Annual Report 2015
Fiscal Year Ended March 2015

Setting Our Sights Even Higher

www.nisshinbo.co.jp/english/

NEXT 2015

Nisshinbo Holdings Inc.
2-31-11, Ningyo-cho, Nihonbashi,
Chuo-ku, Tokyo 103-8650, JAPANTEL +81-3-5695-8833 FAX +81-3-5695-8970

Printed in JapanAs an “Environmental and Energy Company” group working to create a sustainable society,
Nisshinbo Holdings Inc. is aiming for net sales of ¥600 billion and ROE of 9% in the fiscal year
ending March 2018.
Our management policy for the fiscal year ending March 2016 is to “Drive Productivity and
Performance and Inspire Creativity and Innovation.” We will step up cash flow management andimplement initiatives to achieve our objectives.
We will also work to generate sales in excess of our original ¥600 billion target. Our new longterm strategic plan is targeting net sales of ¥1 trillion and ROE of more than 12% ten years fromnow, in the fiscal year ending March 2026. The whole Group is committed to delivering further
growth, backed up by our vision and strategy of transforming Nisshinbo into an “Environmental
and Energy Company” group.

The Nisshinbo Group’s Future Image
New Strategic Plan for the fiscal year ending March 2026
Net sales of ¥1 trillion, ROE of more than 12%

Providing solutions to global society
as an “Environmental and Energy Company” group

Highlights

For the years ended March 31(millions of yen)(thousands of
US dollars)

2011

2012

2013

2014

2015

2015

¥325,555¥379,340¥450,693¥494,350¥523,758$4,364,650

Electronics

112,820

169,907

175,308

187,743

209,116

1,742,633

Automobile Brakes

46,11947,450118,849

148,699

161,887

1,349,058

Precision Instruments

32,02025,191

24,52028,65528,608238,400

Chemicals

7,284

8,258

8,150

8,810

8,943

74,525

Textiles

57,40060,96450,77351,34947,361

394,675

Papers30,32630,22030,524

31,686

31,280260,667

Real Estate

12,437

9,082

15,367

10,567

9,246

77,050

Other Businesses

27,14928,26827,202

26,841

27,317

227,642

Operating Income

19,843

4,170

13,394

13,175

13,744

114,533

Net Income

11,185

9,416

6,418

9,012

13,694

114,117

Total Assets¥479,852¥534,584¥551,933¥611,311¥678,486$5,654,050

Equity211,557

213,751

242,623

276,865

306,938

2,557,817

Net Cash Provided by Operating Activities¥16,529¥12,974¥34,095¥26,075¥37,120$309,333

Net Cash Provided by (Used in) Investing Activities

11,591(57,861)(10,973)(19,862)(21,271)(177,258)

Net Cash Provided by (Used in) Financing Activities

703

16,835(24,073)(2,321)(6,238)(51,983)(yen)(dollars)

Operating Results
Net Sales

Financial Position
Wireless
communications
andelectronics< Editing Policy >In addition to the usual financial data andinformation about business strategies,
Nisshinbo’s Annual Report 2015 includes
an in-depth section about the Group’s
environmental, social and governance (ESG)
activities to provide readers with a moredetailed picture of the Group’s businessactivities. This information highlights how
the Nisshinbo Group is striving to increase
corporate value in areas such as personnel
training and consideration for the environment, complementing efforts to increasevalue through earnings growth.  
Effective from the fiscal year ending
March 2016, the Group has changed theorder in which it presents segment information. The new order has been adopted forthe first half of this report.

Automotive
parts
and
devices

New energy
andsmart society

Lifestyleandmaterials
経営基盤の強化

Cash Flows

Strategic Goals for the fiscal year ending March 2018
Net sales of ¥600 billion, ROE of 9%

NEXT 2015
Net sales of ¥550 billion, ROE of 6%
Strengthening ofbusiness structure

Integration for Growth

Strengthening ofmanagement baseNurturing ofgrowth drivers

Business Segments

Electronics
Automobile
BrakesPapersTextilesPrecision
Instruments

Chemicals

Corporate Philosophy

Net Income¥63.32¥53.83¥36.74¥51.60¥80.33$0.67

Shareholders’ Equity

1,036.80

1,063.19

1,198.67

1,369.78

1,634.07

13.62

15.00

15.00

15.00

15.00

15.00

0.13

Cash Dividends

Public entity / Consistent integrity / Innovation(%)

Key Ratios
Return on Assets (ROA)

2.7

1.9

1.2

1.5

2.1

Return on Equity (ROE)

6.1

5.1

3.2

4.0

5.5

Number of Employees

18,292

22,30422,08322,052

21,387

Number of Patents Approved

1,986

1,986

2,293

2,448

2,410

1.8

1.6

1.6

1.4

1.4

ESG Indicators

Contents
1 Highlights
2 Business Diversification
4 The Nisshinbo Group’s
Management Capital
6 To Our Shareholders
10 At a Glance

Per Share

12 Overview of Business Segments
12 Electronics
14 Automobile Brakes
16 Precision Instruments
18 Chemicals
20 Textiles
22 Papers
24 Real Estate

25 Interview with Outside Directors
28 Human Capital and Diversity
29 Employee Interview
30 Intellectual Capital and R&D
31 Protecting the Environment
32 The Nisshinbo Group’s
Management Framework

38 Board of Directors
39 Financial Section
63 History
64 Corporate Data

Greenhouse Gas Emissions per Unit of Sales (t-CO2/million yen)

Note: The U.S. dollar amounts in this report are given for convenience only and represent translations of Japanese yen at the rate of ¥120 = US$1.

1

Business Diversification
Fiscal year ended Mar. 2015

Segment

1940 1945 1955 1965 1975 1985 1995 2005

Segment Sales

Main products

Share

AmountStrategic Businesses in Four Areas(billions of yen)

Electronics
Nisshinbo’s involvement in this field began in the 1950s when we transferred management personnel to Japan Radio Co., Ltd. Over the years,
we gradually strengthened our partnership with the Japan Radio Groupto enhance our presence in the environmental and energy field. Today,
the electronics business segment covers Japan Radio Co., Ltd. and 35
other consolidated subsidiaries and affiliates.

Wireless Communications and Electronics• Wireless disasterprevention systems andother solutions, marine
equipment, semiconductor products

Automobile Brakes
Leveraging our technologies in cotton spinning, we diversified into
automotive friction materials in the 1940s. With the acquisition of TMD
Group, Nisshinbo became the world’s leading maker of brake friction
materials by market share in the fiscal year ended March 2012. We are
currently working on the development of new materials that meetenvironmental standards for lower copper content.

39.9% 209.1• Automotive
friction materials

Wireless disasterprevention systems

Marineequipment

Semiconductor
products

Automotive Parts and Devices

Precision Instruments
From the late 1940s, we started manufacturing various types of machine
tools, drawing on human resources from our textiles business.
We then moved into the production of fans and other plastic molded
parts and precision parts for automobiles.

• System equipment• Precision parts• Plastic molding parts

Friction materials
and assembly
products

ChemicalsThis business has its roots in our staple fiber business. We are currently
stepping up the development of environmental and energy products, suchas rigid urethane foam used in insulation materials, functional chemicals,
and fuel cell parts and materials.

• Insulation panels• Functional chemicals• Bipolar plates for fuel cells

30.9% 161.9

Processed precisioncomponents

Lifestyle and Materials

TextilesCotton spinning was Nisshinbo’s first business when it was founded in
1907. Since launching APOLLOCOT 100% cotton non-iron shirts in 2009,
we have been using the same technology to develop and sell a range of new
APOLLOCOT products.

• Dress shirts• Denim

Shirts, denim,
and uniforms

PapersFrom the late 1940s, the business has expanded through M&A deals. We
now focus on high value-added products such as highly absorbent toilet
tissue for use with bidets and fine paper for high-grade printing applications.

• Household papers• Fine papers

Real Estate
Since the 1990s this business has been working to effectively use theGroup’s idle land that was freed up due to a shift in manufacturing
overseas. The business has focused on leasing real estate for shopping
centers, and more recently, on releasing land for residential development.

Other Businesses• Housing lot sales,
property leasing andother real estatebusinesses• Others

TOTAL
2

5.5%

28.6

1.7%

8.9

9.0%

47.4

6.0%

31.3

1.8%

9.2

5.2%

27.3

Household papers

New Energy and Smart Society

Bipolar plates forfuel cells

Modifier usedin bioplastic
manufacturing

Smart factory¥ 523.8 billion
3

The Nisshinbo Group’s Management Capital
The Nisshinbo Group aims to create corporate value through positive outcomes from the use of various capitals
in business processes such as research and development, material procurement, manufacturing and sales activities, rather than simply increasing financial capital through its operations.
Underpinning this approach is the Corporate Philosophy of the Nisshinbo Group (see P32 for more details).
Based on this philosophy, the Business Conduct Guidelines of the Nisshinbo Group define standards of behavior

01

02

Material
Procurement

Number of patents
approved

Number of employees

Frequency of injuries withlost work*（billions of yen）

25

25,0002,000

2020,0001,000■ Japan ■ Overseas

4

14.3

15.3

13.3

14.3

15.3

Energy consumption
per unit of sales（ｔ-CO2/million yen）

（m3/million yen）

（GJ/million yen）

2.0

80

1.5

60

1.0

40

0.5

20

25
20

10

0.5

0

0

0

0

13.3

Water usage per unitof sales

15

5,000

5

0

* Frequency of Injuries with lost work
= (number of employees injured
with lost work ÷ aggregate number ofworking hours x 1 million)

Greenhouse gas emissions
per unit of sales

1.0

10,000

10

500

1.5

15,00015

The Nisshinbo Group takes customer complaints
seriously, gathering all relevant information as quickly
as possible. In the automobile brakes business, forexample, the Group conducts surveys of companies
in the distribution route as required, addresses
needs that may be difficult to identify under normal
circumstances and actively takes on board theirrequests. In the papers business, we have established acontact center for customers as part of a frameworkthat allows consumers to provide direct feedback suchas complaints and requests. We are also working hardto educate distribution agents about our products.
This includes holding regular seminars and productexhibitions to give distributors a better understanding
about the features of the Nisshinbo Group’s products.

Natural Capital

Human Capital

2,500

1,500

The Nisshinbo Group also views distributors asvalued partners, aiming to grow and develop withthem. In the papers business, for example, wehave built long-term partnerships with distributors
based on areas such as careful attention to detail inworking conditions at their operations. This approachhas resulted in distribution services with high levelsof customer satisfaction by addressing individual enduser needs, such as how products are stacked andunloaded.
Our distributors also take into accountenvironmental concerns, making adjustments toincrease load efficiency and using rail, sea and othermodes of transport where possible.

absence rate: Frequency of occupational injuries (injuries with lost work
* Overall+ injuries with no lost work)

Research and development
expenses

Sales

Distribution

The Nisshinbo Group's production sites are
distributed worldwide. All these sites are working toprotect the global environment in accordance with
the Business Conduct Guidelines of the Nisshinbo
Group. Workplace safety is also a key theme for theGroup, with our all sites worldwide taking steps toreduce the rate of workplace accidents. The TMD
Group, which became part of the Nisshinbo Groupin the fiscal year ended March 2012, has production
sites in nine countries. By implementing Nisshinbo’s
health and safety initiatives, TMD has achieved asignificant reduction in the overall absence rate*.

