a constant increase in inquiries about temporary equipment
and materials. DIMENSION-ALL purchases equipment and materials for lease from South Korea
and civil engineering materials from Japan, steadily accumulating assets available for lease. We
will continue to proactively invest in order to establish systems that can meet the brisk demand.
Under the leadership of the Overseas Business Department, we have been promoting
people-to-people exchanges between overseas locations. By reinforcing cooperation between
overseas bases in South Korea, the Philippines and Vietnam, we are refining systems to allow
each of our overseas subsidiaries to independently operate businesses while pursuing efficiency.
Additionally, we have our sights set on alliances with major local companies and will proactively
pursue M&A opportunities in order to further expand into business domains surrounding ourexisting businesses, as well as to enhance our Group’s capabilities.

Message from the Officer in Charge

Ensuring the building of a foundation for global expansion
with a key turning point in sight to play a central role in
the growth of the Group
Yuki Mukaiyama
Director and Executive Officer
Division General Manager of Business Development Division

The overseas business segment showed a loss for the fiscal year ended March
31, 2017. Despite these unsatisfactory results, our basic mindset calls forforward-looking management at all times. We decided that in order to playa central role in the growth of our Group in 2020 and onward, we must makereforms to the management control structure in our overseas business segment
and build a solid foundation, even if this meant that we have to stall temporarily

financial resources. I believe that we are beginning to see concrete results fromthose initiatives.
Furthermore, our pausing to reflect about the issue allowed us to see various
events, which had been seen as individual “dots,” as clearly forming connected“lines.” We will work to make a “surface” with those “lines” over the next few
years, an undertaking that we believe will become an important turning point forour sales activities to do so. As a result, we successfully returned to profitability
for the fiscal year ended March 31, 2018.
Our overseas business operates mainly in South Korea, Vietnam, and thePhilippines, where we already have subsidiaries. When we see Southeast Asia
as one market, we must consider which combinations of bases will increase
profitability and operational efficiency. Some of the criteria that we have taken
into account include each subsidiary’s features, regional characteristics andmarket environment, as well as how best to allocate human, material andour business, enabling us to take on a central role in the growth of the Group.
Under the new medium-term management plan, we will commit to achieving
a 50.9 % increase in sales in three years, which is the highest target among
all the segments in the Group. The Asian economy is still strong, with specificeconomic policies and infrastructure investment projects on the horizon. We will
seize this opportunity to establish a solid foundation for “Takamiya” to expand
globally.

Roles and strategies of key locations
Hory Korea Co., Ltd.

Marketing Manufacturing

Korea

Hory Korea Co., Ltd.

Vietnam•Expand the rental business for temporary
equipment and materials•Work toward achieving the widespread use ofnext-generation scaffolding•Manufacture and sell solar panel frames

HORY VIETNAM Co., Ltd.

HORY VIETNAM Co., Ltd.
Philippines

DIMENSION-ALL INC.

Manufacturing

Numerical targets under the 2018
Medium-term Management Plan
Net sales•Mother plant for products for Southeast Asia markets•Shift production of aluminum products into high gear
•Increase the floor of the plant to meet increasing
demandDIMENSION-ALL INC.

+¥2,968 million（＋50.9%)¥8,800 million
Marketing¥5,832 million•Sell and lease framework and support systemfor construction for local construction companies•Establish a new equipment and materials center2018.3(Result)

2021.3(Target)Annual Report 201823

Management Foundation that Supports Our Value

Response to ESG Issues
and Value Creation
These days, the social expectations and responsibilities required of companies are increasing more than ever before. They
include contributing to resolving environmental and other social issues and reinforcement of the corporate governancesystem to support sustainable growth.
We were introducing the theme of safety, environment, and workability to our business before corporate ESG initiatives
were prioritized. It is our belief that scaffolding must not only ensure the safety of workers at construction sites andincrease workability but also be designed with consideration for the surrounding environment. What lies at the basis of ourbusiness is love, as stated in our mission statement, and it serves as our driving force from the perspective of work-stylereform and diversity.
We are now expanding our business domains to overseas operations and supplying agricultural materials. Through these
efforts, we aim to create corporate value while living in harmony with society.

Contribute to reducing our environmental impact by• Providing environmentally friendly products and services• Taking advantage of clean energy

Co-create social value by• Reducing our environmental impact
at manufacturing sites

Case study 1• Promoting environmental awarenessin the officeCase study 2• Contributing to the improvement of social infrastructure• Contributing to disaster prevention

Case study 6• Helping to resolve Japan's declining birthrate,
aging population and labor shortage Case study 7• Providing high-quality and safe products• Strengthening business alliances• Undertaking research and development

Environment

SocialGovernance
Governance to enhancetrust from society by• Continually improving ourcorporate governance•Promoting work- style reform

Case study 3• Promoting diversity

Case studies 3 and 5• Strengthening compliance• Improving work environments Case study 4• Managing risk
• Improving quality and safety• Hiring, developing andleveraging human resources• Raising customer satisfaction• Implementing life-plan support• Holding dialogues with stakeholders
See P. 28–31 Corporate governance

