(Translation)

Note: This document has been translated from a part of the Japanese original for reference purposes only. In
the event of any discrepancy between this translated document and the Japanese original, the original shallprevail. The Company assumes no responsibility for this translation or for direct, indirect or any other formsof damages arising from the translation.
Securities Code 5233
June 4, 2019
To Those Stockholders with Voting Rights
Masafumi Fushihara
President and Representative Director
Taiheiyo Cement Corporation
2-3-5, Daiba, Minato-ku, TokyoNOTICE OF THE 21st ORDINARY GENERAL MEETING OF STOCKHOLDERS
You are cordially invited to the 21st Ordinary General Meeting of Stockholders of Taiheiyo Cement
Corporation (the “Company”). The meeting will be held as stated below.
If you are unable to attend the meeting, you can exercise your voting rights by paper ballot or via theelectromagnetic method such as the Internet. Please review the attached Reference Documents for the General
Meeting of Stockholders, and either return the Voting Rights Exercise Form with your selections towards
proposals, or vote via the Internet.
1. Date and Time:Thursday, June 27, 2019 at 10:00 a.m.

2. Place:

Head office of the Company
2-3-5, Daiba, Minato-ku, Tokyo

3. Agenda of the Meeting:
Matters to be reported: 1. Business Report, Consolidated Financial Statements for the 21st Fiscal Term(from April 1, 2018 to March 31, 2019) and results of audits by the Accounting
Auditor and the Board of Auditors of the Consolidated Financial Statements
2. Non-Consolidated Financial Statements for the 21st Fiscal Term (from April 1,2018 to March 31, 2019)
Proposals to be resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Partial Amendments to the Articles of Incorporation
Proposal No. 3: Election of Fourteen Directors
Proposal No. 4: Election of Two Corporate Auditors
Proposal No. 5: Election of One Substitute Corporate Auditor
4. Voting Guide
If you are attending the Meeting:
Please hand in the enclosed Voting Rights Exercise Form at the front desk when you arrive at the venue.
If another stockholder is attending the Meeting on your behalf, he/she must submit a letter of proxy andyour Voting Rights Exercise Form as well as his/her Voting Rights Exercise Form at the front desk upon
arrival at the venue. (Please be advised that a proxy is limited to one person and must be anotherstockholder with the Company’s voting rights pursuant to the provisions of the Articles of Incorporation.)1

(Translation)

If you are NOT attending the Meeting:
Please review the attached Reference Documents for the General Meeting of Stockholders, and exercise yourvoting right by either of the following two methods.
(i) Exercise of voting rights by postal mail (paper ballot)- Please indicate your vote for or against the Proposals on the Voting Rights Exercise Form and send it
back, making sure that it will arrive by 5:00 p.m. on Wednesday, June 26, 2019 (Japan Standard Time).
- If you make no indication on the Voting Rights Exercise Form whether you are voting for or against the
Proposals, you shall be deemed to have voted FOR the Proposals.
(ii) Exercise of voting rights via the Internet, etc.
- Please exercise your voting right via the voting rights exercise site (https://www.web54.net) specified
by the Company before 5:00 p.m. on Wednesday, June 26, 2019 (Japan Standard Time).
- If you exercise your voting right via the Internet, etc. more than once, your final vote shall prevail.
If you vote both by postal mail and via the Internet, etc., the one received later shall prevail. If we receive
both on the same day, your vote cast via the Internet, etc. shall prevail.

Notes:
 Of the documents required to be included in this notice of convocation, “Consolidated Statements of
Changes in Net Assets” and “Notes to the Consolidated Financial Statements” of the Consolidated
Financial Statements, and “Non-consolidated Statements of Changes in Net Assets” and “Notes to the
Non-consolidated Financial Statements” of the Non-consolidated Financial Statements are, pursuant to
the provisions of laws and regulations and the Articles of Incorporation of the Company, posted on the
Company’s website (http://www.taiheiyo-cement.co.jp), and are therefore not contained in the Appendix
attached to this notice of convocation.
The Consolidated Financial Statements and the Non-consolidated Financial Statements audited by
Corporate Auditors and the Accounting Auditor include “Consolidated Statements of Changes in Net
Assets,” “Notes to the Consolidated Financial Statements,” “Non-consolidated Statements of Changes in
Net Assets” and “Notes to the Non-consolidated Financial Statements” which are posted on the
Company’s website, in addition to each document included in the Appendix of this notice of convocation.
 Subsequent amendments to the Reference Documents for the General Meeting of Stockholders, theBusiness Report, the Consolidated and Non-Consolidated Financial Statements (if any) will be listed on
the Company’s website (http://www.taiheiyo-cement.co.jp).

2

(Translation)

Reference Documents for the General Meeting of Stockholders
Proposals and References
Proposal No. 1:
Appropriation of Surplus
With respect to the year-end dividend for the term under review, the Company would like to pay out asfollows, in consideration of the business environment and our performance for the term under review, while
maintaining our basic policy of stable dividend payouts.
Matters concerning the year-end dividend(1) Type of Dividend
Cash(2) Matters concerning the distribution of dividends to stockholders and its total amount
30 yen per share of common stock of the Company, for a total amount of 3,681,564,750 yen.
The annual dividend per share for the term under review will amount to 80 yen, which includes aninterim dividend already paid (ordinary dividend of 30 yen and commemorative dividend of 20 yen
for the 20th anniversary of the Company’s founding).
(3) Effective Date of Dividends from surplus
June 28, 20193

(Translation)

Proposal No. 2:
Partial Amendments to the Articles of Incorporation
1. Reasons for the amendments(1) With the intent of improving business efficiency and productivity, in May 2020, the Company
plans to change the location of the head office from Minato-ku, Tokyo, the current location of thehead office, to Bunkyo-ku, Tokyo. Accordingly, the Company proposes to amend the provisionsof Article 3 (Location of Head Office) of the current Articles of Incorporation with theamendments taking effect on the head office relocation date to be determined by a Board of
Directors’ meeting to be held prior to the 22nd Ordinary General Meeting of Stockholders to beheld in 2020, and supplementary provisions to that effect shall be established. The supplementaryprovisions shall be deleted after the effective date.
(2) The Company proposes to add new provisions to the Articles of Incorporation to allow the
Company to exempt from liabilities for damages of Directors and Corporate Auditors within thelimit stipulated by laws and regulations by a resolution of the Board of Directors, pursuant to theprovisions of Article 426, Paragraph 1 of the Companies Act, in order to enable Directors andCorporate Auditors to fully perform their roles expected of each position and facilitate theinvitation of appropriate human resources. In line with the enforcement of the “Act for Partial
Revision of the Companies Act” (Act No. 90 of 2014) on May 1, 2015, the scope of Directors andCorporate Auditors with whom the Company may conclude limited liability agreements has been
expanded. In line with these changes, the provisions of Article 26 (Limitation of Liabilities of
Directors) and Article 33 (Limitation of Liabilities of Corporate Auditors) of the current Articles
of Incorporation are proposed to be partially amended so that the Company can enter into limited
liability agreements with Directors (excluding Executive Directors, etc.) and all Corporate
Auditors. Approval has been obtained from each Corporate Auditor with respect to the addition of
new provisions and amendments to the existing provisions relating to Directors.
2. Details of the proposed amendments
Details of the proposed amendments are stated below.
(Underlined parts are amended.)
Proposed Amendments(Location of Head Office)
Article 3. The head office of the Company shall belocated in Bunkyo-ku, Tokyo.
(Limitation of Liabilities of Directors)
Article 26. Pursuant to the provisions of Article 426,
Paragraph 1 of the Companies Act, theCompany may exempt from liabilities fordamages of Directors (including persons
who were Directors) arising fromnegligence in the performance of his/herduties within the limit stipulated by laws
and regulations by a resolution of theBoard of Directors.

Current Articles of Incorporation(Location of Head Office)
Article 3. The head office of the Company shall belocated in Minato-ku, Tokyo.
(Limitation of Liabilities of Directors)
Article 26.
(New)

2. Pursuant to the provisions of Article 427,
Paragraph 1 of the Companies Act, theCompany may enter into an agreementwith each of the Directors (excluding
Executive Directors, etc.) to the effect thatany liability for damages of such Directors
arising from negligence in theperformance of his/her duties shall belimited; provided, however, the limit of
the liability shall be the amount set by

Pursuant to the provisions of Article 427,
Paragraph 1 of the Companies Act, theCompany may enter into an agreementwith each of the Outside Directors to theeffect that any liability for damages ofsuch Outside Directors arising fromnegligence in the performance of his/herduties shall be limited; provided,
however, the limit of the liability shall be
the amount set by laws and regulations.
4(Translation)

laws and regulations.
(Limitation of Liabilities of Corporate Auditors)
Article 33.
(New)(Limitation of Liabilities of Corporate Auditors)
Article 33. Pursuant to the provisions of Article 426,
Paragraph 1 of the Companies Act, theCompany may exempt from liabilities fordamages of Corporate Auditors (including
persons who were Corporate Auditors)
arising from negligence in theperformance of his/her duties within thelimit stipulated by laws and regulations by
a resolution of the Board of Directors.
2. Pursuant to the provisions of Article 427,
Paragraph 1 of the Companies Act, theCompany may enter into an agreementwith each of the Corporate Auditors to theeffect that any liability for damages ofsuch Corporate Auditors arising fromnegligence in the performance of his/herduties shall be limited; provided, however,the limit of the liability shall be theamount set by laws and regulations.

Pursuant to the provisions of Article 427,
Paragraph 1 of the Companies Act, theCompany may enter into an agreementwith each of the Outside Corporate
Auditors to the effect that any liability fordamages of such Outside Corporate
Auditors arising from negligence in theperformance of his/her duties shall belimited; provided, however, the limit of
the liability shall be the amount set bylaws and regulations.
(New)

Supplementary Provisions
Amendments to the provisions of Article 3 shall takeeffect on the head office relocation date that is to be
determined by a Board of Directors’ meeting to beheld prior to the 22nd Ordinary General Meeting ofStockholders to be held in 2020. This supplementaryprovision shall be deleted after the head officerelocation date.

5

(Translation)

Proposal No. 3:

Election of Fourteen Directors

The term of office of all fourteen Directors will expire at the close of this General Meeting of Stockholders.
Accordingly, the Company would like to propose the election of fourteen Directors, including two Outside
Directors.
The candidates for Director are as follows.
No.
1
2
3
4
5
6
7
8
9
10
11
12

13

14

Name
Reappointment
Shuji Fukuda
Reappointment
Masafumi Fushihara
Reappointment
Yuuichi Kitabayashi
Reappointment
Keiichi Miura
Reappointment
Masahiro Karino
Reappointment
Kunihiro Ando
Reappointment
Katsuhide Fukuhara
Reappointment
Toshiaki Suzuki
New Candidate
Yoshiyuki Uenoyama
New Candidate
Hideaki Asakura
New Candidate
Tetsuya Ohashi
New Candidate
Yoshifumi Taura
Reappointment
Yoshiko Koizumi
Outside Director
Independent Director
Reappointment
Yuzo Arima
Outside Director
Independent Director

Current position at the Company
Chairman and Director
President and Representative Director
Vice President and Representative Director
Director and Senior Executive Officer
Director and Senior Executive Officer
Director and Managing Executive Officer
Director and Managing Executive Officer
Director and Managing Executive Officer
Senior General Manager, Cement Business Division
Managing Executive Officer
Managing Executive Officer
Managing Executive Officer
Managing Executive Officer
Senior General Manager, International Business Division

Director

Director6

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1974
June 1999
April 2004
April 2006
April 2008

1

Joined Onoda Cement Co., Ltd.
General Manager, Accounting & Finance
Department of Taiheiyo Cement Corporation
General Manager, Accounting & Finance
Department and General Manager, Accounting& Finance Business Operation Center
General Manager, Hokuriku Branch
Executive Officer and General Manager,
Human Resources Department and General
Manager, Personnel Business Operation
CenterExecutive Officer and General Manager,
Human Resources Department
Director, Managing Executive Officer andGeneral Manager, Human Resources
Department
Director and Managing Executive Officer
President and Representative Director
Chairman and Director (to present)

October 2008
Shuji Fukuda
Reappointment
August 2010
(December 20, 1951)
Attended 15 out of 15
meetings of the Board October 2010of Directors (100%) April 2012
and will have served as April 2018
Director for 8 years
and 10 months at close (Significant concurrent positions)
Outside Director, Sapporo Holdings Limitedof this General
Meeting of
Reason for nominating Shuji Fukuda as Director
Stockholders
Since 2010, Mr. Shuji Fukuda has engaged in management of
the Company as Director, and currently serves as Chairman and
Director after serving as President and Representative Director.
He therefore has a wealth of experience, achievements, andknowledge as a manager. The Company has judged that he is anappropriate person to aim to enhance the function of the Boardof Directors as a chairman of the Board meetings, andcontinuously increase corporate value of the Group as he leads
the Group’s management, determines important management
matters, and supervises business execution, etc., and requests
that he continue to be a candidate for Director.

