Asahi Industries
Group Report
2018The Earth is moving.
As a hi Industr ies iscre a ting t om or r ow, again to d a y .

1What we are working towards.
The realization of a plentiful society that organicallyties the past to the present and the present to the
future through resource recycling.

Our role in that society is to be a driver sitting at
the center of that cycle, using our technical expertiseto seek out, utilize and restore resources so that
Earth's wealth becomes the riches of tomorrow.

The steel and agriculture sectors that we work inare paving the way for a new future for society.
The Earth is moving, and a new tomorrow is coming.
We will continue to be a company that is always at
the forefront of creating new possibilities for resources.

2

INDEXManagement Principles
Being honest, fair, and respected by all, both now and forgenerations to comeContinuing to provide products and services of high quality

Management
Principles

and value while contributing to the global environment

4

The Asahi Industries Story

6

Medium-term Management Plan,
Financial Results for FY*20177Medium-term Management PlanCSR Guidelines(FY2016-2018)
Financial Results for FY2017

Focusing on appreciating and contributing to
the community

Environmental Guidelines

TOP MESSAGE

CSR
Guidelines

Environmental
Guidelines

Contributing to the environment by decreasing

8
11

Business Summary

13

Steel Business

15

Crushed Stone and Material Recycling
Business (Jobu Co., Ltd.)

19

Agribusiness21

environmental impacts, preventing global warming

The Environment, Governance &and achieving zero emissions

Social Responsibility

27

Environment

28

Governance

33

CSR Activities

36

Financial Data, Corporate Information,

Corporate Icon

Investors Information

With the “A” of Asahi Industries at its center connecting circles that

Financial Data

38

Corporate Information

41

Investors Information

42

symbolize “Sun”, “Nature” and “Earth”, our corporate icon expresses ourmanagement vision of contributing to the global environment.

* FY:Fiscal year ended March 31

337

TOP MESSAGE
For over 80 years since it was founded, the Asahi Industries Group has built a proud record of “contributing to the global environment and local communities”,
honoring its commitment to being “a company that is respected by everyone”.
Our goal as a Group is to help realize a sustainable society through our operations, from recycling steel scrap into solid steel reinforcing for buildings, bridges
and expressways through to producing safe, high-quality organic fertilizers* from livestock manure and waste products such as poultry feathers, oil cake andthe wastewater from food and beverage plants.
Our group has overcome the demanding business environment created by the Great East Japan Earthquake and trying conditions that resulted from thestoppage of steel-making operations due to the snow disaster of 2014 and consequently secured earnings in the black for 3 consecutive terms starting in
FY2014, which shows a v-shaped performance recovery. Looking forward to our Group vision for 2020, we have formulated our medium-term management
plan for the FY2016 to 2018 period, “ASAHI 2018 Project” (medium-term plan) which clarifies our new direction.

ASAHI 2018 Project

A mbition
Speciality
ActionH igh quality
I nnovation

With great ambition,
to be a leader in speciality areas,
we take immediate action.
Pursuing high quality,
we put steady effort into innovation.

Amid such conditions, we are in the FY2017 at the midpoint of our medium-term plan, with the Steel Division having experienced lowered profits that we havebeen unable to cover with profits from other divisions. The lowered profits were a result of continued stagnation due to rises in costs of both main andsecondary raw materials, which have failed to keep pace with product pricing. This has resulted in less than favorable results.
The business environment in which we are operating is changing on a large scale, and in the Steel Division, we are aware that a change in structuring has
already started involving a shift in construction method from RC (rebar) construction to S (steel frame) construction, due to a factor being shortened
construction period driven by worker shortages. Also in the Agricultural Division, grade sorting down and competitive bidding on fertilizer accompanying
ZEN-NOH** reform has started, and change in structuring has now started.
To cope with these kinds of large structuring changes, we will move at full speed in shifting to the specialty areas given in our medium-term plan, that is, in
the Steel Division, a shift to high-strength/threaded deformed bars and additionally, enhanced structural steel including special steel, and in the Agricultural
Division, a greater shift to organic fertilizer.

July 2018
President

We look forward to your continuing support.

Masanori Murakami* Organic fertilizer in this report refers to fertilizer containig 20% or more organic materials.
** National Federation of Agricultural Cooperative Associations4

To create a truly sustainable society

Steel Business
Structural steels

Steel BusinessDeformed bars (rebar)

Seed Business
Seeds

Fertilizer BusinessFertilizer for growers

Hay Business
Hay

The efforts that the Asahi Industries Group is making tobuild a sustainable society are actually already part andparcel of everyone's daily lives.

Our activities now cover a broad spectrum through our
Steel Business, Crushed Stone
and Material Recycling Businessand Agribusiness.

In the future, our work recycling valuable resources will
inevitably become even more wide-ranging.

Jobu Co., Ltd.
Crushed stone

5

Steel BusinessThreaded deformed bars

Fertilizer BusinessFertilizer for home gardens

Jobu Co., Ltd.
Wood chips

T h e Asahi I ndus t rie s St ory
1935

Asahi Chemical Fertilizer Co., Ltd. is established.
Predecessor of the fertilizer businessAsahi Chemical
Fertilizer Co., Ltd.
establishedJapan Nickel Co., Ltd.
established

1935

1936

(Amagasaki-shi, Hyogo Prefecture)
Merger

1936

Japan Nickel Co., Ltd. is established.
Predecessor of the steel business

Seibu Chemical
Industries Co., Ltd.

(Kodama-gun, Saitama Prefecture）

1960
1960

Asahi Chemical Fertilizer Co., Ltd. takes over the steel divisionof Japan Nickel Co., Ltd. and the company name is changed to Seibu
Asahi Industries Co., Ltd.

Chemical Industries Co., Ltd.
Gives rise to an integrated business model : “steel and fertilizer”.
1992

1992

The current Asahi Industries Co., Ltd. is established.
Leave the Saison Group

1995

Johnson Asahi Pty. Ltd. is established as a joint venture. (Victoria,

2003

Australia)
2003

Asahi Industries leaves the Saison Group.

2005

The company is listed on the JASDAQ Securities Exchange.

Listed on the JASDAQ Securities Exchange

2005(Currently JASDAQ on the Tokyo Stock Exchange, Inc.)
2011

Announce Medium-term Management Plan
"ASAHI 2018 Project"

Laiyang Longda Asahi Agricultural Technology Co., Ltd. is established2016

as a joint venture.
(Shandong Province, China)
2016

Medium-term Management Plan is announced.
"ASAHI 2018 Project"

6M e dium-t er m Managem ent P l a n , F i n a n c i a l Re s u l t s
for FY20177

Medium-term Management Plan (FY2016-2018)
In April 2016, the Asahi Industries Group launched its medium-term management plan (medium-term plan), “ASAHI 2018 Project” (FY2016 to 2018).
In the 2 years through FY2017, we rolled out our policies promptly with regard to our management fundamentals enhancement strategy and our business strategy for affiliated companies, and were able
to smoothly carry out the structures and systems that were introduced. On the other hand, our main businesses, steel and agriculture, both had results that were not able to reach goals as they faced
structuring changes.
In FY2018, the last year of our medium-term plan, we will go forward strongly and shift to the “specialty areas” given in our medium-term plan and solidly cope with the structuring changes. To continue
as a group with a felt presence even after the 2020 Tokyo Olympics and Paralympics, we will keep innovation and willingness to challenge at the forefront, thereby raising our corporate value.

Basic Policies

Results for FY2016-2017

Plan for FY2018

Business strategy

Accelerated Change

A company with “Specialities (clear strengths)”
as supporters of a sustainable society【Steel Business】

Our goal is to be a leader in “Speciality areas (areas of particular【Crushed Stone Business】

Change to portfolio of steel types in anticipationof rebar demand shrinkage▪ Special steel production in full momentum▪ Promotion of OEM

Special steel production restarted

Obtained new mining site and developed roads
for raw stone transport

strength)”, committed to excellence and to further enhancing our

Increases in sales prices

technological and developmental capabilities.
【Agribusiness】(Fertilizer) Secured share in Kanto and Tohoku through concentrated
purchases by ZEN-NOH

Key Strategies(

Seed ) Concluded an exclusive sales contract with Shanghai Wells Seed Co., Ltd.
Concluded an exclusive partnership contract with Nacos Co., Ltd.