Intellectual Capital

04

03

Manufacturing

The Nisshinbo Group is diversifying its supplierbase by using a wider geographical distribution of
suppliers in Japan and procuring materials fromoverseas suppliers. Our goal is to ensure we haveaccess to stable supplies of raw materials in all ourbusinesses, particularly automobile brakes, precision
instruments and papers, even during an emergency
such as a natural disaster or accident.
The Group has also established internal
regulations on product quality that conform to strict
international standards. Based on these regulations,
we have created a quality assurance management
system and are implementing other measuresdesigned to support continual improvement inquality control at the point materials are received by
the Group.

expected of our executives and employees in six areas: compliance, the environment, human rights, workplacesafety, product safety and procurement. We have also formulated the Basic CSR Procurement Policy of the
Nisshinbo Group, which covers seven areas: compliance, fair trade, information security, environmental
preservation, human rights, safety and health, and quality and safety. Based on this policy, we work with
suppliers to implement concrete CSR initiatives across the entire supply chain.

13.3

14.3

15.3

13.3

14.3

15.3

5

0

13.3

14.3

15.3

0

13.3

14.3

15.3

13.3

14.3

15.3

■ Average for Japanese manufacturing industry■ Nisshinbo Group (Japan)■ Nisshinbo Group (overseas)5

To Our Shareholders

Financial Results for the Fiscal Year Ended March 2015

Setting Our Sights
Even Higher
In the fiscal year ended March 2015, the second
year of our current three-year management
plan, NEXT 2015, we reported higher net
sales and profits year on year, supported by astrong performance in the electronics businesssegment. Going forward, we will continue toreinforce the Group’s earnings capabilities as wework towards our strategic goals for the fiscal
year ending March 2018.

Net sales and profits both increased year on year
and we achieved the sales target in our three-year
management plan NEXT 2015. However,
performance on an operating income basis was
still below our expectations.

In the fiscal year ended March 2015, net sales increased 5.9%
year on year to ¥523.8 billion, operating income rose 4.3% to¥13.7 billion and net income increased 52.0% to ¥13.7 billion.
Sales and profits grew year on year, but operating income
was short of our target in NEXT 2015.
The electronics business segment, which generates
around 40% of consolidated sales, continued to perform
well. Sales and profits both increased in this business, supported by growth in the disaster prevention-related sector.

Initiatives to Boost Earnings
In the fiscal year ending March 2016, the entire
Nisshinbo Group will focus on boosting earnings
capabilities, guided by our new slogan “Drive
Productivity and Performance and Inspire
Creativity and Innovation.”

We are working to ensure our Corporate Philosophy takes
root in the Group’s operations worldwide. The main principles of our Corporate Philosophy – Public Entity, Consistent
Integrity and Innovation – underpin the quality of products
and services provided by the Nisshinbo Group. These principles also represent a shared foundation for all our stakeholders in each region. Over the last year, we have taken steps tocultivate a unified Nisshinbo Group corporate culture at ouroperations in Europe, China and elsewhere.
In the past fiscal year, we also set targets to improve cash
flow management more rapidly, working to reduce inventories
and receivables at all our businesses and operating sites. Frontline
sales teams and plants worked closely with back office divisions
towards this shared goal, leading to significant results.
We believe that establishing our Corporate Philosophy
and cash flow management across the Group will help support global growth and a solid management base.
6

In the fiscal year ending March 2016, we expect the marine
electronics equipment business to contribute to earnings
in this segment on the back of a recovery in the merchant
shipbuilding market.
In the automobile brakes business segment, earnings inJapan were affected by weaker sales of new cars due to apullback in demand after a spike ahead of the increase in
consumption tax. However, sales rose overall, supported by
growth overseas. Profits in the business declined due to anincrease in goodwill depreciation costs related to the TMD acquisition, caused by the weak yen. However, operating income
before goodwill depreciation costs increased year on year.
Sales and profits in the textiles business segment
declined, reflecting a sharp drop in sales due to the sale ofsubsidiary CHOYA CORP. and weak sales of mainstay dress
shirts and denim in Japan. Also, the weak yen led to highprices for products purchased from overseas manufacturing
sites, weighing on profits.

In the fiscal year ending March 2016, the entire Nisshinbo
Group will focus on boosting earnings capabilities, guided by
our new slogan “Drive Productivity and Performance andInspire Creativity and Innovation.” Driving productivity andperformance will involve increasing earnings in key operations
in each business segment. Inspiring creativity and innovation
will mean leveraging the results of research and development
programs more rapidly and accelerating the commercialization of new products.  
We will also have to make important management decisions about which businesses to exit. In the fiscal year ended
March 2015, we sold apparel subsidiary CHOYA CORP.
However, we think it is important to have close links with
consumers in our textiles business, so we acquired TOKYOSHIRTS CO., LTD., which operates an SPA* business model.
With this acquisition, we are targeting a major step forwardin our shirts business by combining TOKYO SHIRTS’ supply
chain in manufacturing through sales with the Nisshinbo
Group’s strengths in textile development and production.
Based on our plans for the future development of theGroup, we also decided to sell our electric double-layer
capacitor business. However, we will use the expertise wehave built up in the capacitor field to take on new challenges,
such as the development of large-capacity storage devices.

* Specialty store retailer of private label apparel7

Targeting Further Growth
The Group is working to achieve net sales of ¥600
billion and ROE of 9% in the fiscal year ending
March 2018.

The fiscal year ending March 2016 is the final year of NEXT2015. Looking further ahead, the entire Group will work
toward net sales of ¥600 billion and ROE of 9% in the fiscal
year ending March 2018.
We plan to achieve these targets by focusing on four
strategic business fields.
First, wireless communications and electronics. This is ourlargest business field and operations are centered on Japan
Radio Co., Ltd. In December 2014, we completed our new
Advanced Technology Center in Nagano. The building has six
floors with a combined floor area of 13,000 m2. Around 1,000
engineers from Japan Radio and Nagano Japan Radio Co., Ltd.
are now working at the center, generating synergies between
the two companies. A new production site for Japan Radio wasalso completed at the same location in March 2015. About 250
employees have been transferred to this site from the Mitaka
Plant and around 200 employees from Nagano Japan Radio.
Nisshinbo has accumulated a strong portfolio of technologies
in the wireless communications and electronics field. We plan
to leverage these capabilities in our core solutions and marine

electronics equipment businesses and use them to deliver
results in a wide range of new fields in the future.
The second strategic business field is automotive partsand devices. At the moment, operations in this field arefocused on friction materials in the automobile brakes business, which generates annual sales of roughly ¥160 billion.
In the brakes business, boosting earnings capabilities at TMD
is the most pressing issue. As part of our efforts, we havetransferred and expanded our manufacturing site in Brazil
and we are currently consolidating our plants in Germany.
Also, we are aiming for sales of more than ¥100 billion in
non-brake fields by expanding sales of automotive products
and devices in the electronics business and precision instruments business.
The third field is lifestyle and materials, where our operations are focused on textiles and paper products. In this field,
we plan to strengthen links between overseas business sites
and actively promote our products worldwide.
The fourth strategic business field is new energy andsmart society, which holds the key to the Nisshinbo Group’s
future. We plan to accelerate the research, development andcommercialization of new products in fields that offer goodprospects for demand, such as bioplastic modifier Carbodilite, bipolar plates for fuel cells, carbon alloy catalysts for fuelcells and photovoltaic module-related materials. Anotherexample is smart factories, which bring together andintegrate a wide range of the Group’s environmental andenergy technologies.

Working Together with Shareholders
We intend to work closely with all shareholders
to increase shareholder value over the medium
and long term.

Strategic Business Domains

Strategic Business Domains“Environmental andEnergy Company”
group

Wireless
Communications
and Electronics

Automotive Parts
and Devices

Lifestyle andMaterials

New Energy andSmart Society●

Electronics
Automobile Brakes
Businesses

8●

Precision Instruments
Chemicals●

Textiles●Papers●●A new Corporate Governance Code came into effect in Japanin June 2015. The code, which is designed to increase the earnings capabilities of Japanese companies, has triggered various
developments in the Japanese business community. At Nisshinbo, we believe it is vital to work closely with all shareholders inorder to increase shareholder value over the medium and longterm. Going forward, we will continue to strengthen corporate
governance through purposeful dialogue with shareholders andother investors and through information disclosure.

Looking beyond our targets for the fiscal year ending
March 2018, we have formulated a new long-term strategicplan for the fiscal year ending March 2025. A decade from now,
we aim to generate net sales of ¥1 trillion and achieve ROE
of more than 12%. Over that period, we will strive to boost
shareholder value and return profits to shareholders, while also
targeting sustained growth and stable management.
I hope we can count on your continued support as wework to steadily grow Nisshinbo as an “Environmental andEnergy Company” group.
June 2015

Masaya Kawata
President

9At a Glance
The Nisshinbo Group comprises seven businesses: electronics, automobile brakes, precision instruments,
chemicals, textiles, papers and real estate. Leveraging the manufacturing technologies and assets of ouroriginal spinning business, we have diversified into other business fields, where we supply high value-added
products to satisfy a range of customer needs.

Electronics

Automobile
BrakesPrecision
Instruments

Chemicals

TextilesPapersReal Estate

39.9%

30.9%

5.5%

1.7%

9.0%

6.0%

1.8%

SEGMENT SHARENET SALES(billions of yen)(billions of yen)(billions of yen)(billions of yen)(billions of yen)(billions of yen)

28.6

8.8 51.3
8.9 47.4

51.3
51.3 47.4 10.6
31.7
209.1
161.9
31.3 161.9
148.7161.9
148.7
187.7 47.4
9.2148.7

51.3
31.7
28.7
31.7
28.6
31.3
31.3
47.4

28.7 28.628.7
8.8 28.6
8.9
148.7161.9

31.7
8.8 31.3
8.9
8.8
209.1
187.7

28.7
28.6 209.1
8.8 8.9
8.9
51.3 47.4
10.6
51.3 10.6
10.6
209.1
47.4 161.9
148.7
187.7 9.2187.7
9.2
9.2

15.3

14.3 14.3
15.3 15.3

14.3
14.3 15.3
15.3
14.3
14.3 15.3
15.3

14.314.315.3
14.315.3
14.315.315.3

15.3
14.3 14.3
15.3 14.3

14.3
15.3
14.3
14.3
15.3
15.3
14.3

15.3
14.3

MAIN BUSINESS AREAS

15.3 14.314.315.3 15.3
14.3

15.3

15.3

14.3 15.3
15.3
15.3
14.3
14.3

15.3
14.3

15.3
14.3
14.3

14.3 15.3
15.3
15.3
15.3 14.3

10.6
31.728.7
28.6
31.3

14.3
14.3 15.3
15.3 14.3

14.3 14.3
15.3 14.3
15.3 15.3

15.3

9.2

Involved in wireless communications equipment andelectronic parts; in wirelesscommunications equipment,
supplies solutions such as
disaster prevention systems,
as well as marine electronics
equipment and communications equipment; in electronicparts, aiming to grow theelectronic devices businesswith a focus on microelectronics technologies

The Nisshinbo Group is theworld’s leading maker of brakefriction materials by market
share; acquired TMD Friction
Group S.A., Europe’s largest
manufacturer of brake friction
materials, in 2011; now expanding presence as a true global
supplier, with manufacturingbases in North America, South
Korea, Southeast Asia, China,
Europe, South America, andSouth Africa.