Number ofshares of theCompany held

3,300

Notes:
1. If the election of Mr. Shuji Fukuda is approved, and Proposal 2 “Partial Amendments to the Articles ofIncorporation” is approved as originally proposed, the Company plans to enter into an agreement withhim, which would limit his liability for damages in respect of his responsibilities set out under Article
423, Paragraph 1 of the Companies Act, to the minimum limit of liability set out under Article 425,
Paragraph 1 of the same provided that he executes his duties in good faith and without grossnegligence.
2. No special relationship exists between the Company and Mr. Shuji Fukuda.

7

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1978
April 2007
May 2009

October 2010
April 2012

2

Joined Onoda Cement Co., Ltd.
General Manager, Business Promotion
Department of Environmental BusinessCompany of Taiheiyo Cement Corporation
General Manager, Sales Department ofEnvironmental Business Company
General Manager, Environmental Business
Development Department
Executive Officer and General Manager,
Environmental Business Development
Department
Managing Executive Officer
Director and Managing Executive Officer
Director, Managing Executive Officer andSenior General Manager, Cement Business
Division
Director, Senior Executive Officer and Senior
General Manager, Cement Business Division
President and Representative Director(to present)

Masafumi Fushihara April 2015
June 2015
Reappointment
April 2016
(May 18, 1954)
Attended 15 out of 15
meetings of the Board April 2017of Directors (100%)and will have served as April 2018
Director for 4 years at
close of this General
Meeting of
Reason for nominating Masafumi Fushihara as Director
Stockholders
Since 2015, Mr. Masafumi Fushihara has engaged inmanagement of the Company as Director, and currently serves
as President and Representative Director, after serving as Senior
General Manager of the Cement Business Division. He therefore
has a wealth of experience, achievements, and knowledge as amanager. The Company has judged that he is an appropriate
person to aim to continuously increase corporate value of theGroup as he leads the Group’s management, determines
important management matters, and supervises businessexecution, etc., and requests that he continue to be a candidate
for Director.

Note: No special relationship exists between the Company and Mr. Masafumi Fushihara.

8

Number ofshares of theCompany held

3,100

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1978
May 2009
April 2011
April 2013
June 2013
April 2016

3

Joined Nihon Cement Co., Ltd.
General Manager, Kamiiso Plant of Taiheiyo
Cement Corporation
Executive Officer and General Manager,
Production Department
Managing Executive Officer
Director and Managing Executive Officer
Representative Director and Senior Executive
Officer
Vice President and Representative Director
Overseeing Corporate Planning Department(to present)

Yuuichi Kitabayashi
Reappointment(June 2, 1955)
April 2017
Attended 15 out of 15
meetings of the Boardof Directors (100%)and will have served as Reason for nominating Yuuichi Kitabayashi as Director
Director for 6 years at Since 2013, Mr. Yuuichi Kitabayashi has engaged inclose of this General management of the Company as Director, and since 2016, heMeeting of
has served as Representative Director. He therefore has a wealth
Stockholders
of experience, achievements, and knowledge as a manager. The
Company has judged that he is an appropriate person to aim tocontinuously increase corporate value of the Group as he leads
the Group’s management, determines important management
matters, and supervises business execution, etc., and requests
that he continue to be a candidate for Director.

Note: No special relationship exists between the Company and Mr. Yuuichi Kitabayashi.

9

Number ofshares of theCompany held

5,200

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1980
April 2012
April 2013

4

Number ofshares of theCompany held

Joined Onoda Cement Co., Ltd.
General Manager, Central ResearchLaboratory of Taiheiyo Cement Corporation
Executive Officer and General Manager,
Central Research Laboratory
Managing Executive Officer
Director and Managing Executive Officer
Director and Senior Executive Officer(to present)

Keiichi Miura
April 2016
Reappointment
June 2016(November 13, 1956) April 2019
Attended 15 out of 15
meetings of the Boardof Directors (100%) Reason for nominating Keiichi Miura as Director
and will have served as Since 2016, Mr. Keiichi Miura has engaged in management of
Director for 3 years at the Company as Director, and has been making significant
close of this General contribution to the development of the Group as an officer
overseeing research and development divisions. The Company
Meeting of
has judged that he is an appropriate person to aim to
Stockholders
continuously increase corporate value of the Group as hedetermines important management matters, and supervises
business execution, etc., and requests that he continue to be a
candidate for Director.

Note: No special relationship exists between the Company and Mr. Keiichi Miura.

10

4,500

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1980
April 2004
April 2013

5

Number ofshares of theCompany held

Joined Nihon Cement Co., Ltd.
General Manager, Legal Department of
Taiheiyo Cement Corporation
Executive Officer and General Manager, Legal
Department
Managing Executive Officer
Director and Managing Executive Officer
Director and Senior Executive Officer(to present)

Masahiro Karino
April 2016
Reappointment
June 2016(March 23, 1957)
April 2019
Attended 15 out of 15
meetings of the Boardof Directors (100%) Reason for nominating Masahiro Karino as Director
and will have served as Since 2016, Mr. Masahiro Karino has engaged in management
Director for 3 years at of the Company as Director, and has been making significant
close of this General contribution to the development of the Group as an officer
overseeing human resources and legal divisions. The Company
Meeting of
has judged that he is an appropriate person to aim to
Stockholders
continuously increase corporate value of the Group as hedetermines important management matters, and supervises
business execution, etc., and requests that he continue to be a
candidate for Director.

Note: No special relationship exists between the Company and Mr. Masahiro Karino.

11

3,700

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1980
April 2011
April 2013

6

Number ofshares of theCompany held

Joined Onoda Cement Co., Ltd.
General Manager, Ofunato Plant of Taiheiyo
Cement Corporation
Executive Officer and General Manager, Oita
Plant
Executive Officer and General Manager,
Mineral Resources Business Department
Managing Executive Officer
Director and Managing Executive Officer(to present)

April 2015
Kunihiro Ando
Reappointment
April 2016
(May 4, 1957)
June 2016
Attended 15 out of 15
meetings of the Boardof Directors (100%) Reason for nominating Kunihiro Ando as Director
and will have served as Since 2016, Mr. Kunihiro Ando has engaged in management of
Director for 3 years at the Company as Director, and has been making significant
close of this General contribution to the development of the Group as an officer
Meeting ofoverseeing the mineral resources business and environmental
Stockholders
business. The Company has judged that he is an appropriate
person to aim to continuously increase corporate value of theGroup as he determines important management matters, andsupervises business execution, etc., and requests that hecontinue to be a candidate for Director.

Note: No special relationship exists between the Company and Mr. Kunihiro Ando.

12

4,800

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1981
April 2013
April 2015

7

Number ofshares of theCompany held

Joined Onoda Cement Co., Ltd.
General Manager, Corporate Planning
Department of Taiheiyo Cement Corporation
Executive Officer and General Manager,
Corporate Planning Department
Managing Executive Officer
Director and Managing Executive Officer (topresent)

Katsuhide Fukuhara
April 2017
Reappointment
June 2017(September 25, 1956)
Attended 14 out of 15
meetings of the Board Reason for nominating Katsuhide Fukuhara as Directorof Directors (93.3%) Since 2017, Mr. Katsuhide Fukuhara has engaged in
and will have served as management of the Company as Director, and has been making
Director for 2 years at significant contribution to the development of the Group as anclose of this General officer overseeing the construction materials business andGroup companies management division. The Company has
Meeting of
judged that he is an appropriate person to aim to continuously
Stockholders
increase corporate value of the Group as he determines
important management matters, and supervises businessexecution, etc., and requests that he continue to be a candidate
for Director.

Note: No special relationship exists between the Company and Mr. Katsuhide Fukuhara.

13

4,200

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)

March 1980
April 2011
April 2014
April 2015

8

Number ofshares of theCompany held

Joined Chichibu Cement Co., Ltd.
General Manager, Tohoku Branch of Taiheiyo
Cement Corporation
Executive Officer and General Manager,
Tohoku Branch
Executive Officer and General Manager, Tokyo
BranchManaging Executive Officer and Senior General
Manager, Cement Business Division
Director, Managing Executive Officer andSenior General Manager, Cement Business
Division (to present)

April 2018
Toshiaki Suzuki
Reappointment
June 2018(August 18, 1956)
Attended 11 out of 11
meetings of the Boardof Directors (100%) (Significant concurrent positions)and will have served as Outside Director, P.S. Mitsubishi Construction Co., Ltd.
Director for 1 year at
close of this General Reason for nominating Toshiaki Suzuki as Director
Since 2018, Mr. Toshiaki Suzuki has engaged in management of
Meeting of
the Company as Director, and has been making significant
Stockholders
contribution to the development of the Group as an officer
overseeing the cement business. The Company has judged that
he is an appropriate person to aim to continuously increase
corporate value of the Group as he determines importantmanagement matters, and supervises business execution, etc.,
and requests that he continue to be a candidate for Director.

2,600

Notes:
1. Mr. Toshiaki Suzuki was newly elected at the 20th Ordinary General Meeting of Stockholders held on
June 28, 2018 and took office as Director on the same day; therefore, his attendance at meetings of theBoard of Directors refers to those convened since he took office.
2. No special relationship exists between the Company and Mr. Toshiaki Suzuki.

14

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1982
April 2012
April 2013
April 2015
April 2016
April 2017

9

Joined Nihon Cement Co., Ltd.
General Manager, Green Innovation Promotion
Department of Taiheiyo Cement Corporation
General Manager, Saitama Plant
General Manager, Kamiiso Plant
Executive Officer and General Manager,
Kamiiso Plant
Executive Officer and General Manager,
Production Department
Managing Executive Officer (to present)

Yoshiyuki Uenoyama April 2019
New Candidate
Reason for nominating Yoshiyuki Uenoyama as Director(May 21, 1959)
Mr. Yoshiyuki Uenoyama has been involved in operations of the
production business for many years. Since 2016, he has served
as Executive Officer and has a wealth of experience and insight
regarding overall management. The Company has judged that heis an appropriate person to aim to continuously increase
corporate value of the Group and requests that he be a new
candidate for Director.

Note: No special relationship exists between the Company and Mr. Yoshiyuki Uenoyama.

15

Number ofshares of theCompany held

3,100

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1982
April 2011
April 2016

April 201810

Joined Nihon Cement Co., Ltd.
General Director of Nghi Son Cement
Corporation
Executive Officer of Taiheiyo Cement
Corporation
General Director of Nghi Son Cement
Corporation
Executive Officer and General Manager, Sales
Department, Cement Business Division of
Taiheiyo Cement Corporation
Managing Executive Officer (to present)

Hideaki Asakura
April 2019
New Candidate(November 20, 1959) Reason for nominating Hideaki Asakura as Director
Mr. Hideaki Asakura has been involved in operations of theinternational business and cement business for many years.
Since 2016, he has served as Executive Officer and has a wealthof experience and insight regarding overall management. The
Company has judged that he is an appropriate person to aim tocontinuously increase corporate value of the Group and requests
that he be a new candidate for Director.