(

Hay

Business strategy) Reached 100-thousand ton sales quantity
Obtained land and constructed storehouses

Johnson Asahi(Fertilizer) Change to revenue structuring so as to remainamid manufacturer consolidation and acquisitioning▪ Acceleration of shift to organic fertilizer▪ Business expansion through cooperation with othercompanies▪ Cost reductions exceeding industry standards( Seed ) Turnaround to profitability( Hay ) Consolidation of Johnson Asahi operations● Focus resources on manufacturing and selling products backed by technicaland developmental expertise and enhance our “speciality areas (areas where
we are strong)”● Strive for real cost reductions through measures such as lowering specificpower consumption and improving productivity

Management fundamentals enhancement strategy● Reform our corporate governance regime through measures such as

reorganizing, transitioning to a company with an audit and supervisorycommittee, and reviewing our committee structures● Broaden our “human resources” base through measures such as introducing

an executive officer system and reforming our human resources systems

Financial strategy

Management fundamentals enhancement strategy
࢒Transitioned to a company with an audit and supervisory committee
࢒Introduced an executive officer system
࢒Introduced a new human resources system
࢒Asahi Business Support Co., Ltd. established to take on management tasks of Asahi
Industries
࢒ Promoted diversity (Employment of persons with physical challenges, acceptanceof foreign staff)
࢒Unified systems within the group (human resources system, accounting system)
࢒Withdrew from the Environmental Solutions Business

Financial strategy
Promote fund procurement at long-term fixed interest rates with a view to hedging risk from rising interest rates
Management Indices

FY2016 results

FY2017 results

FY2018 projected

Ordinary income rate (%)

3.4

△0.2

2.6

ROE (%)

10.2

-

9.2

73

71

79

27.3

60.9

78.9

Net interest-bearing debt* (Billions of yen)

● Reduce interest-bearing debt through stable profits

Formulation of new medium-term planLong-term fixed interest rate procurement ratio (%)* Net interest-bearing debt = Interest-bearing debt - cash and equivalents

8(Released May 2018)

Business Portfolio

Key Business
Crushed Stone and Material
Recycling Business (Jobu Co., Ltd.)

Steel Business

Retain and hold our position in the leading group forlight bar production and sales volumes in the

Maintain its position as the top crushed stone

Kanto region

manufacturer in Saitama prefecture
Expand market share by securing new mining sites

Segment net sales and income

Key Business

Shift to high-strength and/or large-diameter deformed bars andPer-businesssales ratio(Millions of yen)threaded deformed bars
Reduce specific power consumption
Improve productivity by reviewing our product portfolio

Crushed Stone andMaterial Recycling
Business

FY2016
results

FY2017
results

FY2018projected

Net sales

2,095

2,364

2,500

Segment income

127

139

150

Segment net sales and income(Millions of yen)

SteelBusiness

FY2016
results

FY2017
results

FY2018projected

Net sales

17,452

20,99526,500

Segment income

1,318

85

1,150

Agribusiness
Grow as a fertilizer manufacturer that specializes in seed and hay

Fertilizer Business
Key Business

Seed Business
Rise-to-the-Challenge Business

Segment net sales and income

Hay BusinessProfitable Business

Expand granular organic fertilizer production and sales

Develop our own products andPerform integrated management

Make production more efficient through integrated

increase domestic and overseas sales

with Johnson Asahi Pty. Ltd.

management of 3 plants

9(Millions of yen)

Agribusiness

FY2016
results

FY2017
results

FY2018projected

Net sales

12,723

12,464

13,500

740

808

900

Segment income** Including income from Asahi in Australia, which is subject to the equity method

Business strategy

Steel Business

Agribusiness (Fertilizer)

Change to portfolio of steel types in anticipation ofrebar demand shrinkage

Change to revenue structuring so as to remainamid manufacturer consolidation and acquisitioning

Acceleration of management resource
shift to organic fertilizer

࢒

Rebar

Rebar

(including threaded)(including threaded)

6

Steel type shift ＋ new projects

８

Organic(color identification marking)

Organic

Productivity improvements࢒

7

Threaded deformed bars

࢒

Cost reductions exceeding
industry standards࢒(3-plant cooperation, increased yield, grade sorting down)

100

High-strength࢒(used in highways, etc.)

Outsourcing of production and physicaldistribution for home garden fertilizer

࢒

120

Increases in ratio of own materials used࢒

Acceleration of businessexpansion through cooperation
with other companies

࢒
࢒

OEM

࢒

Special steel(OEM)(Special steel)

Structural
steel

Structural
steel

2

3

(Ecolet)(Ecolet*)4

Inorganic

Inorganic
Thorough cost reductions

࢒

45(Figures indexed with current quantity of organic fertilizer sales at 100)
* Our strategic organic fertilizer that is derived from animal manure

1045

Financial Results for FY2017
Consolidated results

Perfomance by Segment

Figures in red for first time in four terms, as a result of inability to covernon-profitability of main steel business with other businesses

FY2016Net Sales
Operating income
Ordinary income■ Steel Business(Millions of yen)Segment net sales <millions of yen>

FY201732,3541,200
1,115

25,000△74△362

Total assets

27,50730,514

Net assets

8,404

7,872

Ratio of equity to total assets (%)

30.6

25.8

1,300

15,000900

10,000

600

5,000

300

0

0
FY2016

ROE (%)FY2017

Segment net sales <millions of yen>

3.4

Reasons for changes

94%
down

࢒Increased net sales with risein sales prices
࢒Substantially reduced income

85
FY2016FY2017due to increased costs
accompanying rise in pricing
of both main and secondary
raw materials■ Crushed Stone and Material Recycling Business

2,500

Ordinary income rate (%)

1,318

17,452

△64

820

1,600

20,99520,00035,878Net income

20% upSegment income <millions of yen>

13% up2,364

Segment income <millions of yen>
150

△0.2

2,000

120

10.2

ー

1,500

90

Net interest-bearing debt *1 (Billions of yen)

73

71

1,000

60

Dividend (yen)

30

10

500

30

0

139
Reasons for changes
࢒Increased net sales andincome from expanded sales
venues and increased
productivity

0
FY2016*1 Net interest-bearing debt = Interest-bearing debt - cash and equivalents

10% up127

2,095

FY2017FY2016FY2017■ Agribusiness
Segment net sales <millions of yen>

2% down

15,00012,723

800

9,000

600

6,000

400

3,000

200

FY2016

9% up

1,000

12,46412,000011

Segment income <millions of yen>

FY2017808

Reasons for changes

740
࢒Net sales decreased slightly

as a result of decrease inproduction orders despite Ecoletsales expansion
࢒Increased income due to increase

FY2016FY2017in sales quantities to China, etc.
in Austrailian hay businessFinancial Highlights (Consolidated)
Ordinary income rate (%)

Net sales

Millions of yen

50,000Ordinary income

43,59140,00035,49436,34832,35435,878

5.3%

1,000

0

1.0%

20,000△1,00010,000
0
2015

2016

2017 FY

2013

1,000

0

0

ï

△1,00036.4%
549

Millions of yen

20,000

50

2014

10.2%

2015

2016

12,00040ï2017 FY

Millions of yen

12,500

29.9％
18.9％

ï

△102.5%△12,000 △11,093
2013

2016

ï
2017 FY

Investment cash flow

Free cash flow

2014

2015

Operating cash flow

Cash flow

Millions of yen

3,852

4,000

5,160

6,028

7,872 20

4,000

10

0
2013

2014

2015

2,640
2,640

25.8％ 30
8,404

2016

3,791
2,116

30.6％

21.6％
7,716

8,000

10,0002017

0Year end

3,336

4,238

2,000

7,500
5,000

0

△362

Cash and equivalents

Net interest-bearing debt

△4.5%

9.8%

1,501

16,000

25

820

△74

Net interest-bearing debt

Ratio of equity to total assets (%)

Net assets

5

50

△0.2%

△641

△2,000
2014

2,000

1,115

3.4%

△1.5%

Millions of yen

2,503

10

348

30,0002013

Net income

Millions of yen

1,931

2,000

ROE (%)

0

11,010
8,499

1,410
1

△1,164△1,044

7,282

7,361

7,195

2,500

△61
△1,095△2,000△2,115

0

1,037
314

421
△615

△2,209△4,000
2013

2014

2015

12

2016

2017 Year end

2013

2014

2015

2016

2017 FY

Business Summary

13

Jobu Co., Ltd.

Saitama Office

Chiba Plant

Jobu Co., Ltd. (Crushed stone
and material recycling)
Saitama Office, Research Station(Steel and Fertilizer)

Laiyang Longda Asahi Agricultural
Technology Co., Ltd.