Leverages advanced mechatronics technologies in awide range of business fields,such as customized machine
tools, air conditioner fans andprocessed precision automotive parts

Manufactures a range ofhighly promising products in theenvironmental and energy fields,such as Carbodilite, a modifier
used in bio-plastic manufacturing,and bipolar plates for fuel cells

Mainstay business is products
made from natural cotton; supplies
high-quality “Made by Nisshinbo”
dress shirts, denim, uniforms
and other products to markets
worldwide

Makes high value-added products for everyday use such as
toilet tissue and other household paper products, specialty
paper used in pamphlets andother materials and processed
paper products such as telegram paper

Procures funds to support
the Nisshinbo Group’s growthstrategy by effectively utilizing
idle plant sites and other realestate assets arising from business restructuring— Solutions and specialized
equipment :— Friction materials:— Household paper products:— Sales:— Assembly products:— Carbodilite highperformance chemical
additive— Bipolar plates for fuelcells
— Rigid urethane foam
— Fine carbon products— Shirts:

Disaster prevention systems— Precision parts processing
including parts forelectronic brake systems(EBS)— Plastic molding andprocessing— Customized machine tools— Communications
equipment :GPS receivers

10

14.3

(billions of yen)

31.7 31.3
209.1
148.7161.9
187.7— Marine electronics
equipment :   Inmarsat satellite ship
earth stations— Electronic devices:   Semiconductor devices
   SAW filters

Disc pads and brake linings
Drum brake products

Dress shirts, casual shirts
and fabric— Textiles:

Uniform fabric and casual
fabric— Denim:Jeans and denim fabric— Others

Toilet tissue, facial tissue (madewith virgin and recycled pulp)
and kitchen-related products— Specialty paper:

28.7 28.6
8

14.3

15.3
14

Housing lots
— Leasing:

ARIO Nishi Arai and otherproperties

Fine paper and synthetic
paper— Processed paper products:

Telegram-related paper,
high-end packaging and otherproducts
11Overview of Business Segments

Electronics
Japan Radio Co., Ltd.
This segment is Nisshinbo’s largest and is centered on leading communications equipment company
Japan Radio Co., Ltd. Other major subsidiaries in the segment include New Japan Radio Co., Ltd.,
Nagano Japan Radio Co., Ltd. and Ueda Japan Radio Co., Ltd., which operate businesses in theelectronic equipment, communications, and semiconductor fields.

Segment Income

Segment Income Breakdown(millions of yen)(millions of yen)

15,00010,00010,000

5,000

0

13.3
12

14.3

15.3

13.3

14.3

15.3

Japan Radio

3,919

7,281

7,713

New Japan Radio

1,469

2,276

2,918

Nagano Japan Radio864(1,813)

217

Ueda Japan Radio

330

437

974

Eliminations

1,205

1,170

881

Total

7,788

9,352

12,704

Summary of Financial Results for the
Fiscal Year Ended March 2015

Business Strategies for the Fiscal YearEnding March 2016

In the fiscal year ended March 2015, the electronics
business reported net sales of ¥209,116 million, up 11.4%
year on year, and operating income of ¥12,704 million, an
increase of 35.8%. Earnings were significantly higher than
the target in our three-year management plan.
Japan Radio Co., Ltd. reported higher sales of marine
equipment on the back of firm demand for equipment
for commercial vessels amid a strong shipbuilding market. Alphatron, a company acquired in the previous fiscal
year, also contributed to earnings. Sales also increased in
the communications equipment field due to higher salesof intelligent transport systems (ITS) and the launchof new PHS terminals. In the solutions and specialized
equipment field, which is focused on the public sector,
demand for disaster prevention systems from local
public agencies supported higher sales. Sales of vessel
traffic management systems (VTS) and weather radarsystems also increased year on year.  
New Japan Radio Co., Ltd. added more production capacity in response to a steep rise in orders forelectronic devices such as MEMS devices*1 and SAW
filters*2, which are used in smartphones. The weak yen
and business restructuring also contributed to earnings.
Nagano Japan Radio reported higher sales year on
year and returned to profit, with an increase in the ratioof high value-added products supporting a significant
improvement in profitability.
In the fiscal year under review, Japan Radio established a new Advanced Technology Center on land next
to a site owned by Nagano Japan Radio Co., Ltd. Japan
Radio has transferred technology development functions
from its Mitaka Plant to the new center, which is now
the main technology development site for the electronics business. Around 1,000 engineers from Japan Radioand Nagano Japan Radio now work at the center, which
was completed in December 2014. Also, in March 2015,a new production facility was completed on the samesite. We plan to sell off the Mitaka site in stages, with thefirst stage of roughly 29,000 m2 sold during the fiscal
year under review.

The electronics business is aiming to generate new
growth by restructuring its operations, based on two
basic strategies: implement a growth strategy and reformthe global cost structure.
In order to build a new earnings base, Japan Radio
will focus on its business in emerging economies, particularly the fast-growing markets of Southeast Asia. In
the key marine equipment field, the company aims toboost its share in the commercial vessel market and in
the workboat and offshore vessel market, and reinforce
its strategic business alliance with Alphatron. Japan
Radio will also increase its cost competitiveness by using
overseas production sites and target growth in services
that support safe vessel operations. Japan Radio andNagano Japan Radio are currently working together toincrease output of marine equipment. In the solutions
and specialized equipment field, existing disaster prevention upgrade projects are set to continue, but the valueof investment in some areas of disaster prevention is
likely to decline. Given this outlook, we will work hard tosecure orders for disaster prevention systems and waterand river management systems. In research and development, we are making preparations to transfer systemengineering, R&D functions and related personnel to a
new site in Saitama Prefecture that was acquired fromNew Japan Radio in June 2014.
At New Japan Radio, we expect new businesses
such as SAW filters and MEMS devices to continue
driving earnings, as these products are likely to be in highdemand amid market growth and rising performance forsmart devices. We aim to put New Japan Radio on thepath to strong growth by developing new businesses andapplications for these products.

electromechanical system devices: small devices made using semiconductor*1 Microfabrication technology*2 Service acoustic wave filters: used in smartphones and other communication devices
13

Overview of Business Segments

Automobile Brakes
Nisshinbo Brake Inc./TMD Friction Group S.A.
Nisshinbo is a global supplier with world-class development capabilities in the field of friction materials,
which are key components of automobile brake systems. The automobile brakes business also includes
Luxembourg-based TMD Friction Group S.A., making Nisshinbo one of the world’s leading manufacturersof friction materials. As a global leader in the friction materials industry, we are working to address
global automaker needs for optimum parts procurement.

Summary of Financial Results for the
Fiscal Year Ended March 2015

Business Strategies for the Fiscal YearEnding March 2016

In the fiscal year ended March 2015, the automobile
brakes business reported net sales of ¥161,887 million,
up 8.9% year on year, and an operating loss of ¥2,069
million. Operating profitability deteriorated by ¥255
million compared with the previous fiscal year. However,excluding goodwill amortization costs of ¥6,916 million
related to the acquisition of TMD and other factors,
operating income rose 4.9% year on year to ¥4,847
million.  
In Japan, new car sales declined due to a pullbackin demand after the consumption tax hike. This pushed
down domestic sales in the automobile brakes business,but an increase in exports and the weak yen supported
higher overall sales year on year. Overseas, earnings wereaffected by political instability and the end of new car
subsidies in Thailand, but sales increased overall on theback of sales growth in the US and South Korea. The
business result of the production subsidiary in China wasin the black in the fiscal year under review.  
In addition, Nisshinbo Commercial Vehicle Brake Ltd.
(NCB), a new subsidiary set up in Thailand to manufacture brakes for commercial vehicles, started productionin December 2014. TMD’s earnings were largely firm,
supported by growth in new car sales in Europe. However, goodwill amortization costs increased due to theweak yen.

In the fiscal year ending March 2016, we forecast a decline
in domestic car sales due to an increase in the tax on
mini-vehicles in April 2015. However, overseas, we expect
markets to continue expanding in the US and Asia, and
we also see higher sales year on year in Europe.
Against this backdrop, the automobile brakes businesswill boost production capacity in Asia using new plants
in China and Thailand, aiming to increase market share in
emerging markets. We will also work to lift earnings at TMD.
TMD is currently working on creating an optimum
production framework. In Brazil, operations have beentransferred to a larger production site, while a newplant is being constructed at TMD’s existing site in Essen,
Germany. Production activities currently carried out by
the Leverkusen plant will be consolidated at Essen once
the new plant is completed, which is scheduled for the
middle of the fiscal year ending March 2016. Nisshinbo
Brake and TMD will also work together to boost sales toglobal automakers.
The automobile brakes business is currently developing products to comply with new regulations on copper
content in friction materials*. Nisshinbo Brake plans
to start production of compliant non-asbestos-organic
materials for US and Japanese automakers in the fiscal
year ending March 2016, while TMD is installing the latest production equipment and realigning its production
facilities to supply compliant friction materials to European automakers. Volume production of these low-steel
materials is now under way and the materials are alreadybeing used in some models.
The US state of California has passed a law, effective from 2021, prohibiting the sale of new* friction
materials or vehicles fitted with friction materials that have a copper content of
more than 5%. From 2025, the limit on copper content will be reduced to less than 0.5%.

Segment Income

Segment Income Breakdown(millions of yen)(millions of yen)

6,000

14.3

15.3

4,000

NISB* —Domestic

1,732

1,836

1,950

2,000

NISB

2,158

4,824

5,267

(941)

718

1,013

TMD acquisition costs, etc.

(7,250)(9,192)(10,298)

Total(4,302)(1,814)(2,069)0—Overseas

TMD-2,000-4,000-6,000

13.3

14

13.3

14.3

15.3

* Nisshinbo Brake Inc.
15

Overview of Business Segments

Precision Instruments
Nisshinbo Mechatronics Inc.
Utilizing know-how accumulated over roughly 70 years as a machine tool maker supporting various
manufacturing industries, Nisshinbo is focusing on three areas in this field: customized production
equipment, including manufacturing equipment for photovoltaic modules; precision parts processing,
mainly for automotive applications; and plastic molding and processing, primarily fans for air conditioners.
We are developing these businesses globally, centered on Asia.

Summary of Financial Results for the
Fiscal Year Ended March 2015

Business Strategies for the Fiscal YearEnding March 2016

In the fiscal year ended March 2015, the precision instruments business reported net sales of ¥28,608 million,
down 0.2% year on year, and operating income of ¥264
million, down 75.5% year on year.
In customized production equipment, sales declined
due to weak demand in the photovoltaic module-related
business. This reflected a fundamental review of therenewable energy feed-in tariff system in Japan and theimplementation of anti-dumping measures by the US
against imports of solar products from China and Taiwan.
Sales of other customized equipment also declined due
to a drop in large orders.
In precision parts processing, sales volume of Chinesemade products increased, supporting higher sales, but
profits declined year on year due to start-up costs at
Nisshinbo-Continental Precision Machining (Yangzhou)Co., Ltd., a new joint venture in China with Continental
Automotive Holding Co., Ltd. that started production in
November 2014.
In plastic molding and processing, sales increased
but profits declined year on year. Although shipments
to China and ASEAN countries rose, shipments of air
conditioner parts declined and margins deteriorated.

The precision instruments business will work tostrengthen earnings through business restructuring andaccelerate efforts to expand its manufacturing and sales
network globally.
The precision parts processing business is aiming
to capture market share in China by building a reliable
volume production system at Nisshinbo Yawei Precision
Instruments & Machinery (Jiangsu) Co., Ltd. This joint
venture manufactures and sells valve blocks, a key component in electronic brake systems (EBS).
In the plastic molding and processing business, we
are working to attract new customers in India and stepping up efforts to win orders in Shanghai and Thailand.
We are targeting global expansion while also making andselling lightweight plastic fans marketed under the Eco
Cross and Eco Turbo brands.
Amid continued tough market conditions in thephotovoltaic module-related business, we will continue
to actively cut costs and channel resources into strategicareas in order to boost profitability. The number of new
solar power facilities being installed in Japan is declining
following changes to feed-in tariffs for electricity generated by solar power. We therefore plan to strengthen
our position in facility maintenance and inspection
services. We are currently conducting joint research with
NEDO* into photovoltaic modules that can generate
electricity and heat water, with the research projectscheduled to end in February 2017. We anticipate themain users of these modules will be facilities that use
large amounts of hot water.
New Energy and Industrial Technology Development Organization, a national research and* development
agencySegment Income

Segment Income Breakdown(millions of yen)(millions of yen)

1,500

1,000

500

0

13.3

14.3

15.3

Mechatronics

(790)

218

(509)

Plastic molding

689

949

853

Eliminations

(46)

(92)

(81)

Total

(146)

1,075

264

-500

13.3
16

14.3

15.3

17

Overview of Business Segments

Chemicals
Nisshinbo Chemical Inc.
This segment is pushing ahead with the development of environment-related products on a global
basis, drawing on a broad base of expertise and intellectual property in the chemical field. Our
environment- and energy-related products include bipolar plates for fuel cells and Carbodilite,
which is a high-performance plastic material that increases the durability of bio-plastics. We areinvesting management resources in these promising growth areas as a matter of priority.