Note: No special relationship exists between the Company and Mr. Hideaki Asakura.

16

Number ofshares of theCompany held

1,420

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)

April 1982
October 2010
April 2015
April 201611

Tetsuya Ohashi
New Candidate(March 7, 1960)

April 2019

Number ofshares of theCompany held

Joined Onoda Cement Co., Ltd.
President of Taiheiyo Cement U.S.A., Inc.
General Manager, Business Development
Department, International Business Division of
Taiheiyo Cement Corporation
Executive Officer and General Manager,
Business Development Department,International Business Division
Managing Executive Officer (to present)

Reason for nominating Tetsuya Ohashi as Director
Mr. Tetsuya Ohashi has been involved in operations of theaccounting division and international business for many years.
Since 2016, he has served as Executive Officer and has a wealthof experience and insight regarding overall management. The
Company has judged that he is an appropriate person to aim tocontinuously increase corporate value of the Group and requests
that he be a new candidate for Director.

Note: No special relationship exists between the Company and Mr. Tetsuya Ohashi.

17

1,900

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1983
April 2013
April 2017
April 201912

Yoshifumi Taura
New Candidate(March 4, 1960)

Joined Onoda Cement Co., Ltd.
General Manager, International Marketing &Trading Department, International Business
Division of Taiheiyo Cement Corporation
Executive Officer and General Manager,
International Marketing & Trading Department,International Business Division
Managing Executive Officer and Senior General
Manager, International Business Division (topresent)

Reason for nominating Yoshifumi Taura as Director
Mr. Yoshifumi Taura has been involved in operations of theinternational business for many years. Since 2017, he has served
as Executive Officer and has a wealth of experience and insight
regarding overall management. The Company has judged that heis an appropriate person to aim to continuously increase
corporate value of the Group and requests that he be a new
candidate for Director.

Note: No special relationship exists between the Company and Mr. Yoshifumi Taura.

18

Number ofshares of theCompany held

2,900

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)

Registered as a lawyer (Daini Tokyo Bar
Association)
January 1980
Partner, Masuda and Ejiri Law Office(predecessor of Nishimura & Asahi)
January 2008
Counsel, Nishimura & Asahi
April 2009
Partner, City-Yuwa Partners
June 2015
Outside Director of Taiheiyo Cement
Corporation
Outside Director, Dowa Holdings Co., Ltd.
Partner, City-Yuwa Partners
June 2016
Outside Director of Taiheiyo Cement
Corporation
Outside Director, Dowa Holdings Co., Ltd.
Outside Corporate Auditor, Sumitomo Bakelite
Yoshiko Koizumi
Co., Ltd.
Candidate for Outside
Partner, City-Yuwa Partners
Director
September 2017 Outside Director of Taiheiyo Cement
Reappointment
Corporation
Outside Director, Dowa Holdings Co., Ltd.
(September 25, 1943)
Outside Corporate Auditor, Sumitomo Bakelite
Attended 15 out of 15
13 meetings of the Board
Co., Ltd.
Outside Corporate Auditor, Nippon Koei Co.,of Directors (100%)
Ltd.
and will have served asPartner,City-Yuwa Partners (to present)
Director for 4 years at

Number ofshares of theCompany held

April 1972

close of this General
Meeting ofStockholders

1,500(Significant concurrent positions)
Outside Director, Dowa Holdings Co., Ltd.
Outside Corporate Auditor, Nippon Koei Co., Ltd.
Lawyer, Partner of City-Yuwa Partners
Reason for nominating Yoshiko Koizumi as Outside Director
Although Ms. Yoshiko Koizumi has not engaged in corporate
management in the past, as a lawyer, she has a wealth ofexperience, achievements, and knowledge regarding corporate
law, and provides precise recommendations and advice from an
objective standpoint independent from the management teamthat executes business in the Board of Directors. The Company
has judged that she makes significant contribution to themonitoring and supervision of overall management, andrequests that she continue to be a candidate for Director.

Notes:
1. Ms. Yoshiko Koizumi is nominated as an Outside Director.
2. Ms. Yoshiko Koizumi currently serves as an Outside Corporate Auditor at Sumitomo Bakelite Co., Ltd.,and is scheduled to retire from Outside Corporate Auditor as of June 24, 2019.
3. The Company currently has an agreement with Ms. Yoshiko Koizumi, which limits her liability fordamages in respect of her responsibilities set out under Article 423, Paragraph 1 of the Companies Act,to the minimum limit of liability set out under Article 425, Paragraph 1 of the same provided that she
executes her duties in good faith and without gross negligence. If the election of Ms. Yoshiko Koizumi
is approved, the Company plans to continue the said agreement with her.
4. Ms. Yoshiko Koizumi satisfies the Independence Criteria for Outside Officers defined by the Company,
19

(Translation)and the Company has registered Ms. Yoshiko Koizumi as an independent director at Tokyo Stock
Exchange, Inc. and Securities Membership Corporation Fukuoka Stock Exchange. Additionally, theIndependence Criteria for Outside Officers defined by the Company is provided on page 25.
5. The Company receives legal advice as required from lawyers of City-Yuwa Partners other than Ms.
Yoshiko Koizumi, where she serves as a partner, but the Company has not concluded an advisory
agreement with the law firm. The advisory fees paid to the law firm are less than 1% of annual sales foreach of the Company and the law firm, and there is no special interest relationship. Additionally, there
are no special interest relationships between the Company and any of the significant concurrent
positions.
6. No special relationship exists between the Company and Ms. Yoshiko Koizumi.

20

(Translation)

No.

Career summary, position, assignment andsignificant concurrent positions

Name(Date of birth)
April 1971
June 2000
June 2005

Joined Toyo Soda Manufacturing Co., Ltd.
(currently TOSOH CORPORATION)
Director of TOSOH CORPORATIONManaging Director of TOSOHCORPORATIONManaging Director of TOSOHCORPORATION
President and Representative Director of
TAIYO VINYL CORPORATION
President and Representative Director of
TAIYO VINYL CORPORATION
Advisor of TAIYO VINYL CORPORATION
Outside Director of Taiheiyo Cement
Corporation (to present)

June 2009
Yuzo Arima
Candidate for Outside
Director
Reappointment
June 2010(May 16, 1947)
Attended 15 out of 15 June 201514
meetings of the Board June 2016of Directors (100%)and will have served as
Director for 3 years at Reason for nominating Yuzo Arima as Outside Director
close of this General Mr. Yuzo Arima has a wealth of experience, achievements, andinsight as a corporate manager and provides precise
Meeting ofrecommendations and advice from an objective standpoint
Stockholders
independent from the management team that executes businessin the Board of Directors. The Company has judged that hemakes significant contribution to the monitoring and supervisionof overall management, and requests that he continue to be a
candidate for Director.

Number ofshares of theCompany held

800

Notes:
1. Mr. Yuzo Arima is nominated as an Outside Director.
2. The Company currently has an agreement with Mr. Yuzo Arima, which limits his liability for damages
in respect of his responsibilities set out under Article 423, Paragraph 1 of the Companies Act, to theminimum limit of liability set out under Article 425, Paragraph 1 of the same provided that he executes
his duties in good faith and without gross negligence. If the election of Mr. Yuzo Arima is approved, theCompany plans to continue the said agreement with him.
3. Mr. Yuzo Arima satisfies the Independence Criteria for Outside Officers defined by the Company, andthe Company has registered Mr. Yuzo Arima as an independent director at Tokyo Stock Exchange, Inc.
and Securities Membership Corporation Fukuoka Stock Exchange. Additionally, the Independence
Criteria for Outside Officers defined by the Company is provided on page 25.
4. No special relationship exists between the Company and Mr. Yuzo Arima.

21

(Translation)

Proposal No. 4:

Election of Two Corporate Auditors

The term of office of Mr. Yoshio Narukage will expire and Mr. Hidehiko Kasamura will resign from
Corporate Auditors at the close of this General Meeting of Stockholders. Accordingly, the Company would
like to propose the election of two Corporate Auditors.
The candidates for Corporate Auditors are as follows.
The Board of Auditors has previously given its approval.
No.

Name
(Date of birth)

Career summary, position andsignificant concurrent positions
April 1979
May 2009
April 2011
April 20121

Shigeru Matsushima
New Candidate(May 6, 1956)

April 2013
June 2013
April 2017
April 2019

Joined Nihon Cement Co., Ltd.
General Manager, Hokkaido Branch of
Taiheiyo Cement Corporation
Executive Officer and General Manager,
Hokkaido Branch
Executive Officer and Deputy Senior General
Manager, Cement Business Division andGeneral Manager, Administration Department
of Cement Business Division
Managing Executive Officer
Director and Managing Executive Officer
Director and Senior Executive Officer
Director (to present)

Number ofshares of theCompany held

4,620

Reason for nominating Shigeru Matsushima as Corporate
AuditorMr. Shigeru Matsushima has been overseeing the general affairs,
accounting, and finance divisions and environmental business as
an officer and has an experience supervising business execution
as Director as well as a wealth of insight. The Company has
judged that he will be able to appropriately supervise the
Directors’ performance of duties to aim to continuously increase
corporate value of the Group and requests that he be a new
candidate for Corporate Auditor.
Notes:
1. If the election of Mr. Shigeru Matsushima is approved, and Proposal 2 “Partial Amendments to the
Articles of Incorporation” is approved as originally proposed, the Company plans to enter into anagreement with him, which would limit his liability for damages in respect of his responsibilities set
out under Article 423, Paragraph 1 of the Companies Act, to the minimum limit of liability set out
under Article 425, Paragraph 1 of the same provided that he executes his duties in good faith andwithout gross negligence.
2. No special relationship exists between the Company and Mr. Shigeru Matsushima.

22

(Translation)

No.

2

Name
(Date of birth)

Career summary, position andsignificant concurrent positions

November 1974 Joined Chuo Accounting Audit Corporation(MISUZU Audit Corporation)
March 1980
Registered as a Certified Public Accountant
September 1990 Partner of Chuo Shinko Audit Corporation(MISUZU Audit Corporation)
August 1996
Representative Partner of Chuo Audit
Corporation (MISUZU Audit Corporation)
July 2007
Retired from MISUZU Audit Corporation
June 2011
Outside Corporate Auditor of JIEC Co., Ltd.
May 2012
Outside Corporate Auditor of JIEC Co., Ltd.
Outside Corporate Auditor of Prime WorksCo., Ltd. (currently Neos corporation)
May 2016
Outside Corporate Auditor of JIEC Co., Ltd.
June 2016
Outside Director, Audit and Supervisory
Yoshio Fujima
Committee member of JIEC Co., Ltd.
New Candidate
May 2019
Retired from Outside Director, Audit andCandidate for Outside
Supervisory Committee member of JIEC Co.,Ltd.
Corporate Auditor(January 8, 1948)(Significant concurrent positions)Certified Public Accountant

Number ofshares of theCompany held

0

Reason for nominating Yoshio Fujima as Outside Corporate
Auditor
Although Mr. Yoshio Fujima has not engaged in corporate
management in the past, he has been practicing corporate
accounting for many years, and has a wealth of experience,achievements, and insight as a Certified Public Accountant. The
Company has judged that he can audit the business execution of
Directors from an objective, independent, and fair standpoint,
and requests that he be a new candidate for Outside Corporate
Auditor.
Notes:
1. Mr. Yoshio Fujima is nominated as an Outside Corporate Auditor.
2. If the election of Mr. Yoshio Fujima is approved, the Company plans to enter into an agreement withhim, which would limit his liability for damages in respect of his responsibilities set out under Article
423, Paragraph 1 of the Companies Act, to the minimum limit of liability set out under Article 425,
Paragraph 1 of the same provided that he executes his duties in good faith and without grossnegligence.
3. Mr. Yoshio Fujima satisfies the Independence Criteria for Outside Officers defined by the Company,
and in the event that he takes office as an Outside Corporate Auditor, the Company plans to register
him as an independent corporate auditor at Tokyo Stock Exchange, Inc. and Securities Membership
Corporation Fukuoka Stock Exchange. Additionally, the Independence Criteria for Outside Officers
defined by the Company is provided on page 25.
4. No special relationship exists between the Company and Mr. Yoshio Fujima.