Chiba Plant(Fertilizer)
Head OfficeKansai Plant(Fertilizer)

Kansai Plant (Shiga prefecture)

Osaka OfficeJohnson Asahi Pty.Ltd.

Laiyang Longda Asahi Agricultural
Technology Co., Ltd.

Johnson Asahi Pty.Ltd.

14

15

Shifting to specialty areas, coping with structuring changes
Asahi Industries manufactures rebars/threaded deformed bars and structural steels from steel scrap with anelectric arc furnace. Our products are produced in environmentally friendly manufacturing facilities with strict

Steel Businessquality control. Our rebars/threaded deformed bars are used in the construction and engineering work that
underpins our lifestyle, and our structural steels are used in products such as construction and engineering
materials and machining components.
To continue as a manufacturer always in demand by our customers, we will deliver products that meet market
needs while taking the initiative toward realizing a sustainable society.

Strengthen
threaded deformed
bar operations

Expand range ofhigh-strength rebar

Produce special steel
in full momentum

Rapidly responding tochanges in demand

Meeting the needs of high-risebuildings and earthquake-proof
construction with our full rangeof high-strength products

Expanding sales items and areas

Meeting the needs ofthe construction field such as
improved workability andshortened work periods

R e s u l t s a n d P r o j e c t ions

Segment
net sales

Segment
income2,500

20,0002,000

15,0001,500

10,000

1,000

5,000

500

0
2014

2015

2016
results

16

2017

2018
projected

0
FY

Segment income <millions of yen>Segment net sales <millions of yen>

25,000Manuf a c turi ng P r ocess

Continuous casting facility (CC)

Ladle furnace (LF)

Electric-arc furnace (EAF)

Scrapyard

Melted steel following the LF process
poured into molds to manufacture billets-- an intermediate product

Impurities in the melted steel
removed and the composition
adjusted to suit the productSteel scrap melted in thearc furnace

Steel scrap sorted andmatched to the products
being manufactured

Steel scrap purchasing

Dismantling

To construction andengineering industries

Heating furnace
Billets heated to the righttemperature for rolling

Deformed bars (rebar)

To construction andengineering industries
Threaded deformed bars

Rolling

Cooling bed

Heated billets formed into products
using No.0 to No.18 stands

Rolled products gradually cooled

To machining plants
Structural steels

Q u a lity Contr ol
Highly accurate electron microscopes are used in extremely precise quality
control processes to ensure that our product assurance system is flawless. In
1994, we were the first manufacturer of ordinary steel using an electric-arc
furnace to be ISO-certified for quality. In April of 2018, we completed transition to
the latest standard for quality, ISO 9001: 2015, and solidified customer trust.

Microscope

17

Tension testing

Pickling

P roduc t s

Deformed bars (rebar)

Structural steels

Deformed bars are very widely used in construction projects
such as apartment blocks and office buildings, as well as
expressways and Shinkansen bridge piers.
Asahi Industries is one of the few manufacturers who produce
and sell deformed bars in a wide range of diameters. Our
products have been used in projects such as Tokyo Station
and Tokyo metropolitan expressways.

Structural steel is processed into a variety of products ranging from mechanical components through to materials forconstruction and engineering. It is used as reinforcing material for airport runways, and in the foundations for major
shopping centers, and structures such as warehouses and prefab.

Threading“Neji-A-Con” threaded deformed bars
Threaded deformed bars are rebars formed with a screw threadso that they can be joined together using mechanical couplers.
The benefits of using these bars include shorter working times
and the fact that they can be assembled in any sort of weather.
Ability to use a screw plate method (mechanical fastening) avoids
them becoming over-concentrated for more streamlined
construction. Joining with mechanical couplers and mechanicalfastening can be completed with only simple instruction, anddemand for this product is growing.
The USD590A, USD590B, USD685A, USD685B and USD980
Neji-A-Con that are high-strength products have been granted
Ministry certification.

Screw plate method

Method for fastening rebar inplace of fers an alternative tofastening rebar by bending thee n d s o v e r. O u r s c r e w p l a t emethod has been certified by
the Building Center of Japan(BCJ).

Special steels

Color identification marking(facilities introduced in 2018)

Special steel has its characteristics such as rigidity, strength, toughness, and wear resistance increased by additionof elements such as nickel and chrome, and is used in many different fields such as parts and work tools forautomobiles and construction/production machinery.
While production was suspended in FY2014, it was recommenced in FY2017, and we are planning to expand
quantities with facilities enhancement in FY2018.

*This photo is for illustrative purposes only.

Workers on site can easily discern steel
types and sizes of threaded deformed
bars, which prevents mistaken placementof bars.

Work tools

18

Gears (sprockets)

Hooks

Crushed Stone andMaterial Recycling Business(Jobu Co., Ltd.)
Helping provide infrastructure
and recycling waste materials
for a sustainable society

19Crushed Stone Business
Jobu Co., Ltd. owns mining claims in Saitama prefecture, 1 million m2 in Minano-machi and 300 thousand m2 in Kamikawa-machi, andthe crushed stone and sand from the mine is used as a raw material for buildings, bridges, roads and other construction projects. The
transport road for raw stone from the new mining site was completed in the first half of 2017. This allowed us to increase bothproductivity and quality and thereby meet a wide range of needs, enabling us to get a firm grasp of the number one market share in
Saitama prefecture, and we are making efforts in further expanding our sales channels.

MaintainNo.1 share in Saitama
prefecture

Secure a new site for
operations that will be
the start for
a new generation

Main products■ Crushed stone for concrete・Material for ready-mixed concrete・Material for secondary concrete products■ Crushed sand・Material for ready-mixed concrete・Material for secondary concrete products・Material for asphalt mixture■ Crushed stone for roads
・Material for asphalt mixture
・Gardening material

Material Recycling BusinessResults and Projections

・Civil engineeringand construction■Wood chips
・Material for pulp
・Fuelmaterial

Segment
income

2,500

200

2,000

160

1,500

120

1,000

80

500

40

0
2014

2015

2016
results

20

Segment
net sales2017

02018 FY
projected

Segment income <millions of yen>

■Recycled roadbed material

Segment net sales <millions of yen>

We contribute to the building of a sustainable society by recycling the concrete rubble fromleveled buildings into subgrade material and processing wood scraps from torn-down housing
and cut-down trees into wood chips.

21

Continuing our presence as a unique fertilizer manufacturer dealing withseeds and hay
Fulfilling our mission to make agriculture sustainable and competitive

Agr ibus inessAs structuring change progresses in the agricultural field, innovation in business models is sought. We will
make the most of our strengths in each of our fertilizer, seed, and hay businesses and at the same time
maximizing a synergy to venture into new possibilities in agriculture while continuing with innovation andcreation.

Fertilizer
Business

Seed
Business

Hay
Business

Segment
net sales

R e s ul t s a nd P r oj e ctions

Segment
income2,000

16,0001,600

12,000

1,200

8,000

800

4,000

400
0

0
2014

2015

2016
results

22

2017

2018
projected

FY

Segment income <millions of yen>Segment net sales <millions of yen>

20,000Fertilizer Business
Driven by accelerating agricultural change, the climate that constrains the fertilizer industry has become even moredemanding, as a result of further grade sorting down, expanded lowering of prices, etc. In order to win out amid
manufacturer consolidation, acquisitioning and selection that are gaining full momentum, Asahi Industries will go the fullnine yards in the specialty field gripping its strengths in organic materials development capabilities and granulation
technology. Seeing change as chance, we will boldly take on the challenges of new problems and proposals, striving to
be a group that is able to flexibly cope with any change.

Provide high-quality
fertilizer with our organic
materials development capabilities
and granulation technology

Expand sales areas
by utilizing seed
and hay sales channels

Promote sustainableagriculture throughthe utilization ofunused resources

Environmentally Friendly Manufacturing
Asahi Industries produces many different fertilizers, mainly granular organic fertilizer, withmethods and facilities that take into account impact on neighboring residents, employees,
and the global environment.
Odors

・ Electrostatic precipitators, exhaust gas scrubbers, soil deodorizing equipment,
regenerative thermal deodorizers
・Sealed plant buildings

Waste-water・ Factory wastewater recycled inside the plant using closed systems(Chiba and Kansai plants)

Exhaustgases

・ Exhaust gas scrubbers, electrostatic precipitators

Soil deodorizer

Laiyang Longda Asahi
Agricultural Technology
Co., Ltd.