Segment Income

Segment Income Breakdown(millions of yen)(millions of yen)

13.3

14.3

15.3

600

Environmental &Energy Business

(85)

(120)

328

400

Others

147

184

145

Subsidiaries

60

40

41

Eliminations

10

1

0

Total

133

106

515

200

Summary of Financial Results for the
Fiscal Year Ended March 2015

Business Strategies for the Fiscal YearEnding March 2016

In the fiscal year ended March 2015, the chemicals business reported net sales of ¥8,943 million, up 1.5% year
on year, and operating income of ¥515 million, roughly
five times higher than the level in the previous fiscal year.
Sales of thermal insulation products declined dueto the impact of high raw material prices and weaker
demand amid a decline in housing starts. In insulationmaterials for liquid natural gas (LNG) applications, wesecured orders for tanks to be installed in large-scale
LNG carriers. We forecast continued growth in demandin this field. In bio carriers for waste water treatment,
customers in China started to use our products forsmall-scale purification tanks. Supported by a stricter
regulatory environment, we intend to expand sales ofbio carriers in China by promoting their use for waste
water treatment facilities. Carbon products registered
lower sales year on year due to sluggish demand forsemiconductor and LCD manufacturing equipment.
However, sales of Elastomer products increased on theback of firm demand for sealing tape and other products.
In environment- and energy-related products, sales rosedue to strong demand for fuel cell bipolar plates for residential fuel cell systems. We continue to push ahead withthe development of carbon alloy fuel cell catalysts, which
are seen as a promising alternative to platinum catalysts.
Sales of Carbodilite increased year on year, supported byrising demand for water-based cross-linking agents.
Meanwhile, we took the decision to transfer the
manufacture and sale of electric double-layer capacitors
to another company.

The chemical business is stepping up efforts to develop
and sell Carbodilite and fuel cell bipolar plates.
We will actively develop the environment- andenergy-related business, including setting up a production
system for insulation panels used in LNG carriers andexpanding our bio carriers for waste water treatment
into overseas markets. In addition, we will explore anddevelop businesses that address the needs of newenergy and smart society, as well as reinforce our R&D
and new business development capabilities by leveraging
Group synergies and enhancing links with public agencies
and academia.
In the Carbodilite business, where we have added
more production capacity, we forecast rising demand foruse as a water-based cross-linking agent and as a bioplastic modifier. Carbodilite is also increasingly being usedin PET film and other plastic applications. We aim to
expand the market for Carbodilite by responding rapidly
to new applications.
In fuel cell bipolar plates, we will continue to reducethe cost of our products through improvements in
productivity, while also targeting new applications in theautomotive sector. Leveraging the low weight and costof our existing bipolar plates, we are actively developing
products that can clear the performance requirementsof automakers.
Meanwhile, we merged Nisshinbo Chemical’s Elastomer business with Nisshinbo Textile’s Spandex business
in April 2015 due to overlapping business fields andtechnologies.

0

13.3

18

14.3

15.3

19

Overview of Business Segments

TextilesNisshinbo Textile Inc.
Since its founding in 1907, Nisshinbo has led the Japanese textile industry with its state-of-the-art
technologies and high quality. Nisshinbo subsequently expanded its business worldwide into the spinning,weaving, processing, and sewing fields and possesses some of the world’s most advanced technologies inareas ranging from development to production. Nisshinbo is currently working to increase global sales of
the APOLLOCOT brand, underpinned by its portfolio of sophisticated textile processing technologies.

Summary of Financial Results for the
Fiscal Year Ended March 2015

Business Strategies for the Fiscal YearEnding March 2016

In the fiscal year ended March 2015, the textiles business
reported net sales of ¥47,361 million, down 7.8% year
on year, and operating losses of ¥476 million, a deterioration of ¥1,028 million year on year.
In the domestic market, sales of uniform fabricrecovered, but sales fell sharply due to the transfer ofsubsidiary CHOYA CORP. Demand was also weak forthe segment’s mainstay dress shirt fabric and denim
fabric used to make mid-range and premium blue jeans.
Earnings were under pressure from high prices for products procured from overseas manufacturing sites due tothe weak yen, and from an increase in outsourcing costs
for processing work. As a result, sales and profits both
declined compared with the previous fiscal year.
Overseas, sales increased year on year, supported
by strong sales at key subsidiaries in Indonesia. However,profits declined amid higher costs in Indonesia due topersistently high prices for high-grade raw cotton, and as
a result of deteriorating market conditions for products
in Brazil due to lower raw cotton prices.  
As part of measures to reinforce the operating
structure, Nisshin Denim Inc. was merged into Nisshinbo
Textile Inc. and a new Yoshinogawa plant was established.
Product development functions at the Miai Plant werealso transferred to Yoshinogawa, creating an integrated
research and development facility focused on core textile processing technology. We also established a productdevelopment team at PT. Nisshinbo Indonesia, our local
textile processing subsidiary, to speed up development
processes.

The textile business is working to build a global operating structure and a highly profitable earnings structure
through the development and launch of new products,
guided by the Group’s new slogan “Drive Productivity
and Performance and Inspire Creativity and Innovation.”In the mainstay APOLLOCOT range, our shirts,
handkerchiefs, pants and other products already have astrong reputation in the domestic market. We plan tobuild on this success by expanding sales channels and offering an even wider choice of APOLLOCOT products,
such as next-generation thin-weave APOLLOCOT shirts
and APOLLOCOT bedclothes. Overseas, we intend
to build closer links with more business partners andexpand sales of products made overseas to customers
in third countries, utilizing the increased capacity at our
production sites in Indonesia.
Meanwhile, we merged Nisshinbo Chemical’s Elastomer business with Nisshinbo Textile’s Spandex business
in April 2015 due to overlapping technologies. We
intend to reinforce the domestic production and sales
structure and make product development more efficient.
In another move, we acquired TOKYO SHIRTS
Group, in May 2015. TOKYO SHIRTS operates anationwide chain of around 200 specialty shirt stores
under brands such as BRICK HOUSE. We aim to further
reinforce the textile business operating structure bymoving into the SPA* field, a promising growth market,
and creating a new business model that covers manufactured textiles and fabrics, garments and retailing.
* Specialty store retailer of private label apparelSegment Income

Segment Income Breakdown(millions of yen)(millions of yen)

600

13.3

14.3

15.3

Domestic

287

(41)

(1,086)

Overseas

126

689

606

Eliminations

161

(96)

5

Total

575

552

(476)

400
200
0
-200
-400
-600

13.3

20

14.3

15.3

21

Overview of Business Segments

PapersNisshinbo Paper Products Inc.
This business supplies high value-added paper products tailored to market needs in various fields, fromfacial tissue and toilet tissue in the household paper products field, to fine paper and synthetic paper
products in the commercial printing and business communication paper field and telegram-related
products, luxury packaging and other products in the processed paper products field.

Segment Income

Segment Income Breakdown(millions of yen)(millions of yen)

800

13.3

14.3

15.3

600

Household

92

(118)

365

400

Fine Papers

618

159

44

Eliminations

(1)

1

16

Total

709

42

425

200

Summary of Financial Results for the
Fiscal Year Ended March 2015

Business Strategies for the Fiscal YearEnding March 2016

In the fiscal year ended March 2015, the paper products
business reported net sales of ¥31,280 million, down
1.3% year on year, and operating income of ¥425 million,
10 times higher than the level in the previous fiscal year.
Although there were concerns of a pullback in demand
after a spike leading up to the increase in consumption
tax last year, price hikes, mainly for household paper
products, drove strong growth in profits despite largely
flat sales year on year.
In household paper products, there was only a modest drop in sales year on year due to firm sales prices
for key products such as toilet tissue for use with bidets
and toilet tissue made from recycled paper. This helped
to offset the impact of higher raw material and fuel costs
caused by the weak yen, resulting in an increase in profits
year on year.
In specialty paper, there were signs of a recovery indemand for high-grade printing paper and other products. Sales of KI・HOU・SHI paper for packaging applications increased and the launch of new synthetic paper
products also contributed to sales. However, this wasinsufficient to offset the impact of higher raw material
and fuel costs caused by the weak yen, leading to lower
profits year on year.
In processed paper products, sales of packaging
products and printer-related products were firm andmargins improved at a subsidiary in China, supporting an
upturn in profitability.

Although we forecast firm demand for household paper
products, we expect conditions to remain challenging
in the paper products business due to falling demand
for specialty paper amid the shift to digital media. We
also see the risk of higher costs due to persistently
high import prices for raw materials and fuel caused by
the weak yen, and uncertainties related to the supplydemand environment for waste paper. Against thisbackdrop, the paper products business will offer distinctive and high value-added products and seek businessalliances in order to boost earnings.
In household paper products, we will develop
products tailored to market needs and push ahead withcost reduction, aiming to become a maker of household
paper products with a unique position in the market. We
will revise product packaging, develop and promote highvalue-added products, and boost cost competitivenessby improving productivity for toilet tissue and otherroll-based products. We also plan to lift profitability at
consolidated subsidiary Tokai Seishi Kogyo Co., Ltd.
In specialty paper, we plan to develop new applications for fine paper and synthetic paper products,
upgrade existing products and reinforce cooperation
with partner companies in order to stimulate demand
and reinforce the earnings structure.
In processed paper products, we are aiming tobuild a position as a global supplier of luxury packaging
products by expanding business with leading overseas
makers of branded products and developing the business worldwide. We also intend to realign production
and sales sites, strengthen management systems in areas
such as quality control, and reduce costs to increase
profit margins.

0

13.3
22

14.3

15.3

23

Overview of Business Segments

Interview with Outside Directors

Real Estate
Nisshinbo Holdings Inc.
Nisshinbo’s real estate business is active in the redevelopment of business property that has become idle as aresult of business changes by Group companies. It is also involved in the leasing of office and commercial facilities
and the sale of housing lots. Income from those activities is used as capital to launch new businesses and develop
the Group’s global operations. Many Group properties and facilities located throughout Japan have high asset
values and have been used for a wide range of purposes, including shopping centers and offices.

Summary of Financial Results for the
Fiscal Year Ended March 2015

Business Strategies for the Fiscal Year Ending
March 2016

In the fiscal year ended March 2015, the real estate business
reported net sales of ¥9,246 million, down 12.5% year on year,
and operating income of ¥6,669 million, a drop of 14.3%. In theproperty leasing business, revenues were firm in land leasing
and facility leasing, such as offices and commercial properties.
In the housing lot sales business, we made steady progress withthe sale of lots at former plant sites, such as Harisaki, Kawagoe,
Notogawa and Nagoya. However, sales and profits declined
year on year, mainly due to the completion of sales at theformer Hamamatsu Plant site in the previous fiscal year.