23

(Translation)

Proposal No. 5:

Election of One Substitute Corporate Auditor

In order to prepare for cases where a vacancy results in a shortfall in the number of Corporate Auditorsprescribed by laws, the Company proposes the election of one Substitute Corporate Auditor, to substitute for
an Outside Corporate Auditor.
The candidate for Substitute Corporate Auditor is as follows.
The Board of Auditors has previously given its approval.
Career summary, position andsignificant concurrent positions

Name(Date of birth)
October 1983
August 1987
July 1999
August 2014

Number ofshares of theCompany held

Joined Tetsuzo Ota & Co. (currently Ernst & Young
ShinNihon LLC)
Registered as a Certified Public Accountant
Partner of Showa Ota & Co. (currently Ernst &Young ShinNihon LLC)
Retired from Ernst & Young ShinNihon LLC(Significant concurrent positions)
Toshihito Aoki
Certified Public Accountant
Candidate for Outside
Corporate Auditor
Reason for nominating Toshihito Aoki as substitute Outside
Corporate Auditor(April 7, 1954)
Although Mr. Toshihito Aoki has not engaged in corporate
management in the past, he has been practicing corporate accounting
for many years, and has a wealth of experience, achievements, andinsight as a Certified Public Accountant. The Company has judged that
he can audit the business execution of Directors from an objective,
independent, and fair standpoint, and requests that he continue to be a
candidate for substitute Outside Corporate Auditor.

0

Notes:
1. Mr. Toshihito Aoki is nominated as a substitute Outside Corporate Auditor.
2. In the event that Mr. Toshihito Aoki takes office as an Outside Corporate Auditor, the Company plans toenter into an agreement with him, which would limit his liability for damages in respect of his
responsibilities set out under Article 423, Paragraph 1 of the Companies Act, to the minimum limit ofliability set out under Article 425, Paragraph 1 of the same provided that he executes his duties in goodfaith and without gross negligence.
3. Mr. Toshihito Aoki satisfies the Independence Criteria for Outside Officers defined by the Company,
and in the event that he takes office as an Outside Corporate Auditor, the Company plans to register
him as an independent corporate auditor at Tokyo Stock Exchange, Inc. and Securities Membership
Corporation Fukuoka Stock Exchange. Additionally, the Independence Criteria for Outside Officers
defined by the Company is provided on page 25.
4. No special relationship exists between the Company and Mr. Toshihito Aoki.

24

(Translation)(Reference)
Independence Criteria for Outside Officers
Outside officers are considered to be sufficiently independent from the Company if they do not fall under
any of the following items:
1. A person who is or was an executive (Note 1) of the Company or any of its subsidiaries;
2. A person who is or has recently been a person falling under any of the (1) through (7) below:(1) A major stockholder (Note 2) of the Company or an executive of a major stockholder of theCompany;(2) A party whose major business partner is the Company (Note 3) or an executive thereof;(3) A major business partner of the Company (Note 4) or an executive thereof;(4) A person belonging to an audit corporation that is the accounting auditor of the Company;(5) A party who receives a significant amount of donation or aid (Note 5) from the Company or an
executive thereof;(6) An individual who receives a significant amount of money (Note 6) or other property from theCompany as a lawyer, certified public accountant, tax accountant, consultant, etc., in addition
to the compensation that he/she receives from the Company as an outside officer; or(7) An executive of a legal entity, etc. that is a law firm, auditing firm, tax accounting firm,
consulting firm, etc., whose major business partner is the Company (Note 7).
3. A person who is a close relative (Note 8) of any of the persons listed in 1. and 2. above.
Notes:
1. An executive is an executive director, corporate officer, executive officer, or an employee who holds
a senior management position.
2. A major stockholder is a stockholder who holds 10% or more of the voting rights of the Company.
3. A party whose major business partner is the Company is a party who has carried out transactions
with the Company for an amount exceeding 2% of the annual consolidated total net sales for thelatest fiscal year of that party.
4. A major business partner of the Company is a party who has carried out transactions with theCompany for an amount exceeding 2% of the annual consolidated total net sales for the latest fiscal
year of the Company or a financial institution that has an outstanding balance of loans to theCompany that exceeds 2% of the consolidated total assets of the Company as of the end of the latest
fiscal year of the Company.
5. If the recipient is an individual, a significant amount of donation or aid means a donation or aid
exceeding an average of 10 million yen per year over the last three fiscal years. If the recipient is alegal entity, a significant amount of donation or aid means a donation or aid of an average of 10
million yen per year over the last three fiscal years or 30% of the total annual expenses of said legal
entity, whichever the greater.
6. A significant amount of money means an amount of money exceeding an average of 10 million yen
per year over the last three fiscal years.
7. A legal entity, etc. whose major business partner is the Company is a legal entity, etc. that has
carried out transactions with the Company for an average amount per year over the last three years
exceeding 2% of the annual consolidated total net sales of said legal entity, etc.
8. A close relative means a spouse or a relative within the second degree of kinship.

25

(Translation)(Appendix)

Business Report(April 1, 2018 - March 31, 2019)

1. Overview of the Company Group
1)

Business Progress and Results
During FY2018, Japan’s economy continued to undergo a moderate recovery due to factors such as
expansion in capital investment and continued improvements in employment and earnings on the backof strong corporate earnings. Meanwhile, the economic outlook remains uncertain due to the effects oftrade conflict between the U.S. and China and a slowdown in the Chinese economy, in addition to aseries of natural disasters and a serious shortage of labor.
The U.S. economy continued to undergo moderate growth, on the back of reduced levels of theunemployment rate and robust consumer spending.
China’s economy saw a slowdown in the pace of growth due to decreases in export and consumer
spending. In Vietnam and the Philippines, the economy remains solid due to the strong personal
consumption.
Under these circumstances, in FY2018, the Group's consolidated sales increased ¥44,958 million
from the previous year to ¥916,071 million. Consolidated operating income was ¥66,012 million, up¥883 million, while consolidated ordinary income was ¥64,306 million, down ¥59 million and profit
attributable to owners of parent increased ¥4,927 million to ¥43,452 million.
Reviews of operation by each segment are as follows.
Cement Business
Sales¥646,477 million (up 5.6% year-on-year)
Operating Income ¥41,743 million (up 2.6% year-on-year)
Domestic cement demand in the public sector has been on the increase due to the progress ofconstruction related to the Shinkansen across Japan while construction related to the Tokyo Olympics
and Paralympics has begun in earnest. Domestic cement demand in the private sector also remains
strong due to an increase in capital investment, on the back of redevelopment mainly in Tokyo
metropolitan area and improvement in corporate earnings and, as a whole, domestic cement demand
increased 1.7% from the previous year to 42.58 million tons, of which, imported cement decreased
48.1% from the previous year to 0.09 million tons. Total exports decreased 12.1% from the previous
year to 10.37 million tons.
Under these circumstances, the Taiheiyo Cement Group's domestic cement sales by volume,
including consignment sales, increased 3.5% from the previous year to 15.24 million tons, whilst
exports decreased 17.7% to 3.48 million tons.
Shipment volume rose served by our U.S. West Coast cement and ready-mixed concrete businesses,
where the market is generally on a recovery trend. Our cement business in China saw a recovery
trend in price. Our cement business in Vietnam was affected by competition with other products,
among other factors. Our cement business in the Philippines saw a continuing expansion of domestic
demand, and the price began to recover after hitting the bottom.
As a result of the above, consolidated sales increased ¥34,558 million from the previous year to¥646,477 million, and consolidated operating income increased ¥1,091 million to ¥41,743 million.

26

(Translation)

Mineral Resources Business
Sales¥84,262 million (up 3.4% year-on-year)
Operating Income ¥8,242 million (up 2.2% year-on-year)
In our aggregates business, demand related to redevelopment mainly in Tokyo metropolitan area
and the Tokyo Olympics and Paralympics began in earnest, while restoration and reconstruction workin the Tohoku region neared completion. Our mineral products business and geo-solutions businessremain solid.
As a result of the above, consolidated sales increased ¥2,778 million from the previous year to¥84,262 million, and consolidated operating income increased ¥180 million to ¥8,242 million.
Environmental Business
Sales¥92,693 million (up 2.7% year-on-year)
Operating Income ¥6,614 million (down 11.3% year-on-year)
Although sales of fuels and waste processing operations of waste plastics and sludge, etc., werestrong, the volume of incineration ash decreased due to the reduction in the operation rate ofcoal-fired power plants resulting from growth in renewable energy, and costs for distribution and new
business development increased.
As a result, consolidated sales increased ¥2,486 million from the previous year to ¥92,693 million,
and consolidated operating income decreased ¥848 million to ¥6,614 million.
Construction Materials Business
Sales¥82,185 million (up 6.6% year-on-year)
Operating Income ¥4,999 million (up 5.4% year-on-year)
As ground improvement projects are recovering and sales of materials related to civil engineering
increased, consolidated sales increased ¥5,151 million from the previous year to ¥82,185 million, andconsolidated operating income increased ¥259 million to ¥4,999 million.
Other Business
Sales¥86,028 million (up 8.8% year-on-year)
Operating Income ¥4,658 million (up 18.6% year-on-year)
Due to solid demand in the engineering business, consolidated sales increased ¥7,008 million fromthe previous year to ¥86,028 million, and consolidated operating income increased ¥731 million to¥4,658 million.
Sales and Operating Income by Business Segment
Business Segment

Sales

CementMineral Resources
Environmental
Construction Materials
Other
Subtotal
Elimination or unallocated amounts
Total

646,477
84,262
92,69382,18586,028991,647(75,575)
916,071

Year-on-yearincrease (decrease)34,558
2,778
2,486
5,151
7,008
51,983(7,024)44,95827(Unit: Millions of yen)
Operating
Year-on-year
incomeincrease (decrease)
41,743
1,091
8,242
180
6,614
(848)
4,999
259
4,658
731
66,257
1,414
(244)
(530)
66,012883

(Translation)

2)

Capital Investments
The total amount of capital investments by the Group in the fiscal year under review increased¥9,708 million from the previous year to ¥67,796 million, consisting of ¥38,557 million in the Cement
Business, ¥10,246 million in the Mineral Resources Business, ¥1,852 million in the Environmental
Business, ¥3,626 million in the Construction Materials Business, ¥11,899 million in the Other Businessand ¥1,614 million in Group wide assets.