24

Maintain and strengthen managementfoundation supporting sustainablevalue creation by

SRG TAKAMIYA

Case study 5

Case study 1

Reducing our environmental impact at manufacturing sites➡Using LED lighting in plants
We use LED lighting, which generates
very little heat and contains no hazardous
substances, at our plants inside andoutside Japan to reduce CO2 emissions
and reduce environmental impact bylowering energy consumption. In addition,
as LED lighting does not attract insects,
we also expect a positive effect onhygiene control.
Plant using LED lighting (Hory Korea)

Case study 2

Promoting environmental awareness in the office➡Reducing paper usage
We have been promoting the reduction of paper usage by using
electronic documents at Board of Directors Meetings and othermeetings. This effort contributes to minimizing our environmental
impact and reduces printing costs, as well as saving time and laborin terms of distributing and collecting documents. Furthermore,
electronic documents are easy to search and access, improving thework environment.
Tablets are used at
Board of Directors Meetings

Case study 3

Promoting work-style reform and diversity➡Promoting the work-at-home system
Generally, it is not unusual that qualified and experienced employees have to give up their career in
a company or go on leave due to childcare, nursing care, or similar circumstances. Our management
team aims to create an environment where employees can play an active role, so the Company
introduced a work-at-home system targeting employees in the Building Estimation Section in April
2018. Under this system, employees can maintain their careers while working at home, meaning
they can easily return to their on-site jobs. This way of working is beneficial to both employees andthe Company: employees can continue their career and the Company can maintain its valuable
workforce.

Working at home by taking advantage of expertise

Annual Report 201825

Management Foundation that Supports Our Value

Case study 4

Improving work environments➡Providing address-free seating and café booths
We have a variety of address-free seating such as café-style areas and project booths in addition todesk areas. Our office environment is designed so employees can work in many different styles,
such as rehearsing for presentations and attending meetings with a beverage.

Colorful office furniture is used. Layouts are changed occasionally.

Case study 5

Developing human resources / Promoting diversity➡Training program in Japan for employees of overseas subsidiaries
We provide the employees of DIMENSION-ALL INC., a subsidiary in the Philippines, with training
at our equipment and materials centers in Japan to promote the inheritance of technical know-how.
At the end of three months’ training, participants can acquire nearly the same level of technologicalcapability as our Japanese employees. We gave awards to employees in the training program toraise the motivation of subsequent participants.
We plan to implement a training program which will continue for about a year starting from thefiscal year ending March 2019. The goal will be to promote personnel exchanges between groupcompanies, develop global human resources, and improve technical skills.
Case study 6

Contributing to disaster prevention➡Developing products to prevent disasters
In Japan, which is known as a country prone to natural disasters, landslides and flooding resulting
from earthquakes and heavy rain frequently cause tremendous damage. In July 2018, heavy rains inwestern Japan claimed many victims. When disasters like these strike, our products play an activerole in many different situations to save lives.
Tiger Dam: Water bags that can be used in place ofsandbags

26

SRG TAKAMIYAYT Lock System: Scaffolding system used for landslide
prevention work

Case study 7

Helping to resolve Japan’s declining birthrate, aging population and labor shortage➡Developing highly efficient products
Japan’s labor shortage due to its declining birthrate and aging population will become a major
challenge for the nation’s domestic industries in the future. We have contributed to productivity
enhancement at worksites by developing and commercializing solutions such as robots, AI, and
RPA to efficiently carry out tasks in place of humans.
Construction industry
Aging infrastructure across Japan urgently needs maintenance and rebuilding. In thesecircumstances, the labor shortage in the construction industry may affect everyone in the country.
We have created various products, including the next-generation scaffoldingⅠq System, with theaim of providing a work environment where construction workers can work efficiently and safely. In
addition, temporary equipment and materials, including scaffolding, are lightweight and only needa small storage area by design. As these products can be transported by fewer trucks than before,
we also contribute to coping with a growing driver shortage.

190cm

170cm

Ⅰq System: Next-generation scaffolding

Lift Climber: Mast-climbing work platform

Agricultural industry
In the agricultural sector, it is increasingly apparent that there is a shortage of farmers. Because
the problem is recognized as a major challenge from the perspective of food self-sufficiency,
Japan’s national government and local governments have been implementing assistance policies.
To address this challenge ourselves, we have started and been actively promoting a business todevelop, manufacture and construct agricultural greenhouses. These greenhouses feature highceilings and climate control to improve productivity and crop yields per unit area. In addition, while
software technology is advancing rapidly, there are not enough suppliers that provide low-priced
greenhouses with excellent structural designs in this sector. We will strive to help solve these
problems and contribute to productivity improvements in the agricultural sector by capitalizing
on our technologies and expertise, cultivated through developing and manufacturing temporary
equipment and building materials.

G-Castle series: Weather-resistant steel-framed greenhouses

Setting up of an agricultural greenhouse

Annual Report 201827

Management Foundation that Supports Our Value: Corporate Governance

Basic policy on corporate governance
The Group believes that ensuring full compliance, guaranteeing operational transparency andefficiency, and maximizing its corporate value for shareholders and other stakeholders are all central
to corporate governance.