The real estate business will continue to fulfill its role as a sourceof funds to help Nisshinbo attain its management targets byeffectively utilizing the real estate assets of the whole Group.
We forecast continued stable revenues from the property
leasing business, as the Group’s large-scale retail facilities provide
tenants higher returns than their other stores.
In the housing lot sales business, the Group owns high-value
properties in urban areas near stations. Working as the leaddeveloper, the Group carries out all planning and site preparation work for entire premium residential areas.
The table below shows the properties scheduled for sale in
the fiscal year ending March 2016. At the former Miai Plant site,
we are planning to offer retail sites and roughly 330 residential
lots, with sales set to begin in around 2020.

Noboru Matsuda

Yoshinori Shimizu

Noboru Matsuda became a public prosecutor in 1963 and handled casessuch as the Lockheed bribery scandal. After a period as the Governor of the
Deposit Insurance Corporation of Japan, Mr. Matsuda registered as a lawyer.
One of his current positions is Chairman of the Business Ethics Committee
at Mitsubishi Motors Corporation and he became an outside director of
Nisshinbo Holdings in June 2012.

Yoshinori Shimizu became a professor at Hitotsubashi University Graduate
School of Commerce in 1989 and was subsequently appointed as theuniversity’s Vice Chancellor. He later became the President of the Japan
Society of Monetary Economics and is currently professor emeritus
at Hitotsubashi University. Mr. Shimizu became an outside director of
Nisshinbo Holdings in June 2012.

Nisshinbo has created a corporate governance system that emphasizes the views ofpeople from outside the Group. Of the 13 members on Nisshinbo’s Board of Directors,
four are outside appointments. In this section, we speak to two of those outside directors, Noboru Matsuda and Yoshinori Shimizu, about the Nisshinbo Group’s corporate
governance system and its prospects for the future.

paramount in every business decision. I believe Nisshinbo“Public trust is the most importantconsideration in business management.
This has to be paramount in every
business decision.”recognizes this, illustrated by two of the main principles in its

NOBORU MATSUDA

forecasts about the outlook for the economy, allowing me to

Corporate Philosophy – Public Entity and Consistent Integrity.
Shimizu: My background is in macroeconomics and financial
theory. Expert knowledge in these fields helps me develop
contribute to discussions and decisions about major investments
and the future direction of the Nisshinbo Group. I agree with Mr.

Segment Income(millions of yen)

Scheduled building lot sales
in the fiscal year ending March 2016

15,000Total lots

10,000

5,000

0

13.3
24

14.3 15.3

Matsuda: The role of outside directors is under the spotlight

Matsuda. As an outside appointment to the Board of Directors,

more than ever after recent developments such as revisions

it is my duty to contribute to discussions in a way that inside

to Japan’s Company Act. Our duty is to meet the expectations

directors may find difficult.

of the Company’s shareholders, who selected us for our posts,
Already sold

Scheduled for sale

Former Kawagoe Plant

257

121

38

Former Harisaki Plant

227

206

21

Former Nagoya Plant(detached housing lots)

72

16

21

Discussions during Board of Directors meetings are lively. Thisand to fulfill our responsibility as independent members ofshows that members of the board feel comfortable enough to

the Board of Directors. During the course of my career, I havesay what they think.

witnessed many cases of moral hazard, which sometimes led
10,191

6,743

12,289to serious and devastating results. These experiences made me

Matsuda: Yes, Nisshinbo seems to have a corporate culture

realize that, above all, companies have to secure the trust ofthat encourages a thorough debate on every issue.

the public as honest organizations. This point needs to be25

“The Group’s technological skills giveit the potential to take the businessin exciting new directions.The key tosuccess now is how well it uses theseresources and commercializes its latest
technological breakthroughs.”“Nisshinbo’s Board of Directors nevercompromises on tackling any topic,
no matter how difficult.”
YOSHINORI SHIMIZUYOSHINORI SHIMIZU

Shimizu: I remember the board once discussed how an
overseas employee was involved in a bicycle accident on the way
to work. This was part of a wider debate about workplace safety

Shimizu: I agree completely. At the moment, the Nisshinbo

at overseas manufacturing sites. I think this illustrates how

Group is focused on B-to-B operations, but I see new op-

Nisshinbo’s Board of Directors never compromises on tackling

portunities if the Company can strengthen its marketing

any topic, no matter how difficult. That level of commitment iscapabilities and create new businesses by skillfully combining

quite unusual for a company board.

its portfolio of core technologies.
I think the Group’s technological skills give it the potential

Matsuda: Japan’s new Corporate Governance Code cameto take the business in exciting new directions. The key tointo force from June 2015. Companies are now working out

Nisshinbo’s success now is how well it uses these resources

how to put the code’s recommendations into practice. Nisshinbo

and commercializes its latest technological breakthroughs.

has taken steps that go beyond recommendations in the code,

Nisshinbo needs to generate new synergies by investing andincreasing the number of outside directors to four and appointing

acquiring other businesses, and we hope to contribute to thisa woman to the post of outside director.
Shimizu: I think Nisshinbo’s decision in 2009 to adopt a hold-process as outside directors.

Noboru Matsuda

Yoshinori Shimizu

ing company structure reflected its willingness to separate thepeers I think Nisshinbo falls down slightly on promoting itself.

Group’s business execution and supervisory functions. And theappointment of people like us as outside directors was based on
the belief that introducing objective views and outside perspectives would ultimately contribute to the growth of the Nisshinbo
Group.

“Nisshinbo’s Corporate Philosophy is morethan just a slogan; its principles are being
instilled across the whole Group.”
NOBORU MATSUDA

Matsuda: Corporate integrity is crucial, but compared with
The Company needs to be better at public relations, focusing

Matsuda: In that sense then, Nisshinbo’s Corporatea century, this desire to take on new challenges based on an

on how its businesses can help protect the environment,

Philosophy is more than just a slogan; the Company is instill-enterprising spirit of innovation is highly admirable.

as well as its CSR activities, sponsorship for athletes andemployee volunteer work. This would also help boost theing its principles across the whole Group. Nisshinbo’s serious
commitment to discussing any topic, no matter how difficult,Shimizu: Nisshinbo’s current President, Masaya Kawata, ismotivation of employees and the pride their families have inwhich we mentioned earlier, also fits with the Consistenta progressive business leader. Based on shrewd insights and a

the Nisshinbo name.  

Integrity principle in its Corporate Philosophy.

broad outlook about the global economy, Mr. Kawata is striving to boost the Group’s corporate value by focusing on cash

Shimizu: The Nisshinbo Group is putting more emphasis

Shimizu: Based on one of its other principles, Public Entity,

flow management. He is also very upbeat about the need toon how its businesses contribute to society. Nisshinbo has

Nisshinbo’s management team makes decisions with a view

invest, including the possibility of acquisitions.

stated it wants to make a difference to people everywhereas an “Environmental and Energy Company” group, aiming toto benefiting all stakeholders and increasing value over thelong term, rather than focusing on personal gain and the

Matsuda: Masaya Kawata and Shizuka Uzawa work wellincrease its corporate value by contributing to society. This

pursuit of short-term profits. This seems to be a selfless andtogether in their respective roles as President and Chairman.

also illustrates how committed Nisshinbo is to its principle offorward-looking approach.

Both are honest, open and diligent. They are also personable

Consistent Integrity.

and easy to work with.
Matsuda: And that forward-looking approach is evident

26

The President has set strategic sales targets of ¥600 billion

Matsuda: To go back to my first point, public trust must bein the Corporate Philosophy’s third key principle – Innova-

for the fiscal year ending March 2018 and ¥1 trillion for

the first consideration of any company. This is consistent withtion. Along with Nisshinbo’s firm commitment to the ideals

the fiscal year ending March 2026. To achieve those targets,the idea of “proactive governance” in the new Corporateof Public Entity and Consistent Integrity, which have been em-

Nisshinbo will need to attract highly capable people andGovernance Code. As outside directors, I hope we can guide

bedded in the Company’s corporate culture for more thandevelop a third core business to complement electronics andthe Company in the right direction, working closely with

automobile brakes.

everyone to help the Nisshinbo Group reach its full potential.   

27

Human Capital and Diversity

Employee Interview
Promoting diversity is one of the Nisshinbo Group’s most important personnel strategies. We believe ahighly motivated and diverse workforce that can realize its full potential will help support the Group’s
continued growth and development. We are implementing a range of initiatives to create that kind of
workforce. In the fiscal year ending March 2016, we established a new Diversity Development Department
to step up our efforts to promote a more active role for women and foreign employees in the workplaceand offer more opportunities for older workers.

Nisshinbo Holdings has set up a recruitment team
to conduct the Group’s hiring activities for university
and masters graduate positions. In this section, we
speak to one of our Chinese employees, Zhang
Wenyi, who joined Nisshinbo Holdings in October
2014 and now works on the team.

Zhang Wenyi
Nisshinbo Holdings Inc.
Human Resources Group

Promoting a More Active Role for Women
The Group’s workers and managers are actively promoting a better work-life balance. We have set up programs
that include childcare leave, shorter working hours, andsupport for returning to work after taking leave to raisechildren, resulting in a workplace environment that offers
employee benefits above legally mandated levels. In thefiscal year ended March 2015, we increased the numberof paid days employees can take off to care for sick or
injured children who have not yet started at elementary
school, making the system more accessible.
Also, we have set a number of concrete goals aimed
at promoting a more active role for women in the workplace. We aim to achieve these goals by the fiscal year
ending March 2021.
Goals for the fiscal year ending March 2021
(1) Appoint women to the Board of Directors(2) Triple the number of women in management
positions(3) Increase the ratio of female graduate 		recruits to 40% for office positions and to 		
20% for engineer positions

28

Promoting a More Active Role for Foreign
Employees
As the Nisshinbo Group’s businesses and markets become
more diverse, people who can work in an international
environment are increasingly important to the Group’s
growth and development. Since 2011, we have been
recruiting people from overseas to fill university andmasters course graduate positions. As of April 2015, theGroup had 22 employees from six countries, including
some posted to overseas sites. Over the medium tolong term, we plan to create a working environment thatenables foreign employees to play a more active role at
the Company.

Offering More Opportunities for Senior
Employees
The Nisshinbo Group is adjusting its employment systems
and creating better working conditions for senior employees to encourage them to continue taking an active role in
the Group.
The Group is also working to increase the employment of people with disabilities, and takes on students
through its internship program. Under this program, theGroup accepted a total of 312 interns (61 at Japanese
offices and 251 overseas) in the fiscal year ended March2015. We will continue to promote internships as part ofour efforts to train up the next generation of employees.

Q1: Why did you choose to work for the
Nisshinbo Group?
A1: At my university, around one third of students who
study Japanese join Japanese companies. I chose the Nisshinbo Group because it has diversified, global operationsin textiles, automotive parts and chemicals, supported byleading technologies.
Another key factor was the hiring process, the area
I’m involved with now. The process of multiple smallgroup recruitment briefings was meticulous and easy tounderstand. This appealed to me as a student, because therecruiters went into a lot of detail, helping me understandthat Nisshinbo was a worthwhile organization to work for.
After joining the Company, I was given responsibility
from an early stage, which helped me improve my skills ona daily basis.
Q2: Tell us about some of the features ofNisshinbo’s hiring process.
A2: Our priority is to ensure mutual understanding
between the Company and job applicants. Applicants who
attend our small-group recruitment briefings of aroundfive people are encouraged to ask questions, which avoids
a one-way flow of information from the Company. We arealso proactive about taking applicants on visits to manufacturing sites, and we conduct one-on-one interviews to
deepen understanding between both sides.
Q3: What is the current make-up of the 		
recruitment team?
A3: Our team leader is Japanese and there is one otherJapanese member and two Chinese employees. There wasalso a South Korean employee on the team, but he has
been transferred to a different section. Japan’s recruiting

season kicks off in March and runs for six months until
August. We hold around 20 recruitment briefings a weekduring this period. In the autumn, we sometimes headoverseas to recruit international staff to work in Japan.
We visit about one country each year, and this is alreadyreaping results.
Because I’m a non-Japanese employee at Nisshinbo,
foreign students in Japan and overseas students who
are thinking about working for Nisshinbo benefit fromspeaking to me. I can tell them truthfully what it’s like as a
Chinese woman who joined Nisshinbo. I can also answer
their questions about topics such as the challenges of living
in Japan. Responses from questionnaires clearly show thatjob applicants like our approach.