3)

Trends in Assets and Income
Item

18th fiscal year
ended
March 31, 2016

19th fiscal year
ended
March 31, 2017

20th fiscal year
ended
March 31, 2018

21st fiscal year
ended
March 31, 2019
(Current)

Net sales
835,359
798,588871,113916,071(millions of yen)
Ordinary income
60,22559,80264,36664,306(millions of yen)
Profit attributable toowners of parent
36,40447,59738,52543,452(millions of yen)
Net income per share
296.31
383.91
311.40351.72(yen)
Total assets
1,014,075
1,015,415
1,020,111
1,034,428(millions of yen)
Net assets
357,073
400,034
432,326
450,645(millions of yen)
(Notes) 1. The Company, with an effective date of October 1, 2017, conducted a reverse stock split
for its common stock at a ratio of one for 10. As a result, net income per share is calculated
assuming that said share consolidation had been conducted at the beginning of the 18th fiscal year
ended March 31, 2016.
2. “Partial Amendments to Accounting Standard for Tax Effect Accounting" (AccountingStandards Board of Japan (ASBJ), Guidance No. 28, February 16, 2018), etc. has been applied
from the beginning of the fiscal year under review, and the figures for the 20th fiscal term havebeen adjusted to retroactively apply said accounting standards.
4)

Issues to be Addressed
Looking ahead, the Japanese economy is expected to continue recovering moderately, on the back offactors such as improved corporate earnings and employment environment, while the increase of
consumption tax rate scheduled in October 2019 gives cause for concern. However, the businessenvironment is likely to remain unpredictable due to uncertain prospects in the global economy over theeffects of trade conflict between the U.S. and China and a slowdown in the Chinese economy, andconfusion over the U.K. exit from the EU.
Turning our attention to the Group’s business environment, in our core domestic cement business,
demand remains strong due to construction related to the Tokyo Olympics and Paralympics,
redevelopment investment in urban areas, and disaster prevention and mitigation measures, andmoreover, demand for the construction of the Chuo Shinkansen is expected. On the other hand, theimpact of serious labor shortages and an increase in raw material prices continue to warrant concern.
Additionally, in the U.S. economy, on the back of factors such as robust corporate earnings andemployment environment, economic growth is expected to continue, while great uncertainty surrounds
policy management, and trends must be monitored closely.
Under these circumstances, the Group has thus declared—as our future vision and direction targetedat the mid-2020s—to become an enterprise group that provides a sense of safety and security to societies
in the Pacific Rim by demonstrating the Group’s overall capabilities and clarified the medium- tolong-term direction toward sustainable development, and we are actively undertaking the process divided
28

(Translation)

into three steps toward its realization. The Group has positioned the 20 Medium-Term Management Plan
which covers the three-year period until FY2020 as its second step. In FY 2019, the second year of theMedium-Term Management Plan, the Group will actively work toward with the following managementtasks to achieve the targets.
Basic Policies of 20 Medium-Term Management Plan
In the 20 Medium-Term Management Plan, the Group aims to establish solid business foundationsin accordance with the following basic policies.
(i) The Group will preempt future changes to the business operating environment, attempt
innovation from various perspectives, and establish an enterprise group moving forward todevelopment.
(ii) As a member of the social infrastructure industry, the Group will contribute to establishment ofa safe and secure society by stable supply of high quality products, solutions, and advanced
technology development, in order to build national resilience.
(iii) The Group will strengthen its earnings base in existing businesses, and make further
improvements in its financial structure by exhaustive cost-cutting, as well as active investment
in growth areas that will contribute to sustainable development of the Group.
Business Strategies
1. Enhance earnings base for existing businesses and formulate/implement growth strategies
The Group will boost its earnings base by exhaustive cost-cutting and promotion of process
innovation, etc., and pursue competitive advantages through new value creation and differentiation.
Furthermore, the Group will conduct growth investment in order to grow earnings capacity, andcontribute to resolution of social issues by working steadily toward the achievement of businessstrategies.
2. Support for national projects
The Group will maximize the Group’s strength, muster all of its resources, conduct stable supplyof high-quality products, and provide solutions steadily in order to meet full-fledged restoration andreconstruction demand in Fukushima Prefecture, various infrastructure improvements for the Tokyo
Olympics and Paralympics, and other national projects such as major infrastructure projects.
Research & Development Strategies
As an engine of growth supporting each business segment, the Group will work on research anddevelopment contributing to the whole Group’s development. The Group will also focus on researchand development playing a role in resolution of social issues as a member of the social infrastructureindustry, develop technologies needed, and provide them appropriately for national projects.
Strengthen management foundations
The Group will steadily work toward the realization of targets set in the form of CSR Objectives
for 2025. The Group will also endeavor to improve working efficiency and establish a comfortableworking environment through workstyle reform and promotion of health and productivity
management, as well as securing and training global human resources. Furthermore, the Group willseek to strengthen its management foundations by strengthening group governance, enhancing
corporate governance, continuing selection and concentration, and strengthening competitiveness invalue chains.
The Group looks forward to your continued support and cooperation as our stockholder.

29

(Translation)

5)

Material Subsidiaries
Company name
DC Co., Ltd.
Clion Co., Ltd.
Myojyo Cement Co., Ltd.
Taiheiyo Materials
Corporation
CalPortland Company

The Company’s
percentage of equity
Principal businessparticipation
100
Manufacturing and sale of cement
Manufacturing and sale of autoclaved lightweight
97.7
aerated concrete (ALC)
100
Manufacturing and sale of cement
Manufacturing and sale of various construction
100
materials such as admixture and non-shrink grout
Manufacturing and sale of cement, ready-mixed
100
concrete, etc. in the United States

Jiangnan-Onoda Cement Co.,
88.5
Manufacturing and sale of cement in China
Ltd.
Qinhuangdao Asano Cement
71.9
Manufacturing and sale of cement in China
Co., Ltd.
Dalian Onoda Cement Co.,
84.8
Manufacturing and sale of cement in China
Ltd.
Nghi Son Cement
65.0
Manufacturing and sale of cement in Vietnam
Corporation
Taiheiyo Cement Philippines,
Manufacturing and sale of cement in the
100
Inc.
Philippines(Notes) 1. The Company’s percentage of equity participation includes indirect ownership throughsubsidiaries.
2. The Company’s percentage of equity participation in Clion Co., Ltd. is calculated by
excluding treasury stock.
6)

Principal Businesses
Businesses of the Taiheiyo Cement Group are divided into Cement Business Segment, Mineral
Resources Business Segment, Environmental Business Segment, Construction Materials Business
Segment and Other Business Segment, and mainly consist of the following.
(i) Cement Business
Ordinary Portland cement and other various
types of cement, white cement,
construction – material – purpose cement,
ecocement, cement-based solidifying agent,
ready-mixed concrete, admixture, etc.

(iii) Environmental Business
Waste recycling business (recycling into cement raw
materials and fuels), flue gas desulfurization materials,
recycled products, chemicals, water-related business,
etc.
(iv) Construction Materials Business
Concrete products, construction materials, civilengineering and construction work, etc.

(ii) Mineral Resources Business
Aggregates, limestone, white marble, quicklime,
silica, lightweight aggregates and lightweight
fill material, heavy metal immobilizer, surplus
construction soil recycling business, etc.

(v) Other Business
Real estate business, engineering business, dataprocessing business, finance business, transportation
and warehousing business, chemical products
business, sports business, etc.

30

(Translation)

7)

Principal Business Locations(i) The Company’s principal business locations and plants
Head Office:2-3-5, Daiba, Minato-ku, Tokyo, Japan
Central Research Laboratory: Sakura City, Chiba Prefecture, Japan
Branches and Plants
Branches
Name
Location
Hokkaido Branch
Sapporo City, Hokkaido
Prefecture
Tohoku Branch
Sendai City, Miyagi
Prefecture
Tokyo Branch
Minato-ku, Tokyo

Kumagaya Plant

Kanto Branch

Saitama Plant

Chubu Hokuriku
BranchKansai Shikoku
BranchChugoku Branch
Kyushu Branch

Takasaki City, Gunma
Prefecture
Nagoya City, Aichi
Prefecture
Osaka City, Osaka
Prefecture
Hiroshima City, Hiroshima
Prefecture
Fukuoka City, Fukuoka
Prefecture

PlantsName
Kamiiso Plant
Ofunato Plant

Fujiwara Plant
Oita Plant

Location
Hokuto City, Hokkaido
Prefecture
Ofunato City, Iwate
Prefecture
Kumagaya City, Saitama
Prefecture
Hidaka City, Saitama
Prefecture
Inabe City, Mie Prefecture
Tsukumi City, Oita
Prefecture(ii) Principal business locations of material subsidiaries
Name
Location
DC Co., Ltd.
Kawasaki City, Kanagawa Prefecture
Clion Co., Ltd.
Koto-ku, Tokyo
Myojyo Cement Co., Ltd.
Itoigawa City, Niigata Prefecture
Taiheiyo Materials Corporation
Kita-ku, Tokyo
CalPortland Company
California, USA
Jiangnan-Onoda Cement Co., Ltd.
Jiangsu, China
Qinhuangdao Asano Cement Co., Ltd.
Hebei, China
Dalian Onoda Cement Co., Ltd.
Liaoning, China
Nghi Son Cement Corporation
Tinh Thanh Hoa, Vietnam
Taiheiyo Cement Philippines, Inc.
Cebu, Philippines31

(Translation)

8)

Employees
Business Segment
Number of Employees (persons)Cement8,394
Mineral Resources
912
Environmental
159
Construction Materials
1,230
Other
2,119
Group-wide (common)
269
Total
13,083(Notes) 1. The number of employees refers to the number of persons on the payroll.
2. The above includes the following number of employees of the Company. The number of
employees stated below does not include employees on temporary retirement, seconded
employees, etc. (568 persons).
Number of
Increase or decrease
Average age
Average length of
employees
from previous year
service
1,760 persons
Increase of 14 persons
41.5 years old
19.7 years

32

(Translation)

9)

Major Lenders and Amount of Borrowings

LenderMizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation

Outstanding borrowings (millions of yen)
42,79332,3102. Shares of the Company
1) Total number of shares authorized to be issued

197,730,800 shares2) Total number of shares outstanding

127,140,278 shares(including 4,421,453 shares of treasury stock)3) Number of stockholders

53,116 persons

4) Major stockholders
Stockholder name

Holding

Stockholding ratio(thousand shares)(%)

THE MASTER TRUST BANK OF JAPAN, LTD. (TRUSTACCOUNT)

10,431

8.5

JAPAN TRUSTEE SERVICES BANK, LTD. (TRUSTACCOUNT)

8,788

7.1

JP MORGAN CHASE BANK 385632

3,135

2.5

SSBTC CLIENT OMNIBUS ACCOUNT

2,673

2.1

JAPAN TRUSTEE SERVICES BANK, LTD. (TRUSTACCOUNT 5)

2,478

2.0

MIZUHO BANK, LTD.

2,375

1.9

JP MORGAN CHASE BANK 385167

1,989

1.6

STATE STREET BANK WEST CLIENT-TREATY 505234

1,930

1.5

JP MORGAN CHASE BANK 385151

1,893

1.5

GOVERNMENT OF NORWAY

1,879

1.5

(Notes)1. The Company holds 4,421,453 shares of treasury stock.
2. The stockholding ratio is calculated by excluding treasury stock.

33

(Translation)

3. Company Officers
1)

Name, etc. of Directors and Corporate Auditors
Position

Name

Significant concurrent positions

Chairman and Director

Shuji Fukuda

Outside Director of Sapporo Holdings
LimitedPresident and Representative
Director

Masafumi Fushihara

Vice President and Representative
Director

Yuuichi Kitabayashi

Director

Shigeru Matsushima

Director

Youichi Funakubo

Director

Keiichi Miura

Director

Masahiro Karino

Director

Kunihiro Ando

Director

Ichiro Egami

Director

Tomoya Sakamoto

Director

Katsuhide Fukuhara

Director

Toshiaki Suzuki

Outside Director of P.S. Mitsubishi
Construction Co., Ltd.

Director

Yoshiko Koizumi

Outside Director of Dowa Holdings Co.,Ltd.
Outside Corporate Auditor of Sumitomo
Bakelite Co., Ltd.
Outside Corporate Auditor of Nippon
Koei Co., Ltd.
Lawyer, Partner of City-Yuwa Partners

Director

Yuzo Arima

Corporate Auditor (Standing)Hidehiko Kasamura

Corporate Auditor (Standing)Toshihide Nishimura

Corporate Auditor

Yoshio Narukage
Wakako Mitani

Corporate Auditor(Notes)

1.
2.
3.
4.

(Name on family
registration:
Wakako Akamatsu)

Overseeing Corporate Planning
Department

Outside Corporate Auditor of NIPPONCONCRETE INDUSTRIES CO., LTD.