Overview of Corporate Governance System
Organization

Company with a Board of Corporate Auditors

Chairman of the Board

President and Chairman, Kazumasa Takamiya

Number of Board Members

Ten, including two Outside Directors

Number of Corporate Auditors

Three, including two Outside Corporate Auditors

Board of Directors Meetings
in the FY Mar. 2018

Held: Regularly 12 times, extraordinary five times, written resolutions three times
Director attendance rate: 97.7%, Corporate Auditor attendance rate: 90.1%

Board of Corporate Auditors
Meetings in the FY Mar. 2018

Held: Regularly 12 times, extraordinary once
Corporate Auditor attendance rate: 94.8%

Main Meetings Attended by
Corporate Auditors

Board of Directors Meetings, Management Meetings

Appointment of Independent
Directors

Two Outside Directors and two Outside Corporate Auditors

Accounting auditor

Ernst & Young ShinNihon LLC

Corporate Governance System
Management & decision-making
Board ofDirectors

Appointments and dismissals

Instruction

Representative
Directors

ReportCooperation

Board of Corporate
Auditors

Appointments and dismissals

Business
Division

Accounting audit

AffiliatedSubsidiaries

Cooperation

Cooperation

Audit

Cooperation
Appointments and dismissals

Accounting
AuditorOversight

Internal auditing

Oversight

Internal Audit
OfficeSelection, dismissal, supervision
Report

Audit

General meeting of shareholders

Directors
Outside Directors
Independent Directors andIndependent Corporate Auditors

Business execution

Assessing effectiveness of the Board of Directors and the Board of Corporate Auditors
At every Board of Directors meeting, the Outside Directors and Outside Corporate Auditors supervise and assess the Board of
Directors’ performance of duties by expressing opinions and remarks informed by their objective positions.
Going forward, we will consider analyzing and assessing the effectiveness of the Board of Directors as well.

Succession plan
Currently, the Board of Directors does not supervise any succession planning. However, we acknowledge that succession
planning is a key issue for management, and therefore we have been training candidates from among our management
personnel (Directors and Executive Officers). We will prepare to appoint the most suitable successor for top positions, including
the Directors and Executive Officers, through constructive discussions on management philosophy and specific management
strategies at the Board of Directors meetings and other meetings.
28

SRG TAKAMIYA

Appointment of Outside Directors and Outside Corporate Auditors
We appoint Outside Directors and Outside Corporate Auditors. Each outside member carries out objective and neutral auditing
and monitoring of Directors’ business execution from their respective positions, thus ensuring satisfactory corporate governance.
We have no specific standards or policies for appointment of Outside Directors and Outside Corporate Auditors in place at the
moment. However, when appointing them, we consider their careers and relationship to the Company and ensure that they canbe fully independent from the executive management of the Company and effectively fulfill their roles.
We regularly receive reports from the Corporate Auditors and the manager of the Internal Audit Office and make comments
as needed to strengthen cooperation with them.
Reason for appointing Outside Directors
Kouji Shimokawa (Independent Director)

We have appointed Mr. Shimokawa as an Outside Director in the expectation that
Representative Partner of
the Company can use his knowledge and experience cultivated in management
Shimokawa & Partners Accounting Corporationaccounting as a qualified tax accountant.
Director of GLOBAL CORPORATE CONSULTING, INC.

Noboru Furuichi (Independent Director)

With his experience as a financial advisor at a securities firm and his excellent decision
making skills in business, Mr. Furuichi is capable to fulfilling the role as an Independent
Director in an adequate manner using his knowledge and experience.

Reason for appointing Outside Corporate Auditors
We have appointed Mr. Sakatani as an Outside Corporate Auditor in the expectationthat he will utilize his qualifications as a certified public accountant and tax accountant
and his deep knowledge and understanding of corporate accounting, to perform his
duties appropriately as an Outside Corporate Auditor from an objective and neutral
standpoint, based on his professional insight into finance and accounting.

Yoshihiro Sakatani(Independent Corporate Auditor)
President and Representative Director ofJapan Management Consulting K.K.

Teiji Joko
(Independent Corporate Auditor)
YODOYABASHI & YAMAGAMI Legal
Professional Corporation
The Outside Auditor of G-7 HOLDINGS INC.
The Outside Auditor of Onamba Co., Ltd.

Mr. Joko , a licensed lawyer, has been appointed for the position of an Outside
Corporate Auditor as he can implement audit activities in an objective / neutral
manner with the viewpoint of compliance.