Q4: What kind of employees will Nisshinbo
need in the future?
A4: Non-Japanese currently account for about 20-30% of
the Group’s university and masters graduate intake. New
employees come from China, South Korea, Vietnam andIndonesia. After joining the company, they are first assigned
to sites in Japan and then have access to the same career
paths as Japanese employees.
The Nisshinbo Group is stepping up overseas expansion, so we want people who can support our drive to
become a more global organization. We need employees
who enjoy different cultures and communication, not justpeople with language skills. Also, we’re looking to hire people who can tackle and overcome issues independently
when problems arise.
Personally speaking, I want to act as a bridge between
China and Japan, which I think will help me do a good job
in my role at Nisshinbo.

29

Intellectual Capital and R&D

Protecting the Environment

The Nisshinbo Group is focusing on the environment and energy, two areas that are becoming increasingly
important to society. In these areas, we are channeling our efforts into developing competitive highperformance, high-quality products and technologies.

The Group’s R&D Themes

R&D Framework

As an “Environmental and Energy Company” group,
Nisshinbo is working on the practical application of nextgeneration environmental and energy technologies that
can help address global warming and other changes in the
global environment. Specifically, we are promoting the useof renewable energy and developing and commercializing
carbon-neutral technologies and products. We are alreadydeveloping carbon alloy catalysts, which significantly reducethe cost of fuel cells, and smart factories, which bring
together technologies from across the Group, but we aim
to create more new businesses by expanding synergies inbusiness fields from materials to electronics.

The Group has set up research and development divisions
at the holding company and its operating companies.
Nisshinbo Holdings is responsible for conducting R&D
projects that span different businesses and for commercializing newly developed technologies and products.
The Company also has a specialist office that manages
the Group’s intellectual property. The Group’s operatingcompanies conduct R&D to increase the added value of
products in their respective business fields.

Japan Radio Opens Advanced Technology Center
Japan Radio Co., Ltd. opened a new Advanced Technology
Center in Nagano on December 8, 2014. The center has six
aboveground floors and distinctive balconies on each floor.
The building’s total floor area is around 13,000 m2, but engineers also use the balconies to conduct research and test
communications technology. Inside, each floor is open-planwith an atrium, and the layout is designed to make researchmore efficient and encourage cooperation between teams.
A total of roughly 1,000 engineers from Japan Radioand Nagano Japan Radio Co., Ltd. now work at the center.
A new production site* for Japan Radio was also completed
at the same location in March 2015, making Nagano a key
research and production base for the Nisshinbo Group.
* Solutions and specialized equipment business manufacturing facility

The Nisshinbo Group recognizes that working to solve environmental issues is a challenge common to
all of humanity and is an absolute necessity for the existence and activity of a corporation. As such, we
are working to independently and proactively solve these issues in accordance with the Business Conduct
Guidelines of the Nisshinbo Group*.

20%

In the fiscal year ended March 2015, the Nisshinbo Group used
11.24 million GJ of energy. We had been aiming to cut energy
consumption per unit of sales by 5% from the fiscal year ended
March 2011, but we have achieved an actual reduction of
20%. Purchased electric power accounts for roughly 70% of totalenergy used. In other energy types, we are cutting emissions ofgreenhouse gases by switching from heavy oil to town gas.

9%

Effective Use of Water Resources

In the fiscal year ended March 2015, the Nisshinbo Group
used 28.4 million m3 of water, down 4% comparedwith the previous fiscal year. We also reduced water

consumption by 9% per unit of sales.

64%

Volume of Chemical Substance Emissions
In the fiscal year ended March 2015, the Nisshinbo Group’s
amount of pollutant release and transfer register (PRTR) substances emitted into the environment was 35 tons, down 6%
from the previous year. The reduction was 28% per unit of sales.
We had been aiming to reduce emissions of PRTR substancesby 10% from the fiscal year ended March 2011, but we haveachieved an actual reduction of 64%. By chemical type,dichloromethane accounted for the largest proportion of PRTR
emissions, with 38% of the total.

* https://www.nisshinbo.co.jp/english/profile/vision/principle.html
30

23%

Energy Consumption

Emissions of Greenhouse Gases

In the fiscal year ended March 2015, greenhouse gas emissions by
the Nisshinbo Group totaled 722,000 tons (CO2). We had beentargeting a cut in greenhouse gas emissions of 5% per unit of sales
from the fiscal year ended March 2011, but we have achieved an
actual reduction of 23%. Greenhouse gas emissions from
non-energy sources have been declining over the long term. Theseemissions are mainly from the use of perfluorocarbon (PFC) in IC
manufacturing processes by New Japan Radio Co., Ltd.

35%

SOx

Atmospheric Releases

Based on per unit of sales, sulfur dioxide (SOx) emissions
declined 35% year on year, nitrogen oxide (NOx) emissions
dropped 26%, volatile organic compound (VOC) emissions
fell 21% and the amount of soot and dust released declined
83% from the previous fiscal year.

19

plantsVolume of Waste Generated

In the fiscal year ended March 2015, waste generated by the
Nisshinbo Group totaled 68,600 tons. However, the volume ofwaste generated per unit of sales increased 4% compared withthe previous fiscal year. The recycling rate dropped by approximately 1.5 percentage points year on year to 84.5%, comparedwith our target of at least 95% for the year under review. We willcontinue to work on improving the Group’s recycling rate. As of
the year under review, 19 plants had achieved zero emission
status (recycling rate of 99% or higher).
31

The Nisshinbo Group’s Management Framework

CORPORATE VISIONCORPORATE GOVERNANCE

The Nisshinbo Group believes strongly that its companies are public entities. While pursuing profit on thebasis of fair competition, we consider it our mission to contribute to society at large through our corporate
activities. To achieve further growth in global society by utilizing the organizational culture we have cultivated,
we have formulated our Corporate Philosophy and Business Conduct Guidelines to reflect the values andstandards of behavior that all of our employees throughout the world share and respect.

Nisshinbo Group Corporate Philosophy

Business Conduct Guidelines of the Nisshinbo Group

Guided by two principles in its Corporate Philosophy – Public Entity and Consistent Integrity –the Nisshinbo Group adheres to its fundamental stance of always acting with integrity and in good faith
toward its stakeholders. Reflecting this in our corporate governance activities, we work to ensure thetransparency of management, reinforce accountability and act ethically in all matters.
The Nisshinbo Group also adheres to the intent and spirit of Japan’s Corporate Governance Code formulated by the Tokyo Stock Exchange. The Group intends to disclose a Corporate Governance Report after
considering concrete measures to address provisions in the code’s principles (general principles, principles
and supplementary principles).
The Group’s Business Oversight and Execution

decision-making and oversight functions and business

Framework

execution functions.

The Company’s Board of Directors is responsible for making
Compliance

Environment

Workplace

Human Rights

Product Safety

Procurement

The Board of Management, which is made up of direc-

decisions on key management matters and for overseeing

tors, managing officers and other senior personnel, holds

the actions of the directors. We have also adopted ameetings to discuss important matters related to business

managing officer system in order to strengthen and separate

execution throughout the Group.

Corporate Governance Structure
General Shareholders Meeting

Nisshinbo Group Corporate Philosophy
Our corporate philosophy expresses the values we share as members of the Nisshinbo Group.

Board of Directors
Financial Auditors

13 Directors(including four outside directors)

PUBLIC ENTITYINNOVATION

Believing that our companies are public
entities, we shall aim to realize a sustainable
society＊1 by proposing solutions to global
environmental problems.

Respecting the diverse cultures and customsof the world, as well as biodiversity, we shallconduct fair and sincere business activities withpride as a corporate citizen.

Maintaining our spirit of response to change
and unceasing challenge, we shall create an affluent future together with our stakeholders＊2 .

・ We remember at all times and in all our
activities that the ultimate goal of our Group
is to contribute to society.

・ We fulfill our social responsibilities as acorporate citizen by acting in good faith andwith fairness at all times.

・ We work toward the creation of an affluent
society by constantly creating new andoriginal value.

・ We offer products and services that
help solve global environmental issues, withan eye to developing a society where all
people can enjoy comfortable lifestyles long
into the future.

・ We respect the diverse cultures and customsof countries and regions throughout theworld and uphold the laws and regulationsof each.

・ We satisfy stakeholder expectations bysensitively anticipating changes in the times
and the environment and boldly taking on
new challenges.

Representative Directors

Directors

Managing Officers

・ We conduct our business activities with fullrecognition that the global environment
depends on the maintenance of a delicate
harmony among all living things and that weare part of that diverse harmony.

・ We build ties of trust with stakeholders
and work together with them in ourbusiness activities.

Representative directors are appointed
by resolutions of the Board of Directors.
As of June 26, 2015, the chairman andpresident were the Company’s two
representative directors.

As of June 26, 2015, the Company had 13
directors, including four outside directors. The Board of Directors is responsible for making decisions on importantmanagement matters and for monitoring
the execution of duties by directors.
Directors are appointed for one-year
terms in order to clarify management
responsibility each fiscal year.

Nisshinbo has adopted a managing officer
system to speed up decision-making forbusiness execution and clarify operational
responsibilities. As of June 26, 2015, theCompany had 15 managing officers,
including eight directors with dual roles as
managing officers. Managing officers arealso appointed for one-year terms.

＊1 A sustainable society is a society where environmental
preservation and effective resource use are balanced witheconomic rationality and where, as a result, all people canenjoy comfortable lifestyles long into the future.

32

Audit & Supervisory Board

CONSISTENT INTEGRITY＊2 A stakeholder is any person or organization involved inor affected by our corporate activities, including customers,
shareholders, employees, business partners, community
residents, and governmental organizations.

Four Audit & Supervisory Board Members(including two outside audit & supervisory board members)

Representative Directors

Internal Audit Office
Corporate Strategy Center
Board ofManagement

Managing Officers, Business Divisions, Group Companies

33

GLOBAL MANAGEMENT SYSTEMThe Group’s Audit Framework

Timely Information Disclosure

Centralized Management of Operations in Asia

Nisshinbo has established an Audit & Supervisory Board.

Nisshinbo is working to ensure it is accountable to all stake-In the fiscal year ended March 2012, we established two

The audit framework comprises the audit & supervisory

holders in order to create a highly transparent business. In

management companies in Asia to support business expan-

board members, who conduct audits, the independent audi-

addition to fulfilling timely disclosure standards determinedsion in the region. The first management company, Nisshinbo

tor, who carries out accounting audits, and the Internal Audit

by the Tokyo Stock Exchange, we hold briefings for share-

Singapore Pte. Ltd., is responsible for providing financial

Department, which is responsible for conducting internal

holders and investors on a regular basis and provide otherand internal control support to 10 subsidiaries (as of April

audits. These groups work closely together to improvetimely information via our corporate website as part of

1, 2015) located in ASEAN countries such as Thailand andcorporate governance.

ongoing efforts to improve the provision of information toIndonesia. It also trains personnel for the Group’s global

stakeholders and retain their trust.

operations. The second management company, Nisshinbo

Nisshinbo also conducts oversight of specific areas such

Building and Operating Internal Control

control and operational support to 24 subsidiaries (as of April

1) Audit & Supervisory Board

Systems

1, 2015) in China.