Lawyer, Partner of TANABE &PARTNERS

Directors Yoshiko Koizumi and Yuzo Arima are Outside Directors.
Corporate Auditors Yoshio Narukage and Wakako Mitani are Outside Corporate Auditors.
Director Toshiaki Suzuki was newly elected at the 20th Ordinary General Meeting of Stockholders
held on June 28, 2018, and took office on the same day.
Corporate Auditors Hidehiko Kasamura and Toshihide Nishimura have hands-on experience in thebusiness management division of the Company and have considerable financial and accounting
expertise.

34

(Translation)

5.
6.

7.

8.

9.

Corporate Auditor Yoshio Narukage has years of experience in financial institutions and has
considerable financial and accounting expertise.
The Company receives legal advice as required from lawyers of City-Yuwa Partners other than
Director Yoshiko Koizumi, where she holds a significant concurrent position, but the Company has
not concluded an advisory agreement with the law firm. The advisory fees paid to the law firm isless than 1% of net sales for each of the Company and the law firm, and there is no special interest
relationship. Additionally, there are no special interest relationships between the Company and anyof the significant concurrent positions of the other Outside Executives.
The Company has registered Directors Yoshiko Koizumi and Yuzo Arima as independent directors
and Corporate Auditors Yoshio Narukage and Wakako Mitani as independent corporate auditors at
Tokyo Stock Exchange, Inc. and Securities Membership Corporation Fukuoka Stock Exchange.
Retirements in significant concurrent positions during the fiscal year under review are as follows:
Name
Position
Significant concurrent positions Retirement datePresident andOutside Director of P.S.
Masafumi
June 21, 2018
Fushihara
Representative Director Mitsubishi Construction Co., Ltd.
The Company has introduced an executive officer system; executive officers as of April 1, 2019 are
as follows.
Position
Name
Assignment
Overseeing Intellectual Property Department
Senior Executive Officer
Keiichi Miura*
and Central Research Laboratory
Overseeing Human Resources Department,
Senior Executive Officer
Masahiro Karino*
Legal Department and Internal Auditing
Department
Overseeing Mining Department, Mineral
Resources Business Department andManaging Executive
Kunihiro Ando*
Officer
Environmental Business Development
Department
Overseeing Construction Materials Business
Managing Executive
Katsuhide Fukuhara*
Department and Business Planning &Officer
Administration Department
Senior General Manager of Cement Business
Managing Executive
Toshiaki Suzuki*
Officer
Division
Overseeing Production Department andManaging Executive
Yoshiyuki Uenoyama
Officer
Maintenance & Engineering Department
Overseeing General Affairs Department andManaging Executive
Hideaki Asakura
Officer
Purchasing Department
Overseeing Secretarial Department, Accounting
Managing Executive
Tetsuya Ohashi& Finance Department and Real Estate
OfficerBusiness Department
Senior General Manager of International
Managing Executive
Yoshifumi Taura
OfficerBusiness Division
General Manager of Human Resources
Executive Officer
Seiichi Araki
Department
General Manager of Mineral Resources
Executive Officer
Yoshiaki Tominaga
Business Department
Executive Officer
Yukimasa Nakano
General Manager of Tokyo Branch
Chairman and CEO of Taiheiyo Cement
Executive Officer
Katsuyoshi Fukagawa(China) Investment Co., Ltd.
Executive Officer

Takayoshi Okamura

General Manager of Central Research Laboratory

Executive Officer

Atsuhiro Koike

General Director of Nghi Son Cement
Corporation

35

(Translation)

Executive Officer

Koshiro Hidaka

Executive Officer

Susumu Miyazaki

Executive Officer

Naoyuki Kira

Executive Officer

Masaki Takahashi

Executive Officer

Yasushi Ushiki

General Manager of Maintenance & Engineering
Department
General Manager of Purchasing Department
General Manager of Sales Department, Cement
Business Division
General Manager of Corporate Planning
Department
General Manager of Production Department

General Manager of Environmental Business
Development Department
Persons who concurrently serve as Directors are marked with an asterisk (*).
Executive Officer

Shinji Fukami36

(Translation)2)

Total Amount of Compensation, etc. to Directors and Corporate Auditors
Classification
Number of persons paid (persons)Amount paid (millions of yen)
Directors
14827
Corporate Auditors
4
72
Total
18
899
(Note) Above compensation, etc. includes compensation, etc. to outside officers totaling ¥51 million.
There were four outside officers who received payment.

3)

Outside Officers(1)

Main Activities in Fiscal Year under Review
Attendance atAttendance at
PositionNamemeetings of Board
meetings of Board ofof Directors
Auditors

Director

YoshikoKoizumi15 out of 15 meetings-

Director

Yuzo Arima

15 out of 15 meetings-

Corporate
AuditorYoshioNarukage

12 out of 15 meetings

13 out of 13 meetings

Corporate
Auditor

WakakoMitani15 out of 15 meetings

13 out of 13 meetings(2)

Comment status
Made comments as appropriate
at the meetings of the Board of
Directors based on her wealthof experience and insight incorporate management mainly
as a lawyer.
Made comments as appropriate
at the meetings of the Board of
Directors based on his wealthof experience mainly as amanagement executive of amanufacturing company.
Made comments as appropriate
at the meetings of the Board of
Directors and meetings of theBoard of Auditors based on his
wealth of experience mainly asa management executive of afinancial institutions, etc.
Made comments as appropriate
at the meetings of the Board of
Directors and meetings of theBoard of Auditors based on her
wealth of experience andinsight
incorporate
management mainly as alawyer.

Overview of Limited Liability Agreement
The Company has concluded an agreement with each outside officer, which limits his/her liability fordamages in respect of his/her responsibilities set out under Article 423, Paragraph 1 of the Companies
Act, to the minimum limit of liability set out under Article 425, Paragraph 1 of the same provided thathe/she executes his/her duties in good faith and without gross negligence.

37

(Translation)

4. Accounting Auditor
1)

Name of the Company’s Accounting Auditor
KPMG AZSA LLC

2)Accounting Auditor’s Compensation, etc. in Fiscal Year under Review¥ 110 million(Notes) 1. Under the audit agreement between the Company and its Accounting Auditor, the amount ofcompensation for audits pursuant to the Companies Act and audits pursuant to the Financial
Instruments and Exchange Act are not distinguished from each other and are indistinguishable
in practice. Therefore, the above amount includes compensation, etc. for audits pursuant to
the Financial Instruments and Exchange Act.
2. The Board of Auditors of the Company, in observance of the “Practical Guidelines for
Cooperation with Accounting Auditors” published by the Japan Audit & Supervisory Board
Members Association, has confirmed the time taken to audit each audit item, trends in audit
fees, and the status of execution of duties of the Accounting Auditor, and upon considering
the appropriateness of the audit plan and appropriateness of audit fees for the fiscal year
under review, agrees to the fees, etc., of the Accounting Auditor under Article 399, Paragraph
1 of the Companies Act.

3)

Description of Non-audit Services to the Company involving Payment of Consideration to
Accounting Auditor
The Company entrusts, to the Accounting Auditor, advisory services relating to the adoption ofInternational Financial Reporting Standards and service of preparing comfort letter for issuance ofcorporate bonds, which are services other than the services set forth in Article 2, Paragraph 1 of
the Certified Public Accountants Act (non-audit services), and pays consideration for said
services.

4)

Policy for Determination of Dismissal or Non-reappointment of Accounting Auditor
1) If the Accounting Auditor is deemed to correspond to any of the matters set forth in the items of
Article 340, Paragraph 1 of the Companies Act, the Board of Auditors will dismiss the Accounting
Auditor subject to the consent of all Corporate Auditors, in which case the Corporate Auditor
selected by the Board of Auditors will report the dismissal and the reason for the dismissal at thefirst Ordinary General Meeting of Stockholders held after the dismissal.
2) The Board of Directors will specify the dismissal or non-reappointment of the Accounting Auditor
as an agenda of the General Meeting of Stockholders based on the Board of Auditors’ resolution incases where severe problems have arisen in the Company’s audit operations and in other suchcases.

5)

Total Amount of Money and Other Property Benefits Payable to Accounting Auditor by theCompany and its Subsidiaries¥ 236 million(Note) Among significant subsidiaries of the Company, CalPortland Company, Jiangnan-Onoda
Cement Co., Ltd., Qinhuangdao Asano Cement Co., Ltd., Dalian Onoda Cement Co., Ltd., Nghi
Son Cement Corporation and Taiheiyo Cement Philippines, Inc. have been audited (limited toaudits under the provisions of the Companies Act or the Financial Instruments and Exchange Act(including laws and ordinances of foreign countries corresponding to said Acts)) by a Certified
Public Accountant or an audit corporation other than the Company’s Accounting Auditor(including those with foreign qualifications equivalent to CPA/auditor qualifications).

38

(Translation)

5.

System to Ensure that Directors Comply with Laws and Ordinances and the Articles ofIncorporation in Executing Their Duties and Other Systems to Ensure Proper Execution of
Operations(1)

Summary of the System to Ensure the Proper Execution of Operations

The Company has systems to ensure the proper execution of operations (so-called internal control
systems) and defines them as shown below.
1)

System to ensure that Directors, Executive Officers and employees comply with laws andordinances and the Articles of Incorporation in executing their duties(i) The Company shall strengthen its system for ensuring that the actions of Directors, Executive
Officers and employees comply with laws and ordinances, the Articles of Incorporation and otherinternal company rules, and conventional wisdom in accordance with the Mission of the Taiheiyo
Cement Group, Business Principles, Basic Compliance Policy and Compliance Rules.
(ii) The CSR Management Committee, an interdepartmental committee under the direct authority of
the Board of Directors, pursues policies to promote compliance awareness among Directors,
Executive Officers and employees in accordance with the CSR Prospectus.
(iii) The Internal Auditing Department conducts audits of the business activities of each place ofbusiness within the Company to determine whether Executive Officers and employees comply withlaws and ordinances, the Articles of Incorporation, etc. in executing their duties, provides advice
and recommendations after identifying items in need of improvement, and reports to the President
about audit results and then notifies Directors and Corporate Auditors.
(iv) The Company employs an internal reporting system that uses a compliance hotline to reach
representatives both inside and outside the Company (law firm) to enable an accurate response
while protecting the informer and ensuring transparency.

2)

System to store and manage information related to the execution of duties by Directors
The Company documents, stores and manages information related to the execution of duties byDirectors in accordance with the Board of Directors Rules, Decision Making Rules and Document
Management Rules. Directors and Corporate Auditors can review these documents at any time.

3)

Rules and other systems related to managing the risk of loss(i) The Company has prepared the Basic Risk Management Policy and Risk Management Rules
covering basic matters and specific responses to prevent and minimize the impact of risk items that
could significantly affect the business of the Taiheiyo Cement Group. The CSR Management
Committee is in charge of pursuing specific measures, and reports to the Board of Directors about
the status of these activities.
(ii) In the event of an emergency, the Company establishes an Emergency Headquarters led by the
President to pool information and exercise top-down leadership in tackling the emergency inaccordance with the provisions of the Risk Management Rules.

4)

System to ensure that Directors execute their duties efficiently(i) The Company delegates to Executive Officers the authority for certain business matters as
stipulated in the Decision Making Rules and elsewhere. Executive Officers, based on a
Management by Objectives, set clear targets for each responsible organization under their control
and execute their duties efficiently.
(ii) The Board of Directors efficiently allocates business resources from the perspective of optimizing
companywide resources and in accordance with the medium-term management plan and annual
management policy (President’s policy), and reviews the targets of Executive Officers and theprogress of policies reported from time to time.