Executive remuneration
Executive remuneration = Basic remuneration + Equity-related remuneration (stock options) + Bonuses
Director remuneration is determined by their respective department’s business results to reflect each Director’s contribution inachieving targets set in the business plans. We aim to improve the long-term and sustainable growth potential of all of the Group,
as well as our corporate value, by ensuring that those assessments are in the shareholders’ best interests.
For the fiscal year ended March 31, 2018, executive remuneration for our Directors and Corporate Auditors was as follows:
Classification

Total
remuneration(¥ thousand)Total remuneration by type (¥ thousand)Basic
remuneration

Stock options

Annual bonuses

Retirement
benefits

Number of
executives
covered(persons)

Directors(excluding Outside Directors)

236,358

210,828

25,530——9

Corporate Auditors (excluding
Outside Corporate Auditors)

9,600

9,600

―

—

—

1

Outside Directors andOutside Corporate Auditors

12,235

12,235―——

4Notes: 1. With regard to the remuneration of Directors who concurrently hold an executive position at a consolidated subsidiary, executive remuneration from theconsolidated subsidiary is not included.
2. The above includes remuneration paid to a Director who resigned at the conclusion of the 49th ordinary general meeting of shareholders.
3. The above includes the remuneration paid to Teiji Jouko during his term as a temporary corporate auditor (from March 3, 2017 to June 28, 2017).

Annual Report 201829

Management Foundation that Supports Our Value: Corporate GovernanceAccounting auditor remuneration
For the fiscal year ended March 31, 2018, remuneration paid to certified public accountants and others was as follows:
Previous fiscal year

Current fiscal year

Classification

Compensation paid foraudit certification work(¥ thousand)Compensation paid for nonaudit certification work(¥ thousand)Compensation paid foraudit certification work(¥ thousand)Compensation paid for nonaudit certification work(¥ thousand)

The Company

32,000—32,000

—

—

—

—

—

32,000—32,000—Consolidated subsidiaries
Total*Our consolidated subsidiaries of Hory Korea Co., Ltd., HORY VIETNAM Co., Ltd., and DIMENSION-ALL INC., paid a total of ¥3,896 thousand as remuneration based
upon audit certification work to Ernst & Young member firms, which are members of the same network as our certified public accountants.

Communications with shareholders and investors
We endeavor to provide shareholders and investors with timely information in a transparent, fair and consistent manner. As
well as striving to disclose information in accordance with appropriate disclosure regulations, we work proactively to disclose
information that is effective in fostering a better understanding of the Company.
We aim to expand the numbers of shareholders and investors, and are attempting to increase their understanding of our businessactivities, strategies and performance through direct communications. Specifically, we hold meetings and financial results briefings
with analysts and institutional investors, as well as make our financial results briefing videos and materials available to the public. We
are also working on adding more contents to our meeting notices and improving briefings for individual investors.
Our main investor relations activities for the fiscal year ended March 31, 2018 were as follows:
For individual investors

For analysts and institutional investors

IR website•Presentations for individual investors:
four/year (total participants: 600)

•Financial results presentations: two/year(year-end, end of the second quarter)•One-on-one meetings: 81 times•https://www.srg.jp/en/ir/index.html

We hold regular presentations at the
Security Analysts Association of Japan
as well as at branches of securities
companies, with our officials as speakers.
Our IR website indicates the timing of thisdisclosure.

At our semi-annual results presentations,the President and Chairman and otherexecutives summarize our performanceand provide earnings forecasts. Materials
and videos are available on our investor
relations website.

To ensure the timeliness and fairnessof disclosure, we disclose materials on
our IR website in a timely manner. This
information includes analyst reports andhistorical data. We also provide in-depth
content to assist in a further understandingof our business and strategy.

Internal controls, compliance and risk management
For internal controls, we have developed a system in which internal checking operates between departments and clarifies thedivision of duties by establishing internal regulations and other rules. In addition, the Basic Policy for Internal Control and the Basic
Policy for Financial Reporting outline systems to ensure that the Directors comply with laws and the articles of incorporation
when conducting operations, and also to ensure proper operations of the Company.
For compliance, we have outlined the Compliance Standards and the Code of Conduct in the Compliance Manual. We haveestablished the Risk and Compliance Committee, with the General Affairs Department acting as the administrative office,to discuss specific compliance initiatives to implement internally and to identify at early stages legal issues emerging in the
Company. Through these efforts, we aim to further raise and promote compliance awareness, especially concerning legal issues.
Additionally, we seek advice and guidance as needed from our corporate lawyers regarding our daily operations and managerial
decisions.
For risk management, the Basic Rules for Risk Management stipulate the basic policy and other basic matters concerning risk
management. In addition, we have established the Risk and Compliance Committee, with the General Affairs Department acting
as the administrative office. The Committee discusses issues and measures regarding the promotion of Company-wide risk
management in order to appropriately manage and respond to the variety of risks that surround our businesses.
30

SRG TAKAMIYAMessages from the Outside Directors

The Key Challenge Is the Transformation of the Business Structure
Kouji Shimokawa
Outside Director (Independent Director)