Regenerative thermal deodorizer

Exhaust gas scrubber

Joint R&D of Microbial Materials
In order to respond to the needs of growers and enhance R&D of fertilizers and their materials to
DFFRPPRGDWHFRQVXPHUV·RULHQWDWLRQWRZDUGVDIHW\ZHDUHPRYLQJDKHDGZLWKUHVHDUFKLQPDQ\different areas, mainly development of microbial materials, in conjunction with public and private
research organizations, universities, and prefectural governments. In 2018, several new products
are scheduled to be introduced.

• Established in 2011 as a joint venture with Toyota
Tsusho Corporation and Longda Foodstuffs Group
Co., Ltd.
• Located in Shandong Province, China's largest
agricultural production region, the company uses
environmentally friendly facilities such as exhaustgas scrubbing and industrial wastewater recycling
equipment to manufacture high-quality granularorganic fertilizers with technical guidance from
Asahi Industries• Compliance with more stringent environmental
standards completed January 2018
(Installation of gas furnace, bag filter, etc.)

Joint R&D with
Tokyo University of Agriculture
and Technology and others

23

Joint R&D with National Center for
Genetic Engineering and Biotechnology
in Thailand

Materials Development and Manufacturing
Techniques for Organic Fertilizers

Together with growers
We always stand in the shoes of the grower as we go forward with product development andmarketing. One of our activities in which we put full effort into as part of our services to our customers
is soil diagnosis and fertilizing consultation. Providing advice on fertilization that is appropriate for thenature of the soil leads to increased yield, lower required effort, and reduced costs. Numbers ofconsultations increase yearly, with about 3,000 consultations in FY2017.
We will continue to directly lend an ear to growers through our soil diagnosis and deliver high-quality
fertilizer.

$VDKL,QGXVWULHV·JUDQXODURUJDQLFIHUWLOL]HULVFUHDWHGXVLQJRUJDQLFPDWHULDOVGHYHORSHGLQGHSHQGHQWO\DV
well as other materials. Our unique granulation technology allows us to create granules that have excellent
hardness and sphericalness characteristics, and are optimal for mechanical fertilizing. Increasing the
proportion used of such organic materials also contributes to cost reductions.

Pig manure

Dried sludge** Organic material generated during waste-water treatment
processes at food processing plants, etc.

Taking soil samples

Manufacturing process for granular organic fertilizer
Plant-basedorganic fertilizer Raw materials
Animal-basedorganic fertilizer

Exhaust gas scrubber

Regenerative thermal
deodorizers
Product shipment

Granulation fluid

Mixer

Fertilization consultation

Soil deodorizer

Dryer

Inorganic fertilizer

ReturnProduct
hoppers

Granulator
Bunker scale

Scale

CrusherVibrating screens

Heat sealing

Cooler

Weighing/
packaging unit

Fertilizer for growers

Loading robot

Organic fertilizer granules

Fertilizer for home gardens

Available from our Vege Garden website
http://www.vege-garden.com/

24

S e e d Bus iness
To respond to the needs of both growers and consumers, Asahi Industries is putting effort into R&D of vegetablevarieties with a focus on resistance to diseases, high yield, ease of cultivation, as well as delectability. During open
farm days held twice a year in spring and fall, we show varieties developed independently and jointly in this way andselected from domestic and international markets to growers, market participants, and the mass media, which canlead to sales.
We will progress with expansion of the range of our own varieties, enhancement of selection from joint developmentwith partners, and building of new sales channels such as agricultural corporations in striving for profitability
improvements.

Expand sales ofvarieties researchedand developed
independently or jointly

Stable supply
to growers

Expand sales channels
by utilizing fertilizer
sales channels
by cooperating withoverseas partners

Seed Production and Quality Management

Kamikawa
Research Station

While a research station where R&D, cultivation
testing, and selection of vegetable varieties isconducted, it also serves as demonstration farmfor presenting varieties to participants.

Main Products

Seed production and quality management are extremely important processes in the seed business.

Start of sales of broccoli seeds

Since large-scale seed production is almost entirely carried out overseas (Asia, etc.), we are building
good relationships with trusted foreign seed growers that allows quality seeds to be produced stably.
Having passed purity testing (DNA marker), germination testing (selection), pathological testing (DNAmarker, chromatographic strip test), and other testing, only items that are biologically certain in quality
are supplied to growers.
台木

Seed production (China)

Purity testing using DNA markers

25

In October 2017, we entered into an exclusive
domestic distributorship contract with Nacos
Co., Ltd., which has strengths in developmentof broccoli varieties and stable supply of theirseeds.
Starting with
Saitama prefecture,a major production
area of broccoli anda location for Asahi
Industries fertilizer
business, we makeuse of our national
agriculture businesssales network indeveloping oursales activities.

Hay Business
We import mainly oaten hay from Australia for stable supply of quality hay to the Japanese market.
Johnson Asahi Pty. Ltd., located in Australia, is a location important to our hay business. In 2017, driven by
expanding demand for hay in China, we have steadily increased sales quantities, and have achieved 100
thousand tons (yearly sales quantity) that has been a goal since first establishment.

Promote joint marketingwith leading
domestic partners

Johnson Asahi Pty.Ltd.
• 1995, established joint venture with J.T. Johnson & Sons Pty. Ltd., a major Australian hay
processor and exporter• Production of high-quality hay in Horsham, Victoria by thorough quality management• Hay exported to Japan, China, Korea, Taiwan, and other destinations

Meet Asian demand(Johnson Asahi)

Hay processing facilities

Leaping forward

Products

Taking into consideration an expected increase in global demand for hay, we obtained 20 haof land in Dooen, 10 km north of Horsham, in order to achieve enhanced production
capability and improved shipping convenience. We constructed 3 storehouses in March of
2018, and we are also planning relocating production in the future.
As we strive to increase sales quantities, we will also work towards development of productsthat are according to market needs and towards further improved quality management, so
as to respond to demand in the Asian region.

Oaten hay (Australia)
Our main product and a highly palatablevariety due to its high sugar content

Dooen
Victoria
Horsham

Melbourne

Australia

Victoria

New storehouses (Dooen)

26

The Environment,
Governance & Social Responsibility

27

Fourth Medium-term
Environmental Action Plan

Environmental Management
The Asahi Industries Group endeavors above all to “contribute to the global environment

The Asahi Industries Group has formulated its “Fourth Medium-term Environmental Action Plan”(FY2015-2018) and has been undertaking activities based on that plan.

and local communities”, honoring its commitment to being “a company that is respected by everyone”.

Asahi Industries Group Environmental Guidelines
Contributing to the environment by decreasing environmental impacts, preventing global
warming and achieving zero emissions

Countermeasures for
global warming

Environmental Management System
Promotion of energy savings

Working to build an environmental management system that encompasses the entire
Asahi Industries Group and forcefully promoting ongoing environmental activities

Promotion of environmental
impact reductions, etc.
Environmental impact
reductions

Environmental Management
System Framework

President

Biodiversity conservation

Management Meetings

Executive Office(Environmental Safety
Management Dept)

Environment, Safety &Health Committee

Environmental Project Leaders
Assistant Environmental Project Leaders

Energy Savings
Promotion Committee

Communication
enhancement
Development ofenvironmental management

Affiliated Companies

Steel Division

Administration and
Planning Division

Environmental education &training

Agribusiness Division

Environment Management System
Asahi Industries steel plant (Saitama Plant) and fertilizer plants (Kanto Plant, Chiba Plant, Kansai
Plant), and Jobu Co., Ltd. are certified with ISO 14001 (environmental ISO standard) for theirenvironment management systems.
Environmental ISO activities are centered around environmental management committees at
each plant, which establish goals every year, toward which efforts are made in each workplace.

28

Contribution to building
sustainable communities

28

Contribution to the environment
through business growth

Promotion of environmental impact reductions, etc.
Countermeasures for global warming

Promotion of energy savings
The Asahi Industries Group is working to reduce its energy usage as a key measure. The Steel
Division is a particularly heavy user of energy and manages its energy consumption very
carefully.
The Energy Savings Promotion Committee is made up of energy managers from each plant andmanages the progress of energy saving measures throughout the company while also rolling out
energy saving campaigns.

We are actively engaged in efforts to reduce our CO2 emissions as a countermeasure against
global warming. The conversion of the fuels used in our main facilities (to natural gas) between
FY2009 and FY2012 has since helped to significantly reduce CO2 emissions.