5)

System for ensuring proper execution of operations within the company group, comprising theCompany and its subsidiaries
39

(Translation)

The Company, in accordance with its Group Companies Management Rules, takes the following steps
to provide appropriate management and support to its subsidiaries to enable the adequate functioning of
their management organizations (general meeting of stockholders, board of directors, corporate auditors,
and board of auditors) and the establishment of independent management based on self-responsibility.
(i) The Company assigns, in principle, Directors, Executive Officers and employees to serve as
directors or corporate auditors at its subsidiaries. These corporate auditors conduct audits ofinternal control systems.
(ii) The Internal Auditing Department conducts audits of the business activities according to the size,
nature of business, etc. of subsidiaries to determine whether the directors and employees of thesubsidiaries comply with laws and ordinances, the Articles of Incorporation, etc. in executing theirduties, provides advice and recommendations after identifying items in need of improvement, andreports to the President about audit results and then notifies Directors and Corporate Auditors.
(iii) The Company seeks to understand the business conditions of each subsidiary through performance
reports and other means and endeavors to share information through exchanges of opinions
between the Company and directors at subsidiaries (including directors serving concurrently as
Directors, Executive Officers or employees at the Company) by periodically holding Group
Executive Committee meetings.
(iv) The Company makes its subsidiaries appoint officers responsible for risk management andcompliance as well as risk management and compliance promoters according to their size, natureof business, etc. and strives to prevent and reduce risks in the Taiheiyo Cement Group bycollaborating with each company, and adopts a system for reporting to Directors and Corporate
Auditors of the Company if a crisis occurs or if an event with the risk of developing into a crisis
arises at a company.
6)

System to ensure reliability of financial reporting
The Company develops a system required to properly conduct financial reporting such as consolidated
financial statements.

7)

Matters related to personnel to assist Corporate Auditors and independence of such personnel
from Directors
The Company has established a Corporate Auditor’s Office which assists Corporate Auditors in
performing their duties, and assigns full-time personnel. The Company shall request and respect theopinion of the Board of Auditors in matters related to the transfer and evaluation of such full-time
personnel.

8)

System for reporting to Corporate Auditors by Directors, Executive Officers and employees of theCompany as well as directors, corporate auditors and employees of subsidiaries or persons who
received a report from them and other systems for reporting to Corporate Auditors(i) The Company employs a system in which Corporate Auditors can attend important meetings
related to business matters to receive reports from Directors and other employees about the statusof the execution of their duties.
(ii) The Company adopts a system in which any facts that may inflict serious damage to the Company
are reported to Corporate Auditors by Directors, Executive Officers and employees of theCompany as well as directors, corporate auditors and employees of subsidiaries or persons who
received a report from them.
(iii) The Company prohibits the unfavorable treatment of anyone who has made a report under thepreceding item.

9)

Other systems to ensure effective auditing by Corporate Auditors(i) The Company employs a system in which Corporate Auditors are shown documents related toimportant decisions and can gain access to a variety of information, including management
information, at any time.
(ii) The Company provides a venue for Corporate Auditors to exchange opinions and information with
the Accounting Auditor.
40

(Translation)(iii) When a Corporate Auditor requests the prepayment or payment of expenses required for
performing his/her duties, the Company promptly pays such expenses.
(2)

Summary of the Operational Status of the System to Ensure the Proper Execution of Operations

The Company’s Internal Control System is maintained through systems in line with the basic policy above,and is appropriately managed. Key measures are as follows.

41

(Translation)

1)

Compliance system(i) Based on the CSR Prospectus, a CSR Management Committee has been established composed of
all Directors with the President as the Chairman, and it is held once per quarter. The CSRManagement Committee formulates a CSR Action Plan for every fiscal year, understands andconfirms its status of progress, and makes evaluations. Additionally, the results are reported to theBoard of Directors.
(ii) Directly under the CSR Management Committee, the Risk Management and Compliance
Committee was established as a subordinate body, and upon formulation of the action plan, it
understands and confirms the status of implementation. Additionally, the status of these measures
is reported to the CSR Management Committee.
(iii) Officers responsible for risk management and compliance as well as risk management andcompliance promoters are selected, these persons engage in promotion of compliance, and theCompany also implements training for these responsible persons and leaders.
(iv) Education regarding compliance is conducted via forms such as training for new employees andtraining depending on job level, distributing action guideline casebooks, and self-checks utilizing
e-learning, all in an effort to thoroughly implement compliance.

2)

Risk management system(i) Based on the Basic Risk Management Policy, Risk Management Rules are defined, and while
promoting measures toward risk management, responses to emergency situations are defined in the
Crisis Management Rules.
(ii) The annual risk countermeasure plan is formulated, and based on a PDCA cycle, measures for risk
management are promoted.
(iii) In preparation for unexpected events such as disasters and accidents, etc., periodic disasterprevention drills and emergency supply distribution exercises are implemented. Additionally,
exercises such as initial response simulation training in the event of a large-scale natural disasterare also conducted to aim to increase awareness of response processes.
(iv) Under the Basic Information Security Policy, an information security management system has been
established, and while aiming for thorough protection of information assets and appropriate
management and handling, information risk countermeasures are promoted via information
security education such as e-learning.

3)

Ensuring proper execution of operations at the Group(i) Based on the Group Companies Management Rules, a system is maintained where groupcompanies and the Company deliberate on important matters, direction and management isconducted as required, and support is provided to management.
(ii) While understanding the management conditions of each group company through periodic
achievement reporting, etc., a Group Executive Committee meeting is held twice per year to
exchange opinions on various themes and share information related to management of the Group.
(iii) Directors and Corporate Auditors of subsidiaries are seconded from the Company to supervise
business execution and implement audits regarding the internal control systems, etc.
(iv) The Internal Auditing Department, upon formulating an audit implementation plan based on theannual audit policy, implements internal audits toward subsidiaries, and provides advice andrecommendations.

4)

Execution of business by Directors(i) The Board of Directors is composed of 14 persons, including two Outside Directors, and meetings
were held 15 times during the fiscal year under review, where deliberation and determination wasmade regarding important matters defined by laws and regulations and the Articles ofIncorporation, in addition to supervision of the execution of business by Directors.
(ii) For important matters other than those to be deliberated by the Board of Directors, Executive
Committee meetings were held 23 times for deliberation.
(iii) To secure the efficiency of execution of business by Directors, reports on the status of businessexecution are made at the Board of Directors by dividing up duties among the Directors and42

(Translation)

Executive Officers.
(iv) Regarding management execution, a certain level of authority is delegated to Executive Officers.
Executive Officers execute business via a Management by Objectives that is in line with theMedium-term Management Plan and the annual management policy (President’s policy), and theBoard of Directors reviews the status of progress.

43

(Translation)

5)

Execution of business by Corporate Auditors(i) Aside from Board of Directors meetings, Corporate Auditors attend important meetings such as the
Executive Committee to confirm the status of the development and operation of the internal control
system.
(ii) Corporate Auditors receive reports on the internal audits carried out by the Internal Audit
Department, while cooperating with the Internal Audit Department to efficiently carry out audits ofeach business office, subsidiary, etc.
(iii) Periodic meetings are held with the Accounting Auditor to exchange information.
(iv) A Corporate Auditor’s Office has been established to assist Corporate Auditors in performing theirduties, and full-time personnel has been assigned.

Figures stated in this Business Report are rounded down to the nearest unit of presentation (first decimal placein the case of percentages), except for net income per share, which is rounded off to the second decimal place,and average age and average length of service of employees of the Company, which are rounded off to thefirst decimal place.
44

(Translation)

Consolidated Financial Statements(April 1, 2018 - March 31, 2019)

Consolidated Balance Sheets
Account

FY2018(as of March 31, 2019)(Unit: Millions of yen)
(Reference)
FY2017(as of March 31, 2018)

AssetsCurrent assets

341,307333,275

Cash and deposits

56,56153,766

Notes and accounts receivable-trade180,535

182,272

Electronically recorded monetary claims-operating

12,998

10,989Merchandise and finished goods

31,13829,193Work in process

2,268

2,383

Raw materials and supplies

43,314

41,761

Short-term loans receivable

3,421

3,464

Other

11,714

10,560(646)(1,116)

Noncurrent Assets

Allowance for doubtful accounts

693,120

686,836

Property, plant and equipment

520,939

505,438

Buildings and structures

135,653

134,456

Machinery, equipment and vehicles

134,649

136,603Land

157,638

158,057

Lease assets

22,12020,998Construction in progress

48,67832,647

Other

22,19922,674

Intangible assets

30,87533,038

321

777

Other

30,55332,261

Investments and other assets

141,306

148,360

Investment securities

83,692

86,834Long-term loans receivable

1,754

2,941

Deferred tax assets

17,10917,484

Assets for retirement benefits

17,807

21,298Other

28,374

28,341

Allowance for doubtful accounts(7,432)(8,539)1,034,428

1,020,111

Goodwill

Total Assets

45

(Translation)

FY2018(as of March 31, 2019)

Account(Reference) FY2017(as of March 31, 2018)

Liabilities
Current liabilities
349,390
360,546
Notes and accounts payable-trade96,275
91,113
Electronically recorded obligations-operating
8,716
4,670
Short-term loans payable
135,381
153,181Commercial papers
4,000－
Current portion of bonds
10,00015,035
Income taxes payable
8,376
6,416
Provision for bonuses
6,046
6,021
Other provision
220
121
Other
80,37383,986
Noncurrent liabilities
234,392
227,238
Bonds payable
30,00020,000Long-term loans payable
100,233
100,390
Deferred tax liabilities
7,630
8,024
Liability for retirement benefits
24,20624,559Provision for directors' retirement benefits
535
520
Provision for special repairs
75
128
Other provision
757
750
Lease obligations
17,616
18,844
Asset retirement obligations
7,619
7,553
Other
45,71846,466
Total liabilities
583,783
587,785
Net Assets
Shareholders’ equity
424,767
395,582
Capital stock
86,174
86,174
Capital surplus
60,40860,339Retained earnings
294,265
260,016
Treasury stock(16,081)(10,947)
Accumulated other comprehensive income(10,057)(313)
Valuation difference on available-for-sale securities
8,688
10,941
Deferred gains or losses on hedges(3)
1
Revaluation reserve for land
5,019
5,057
Foreign currency translation adjustments(20,128)(16,201)
Retirement benefits liability adjustments(3,632)(111)
Non-controlling interests
35,93537,058
Total net assets
450,645432,326
Total liabilities and net assets
1,034,428
1,020,111(Note) Partial Amendments to Accounting Standard for Tax Effect Accounting (Accounting Standards Board of Japan(ASBJ), Guidance No. 28, February 16, 2018), etc. has been applied from the beginning of the fiscal year under review,and the figures have been adjusted to retroactively apply said accounting standards.
46

(Translation)

Consolidated Statements of Income
Account

FY2018(Unit: Millions of yen)
(Reference)
FY2017(April 1, 2018 - March 31, 2019) (April 1, 2017 - March 31, 2018)

Net sales

916,071871,113

Cost of sales

712,660

664,996

203,411206,117

137,398

140,987

Operating income

66,012

65,129Non-operating income

7,691

8,378

Interest and dividends income

1,860

1,969

Equity in earnings of unconsolidated subsidiaries and affiliates

2,288

3,196

Other

3,542

3,212

Non-operating expenses

9,397

9,141

Interest expenses

4,068

4,639

Loss on disposal of inventories

1,126

258

－

1,030

Other

4,202

3,213

Ordinary income

64,30664,366Extraordinary income

1,917

1,616

Gain on disposal of non-current assets

1,149

1,417

Gain on sales of investment securities

532

92

Other

234

106

7,049

7,341

Loss on disposal of non-current assets

4,828

4,725

Loss on sales of investment securities

133

23

Loss on valuation of investment securities

326

1,356

1,101

577

660

658

Income before income taxes

59,17458,642

Income taxes-current

11,760

10,200

Income taxes-deferred

1,796

7,356

Profit45,61641,085

Profit (loss) attributable to non-controlling interests

2,164

2,559

Profit attributable to owners of parent

43,452

38,525Gross profit
Selling, general and administrative expenses

Provision of allowance for doubtful accounts

Extraordinary loss

Impairment loss
Other

47

(Translation)

Non-consolidated Financial Statements(April 1, 2018 - March 31, 2019)Non-consolidated Balance Sheets
Account