The Company’s downward revision of its forecasts and results
for the former medium-term management plan period andthe fiscal year ended March 31, 2018 were disappointing and
not up to expected standards. According to the Company’s
analysis, the main contributing factors to these revisions was theunexpected significant changes in the business environment;
nevertheless, the Company must take these results seriously.
That said, despite the adverse conditions, the Company achievedfavorable results by proactively implementing priority measuresand investing with a long-term perspective, which I believe iscommendable. For example, it acquired the largest market sharefor next-generation scaffolding and established new foundations
for growth, including those for the overseas business andagriculture business. However, as the Company moves
forward with the new medium-term management plan, thosecommendable accomplishments must lead to concrete results.
The new medium-term management plan will test theCompany’s true strength. Transformation, the Company’s
new slogan, will involve changing everything, which cannot
be achieved through determination or momentum alone. We
need to return to the basics and to steadily overcome the many

challenges that occur in the various execution stages, including
implementing marketing strategies, developing technologies
and cultivating human resources. At the same time, from thestandpoint of corporate governance, it is necessary to aim forbusiness growth while complying with laws and systems. Moreprecautions will be required when responding to changes to thelegal system, such as work-style reform, or with new initiatives,
such as the development of the overseas business and theagriculture business.
In five to ten years, the declining birthrate and aging
population, as well as the falling population, are expected to fully
impact the economy. Coupled with the innovation of industrial
technologies such as AI and robotics, social and economic
structures will significantly change. Under such circumstances,in order to continue to achieve stable growth, the Company
must rapidly adapt to changes in the business environment andconstantly modify its business portfolio accordingly. I believe a
key challenge is the transformation of the business structure.
I hope the Company will achieve this transformation withappropriate risk management measures in place but without
fearing change, and prove its growth potential.

ESG Investment-conscious Corporate Management
Noboru Furuichi
Outside Director (Independent Director)

The Company failed to achieve the targets in the previous
medium-term management plan and for the fiscal year ended
March 31, 2018. However, despite those unsatisfactory results,
it is important to properly analyze the contributing factors andthoroughly discuss internally how best to apply those results tothe next stage. Once the new plan is set in place, the Company
should pass on that information to shareholders and investors.
The Company, which has proactively worked to disclose
information, needs to continue these efforts and strengthen thetrust of shareholders and investors. I hope that being constantly
conscious of outside stakeholders' perspectives will foster apositive alertness in the Company and increase the motivation
toward achieving its goals.
Ahead of the Tokyo Olympic and Paralympic Games in 2020,
demand for domestic construction is expected to remain strong.
It is important that the Group capture profit-earning opportunities
without fail and expand its business performance. In themeantime, with an eye towards post-Olympics opportunities, it
is essential to develop a new business infrastructure to achievesustainable growth. In the new medium-term management

plan, the Company needs to respond to the expectations ofshareholders and investors by improving profit margins, whichhave been on a downward trend, while envisioning and achieving
new growth strategies.
In the construction industry, it is likely that the domestic
market will contract due to the declining population. Under
such circumstances, in order to continue to grow sustainably,
the Company is essential to expand its overseas business.
Asian countries, in particular, have seen remarkable growth,and the Company needs to take advantage of this growth byforging alliances with local companies to pursue localization
while using its advanced technologies and expertise as strong
assets. Furthermore, corporate management that is attentive
to ESG investment will become important for medium- tolong-term growth in the future. It is important to expand thescope of business operations by further refining products
and services required in Japan and overseas, such as theCompany’s mainstay product, the highly safe Iq System, and theenvironmentally friendly rental system, as well as enhance social
credibility by reinforcing governance.

Annual Report 201831

Directors, Corporate Auditors and Executive Officers (As of June 27, 2018)

Directors

Kazumasa Takamiya

Akiyoshi Takamiya

Hideki Yasuda

Tsutomu Abe

Takashi Matsui

Representative Director,
President and Chairman
Executive Manager ofOverseas Business

Representative Director,
Executive Vice President
Executive Manager ofSales & Marketing
In charge of Environmental
Business Marketing

Director andManaging Executive Officer
Division General Manager ofBusiness Management Division

Director and Executive Officer
Division General Manager ofSales & Marketing Division
General Manager ofRental Department

Director and Executive Officer
Division General Manager ofScaffolding Management Division
General Manager ofScaffolding Purchasing Department

Sadamitsu Shimizu

Yuki Mukaiyama

Yasunori Nishioka

Kouji Shimokawa

Noboru Furuichi

Director and Executive Officer
Division General Manager ofProcurement Division andR&D Division

Director and Executive Officer
Division General Manager ofBusiness Development Division

Director and Executive Officer
Division General Manager of
Manufacturing Department

Outside Director

Outside Director

OutsideIndependent

OutsideIndependent

Corporate Auditors

Kazumasa Yamaguchi

Yoshihiro Sakatani

Teiji Joko

Corporate Auditor (full-time)

Outside Corporate Auditor

Outside Corporate Auditor

OutsideIndependent

OutsideIndependent

Note: Kouji Shimokawa and Noboru Furuichi are Outside
Directors. Yoshihiro Sakatani and Teiji Joko
are Outside Corporate Auditors. The Company
designated these four as Independent Directors
and Independent Corporate Auditors pursuant to
the regulations of the Tokyo Stock Exchange andregistered them as such at the stock exchange.