ー Main activities in FY2017 ーー Main activities in FY2017 ー・ Decreased power/fuel due to facilities maintenance and operational improvement
・ Saved energy thoroughly in plants/offices
・ Introduced hybrid and EV fleet vehicles
・ Utilized Saitama prefecture emissions trading system and sold excess reductions of CO2 from ourlocations in the prefecture• Reduced energy usage and improved specific power consumption by appropriate operational
management of electric-arc furnace in the Steel Division and by improved productivity in the Fertilizer
Division• Actively inspected AC, lighting, PC, etc. in an energy conservation checkpoint, with a checkpoint
theme being decided on monthly

Targets

Results

࢒ CO2 emissions 25% reduction on FY1990 levels
5% reduction on FY2005 levels

Assessment

Targets◎

࢒ 1% reduction in specific energy consumption
on a 5-year average• 46% reduced FY1990 levels• 22% reduced FY2005 levels

Results

Assessment• 0.8% reduced yearly average from
FY2013 to FY2017○

Assessment ◎: 100% achieved ○: 70% achieved △: Less than 70% achieved, improvement required■Changes in CO2 emissions■Changes in energy consumption

࢒On FY1990 levels(kt-CO2)

250

46% reduction

Year-on-year change in specificenergy consumption(kt-CO 2)

252(Terajoules:amount of heat)

250

150

150

98.3

134

158

161

4,000

2,983
100

CO 2 emissions

CO 2 emissions

Energy consumption

100

0

2015

2016

3,684

137

50

2017 FY* Results for each year calculated using the energy coefficient for FY1990

98.6

100.4

98.5

99.2
100.0

166
139

105.0

22% reduction

50

0Benchmark year
(FY2005)

2015

2016

3,228

3,287

90.0

85.0

0

80.0

2014

2015

2016

2017 FY* Year-on-year change in specific energy consumption of lessthan 100% deemed as improvement over previous fiscal year

* Results calculated using the energy coefficient for each year

29

95.0

2,000

2013

2017 FY

3,346

Year-on-year change in specificenergy consumption

200

（%）

6,000

206
200

Benchmark year
(FY1990)

Energy consumption

࢒On FY2005 levels

Environmental impact reduction

Biodiversity conservation

In order to conserve the environment and biodiversity, we are setting and administering our own
voluntary management targets for exhaust gas and wastewater emissions from our plants thatare stricter than the standards stipulated by law.
As well as lowering our emissions, we are also making more effective use of our waste products
through in-house recycling and the re-use of valuable materials.

Each of the Asahi Industries Group plants is surrounded by abundant natural beauty. Our
environmental protection efforts include participating in local volunteer programs and conducting
clean-up programs in the plant surrounds. In our Seed Business, we have also developed
disease-resistant varieties that can be cultivated with low levels of chemicals, helping us tomaintain biodiversity with products that customers prefer us to use.

ー Main activities in FY2017 (exhaust gases and wastewater management) ーTargets

Results

Assessment

・Thoroughly implemented appropriate operation management and maintenance for exhaust gas andwastewater treatment equipment

࢒Promotion of the development and adoptionof disease resistant vegetable varieties

・Enhanced water quality monitoring during summer months (to cope with unusual climate, etc.)
・Conducted continual monitoring by oil film detectors and monitors (to prevent river outflow)

࢒ Conservation activities at offices and plants• Carried out workplace 5S programs andregular patrols of the surroundings• Carried out environmental monitoring at
points around land boundaries◎

࢒Participation in programs aimed atpreserving water sources and planting trees• Continued to undertake volunteer activities• Maintained the Asahi Flower Garden• Conserved at corporate-owned forest◎

Targets

Results

Assessment

࢒Exhaust gases:
1/2 or less of stipulated standard value• Fully achieved◎

࢒Wastewater:
1/10 or less of stipulated standard value• All items achieved◎- Main activities in FY2017 (waste products)-■Changes in total waste
products emitted

・ Recycled all soot and smoke emissions
from steelmaking processes at Asahi
Industries recycling facilities（t）・ Started to sell waste wooden pallets

99.1
2 , 000

（％）

100

99

Total waste products emitted

1 , 500

98

1,120
841

97

683
500

96

0

95
2015

Targets

98.8

1 , 000

2016

Results◎

Total emissions

Target99.5%
or better

Recycling and effective use rate

* Recycling and effective use rate: Calculated from theratio of the amount for final disposal relative to standard
emissions (7,223 tons in FY2003)(tomato, cucumber, spinach, rootstock)

Recycling andeffective use rate

99.8

2 , 500• Developed disease-resistant varieties

Lakefront cleanup volunteers
Asahi Industries possesses about 40 hectares of corporate-owned
forest in Gunma prefecture.
Japanese cypress and cedar grow here, and thinning and planting
are carried out regularly to maintain them.
Forest conservation leads to protection of the species of inhabitantorganisms and ecology.

2017FY

It is conservation of biodiversity, and brings about many different
benefits in our living. Additionally, maintained forest absorbs CO2

Assessment

and contributes to prevention of global warming.
࢒ Zero waste product emissions
Recycling and effective use rate of 99.5%
or better• Recycling and effective use rate:
99.8%• Reduced emissions due torecycling of all soot and smoke

The amount of CO2 absorbed as calculated for Asahi Industries-owned◎

forest was about 200 t-CO2* for FY2007 to FY2017.
We will continue maintenance of forests to keep natural forests.
* Calculated referring to the calculation method of the certification system forCO2 absorption by forests in Gunma prefecture30

Forest conservation at corporate-owned forest(thinning)Development of environmental
management

Contribution to building
sustainable communities
The main businesses of the Asahi Industries Group are helping to build
a sustainable society.
Business growth is linked to helping the environment and the company
is united in its efforts.

Communication enhancement“Environmental Communication” seminars are held each year for regional residents to increase
community awareness of environmental activities by the Asahi Industries Group.
Plant visits and discussions serve as an opportunity to exchange views and give people a better
understanding of Asahi Industries.

Contribution to building
sustainable communities

Business
growthBuilding ofsustainablecommunities

Contribution through increased sales
Targets
࢒ Dissemination of environmental informationand participation in regional discourse

Results

Assessment

・Explained business activities and state ofefforts in environmental activities, andconducted tours mainly of steel plant for
those in the region.

・Steel Business re-using steel scrap
・Material Recycling Business re-using waste products
・Fertilizer and Seed Business helping to reduce ourenvironmental impacts◎

Environmental
assessments
for businessContribution through increased
use of unused resources

Environmental education & training

・Use of fertilizer raw materials that utilize unused
resources resources↑

Increased utilization ofunused resources↑

Sales growth

The Asahi Industries Group conducts a range of educational and other programs to increase
environmental awareness among its employees. By raising awareness of the environment
among individual employees, we aim to grow our business as a contributor to a sustainable
society.

Business growth targets basedon environmental assessments

Pointscurrently reached

Targets࢒ Hosting of in-house environmental
seminars

Results

Assessment• Held environmental seminars tailored towork content◎
2015࢒ Encouragement to acquire certifications• 14 persons took tests including Eco Test*(about 330 persons, accumulative)

2016

2017

2018 FY◎

TopicsEnvironmental Management Survey
Achieved 1st Place 2 Years in a Row, Steel Industry
In the environmental management survey of companies conducted by the Nikkei
newspaper, Asahi Industries placed 1st in the steel industry for 2 years in a row. In thissurvey, companies are highly evaluated that are able to achieve both environmental
measures and management. In particular, we received high evaluation for ourenvironmentally friendly products and our efforts toward biodiversity.
In-company environment seminar

Certificate of Eco Test
* Certification Test for Environmental Specialists

31

Sales target
Target for
utilization ofunused resources

Material Balance

Environmental Accounting

INPUT

Raw
materials

224MkWh

Natural gas

17Mm3N

1,856 kt

Heavy oil

3,000 kl

47 kt

Other fuels

4,000 kl

382 ktFertilizers

157 ktCrushed stone
Material recycling

Water

Electricity

Steel

Water

EnergyEnvironmental accounting is a mechanism for ascertaining as quantifiably as possible the costsof environmental impacts and environmental conservation (environmental conservation cost) andits effects (economic impact). The goal is to effectively and efficiently promote environmental
conservation activities so that growth is sustainable.
Environmental conservation cost: Amount of investment and costs incurred in efforts to reduce environmental impacts and provide
infrastructure to conserve the environment
Economic impact: Results of implementing environmental conservation policies and economic benefit to profits

1,624 km3

Environmental conservation costs(Millions of yen)

FY2015FY2016FY2017

Ratio (%)