The Company’s Audit & Supervisory Board comprises four

Nisshinbo endeavors to create a healthy and highly
transparent corporate culture in accordance with theoutside audit & supervisory board members. In accordance

Corporate Philosophy of the Nisshinbo Group. An internal

corporate governance from a global perspective and optimize

with audit policy and plans determined by the Audit &control system has been built and is now being operated

the Group’s operating structure.

Supervisory Board, the audit & supervisory board members

to identify and then remedy any issues in business execu-

monitor business management and execution at the Com-tion processes. In addition, Nisshinbo revised its basic

pany and its subsidiaries by attending important manage-

policy on the construction and operation of internal

ment meetings such as meetings of the Board of Directors

control systems in response to revisions to Japan’sand Board of Management in order to understand operating

Companies Act, enacted in May 2015.

conditions.
1) Internal Control System Reporting Related to Financial
ReportingNisshinbo has established an Internal Audit Office independ-

The Financial Instruments and Exchange Law, which includes

ent from executive business functions to act as the Internal

provisions on internal corporate control known as J-SOX,

Audit Division. The Internal Audit Office conducts ongoingcame into force in April 2008. Since then, we have imple-

audits of operations across the entire Nisshinbo Group andmented control measures to maintain and upgrade ourworks to protect corporate assets and increase manage-internal control system related to financial reporting. During

ment efficiency by providing advice and proposals for reme-

the fiscal year ended March 2015, an assessment led by thedial measures from a legal and rational standpoint.

Internal Audit Office confirmed that the internal control
system related to financial reporting is operating effectively.

Hong Kong:
4 subsidiaries

ThailandSingapore

Indonesia

Nisshinbo
Business Management(Shanghai) Co., Ltd.

Nisshinbo
Singapore Pte. Ltd.

RISK MANAGEMENT
In order to fulfill its corporate social responsibility by contributing to society through ongoing businessactivities, the Nisshinbo Group has established systems to ensure stable operations by mitigating a rangeof risks that could have a serious impact on the smooth operation of the business.
Specifically, following the Great East Japan Earthquake in 2011, we have put priority on managing risks associated with major earthquakes and other natural disasters.
Crisis Management System and Disaster Rapid

ensure disaster prevention management activities remain at

Response Systema high state of readiness. In the fiscal year ended March 2015,

Firefighting teams at each Group business site have access tomanaging officers inspected 13 business sites.

compact water pumps, chemical protection suits, life-saving
equipment, chemical fire trucks and other equipment suited

Initiatives to Ensure Business Continuity

to the facilities and location of each site. As part of efforts to

In addition to improving the Group’s rapid response capabili-

improve emergency response capabilities, business sites also

ties in a disaster, the Nisshinbo Group has formulated a

conduct regular rapid response drills to increase readinessbusiness continuity plan (BCP). The plan is designed to ensure

for early-stage fires, life-saving situations and other potential

operations continue during major natural disasters and otheremergencies such as gas or chemical leaks.

unforeseen interruptions and to restore operations within

Major business sites also conduct annual comprehensive
disaster drills, which are reviewed by managing officers, to34

Shanghai:
9 subsidiaries

China

Going forward, Nisshinbo will utilize these two subsidiaries as business hubs in their respective regions to reinforce

2) Internal Audit Division

Management companies
Overseas sites

Business Management (Shanghai) Co., Ltd., provides internal

as workplace safety, environmental issues and IT systems.

audit & supervisory board members, two of whom are

Nisshinbo subsidiaries in ASEAN and China

the maximum tolerable period of disruption (MTPOD).
Previously, in accordance with the Group’s crisis management35

principles and other guidelines, each business and Groupare working properly, and steps are taken to prevent infor-

Ethics Committee or an outside corporate attorney. Every

Compliance Educationcompany were responsible for formulating their own BCPs

mation leaks and realize ongoing improvements.

effort is made to protect those who have used the system

In order to promote wider understanding of corporate

from unfair treatment.

ethics, the Nisshinbo Group conducts compliance training forbased on their respective business requirements.
However, we have recently shifted to an integrated Group-

Initiatives to Ensure Information Security

If the Corporate Ethics Committee receives a report via

different employee levels and work sites. Compliance is also

wide approach to business continuity management (BCM).

The Nisshinbo Group is constantly reinforcing information

the system, it convenes a meeting, launches an investigation

In the fiscal year ended March 2015, we began developing asecurity measures to prevent leaks of personal informationand takes appropriate action where necessary. If the outside

new plan focused on responding to major earthquakes

about customers and other sensitive information. Nisshinbo

corporate attorney receives a report, appropriate action is

Basic Stance on Antisocial Forces(such as directly below the Tokyo metropolitan area or

widely uses anti-virus software and programs to remedy

taken based on close cooperation with the Corporate Ethics

The Nisshinbo Group rejects all contact with antisocial

Nankai Trough earthquakes), which have the potential tosecurity issues in its IT systems in order to prevent computer

Committee.

forces, which threaten the peace and stability of civil society.

severely damage the Group’s operations and paralyze coreviruses from causing leaks of sensitive data. Steps are also

In the case of reports received from individuals who havemanagement functions.

being taken to tighten access to IT systems to prevent andprovided their name and contact details, the Corporate Eth-

to any antisocial forces and their associates. We will work

limit leaks of information caused by internal unethical actions.

ics Committee provides information about how the matter

closely with the relevant authorities to deal with any illegiti-

We have also formulated information security guidelines,

is being dealt with, such as updates on the investigation andmate demands received from antisocial forces. We do not

The Nisshinbo Group recognizes that one of its key

which are used as a checklist by Group companies in Japana summary of its conclusions. The Corporate Ethics Com-

respond to such demands in any circumstances.

corporate responsibilities is to ensure important informa-and overseas to conduct their own inspections of informa-mittee also works to prevent any future violations of law ortion related to customers, suppliers, employees and othertion security systems.

corporate ethics by providing information to all companies

Initiatives to Protect Personal Informationindividuals is protected appropriately. In order to fulfill thisIn addition to the above measures to protect IT systems,

responsibility, we handle personal information in accordance

we are making continuous improvements to the protection

with an internal privacy policy. In addition, internal audits areof personal information and management of trade secrets

conducted based on Company regulations to ensure systems

through annual internal audits.

part of the curriculum for new employee orientation courses.

The Group as a whole takes an uncompromising approachin the Group about its response to the issue based on the
results of the investigation.

Corporate Ethics Reporting System
Nisshinbo Holdings Inc.

Board of Directors

COMPLIANCE

ReportPresident

Based on two principles in its Corporate Philosophy – Public Entity and Consistent Integrity –the Nisshinbo Group’s mission is to act with fairness and integrity in order to contribute to society throughits business activities. To achieve this aim, we have formulated the Nisshinbo Group Business Conduct
Guidelines, which clearly define the standards of behavior that Nisshinbo employees are expected to follow
as part of wider efforts to enforce compliance.
Corporate Ethics Committee

menting investigations, responses, procedures and remedial

Nisshinbo has established a Corporate Ethics Committee

measures related to consultations and reports received throughthat answers directly to the president. The committee is led

the Company’s Corporate Ethics Reporting System.

by a director with a dual role as a managing officer, who is
responsible for handling all compliance matters across the

Corporate Ethics Reporting System

Nisshinbo Group.

The Nisshinbo Group has established a Corporate Ethics Re-

Specifically, the Corporate Ethics Committee is responsi-

36

Nisshinbo Group

Division subject to investigation
ReportInstruct

Investigate

Corporate Ethics Committee

Internal Contact Point(Corporate Ethics Committee)

Response(Disclosed whistleblower)

External Contact Point
Coordinate(Corporate Attorney)

Promote Groupwide
understanding

Group companies

Report, consult(Disclosed / undisclosed whistleblower)

Stakeholders

porting System to rapidly identify and prevent any reoccur-ble for (1) implementing corporate ethics systems and regu-

rence of potential or actual legal violations. Group employees

lations, (2) deciding the content and methods of corporate

and external parties can submit reports to the system, which

ethics training for employees, and (3) formulating and imple-

can be used to communicate directly with the Corporate

37

Board of Directors(As of June 26, 2015)

Director,*1
ChairmanShizuka Uzawa

Director,
Managing Officer

Takayoshi TsuchidaDirector,*1
President

Masaya Kawata

Director,
Managing Officer

Toshihiro Kijima

Director,
Director,
Senior Executive Managing Officer Executive Managing Officer

Masahiro Murakami

Nobuyuki Hagiwara

Director,
Managing Officer

Director,
Managing Officer

Takayoshi Okugawa

Director,
Executive Managing Officer

Koji Nishihara

Financial Section

Kazunori Baba

P40 Management’s Discussion and Analysis
P45 Six-Year Summary
P46 Consolidated Balance Sheets
P48 Consolidated Statements of Income
P49 Consolidated Statements of Comprehensive Income
P50 Consolidated Statements of Changes in Equity
P51 Consolidated Statements of Cash Flows
P52 Notes to Consolidated Financial Statements
P62 Independent Auditors’ Report

Director*2

Director*2

Director*2

Director*2

Tomofumi Akiyama

Noboru Matsuda

Yoshinori Shimizu

Shinobu Fujino*1 Representative director *2 Outside director
Audit & Supervisory Board Members

Managing Officers(As of June 26, 2015)(As of June 26, 2015)

Yoichi Fujiwara
Takumi Ohmoto

Outside Audit &Supervisory Board Members
Yo Kawakami
Toshihiko Tomita

President
Masaya Kawata*
Senior Executive Managing Officer
Masahiro Murakami*

Executive Managing Officers

Managing Officers

Nobuyuki Hagiwara*

Takayoshi Tsuchida*

Koji Nishihara*

Toshihiro Kijima*
Takayoshi Okugawa*Kazunori Baba*
Masahiro Kawamura
Akihiro Yoshino
Hajime Sasaki
Kazuhiro Iwata
Akihiro Ishizaka
Makoto Sugiyama
Yasuji Ishii* Concurrent board member
38

39

Management’s Discussion and Analysis

HIGHLIGHTS• Net sales increased 5.9% year on year, supported by sharply higher sales in the electronics business and theautomobile brakes business.
• Operating income before goodwill amortization costs rose 6.1% year on year.
• Our long-term strategic plan for the fiscal year ending March 2026 is targeting net sales of ¥1 trillion and ROEof over 12%.

OPERATING RESULTS
Economic Environment
During the fiscal year ended March 2015, the global economy
faced a number of uncertainties, including slowing growth inChina and other emerging economies, a steep drop in the
crude oil price, sovereign debt issues in Greece and economic
sanctions imposed on Russia by the US and Europe due to theconflict in Ukraine. However, there was a continued modest
upturn in the global economy, supported by a steady recovery
in the US and a pickup in Europe.
The Japanese economy also continued to recover gradually,
with economic and monetary policies implemented by thegovernment and the Bank of Japan supporting an improvement
in corporate earnings and employment conditions, underpinningfirm consumer confidence.