Executive Officers
Kazunori Kawakami

Shinri Ueda

Takahiro Shozaki

Koichi Nishihashi

Senior Executive Officer
Deputy Division General Manager
Sales & Marketing Division
General Manager ofScaffolding Construction Department

Executive Officer
General Manager ofScaffolding Quality Control Department

Executive Officer
General Manager ofSales & Marketing Planning
Department
Sales & Marketing Division

Executive Officer
General Manager ofGeneral Affairs Department
Business Management Division

Michio Ashida

Tomoya Tatsumi

Hidehiko Yamashita

Hideo Kato

Executive Officer
General Manager in charge of Vietnam

Executive Officer
General Manager ofFinance & Accounting Department
Business Management Division
Manager of Finance Section

Executive Officer
General Manager ofSales Department
Sales & Marketing Division

Executive Officer
Tokyo Branch General Manager
Sales & Marketing Division

Takashi Masuno

Takashi Nagumo

Mitsunori Yamato

Executive Officer
General Manager of
Manufacturing Division

Executive Officer
Deputy Division General Manager of
Product Development Division
General Manager of Planning and
Design Division

Executive Officer
Division General Manager ofScaffolding Yard Operating Department
Scaffolding Management Division32

SRG TAKAMIYA

Consolidated Six-year Summary(¥ million)
2013.32014.32015.32016.32017.32018.3

Net sales

28,11332,44334,26134,35036,76336,114

Cost of sales

19,917

22,61023,40423,05925,771

25,683

Selling, general and administrative expenses

6,590

6,781

7,758

8,307

8,561

8,740

Operating income

1,605

3,051

3,098

2,983

2,429

1,690

Ordinary income

1,553

3,006

3,325

2,731

2,337

1,610

807

1,768

2,070

2,153

1,516

1,252

Investments in assets for lease

2,850

2,381

5,577

7,227

5,447

3,757

Depreciation

3,280

3,369

3,649

4,137

4,502

4,662

EBITDA

4,886

6,421

6,747

7,120

6,932

6,353

Total assets

33,987

37,245

43,52050,091

52,76052,813

Shareholders’ equity

6,947

9,514

11,453

11,766

12,33813,190Interest-bearing debt

19,384

18,694

21,635

26,63629,28729,497

710

693

903

979

1,010

1,144

Cash flows from operating activities

1,575

2,839

(1,620)(1,081)

1,163

1,714

Cash flows from investing activities(812)(1,239)(1,563)(1,736)(1,093)(1,909)Cash flows from financing activities

(779)

(715)

2,927

2,844

879

(222)

Cash and cash equivalents at end of period

3,076

3,979

4,233

4,242

5,187

4,750

763

1,600

(3,183)(2,817)

70(195)

Earnings (EPS)

18.83

40.17

46.17

48.12

35.14

29.26

Net assets

162.04213.24253.95269.09288.97307.89Dividends

20.0

13.0

16.0

10.0

10.0

11.0

ROE

12.2

21.5

19.8

18.5

12.6

9.8

ROA

4.7

8.4

8.2

5.8

4.5

3.1

Operating profit margin

5.7

9.4

9.0

8.7

6.6

4.7

Equity ratio

20.4

25.5

26.3

23.5

23.4

25.0

D/E ratio

279.0

196.5

188.9

226.4

237.4

223.6

For the year

Profit attributable to owners of parent

At year-end

Number of employees (persons)

Cash Flows

Free cash flows
Per share data (yen)Ratios (%)

Notes: 1. Figures are rounded down to the nearest million yen (except per share information).
2. We conducted two-for-one stock splits on April 1, 2013 and January 1, 2015. Per-share information (excluding dividends) is calculated by deeming stock
splits to have occurred at the beginning of the fiscal year ended March 31, 2012. The dividend for the fiscal year ended March 31, 2015 included acommemorative dividend of ¥2.5 to commemorate the designation of our stock on the First Section of the Tokyo Stock Exchange.
3. EBITDA = operating income + depreciation
4. Return on equity = profit attributable to owners of parent / average equity
5. Return on assets = ordinary income / average total assets

Annual Report 201833

Main Products

Temporary equipment and materials

YT Lock System

V-MAX

Safety Walk

Super Light

This scaffolding can be set up
along slopes. It can also be used
as a gantry.

V-MAX is a hanging-type
scaffolding with high workability
that is used for repair work forbridges.

Safety Walk is a catwalk panel
with less gaps to preventstumbling and falling of objects.

Super Light round pipe is
25% lighter than conventional
products.

ClampsSafety Screen

Power Frame

AL-SPEEDER

This bolted fastening-type metal
fitting is an important part of
temporary equipment.

This sheet is placed on the sideof buildings being constructed toprevent objects from falling.

Power Frame is a wedge-type
support system that fits to theshape of a structure in a flexible
manner.

AL-SPEEDER can be piled up.
This aluminum, light-weightmaterial has improved workability
and it can be used for any typesof scaffolding.

Formwork (Nextech)

Building materials

Structural equipment

STENMETAL (Steel form)

Cap Ten Pile Method

WUTEC-SF

Oct-brace

This steel form has enhanced
cross-sectional performance with
its rib height of 72mm, and canalso be used with a wooden form.

This method can correspondto the large-scale grounddeformation due to an earthquake
and reduce damages to piles.