FY2018(as of March 31, 2019)(Unit: Millions of yen)
(Reference)
FY2017(as of March 31, 2018)

AssetsCurrent assets
Cash and deposits
Notes receivable-trade
Electronically recorded monetary claims-operating
Accounts receivable-trade
Merchandise and finished goods
Raw materials and supplies
Prepaid expenses
Other
Allowance for doubtful accounts
Noncurrent Assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Raw materials land
Land
Lease assets
Construction in progress
Intangible assets
Mining rights
Software
Other
Investments and other assets
Investment securities
Shares of subsidiaries and affiliates
Investments in capital
Investments in capital of subsidiaries and affiliates
Long-term loans receivable
Long-term prepaid expenses
Prepaid pension costs
Other
Allowance for doubtful accounts

116,123
3,784
23,0104,579
52,017
8,678
18,356
490
5,208
(0)
470,906
210,264
24,37050,591
39,104131
816
12,711
66,0573,910
12,56913,707
10,289491
2,926
246,934
22,225170,28935
13,73542
10,364
16,102
38,718(24,580)

113,634
4,143
23,036
4,017
51,9507,439
16,590
409
6,047
(0)
460,475
203,659
23,39550,52637,403
118
772
12,897
66,573
3,930
8,039
13,901
10,502561
2,837
242,91424,051
172,07536
15,99559
10,462
15,481
28,132(23,379)

Total Assets

587,029574,10948

(Translation)
Account

FY2018(as of March 31, 2019)(Reference) FY2017(as of March 31, 2018)

Liabilities
Current liabilities
Electronically recorded obligations-operating
Accounts payable-trade
Short-term loans payable
Commercial papers
Current portion of bonds
Lease obligations
Accounts payable - otherAccrued expenses
Income taxes payable
Advances received
Deposits received
Unearned revenue
Provision for bonuses
Electronically recorded obligations-non-operating
Noncurrent liabilities
Bonds payable
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for loss on guarantees
Guarantee deposits received
Asset retirement obligations
Other

173,044
11,872
29,19365,2594,000
10,0001,039
11,592
19,289
4,572
201
355
1,252
2,124
12,291
138,71730,00069,108
3,206
2,290
2,144
29,056
2,638
271

160,850
10,242
28,66662,025－15,000
1,031
10,672
18,464
2,292
58
306
1,461
2,247
8,382
138,704
20,00078,403
3,230
2,863
2,407
28,873
2,587
337

Total liabilities

311,762

299,554

Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Other retained earnings
Reserve for mine prospecting
Reserve for advanced depreciation of non-current assets
Retained earnings brought forward
Treasury stock
Valuation and translation adjustments
Valuation difference on available-for-sale securities

269,648
86,17456,27642,215
14,061
142,811
142,811269
16,161
126,380(15,613)
5,618
5,618

267,943
86,17456,27642,215
14,061
136,080
136,080261
16,674
119,144(10,586)
6,611
6,611

Total net assets

275,267

274,554

Net Assets

Total liabilities and net assets
587,029574,109(Note) Partial Amendments to Accounting Standard for Tax Effect Accounting (Accounting Standards Board of Japan(ASBJ), Guidance No. 28, February 16, 2018), etc. has been applied from the beginning of the fiscal year under review,and the figures have been adjusted to retroactively apply said accounting standards.
49

(Translation)

Non-consolidated Statements of Income
Account

FY2018(Unit: Millions of yen)
(Reference)
FY2017(April 1, 2018 - March 31, 2019) (April 1, 2017 - March 31, 2018)

Net sales

329,525

321,162

Cost of sales

237,289

225,888

92,235

95,27367,29867,409Operating income

24,937

27,863Non-operating income

6,877

7,656

Dividends income

5,738

6,398

－

26

1,139

1,231

Non-operating expenses

4,477

3,160

Interest expenses

994

1,264

Provision of allowance for doubtful accounts

1,405

－

Other

2,076

1,895

Ordinary income

27,33732,359Extraordinary income

503

1,085

Gain on disposal of non-current assets

134

896

Gain on sales of investment securities

55

3

Gain on sales of shares of subsidiaries and affiliates

313

186

5,878

3,883

3,037

3,155

Loss on liquidation of subsidiaries and affiliates

63

21

Loss on valuation of investment securities

269

4

1,630

128

Loss on sales of investment securities

24

4

Loss on sales of shares of subsidiaries and associates

8

－

843

568

Income before income taxes

21,96329,562

Income taxes-current

5,441

2,501

Income taxes-deferred

(135)

3,806

Net income

16,65623,254Gross profit
Selling, general and administrative expenses

Reversal of allowance for doubtful accounts
Other

Extraordinary loss
Loss on disposal of non-current assets

Loss on valuation of shares of subsidiaries and affiliates

Impairment loss50

(Translation)
Independent Auditor’s Report
May 16, 2019
The Board of Directors
Taiheiyo Cement Corporation.

KPMG AZSA LLC
Yoshihide Takehisa (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Akihisa Sada (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Yoshiaki Sekine (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
We have audited the consolidated financial statements, comprising the consolidated balance sheet, theconsolidated statement of income, the consolidated statement of changes in net assets and the related notesof Taiheiyo Cement Corporation as at March 31, 2019 and for the year from April 1, 2018 to March 31, 2019in accordance with Article 444-4 of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit as
independent auditor. We conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on our judgement, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, we consider internal control relevant to the entity’s preparationand fair presentation of the consolidated financial statements in order to design audit procedures that areappropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
51

(Translation)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position and the results of operations of Taiheiyo Cement Corporation and its consolidated
subsidiaries for the period, for which the consolidated financial statements were prepared, in accordance withaccounting principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to theprovisions of the Certified Public Accountants Law of Japan.

Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as
required by the Companies Act.

52

(Translation)

Independent Auditor’s Report
May 16, 2019
The Board of Directors
Taiheiyo Cement Corporation

KPMG AZSA LLC
Yoshihide Takehisa (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Akihisa Sada (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Yoshiaki Sekine (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
We have audited the financial statements, comprising the balance sheet, the statement of income, the statementof changes in net assets and the related notes, and the supplementary schedules of Taiheiyo Cement
Corporation as at March 31, 2019 and for the year from April 1, 2018 to March 31, 2019 in accordance with
Article 436-2-1 of the Companies Act.
Management’s Responsibility for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of the financial statements and the
supplementary schedules in accordance with accounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable the preparation of financial statements andthe supplementary schedules that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and the supplementary schedules basedon our audit as independent auditor. We conducted our audit in accordance with auditing standards generally
accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements and the supplementary schedules are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements and the supplementary schedules. The procedures selected depend on our judgement,
including the assessment of the risks of material misstatement of the financial statements and the
supplementary schedules, whether due to fraud or error. In making those risk assessments, we consider
internal control relevant to the entity’s preparation and fair presentation of the financial statements and the
supplementary schedules in order to design audit procedures that are appropriate in the circumstances, while
the objective of the financial statement audit is not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of53

(Translation)accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements and the supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn our opinion, the financial statements and the supplementary schedules referred to above present fairly, in allmaterial respects, the financial position and the results of operations of Taiheiyo Cement Corporation. for theperiod, for which the financial statements and the supplementary schedules were prepared, in accordance withaccounting principles generally accepted in Japan.
Other Matter
Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to theprovisions of the Certified Public Accountants Law of Japan.

Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as
required by the Companies Act.

54

(Translation)
Board of Auditors’ Audit Report (Copy)

Audit Report
The Board of Auditors has prepared this Audit Report following deliberations based on the respective audit
reports prepared by Corporate Auditors in relation to the execution of duties by Directors for the 21st fiscal termfrom April 1, 2018 to March 31, 2019. The report is as follows.
1. Method and Description of Audit by Corporate Auditors and the Board of Auditors(1) The Board of Auditors determined the audit policy, audit plan, etc., received reports from each Corporate
Auditor on the progress and results of his/her audit, in addition to receiving reports from Directors, etc. and the
Accounting Auditor on the execution status of their duties, and sought explanations as necessary.
(2) Each Corporate Auditor, based on the audit standards for Corporate Auditors established by the Board ofAuditors, followed the audit policy, audit plan, etc., communicated with Directors, the Internal Auditing
Department and other employees, etc., endeavored to collect information and develop an environment for theaudit, and implemented audits via the following methods.
1) We attended the meetings of the Board of Directors and other important meetings, received reports from
Directors, employees, etc. on the execution status of their duties, sought explanations as necessary, reviewed
important approval documents, etc., and investigated the status of operations and assets at the head office andprincipal places of business. With respect to subsidiaries, we verified the status of their management at theCompany’s major meetings, and requested explanation as necessary. We also communicated and exchanged
information with the directors, corporate auditors, etc. of subsidiaries by conducting site audits in accordancewith audit plans and holding regular meetings with the corporate auditors of major subsidiaries.
2) We also monitored and verified the content of the resolution passed by the Board of Directors regarding thedevelopment of a system to ensure that Directors comply with laws, ordinances and the Articles ofIncorporation in executing their duties and other systems stipulated in paragraphs 1 and 3 of Article 100 of theOrdinance for Enforcement of the Companies Act that are required to ensure proper operations of a company
group comprised of a stock company and its subsidiaries, as well as the status of the system developed
pursuant to such resolution (i.e., internal control system). In regards to internal controls over financial
reporting, we received reports from Directors, etc. and KPMG AZSA LLC on the evaluation and audit statusof such internal controls, and sought explanations as necessary.
3) We monitored and verified whether or not the Accounting Auditor had maintained its independence andwhether or not it had conducted its audit properly, received reports from the Accounting Auditor on theexecution status of its duties, and sought explanations as necessary. In addition, we were notified by the
Accounting Auditor that it is equipped with a system for ensuring that duties are performed properly (matterslisted in the items of Article 131 of the Company Accounting Ordinance) in accordance with the Quality
Control Standards for Audits (issued by the Business Accounting Council on October 28, 2005), etc., andsought explanations as necessary.
Based on the above methods, we examined the Business Report and its supplementary schedules,
Non-consolidated Financial Statements (i.e., Non-consolidated Balance Sheets, Non-consolidated Statements ofIncome, Non-consolidated Statements of Changes in Net Assets and Notes to the Non-Consolidated Financial
Statements) and their supplementary schedules as well as the Consolidated Financial Statements (i.e.,
Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Net
Assets and Notes to the Consolidated Financial Statements) for the fiscal year under review.

55

(Translation)
2. Audit Results(1) Results of audit of Business Report, etc.
1. In our opinion, the Business Report and the supplementary schedules are in compliance with laws,
ordinances and the Articles of Incorporation, and fairly represent the Company’s position.
2. No material facts were identified regarding misconduct or violation of any laws, ordinances or the
Articles of Incorporation in relation to the execution of duties by Directors.
3. In our opinion, the Board of Directors’ resolution on the internal control system (including internal
controls over financial reporting) is adequate in content. We found no matters that need to be pointed
out in regards to the content of the records in the Business Report and the execution of duties by Directors
in relation to said internal control system. Of note, we received reports from Directors, etc. and KPMG
AZSA LLC that there are no material inadequacies to be disclosed in relation to internal controls overfinancial reporting as at the time of preparation of this Audit Report.
(2) Results of audit of Non-consolidated Financial Statements and their supplementary schedules
In our opinion, the methods and results of the audit conducted by Accounting Auditor KPMG AZSA LLC arereasonable.
(3) Results of audit of Consolidated Financial Statements
In our opinion, the methods and results of the audit conducted by Accounting Auditor KPMG AZSA LLC arereasonable.
May 17, 2019
Board of Auditors, Taiheiyo Cement Corporation
Corporate Auditor (Standing)Hidehiko Kasamura[Seal]

Corporate Auditor (Standing)Toshihide Nishimura[Seal]

Outside Corporate Auditor

Yoshio Narukage[Seal]

Outside Corporate Auditor

Wakako Mitani[Seal]

56