560

458

502

47.2

87

77

72

6.7

Recycling costs

318

302

352

33.1

Management costs

30

29

30

2.8

R&D costs

50

54

71

6.7

Social activity costs

24

31

32

3.0

5

5

5

0.5

1,074

956

1,064

100.0

Category* Raw materials for crushed stone production consist of the raw stone used.
Raw materials for material recycling consist of the industrial waste received.
Pollution prevention costs
Global environmental
conservation costs

Production

Production
volumesSteel

340 ktCrushed stone

Fertilizers

137 ktMaterial recycling

1,597 kt
58 kt

Environmental damage
remediation costs, etc.
Environmental conservation
costs (total)

Economic Benefits
Category

OUTPUT
AtmosphericexhaustWastewaterCO2

161 kt

NOx

40 t

SOx

12 t

Water

1,469 km3

Waste
and
byproducts

FY2015FY2016FY2017

Ratio (%)

540

389

489

73.7

Waste disposal benefit

63

49

59

8.9

Product cost reduction benefit

51

41

29

4.4

96

95

86

13.0

750

574

663

100.0

In-house recycling benefit*

Total amount generated

58 kt

Amount recycled

58 kt

Within the Group

8 kt(Millions of yen)

On consignment

50 kt

Received industrial waste
treatment benefit

Amount treated on
consignment

0.8 ktEconomic benefit (total)

Amount for final disposal

0.01 kt* The decline in the effects of in-house recycling is primarily due to reduced recycling of soot and smoke emissions in the steel plant.
●Reporting of environmental activities

Our environmental activities are also describedon the “Environmental Activities” page on the Asahi Industries website.
http://www.asahi-kg.co.jp/csr/environment/ (Japanese)32Corporate GovernanceWe set as our key management issues the provision of a structure capable of responding quickly to changes in the management environment, ensuring management transparency through prompt
and appropriate public disclosure, pursuing efficiency in management based on sensible criteria, and enhancing corporate governance through measures such as strict compliance.

Corporate Governance Framework

General Meeting of Shareholders

Board of Directors is composed of elevenmembers, comprising six directors (excluding
directors on the Audit and Supevisory Committee)
and five directors on the Audit and Supervisory
Committee (three of whom are outside directors).
Regular meetings of the Board of Directors areheld monthly and extraordinary meetings of theboard are held as required. The board isorganized so as to make decisions on items
stipulated by the applicable legislation and otherimportant matters relating to management, and tosupervise the business conduct of the directors.

Appointment/
dismissal

Appointment/
dismissal

Appointment/
dismissal①Board of Directors

Auditing, etc./reports①
Board ofDirectors② Audit and Supervisory Committee
Cooperation

Selection/
supervision

Reports

Entrustment to decide
on important businessconduct

Directions

Auditing

Auditing③Management Meetings
Management meetings are bodies that
discuss, negotiate and decide on importantmatters relating to items to be discussed by the
Board of Directors and the conduct of businessfor which authority is granted by the Board of
Directors. Management meetings are made up
of directors(excluding outside directors), theheads of business divisions, executive officers,
general managers and the heads ofmanagement divisions, and are organized so as
to be capable of considering and discussing
planning for profits, manufacturing and sales,
products, human resources and developmentfrom a medium- and long-term perspective.

Discussions

Directions③ Management⑤

President

Meetings

Reports
Inquiries

Responses④
࢒Compliance Committee
࢒Risk Management Committee

Internal
auditing

Commands/
instructions

࢒Human Resources & Planning

Committee④Committees
Committees are established as advisory
bodies for the President and plan, propose anddiscuss matters in the respective individual
sectors. Committees report on those importantmatters to management meetings or to theBoard of Directors.

Internal
Control Dept

Cooperation

Independent
Auditor(auditingcompany)②Audit and Supervisory
Committee
The Audit and Supervisory Committee is madeup of five directors including three outside
directors and is organized so as to meetmonthly or as necessary. It also works with theInternal Control Department and independent
auditors in the course of supervising thebusiness conduct of directors.The members of
the Audit and Supervisory Committee also
attend meetings of the Board of Directors tomake decisions on proposals and also meeteach quarter with the President to exchange
opinions and provide candid feedback.

⑤Internal Control Dept
(Internal Audit Section, Internal Control Section)

The Internal Audit Section supervises matterssuch as risk management and appropriatenesswith respect to internal regulations and therelevant legislation as they pertain to the work
done by the company's departments andJapanese subsidiaries under the annual plans.
The Internal Control Section also studies andevaluates the status of the provision andoperation of internal controls regarding
financial reporting.
The Internal Control Department cooperates
with the Audit and Supervisory Committee andindependent auditors (auditing company) toensure effective auditing and supervision.

࢒Environment, Safety & HealthCommittee

Divisions/Departments & Affiliates

33

Asahi Industries complies with the five basic principles of the code of corporate governance.Although
Asahi Industries is a company listed on the JASDAQ exchange, it also complies with the basic
principles required for companies listed on the Main Markets.
The Corporate Governance Report filed to the Tokyo Stock Exchange is posted on the Asahi
Industries website.
http://www.asahi-kg.co.jp/corporate/governance (Japanese)Compliance

Compliance Framework

Board of Directors
Asahi Industries President

In the Asahi Industries Group, compliance activities are conducted across the entire Group. Based on acharter on ethical standards, a code of conduct and in compliance with the legislation, Asahi Industries
makes every effort to abide by corporate ethics and social morality. Important guidelines and promotional
planning relating to Group compliance are discussed and formulated by the Compliance Committee, anadvisory body to the President of Asahi Industries that includes representatives from the labor unions ineach workplace as members. The Committee reports either to a management committee or to the Boardof Directors where final decisions are made.

(Chief compliance officer)

Management Meetings
Improvements/
instructions

Compliance Committee
Reports

Main activities in FY2017
Auditing(Asahi Industries, General Affairs andHuman Resources Department)

Compliance Managers

Reports

Reports

Guidance

Compliance Supervisors(Section heads)

Auditing

Risk Management

Communication(Division/dept heads, office managers,
plant managers & affiliate dept heads)

Consultation

Education

Employees
In the Asahi Industries Group, risks are defined as “uncertain events that have an adverse impact
on the organization” , and Group-wide risk management is promoted so as to continually improve
our capacity to deal with and appropriately manage the various risks that could impact on theGroup. To promote basic policies and develop systems for risk management, risk management
issues, key policies and promotional planning, and important matters relating to risk management
are discussed and formulated by the Risk Management Committee. This Committee is an advisory
body to the President of Asahi Industries that includes representatives from each workplace asmembers and that reports either to a management committee or to the Board of Directors where
final decisions are made.

Risk Management Committee Framework

Asahi Industries PresidentManagement Meetings

Main activities in FY2017■Business Continuity Plan (BCP)

Risk Management
Committee

・Implemented annual BCP training in case of large-scale earthquakes

Revision of hazard management rules• Dealt appropriately with J-Alert, in addition to complaints and incidents
as well as large-scale disasters and accidents

34

Executive Office(Asahi Industries, General Affairs andHuman Resources Department)

Consultation/inquiries• Provided group officers/executive with training
regarding harassment (2 times)• Provided sales dapartments with training regarding
display of products, advertising, etc.

Internal Audit Section,
Internal Control Dept

■Awareness and education activities

Executive Office

Cooperation

Human Resources Management
For the Asahi Industries Group, staff are our most important management resource. We face such issues aslabor shortages and an aging society and are making planned efforts in creating an appealing company and
Human Resources development where people with a diversity of backgrounds can work actively in the group fora long time and contribute to society.

Human Resources Development
We are striving for a working environment where workers can share their joy of working with mutual respect,
where differences in personality and values of many different people are overcome. We have in place a structure
where each and every employee can be active with a sense that it is worthwhile and meet the challenges of next
goals, and are ensuring that employees who have worked hard to achieve results are rewarded and are creating
more opportunities for women to be active.

Inductee training

Self Study
We also support employees who study of their own volition to improve themselves and progress theirknowledge and skills.

࢒Employment activities for persons with physical challenges
We actively employ persons with physical challenges so that they can live independently and with a sense of pride.
As part of our support for those with physical challenges, we also participate in the employment preparation
support program for persons for entering the workforce in Honjo in Saitama prefecture.

࢒Correspondence courses
Distance learning courses cover a wide range of areas such as sales, technology, finance/accounting,writing, PC, stress management, health management, and certification, so as to accommodate the broadspan of employees, from younger staff to management.

࢒Acceptance of foreign staff
We actively employ motivated foreign workers. They overcome their cultural differences and are active inmanufacturing and technological fields.