This seismic damper reduces therange of vibration of buildings up
to 80 percent.

This structural part with a seismic
damping function can be used
for buildings of any height fromhigh-rise buildings to low-rise
structures.

Environmental equipment

Agricultural materials

ECHO BARRIER

H2 System

Pipe House

Weather-Resistant Pipe House

Soundproof sheets that reducenoise by absorbing sound. This
product is used to soundproof
school and hospital facilities.

This method, in which solar
modules are supported with
H-steel piles placed in one lane,
reduces the amount of frame
materials.

The agricultural greenhouse ishighly durable against natural
disasters as it uses pipes one-size
bigger than usual ones.

This agricultural greenhouse does
not deform easily under harshconditions caused by natural
disasters.

34

SRG TAKAMIYA

Strategic Products

Next-generation scaffolding,Ⅰq System
Responding to the conditions at current construction worksites,Ⅰq System, a next-generation scaffolding, has made it possible toproduce a wider work space while enhancing the safety and workability. The Company has been promotingⅠq System both in therental and sales fields to make it become the de facto standard of the scaffolding industry.

3. Reduced operating
costs

Increasing the floor heightby 20 cm, to 190 cm,
lets workers work more
comfortably without
bending. Reducing
underfoot gaps also
improves safety.

Compared to theconventional H-frame
type, a strut type
without a fixed width
has increased versatility.
This has led to a dramatic
improvement in rental
utilization rates.

The system can be storedcompactly, with a 50%
reduction in storage
space over conventional
equipment. Another major
benefit is the 30% reductionin the number of transport
vehicles required.

190cm

2. High utilization rate

170cm

1. Outstanding safety

Mast climbing work platform, Lift Climber
Lift Climber is a mast climbing work platform, necessary forrenovation of high-rise buildings such as large-scale repair work to
condominiums. It can handle heights up to 210 meters. The work
platform moves up on two separate pillars, allowing more lighton the subject building than scaffolding, while at the same time
improving the level of security. Additionally, its design features
ensure safety for workers, and it is easy to operate on-site. The
Lift Climber is also easy to assemble, dismantle and relocate, andthe reduced setup period lowers total operational costs.

Advanced hanging-type scaffolding, Spider Panel
Spider Panel has made it possible to minimize the differencesin gaps and levels at an ultimate level in order to improve safety
and workability. Hanging-type scaffolding can be installed byhanging scaffolding with chains, which plays an important rolefor infrastructure restoration including for railways and highways
as this kind of work is expected to increase.

Weather-resistant agricultural greenhouse with steel frames, G-Castle Pro 2
G-Castle Pro 2, a high-grade agricultural greenhouse with low
costs and high weather resistance, has been designed using
our unique structural calculations. It can resist wind speed up to
50m/s and maximum snowfall of 50kg/m2. It responds to various
locations, agricultural products and customer needs.

Annual Report 201835

Corporate Information

Corporate Outline
Name
Date ofestablishment

SRG TAKAMIYA CO., LTD.
June 21, 1969

CapitalRepresentative

Headquarters

Grand Front Osaka Tower-B Bldg. 27F, 3-1,
Ofuka-cho, Kita-ku, Osaka 530-0011, Japan

Number of
employees

Stock Information
Stock data

Breakdown of Shares
by Type of Shareholders(As of March 31, 2018)

144,000,000
45,447,600
3,058

Total number of issuable shares
Total number of issued shares
Number of shareholders

Principal Shareholders(As of March 31, 2018)

Shareholders

6,725
5,503

15.70
12.85

3,511

8.20

2,244

5.24

2,197

5.13

2,109
1,678
1,579
907
888

4.92
3.92
3.69
2.12
2.07

(As of March 31, 2018)

Financial instruments firms

Individuals and others

0.59%

53.33%

254 thousand shares

Number ofPercentage
shares heldof shares(thousand shares) held (%)

Takamiya Ltd.
Tojitsu Takamiya
Japan Trustee Services Bank Ltd.
(Trust account)
Akiyoshi Takamiya
Sky Rainbow Employee Stock
Ownership Community
Kazumasa Takamiya
Toyoji Takamiya
Chikako Takamiya
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Kanamoto Co., Ltd.

¥731,090,000
Kazumasa Takamiya
Representative Director, President and Chairman
Consolidated
1,144(As of March 31, 2018)
Non-consolidated 646

22,845 thousand shares

Foreign institutions and others

3.84%

1,744 thousand shares

Financial institutions

20.18%

8,643 thousand shares

Other Japanese companies

21.83%

9,351 thousand shares*Rounded to the second decimal place.

Notes: 1. The Company holds 2,606 thousand shares of treasury stock. Treasury
stock is excluded from the above.
2. Percentage have been rounded to the second decimal place.

Notes: 1. The Company holds 2,606 thousand shares of treasury stock. Treasury
stock is excluded from the list of major shareholders and is not used in
calculating percentages of shares held.
2. Percentage have been rounded to the second decimal place.

Stock Prices and Trading Volume
Trading volume (¥ thousand)
9,000

Stock price (¥)
900

600

6,000

300

3,000

0

4

5

6

7

8

9

10

11

12

1

2

2015

3

4

5

6

7

8

9

10

11

12

1

2

3

4

2016

5

6

7

8

9

10

11

12

2017

1

2

3

0

2018

Shareholder Information
Fiscal year
Securities code
Ordinary general meeting of shareholders
Record date
Share trading unit
Transfer Agent and Registrar
for Common StockContact for Transfer Agent and Registrar

Method of public notice36

SRG TAKAMIYA

From April 1 to March 31 of the following year
2445 (the First Section of the Tokyo Stock Exchange)
June
Ordinary general meeting of shareholders: March 31 /Year-end dividend: March 31 / 2nd quarter-end dividend: September 30
100 shares
Mitsubishi UFJ Trust and Banking Corporation
Osaka Securities Agent Department, Mitsubishi UFJ Trust and Banking Corporation
3-6-3, Fushimi-cho, Chuo-ku, Osaka-shi, Osaka 541-8502, Japan
TEL: 0120-094-777 (toll-free)
By electronic notification on SRG TAKAMIYA’s website: http://www.srg.jp/
However, if electronic notification is not possible due to an accident or other unavoidable
circumstances, notice will be published in the Nihon Keizai Shimbun newspaper.

Group Network
Rental Business

Nextech Co., Ltd.

AOMORI ATOM Co., Ltd.

Grand Front Osaka Tower-B Bldg. 27F, 3-1,
Ofuka-cho, Kita-ku, Osaka 530-0011, Japan
TEL: +81-6-6375-7200
FAX: +81-6-6375-7227

35-135 Yakiyamakawame, Odanozawa, Higashidori Village,
Shimokita-gun, Aomori Prefecture 039-4223, Japan
TEL: +81-175-45-7750
FAX: +81-175-45-7751

IWATA Co., Ltd.
523-2 Shironodan, Tsukatsuki, Momoyama-cho, Kinokawa City,
Wakayama Prefecture 649-0611, Japan
TEL: +81-736-66-3450
FAX: +81-736-66-3451

HIRAMATSU Co., Ltd.
4342-9 Sumiyoshi, Yoshida-cho, Haibara-gun,Shizuoka Prefecture 421-0421, Japan
TEL: +81-548-74-0700
FAX: +81-548-74-0701

ECO-TRY Co., Ltd.

Overseas Business4388-1 Yatabe, Tsukuba City, Ibaragi Prefecture305-0861, Japan
TEL: +81-29-836-7530
FAX: +81-29-838-2556

DIMENSION-ALL INC.
Unit 906, One Corporate Center, Meralco Avenue corner,
Julia Vargas Avenue Ortigas Center,
Pasig City, 1605 Metro Manila, Philippines
TEL: +63-2-997-4001

Cadian Co., Ltd.
Onward Park Build. 12F, 3-10-5, Nihonbashi,
Chuo-ku, Tokyo 103-0027, Japan
TEL: +81-3-3276-3917
FAX: +81-3-3276-3918

Hory Korea Co., Ltd.
277-5 Myeongdong-ri, Hallim-myeon, Gimhae-si,
Gyeongsangnam-do, Korea
TEL: +82-55-342-5651
FAX: +82-55-342-5654

TOTAL TOSHISEIBI Co., Ltd.
Onward Park Build. 11F, 3-10-5, Nihonbashi,
Chuo-ku, Tokyo 103-0027, Japan
TEL: +81-3-3276-3930
FAX: +81-3-3276-3931

HORY VIETNAM Co., Ltd.
Road D4-1, Long Duc Industrial Park, Long Duc Ward,Long Thanh District, Dong Nai Province, Vietnam
TEL: +84-61-368-1211
FAX: +84-61-368-1199

Nakaya Kizai Co., Ltd.
2-13 Yomeshima-cho, Matsue City,
Shimane Prefecture 690-0047, Japan
TEL: +81-852-28-8201
FAX: +81-852-28-8222

Overview of the Group

Sales

Sales

DIMENSION-ALL

Sales, rental and construction

Sales
Sales

Purchase

SRG TAKAMIYA

Request fortransportation

HIRAMATSU

Transportation

Request fortransportation

Design and drawing

CadianDesign anddrawing
Order for designand drawing

Sales

IWATA, AOMORI ATOM,TOTAL TOSHISEIBI,
Nextech, Nakaya Kizai

Rental andprocessing
Rental and processing
Design and drawing

Annual Report 2018

Rental Business

Order for design and drawing

Sales Business

Sales

Customers (construction companies, housing manufacturers,
agricultural corporations, etc.)

Suppliers (material manufacturers, temporary equipment
and materials manufacturers, trading companies, etc.)

Hory Korea
HORY VIETNAM

Overseas Business

Sales, rental and construction
Purchase

37

SRG TAKAMIYA CO., LTD.
Grand Front Osaka Tower-B Bldg. 27F, 3-1, Ofuka-cho, Kita-ku, Osaka 530-0011, Japan
T. +81-6-6375-3900

Printed in Japan