࢒Learning languages
We have put in place English and Chinese courses to improve communication with overseas corporations
including joint venture companies.

Enhanced Training System

Health management efforts (worker care)

At present, the training conducted by Asahi Industries consists of standard employee training andspecialist skills training.

While physical health is important, we also put effort into mental health and a workplace with vitality, basedon “Guidelines on Maintaining and Improving Mental Health of Workers*”. We are progressing with creationof a workplace that is healthy and easy to work in, by making use of stress checks to grasp worker stressand promote awareness by the employee themself, and enhancement of a support system where they canreceive counseling with an industrial physician or industrial counselor.

࢒Standard employee training
Inductee training, follow-up training (5th year), mid-level staff training, promotion (to manager/department head)
before-and-after training, executive training
࢒Specialist skills training
Participation in training conducted by research facilities, such as instruction in DNA markers and blightcertification, in-house manufacturing skills certification testing, production meister training, etc.

Executive staff training

Communication with employee families
So that employee families have a better understandingof the Asahi Industries Group, we started organizing
family visits (visitor days for children) as of FY2017,
based on the “Act on Advancement of Measures to
Support Raising Next-Generation Children*”. These
events provide families with an opportunity to see thedynamic manufacturing processes and environmentallyfriendly product manufacturing at our steel plant andfertilizer plant, while at the same time strengthening
employees' family bonds.

In-house English classes* Issued by the Ministry of Health, Labour and Welfare

35

Family visit

CSR Activities
The Asahi Industries Group undertakes a range of activities aimed at supporting children and regional communities.
By regularly volunteering to help clean up river banks, parks and roads, maintaining parks, holding festivals for local residents and supporting sporting events, we engage in active
programs to beautify the natural environment and local neighborhoods for all the local residents.
We also support regional education programs in the hope of enriching the lives of local children through initiatives such as classes in growing vegetables, plant and farm tours and art
classes (Asahi Kamikawa Gallery).

Engaging with local communities

Supporting regional education

Clean-up volunteers

Plant tour

Asahi Kamikawa Gallery

Summer river festival
for local residents

Asahi Flower Garden

Seed sowing classat a local kindergarten

Asahi Photo News

Elementary school judo competition

Every year since March 2008, the walls surrounding the Saitama Office have been used to exhibit
artworks by children from local elementary and junior-high schools. In March 2018, 69 new artworks
were added, bringing the total number exhibited so far to 515. This display of youthful energy puts asmile on everyone's face.

36

Financial Data,
Corporate Information,
Investors Information

37

Consolidated Balance Sheets(Millions of yen)

End FY2013

End FY2014

End FY2015

End FY2016(Millions of yen)

End FY2017

AssetsEnd FY2013

End FY2014

End FY2015

End FY2016

End FY2017

5,947

5,626

3,831

4,268

6,441

Liabilities
Current liabilities

Current assets

Cash and deposits

2,640

1,501

2,640

3,336

4,238

Trade notes andaccounts payable

Trade notes andaccounts receivable

5,952

5,671

4,727

4,734

6,401

Electronic record debt

Merchandise inventory andfinished goods

3,221

5,830

4,754

4,762

4,806

Short-term loans payable

5,915

7,245

4,950

4,700

4,000

Raw materials and supplies

2,060

1,527

1,397

1,510

2,080

Current portion of long-termloans payable/corporate bond

1,910

1,554

1,709

2,007

2,487

Other

293

321

328

514

431

Other

3,076

2,213

2,858

2,616

2,429

Allowance for doubtful accounts

△5

△3

△1

△1

△1

Total current liabilities

16,848

16,63813,34813,592

16,242

14,162

14,84913,845

14,856

17,956Long-term loans payable andcorporate bond

3,315

3,713

3,264

3,990

4,947

1,050

722

1,097

964

857

918

835

400

555

594

5,284

5,271

4,762

5,510

6,399

22,132

21,90918,111

19,102

22,642

Total current assets

885

Noncurrent liabilities

Noncurrent assets

Property,plant and equipment

10,652

10,620

10,116

10,611

10,935Net defined benefit liability

Buildings and structures

3,139

3,344

3,134

3,046

3,070

Other

Machinery,equipment and vehicles

4,053

3,817

3,509

3,745

3,963

Total noncurrent liabilities

Land

2,678

2,678

2,678

2,721

2,656

Other

780

779

792

1,098

1,245

Intangible assets

196

193

182

234

216

6KDUHKROGHUV·HTXLW\

4,729

5,361

7,864

8,334

7,762

Investments and other assets

2,280

2,274

1,683

1,804

1,406

Other comprehensive
income, accumulated

430

667

△ 148

69

110

Total noncurrent assets

13,12913,088

11,982

12,65012,558

Total net assets

5,160

6,028

7,716

8,404

7,872

27,292

27,93825,82827,50730,514

Total liabilities and net assets

27,292

27,93825,82827,50730,514

Total assets

38

Total liabilities

Net assets

38

Consolidated Statements ofComprehensive Income

Consolidated Statements of Income(Millions of yen)

FY2013

FY2014FY2015FY2016FY201743,59135,49436,34832,35435,878(Millions of yen)

FY2013

FY2014FY2015FY2016FY2017△11,093

549

2,503

820

△362

Net unrealized gains onavailable-for-sale securities

56

3

△327

133

△85

Foreign currency translation
adjustments

18

28

△67

△28

25

-

204

△420

113

99

74

236

△815

218

40

△11,018

785

1,688

1,038

△322

Comprehensive income attributed
to parent company shareholders△11,018

785

1,688

1,038

△322

Comprehensive income attributes
to minority shareholders

-

-

-

-

-

Net income (loss)
Sales

Other comprehensive income
Cost of sales

Gross profit

Selling, general andadministrative expenses

37,317

29,17428,064

24,83529,446

6,274

6,320

8,284

7,519

6,431

6,836

5,911

6,369

6,318

6,496

Remeasurements ofdefined benefit plans
Total other comprehensive income
Comprehensive income

Operating income (loss)

△562

409

1,915

1,200

△64

Non-operating income

174

197

280

149

246

Non-operating expenses

253

258

264

235

256

△641

348

1,931

1,115

△74

Extraordinary gains

3

545

410

25

151

Extraordinary losses

9,337

263

118

177

124

Income (loss)
before income taxes△9,975

630

2,223

963

△47

104

114

246

73

108

Ordinary income (loss)

Income taxes - current

Income taxes - deferred

Net income (loss)

Current net income (loss)
returned to parent company
shareholders

1,013△11,093△11,093

△33

549

549

△527

2,503

2,503

69

820

820

Consolidated Statements ofCash Flow(Millions of yen)

FY2013

FY2014FY2015FY2016FY2017

Operating activities

2,116△1,164

3,852

1,410

1,037

Investment activities△2,115△1,044△61△1,095△615

Financing activities

73

1,065

△２,639388

476

Effect of exchange rate changes
RQFDVKDQGFDVKHTXLYDOHQWV

3

4

△12

△7

4

Net increase (decrease) in
FDVKDQGFDVKHTXLYDOHQWV

78△1,139

1,139

695

902

&DVKDQGFDVKHTXLYDOHQWVDW
the beginning of current period

2,561

2,640

1,501

2,640

3,336

&DVKDQGFDVKHTXLYDOHQWVDW
the end of current period

2,640

1,501

2,640

3,336

4,238

206

△362

△362

39

Consolidated Statements of Changes in Net Assets
April 1, 2017 through March 31, 2018

(Millions of yen)

Other comprehensive income, accumulated

6KDUHKROGHUV·HTXLW\Balance at the beginning of current period

Common stock

Capital surplus

Retained earnings

Treasury stock

7RWDOVKDUHKROGHUV·
equity

2,190

1,802

4,636

△293

8,334

Net unrealized
gains on available
for sale securities

160

Foreigncurrency translation
adjustments

Remeasurementsof defined
benefit plans

35

Total net
assetsTotal othercomprehensive
income, accumulated

8,404

69

△125

Changes in items during the period
Dividends from surplus

△210

△210

△210

Current net income (loss) returned toparent company shareholders

△362

△362

△362

Net changes in items other than
VKDUHKROGHUV HTXLW\

25

99

40

40

-

-

△572

-

△572

△85

25

99

40

△532

2,190

1,802

4,063

△293

7,762

75

60

△25

110

7,872

Total changes in items during the period
Balance at the end of current period△85

Performance by Segment * 1(Millions of yen)

FY2013

FY2014FY2015FY2016(Millions of yen)

FY2017

Segment net sales

FY2013

FY2014FY2015FY2016FY2017△1,210

65

1,942

1,318

85

146

151

89

127

139

Segment income*4

Steel Business

26,242

19,86019,853

17,452

20,995

Steel Business

Crushed Stone andMaterial Recycling Business

1,994

1,938

2,010

2,095

2,364

Crushed Stone andMaterial Recycling Business

Agribusiness

14,62813,01813,821

12,723

12,464

Agribusiness

1,628

1,100

924

740

808

223

151

150

338

464

Other*2

△30

△20

△6

17

15

Adjustments*3

△221

△116

△108

△255

△410

Adjustments*5△1,114△924△1,071△1,002△1,114

Total

43,59135,49436,34832,35435,878

Total

△562

409

1,915

1,200

△64

Other*2*1: Environmental Solutions Business sold in FY2016 not shown*2: Other: Contracting business operations not categorized in the reporting segments*3: Adjustments: Sales among segments*4: Segment income: Includes investment profit/loss under the equity method, but investment profit/loss under the equity method is excludedin the adjustment amount when the operating profit/loss is adjusted*5: Adjustments: Primarily general and administrative expenses in departments outside the reporting segments

40

Corporate Information

As of the end of June 2018

Corporate Information

OfficesCompany Name

Asahi Industries Co., Ltd.

Saitama Office (Steel Business, Agribusiness)

Head OfficeDaiwa Higashi-Ikebukuro Building, 23-5, Higashi-Ikebukuro
3-chome, Toshima-ku, Tokyo 170-0013, Japan

222 Wataruse, Kamikawa-machi, Kodama-gun, Saitama 367-0394, Japan

TEL:

03-3987-2161

URL:

http://www.asahi-kg.co.jp/

FoundedAugust 16, 1935

Established

October 29, 1991

Common Stock

2,190 million yen

No. of Employees

428 (consolidated base: 489) As of the end of March 2018

TEL: 0274-52-2711
Osaka Office (Agribusiness)
Osaka JA Building, 2-5, Nishitenma 1-chome, Kita-ku, Osaka-shi, Osaka 530-0047, Japan
TEL: 06-6311-6215【Steel Plant】

Saitama Plant

222 Wataruse, Kamikawa-machi, Kodama-gun,
Saitama 367-0394, Japan TEL: 0274-52-2713【Fertilizer Plant】

Kanto Plant

222 Wataruse, Kamikawa-machi, Kodama-gun,
Saitama 367-0394, Japan TEL: 0274-52-2712

Chiba Plant

13, Sakuradai 1-chome, Asahi-shi, Chiba
289-0506, Japan TEL: 0479-68-1600

Kansai Plant

6776 Minakuchi, Minakuchi-cho, Koka-shi,
Shiga 528-0005, Japan TEL: 0748-62-8171

Kamikawa

863-2 Higashikitahara, Niisato, Kamikawamachi,
Kodama-gun, Saitama 367-0232, Japan

Corporate Officers
President

Masanori Murakami

Senior Managing Director

Noriyuki Nakamura

Managing Directors

Kiyoshi Hirose, Susumu Inaba【Farm】

Research Station

Directors

Masaru Kusama, Masaru Sekine

Directors and Audit andSupervisory Committee Members

Akihiro Takahashi, Hiroyuki Harada

Directors and Audit andSupervisory Committee Members(Independent)

Shinichi Tajima, Hideki Hanaeda, Mitsuaki Tsuchiya

Executive Officers

Toshio Sakamoto, Satoru Tanaka, Yoshiro Yamada

Affiliated Companies
Jobu Co., Ltd. (Crushed Stone Production and Sales, Construction Waste materials etc. Recycling)
President: Atsushi Terai
3085-1 Kanezawa, Minano-machi, Chichibu-gun, Saitama 369-1601, Japan
TEL: 0494-62-1321

Asahi Business Support Co., Ltd. (Contracting, Temporary Staffing)
President: Makoto Sato
222 Wataruse, Kamikawa-machi, Kodama-gun, Saitama 367-0301, Japan
TEL: 0274-52-6411

41

Investors Information
Stock Information

As of the end of June 2018

Dividends
As of the end of March 2018

Stock listing

Tokyo Stock Exchange, JASDAQ

Securities identification code

5456

StocksTotal shares authorized: 24,000,000
Total shares issued:
7,200,000

No. of shareholders

7,776

Our basic policy is to return profits to shareholders, fully taking into consideration our consolidated
financial results, and the company's financial status and financial requirements, ensuring that stableprofit distribution is continued. In FY2017, in addition to posting losses, in anticipation of business
investment to increase our corporate value, we did not disburse dividends at the end of the term.
FY2015FY2016FY2017

Interim

0yen

10yen

10yen

Year-end

40yen *

20yen

0yen

Full-year

40yen *

30yen

10yen

■Major Shareholders
Name of shareholder

No. of shares held

Shareholding percentage (%)*Breakdown of FY2015 year-end dividend: Ordinary dividend: 30 yen; Commemorative dividend: 10 yen

Hanwa Co., Ltd.

600,000

8.6

Mitsui & Co., Ltd.

600,000

8.6

Shareholder Benefit Program

Asagami Corporation

522,000

7.5

Long-term Asahi Industries shareholders are eligible for additional benefits over and above thebenefits awarded to normal shareholders.

Katakura & Co-op Agri Corporation

300,000

4.3

The Norinchukin Bank

210,000

3.0

Tokyo Tekko Co., Ltd.

200,000

2.9

Nihon Matai Co., Ltd.

181,000

2.6

100-199

Rice coupons (4)500 yen Quo card (gift card)

Kanehira Steel Co., Ltd.

180,000

2.6

200-299

Rice coupons (8)1,000 yen Quo card (gift card)

Marubeni Itochu Sumisho Techno Steel Inc.

180,000

2.6

300-499

Rice coupons (12)1,500 yen Quo card (gift card)

Credit Saison Co., Ltd.

134,700

1.9

500 or more

Rice coupons (16)2,000 yen Quo card (gift card)

Benefits
No. of shares held
Normal shareholder benefits(Note) Shareholding percentage (%) is calculated exclusive of treasury stock (200,000 shares).
Percentages are shown rounded off to the first decimal place.

■Compositionof Shareholders

Security companies* Holdings where the shareholder number has changed are not regarded as continuous holdings (as in the following situations):① Change in securities company (stockbroker)② Repurchase after selling all shares held
③ Use of stock lending transactions④ Change to registered owner due to inheritance, etc.

0.1％

Overseas corporate shareholder

0.4％s

6KDUHKROGHUV·)DFLOLWLHV7RXU

Treasury stock 2.8％
Financial institutions
Individuals and others

To provide our shareholders with an opportunity to gain a deeper
understanding of Asahi Industries business, we began facilities tours in
FY2016. These started with a semiannual (spring, fall) farm tour, andwe additionally started steel and fertilizer plant tours in fall of FY2017.
These events are venues for disseminating information and at thesame time are venues for corporate officers and shareholders to freely
exchange opinions, and we will continue to hold them regularly.

3.8％
35.5％

Japanese corporate shareholders

Long-term shareholders(shareholders who have owned shares for one year or more)*

57.4％

42

Compilation policy
This report was compiled so as to provide everyone with clear and straightforward account of the business activities and financial details of the Asahi Industries Group (Asahi Industries Co., Ltd. and its affiliated companies), together with its environmental and CSR activities.

Companies covered

Period covered

Reference guidelines

Asahi Industries Co., Ltd.

April 1, 2017 through March 31, 2018

・GRI (Global Reporting Initiative)

Contact information

Jobu Co., Ltd.

(*Periods other than FY2017 are also partially covered.)“Sustainability Reporting Guidelines 4.0”

Asahi Business Support Co., Ltd.

Publication date:July 2018

・Ministry of the Environment, Japan,

Johnson Asahi Pty. Ltd.

Previously published:July 2017

“Environmental Reporting Guidelines” (Fiscal Year 2012 Version)

Laiyang Longda Asahi Agricultural

Planned next publication:July 2019

Available on our website at:

Public Relations Section,Corporate Planning Department,
Administration and Planning Division
Asahi Industries Co., Ltd.
Daiwa Higashi-Ikebukuro Building, 23-5, Higashi-Ikebukuro
3-chome, Toshima-ku, Tokyo 170-0013, Japan
TEL: 03-3987-0283 Email: ir@asahi-kg.co.jp

Technology Co., Ltd.

http://www.asahi-kg.co.jp/csr/ (Japanese)