Results of Operations in the Current Termand Comparison with the Previous Term
The Nisshinbo Group reported sales of ¥523,758 million(US$4,365 million), an increase of 5.9% year on year. Growth
was mainly supported by a steep rise in sales in the electronics
business and the automobile brakes business.
Operating income before goodwill amortization increased
6.1% year on year to ¥21,069 million (US$176 million) andoperating income rose 4.3% to ¥13,744 million (US$115
million). In the electronics business, profits increased due toimproving profitability in the marine equipment business
operated by Japan Radio Co., Ltd., strong sales of electronic
devices at New Japan Radio Co., Ltd. and a return to profit
at Nagano Japan Radio Co., Ltd. on an upturn in margins. The
papers business also continued to perform well.
Net income increased 52.0% year on year to ¥13,694
million (US$114 million), reflecting extraordinary gains suchas gains on the sale of property, plant and equipment at the
Mitaka Plant site operated by Japan Radio Co., Ltd. There wasalso a large decline in extraordinary losses booked in theprevious fiscal year, such as business restructuring costs at
Japan Radio Co., Ltd. and losses related to the redemption of40

TMD corporate bonds. In addition, the Group’s tax burden
declined due to the use of deferred tax assets after profits
improved at domestic subsidiaries in the electronics businessand overseas subsidiaries in the automobile brakes business.

Net Sales

CURRENT BUSINESS STRATEGIESAND FUTURE PROSPECTS
The Nisshinbo Group is targeting net sales of ¥600 billion
and return on equity (ROE) of 9% by the fiscal year ending
March 2018. We aim to achieve these targets by focusing on
strategic businesses in four areas: wireless communications andelectronics, automotive parts and devices, lifestyle and materials, and new energy and smart society. We are also targeting
net sales of ¥1 trillion and ROE of over 12% in the fiscal year
ending March 2026 as our new long-term strategic plan.
Our long-term vision and strategic direction is to become
an “Environmental and Energy Company” group. Guided bythis objective, we will target further growth by reinforcing
existing businesses, leveraging the results of R&D projects
and actively targeting M&A opportunities, working as a united
Group driven by relentless innovation.

(billions of yen)

600
500
400
300
200
100

In the fiscal year ending March 2016, our management
focus will be on reinforcing existing businesses and stepping up
our ability to launch new businesses. We will also continue toaccelerate efforts to improve cash flow management in orderto achieve our targets. In the electronics business, we plan tocomplete work on the three-company business structure –comprising Nagano Japan Radio Co., Ltd., Ueda Japan Radio
Co., Ltd. and anchored by Japan Radio Co., Ltd. We will also
strengthen the segment’s operating base. In the automobile
brakes business, we will enhance TMD’s earnings structure,and in the textiles business, we aim to reap benefits from therestructuring of our shirts business.
Our estimates are based on average exchange rates forthe fiscal year of ¥115/US$ and ¥130/€.

Net Sales (millions of yen)

Operating Income (Loss) (millions of yen)

Textiles

47,361 down 7.8%

Automobile Brakes

161,887 up 8.9%(476) a deterioration of ¥1,028 million

Papers31,280 down 1.3%

425 up 905.5%

Precision Instruments

28,608 down 0.2%

264 down 75.5%

Chemicals

8,943 up 1.5%

515 up 387.3%

Electronics

209,116 up 11.4%

12,704 up 35.8%(2,069) a deterioration of ¥255 million

Real Estate

9,246 down 12.5%

6,669 down 14.3%

Other Businesses

27,317 up 1.8%

(110) a deterioration of ¥43 million

Note: Changes in net sales and operating income (loss) are year-on-year figures; please refer to pages 12 to 24 for details on performance in individual segments.

0
10.3

11.3

12.3

13.3

14.3

15.3

Operating Income(billions of yen)

20

15

10

5

0
10.3

11.3

12.3

13.3

14.3

15.3

DIVIDEND
The full-year dividend for the fiscal year ended March 2015 is¥15 per share.
By focusing on ROE, Nisshinbo is aiming to deliver sustained
increases in shareholder value through the distribution of profits and other means. We also intend to accelerate investment
in areas that drive growth, such as R&D, capital expenditureand M&A, aiming to secure even greater support and trustfrom public and market stakeholders as an environment andenergy company.
In principle, we intend to pay an interim dividend and a
year-end dividend. From the fiscal year ending March 2016,
we are aiming for stable and consistent dividends based on aconsolidated payout ratio target of around 30%.
Also, when the Group holds sufficient internal reserves
to fund growth strategies, we plan to actively return profits
to shareholders through share buybacks and other means
after considering factors such as financial stability. In principle,
Nisshinbo intends to retire treasury stock, but this stock may
be used in share swaps as part of M&A deals aimed at significantly increasing shareholder value.
In accordance with this new policy, we plan to raise the full-year
dividend to ¥30 per share for the fiscal year ending March 2016.

Cash Dividends
(yen)

20

15

10

5

0
10.3

11.3

12.3

13.3

14.3

15.3

41

FINANCIAL POSITION

CASH FLOWSPRODUCTION RESULTS

Total assets at the end of the fiscal year stood at ¥678,486
million (US$5,654 million), an increase of ¥67,175 million fromthe end of the previous fiscal year. This mainly reflected increasesof ¥11,881 million in cash and cash equivalents, ¥9,670 million
in receivables, ¥10,638 million in property, plant and equipmentand ¥20,585 million in investment securities.
Total liabilities at the end of the fiscal year were ¥371,548 million (US$3,096 million), an increase of ¥37,102 million from theend of the previous fiscal year. This mainly reflected increases of¥10,017 million in payables, ¥22,628 million in short-term bankloans, ¥9,231 million in long-term debt and ¥2,651 million indeferred tax liabilities under long-term liabilities, and a decreaseof ¥13,656 million in the current portion of long-term debt.
Equity at the end of the fiscal year totaled ¥306,938 million(US$2,558 million), an increase of ¥30,073 million from theend of the previous fiscal year. This primarily reflected increasesof ¥11,444 million in retained earnings, ¥18,291 million in net
unrealized gain on available-for-sale securities, ¥7,409 million inforeign currency translation adjustments and ¥10,435 million
in minority interests, and a decrease of ¥19,925 million due tothe acquisition of treasury stock. As a result of the above, theshareholders’ equity ratio declined 0.9 percentage points year on
year to 38.2%.

Cash Flows from Operating Activities

Production results in each segment for the fiscal year under review were as follows:

Total Assets

Cash provided by operating activities totaled ¥37,120 million(US$309 million), mainly reflecting income before income taxes
and minority interests of ¥17,959 million and depreciation andamortization of ¥23,111 million.

Cash Flows from Investing Activities
Cash used in investing activities totaled ¥21,271 million(US$177 million), mainly reflecting cash used of ¥32,508 million
for the purchase of property, plant and equipment, and cash
provided of ¥12,282 million from proceeds from the sale ofproperty, plant and equipment.

Cash Flows from Financing Activities
Cash used in financing activities totaled ¥6,238 million(US$52 million), mainly reflecting an increase of ¥22,032 million
in short-term bank loans and ¥28,205 million in proceeds fromissuance of long-term debt, versus decreases in cash of ¥33,174
million for the repayment of long-term debt, ¥20,032 million
for payment for purchase of treasury stock and ¥2,620 million
for cash dividends paid.
As a result of the above, cash and cash equivalents at the endof the fiscal year totaled ¥36,706 million (US$306 million), an
increase of ¥11,881 million from the end of the previous fiscal year.

Industry Segment

TextilesAutomobile Brakes
PapersPrecision Instruments
ChemicalsElectronics
Other Businesses
Total

CAPITAL EXPENDITURESThe Nisshinbo Group channels capital expenditures into
priority product fields that offer the potential for longterm growth and into upgrading manufacturing equipment
to raise product quality. It also invests in environmental
measures such as the reduction of greenhouse gases andin manufacturing facilities in China and Southeast Asia in
response to rising demand driven by market expansion.
As a result, in the fiscal year ended March 2015, capital
expenditures totaled ¥36,909 million. The Group invested¥4,888 million to increase friction material production capacity at TMD consolidated subsidiary TMD Friction GmbHin the automobile brakes business, and ¥2,146 million, toestablish Nisshinbo-Continental Precision Machining (Yangzhou) Co., Ltd. in the precision instruments business. In theelectronics business, Japan Radio Co., Ltd. invested ¥13,648(billions of yen)(billions of yen)

700

350

40

600

300

35

500

250

30

400

200

300

150

200

100

100

50

25
20
15

10.3

42

10
5

0

0
11.3

12.3

13.3

14.3

15.3

0
10.3

11.3

12.3

13.3

14.3

15.3

Year-on-Year Change (%)

42,500+0.9

131,268+8.1

28,779-0.9

28,793

+7.2

6,601

-2.7

219,197

+10.9

542

+50.7

457,680+7.9

Notes: 1. Amounts are calculated based on manufacturing costs.
2. The real estate business does not engage in manufacturing, and therefore the above table does not include any amounts from this segment.
3. The above amounts do not include consumption taxes.

Capital Expenditures

Equity(billions of yen)Amount (millions of yen)

10.3

11.3

12.3

13.3

14.3

15.3

million, mainly in a new Advanced Technology Center andfor the transfer of key manufacturing facilities, while New
Japan Radio Co., Ltd. invested ¥2,169 million, primarily in
new semiconductor manufacturing and research facilities.

RISK INFORMATION
Forward-looking statements in this report are based on
information available to the Nisshinbo Group as of March
31, 2015.
Risks Associated with New Businesses
The Nisshinbo Group is actively developing new businesses
such as carbon catalysts in order to expand sales and profits.
However, uncertainties are inherent in new businesses and thedevelopment of appealing new products and the formation of
new markets may not proceed as anticipated. This could delay
or prevent the recovery of prior investments.

Risk of Fluctuation in the Value ofInvestment Securities
Investment securities held by Nisshinbo are marked to market
in accordance with accounting standards for financial products,
and the Company implements impairment accounting based oneven stricter internal standards for a portion of these securities.
Based on current accounting standards and standards for asset
impairment, there is a limited possibility that impairment losses
will have an impact on net income, as the acquisition cost of
the investment securities was low. However, comprehensive
income may fluctuate significantly owing to changes in market
value. Also, the Company plans to limit increases in interestbearing liabilities by selling investment securities to procure
capital needed for mergers and acquisitions, overseas businessdevelopment, and capital investment, but misalignment of thetiming between sale and investment may give rise to unforeseen
circumstances.

43

Six-Year Summary

Risks Associated with Product Quality
The majority of the Nisshinbo Group manufactures products
in accordance with international quality control standards, butthere is no guarantee that quality-related problems will notoccur in the future. The Company has product liability insurance,
but the occurrence of a large liability could have an adverse
impact on the Group’s financial results.

Risks Associated with Market Shifts Relating
to Product Sales Prices and Raw Material
Procurement
Some of the Nisshinbo Group’s products can be significantly
affected by fluctuations in market prices owing to market developments and competition with other companies. Sales prices
for textile and paper products and raw materials procured by
the Group such as cotton, pulp, steel and other materials are
particularly susceptible to these market trends. The New Japan
Radio Group (New Japan Radio Co., Ltd. and its consolidated
subsidiaries) generates more than 80% of its consolidated sales
from semiconductor devices. Significant fluctuations in demandin the semiconductor market may therefore have a large impact
on the Nisshinbo Group’s financial results.

Risks Associated with Changes in Customer
Business Performance
The customers of the Nisshinbo Group’s automobile brakes
business are automobile manufacturers that conduct businessglobally. The cancellation of contracts or requests to sharply
reduce prices owing to changes in the business results of suchclient companies are factors outside the control of Nisshinbo,
and consequently may have an impact on the Group’s financial
results.
The Japan Radio Group has a relatively high ratio of businesswith central and local governments, so sales tend to be concentrated toward the end of the fiscal year. In addition, trends
in central and local government spending plans and capital
expenditure in the telecommunications sector may affect theGroup’s financial results.

Risks Associated with Supply Chain
The Group may face difficulties in securing necessary components owing to changes in the economic environment. For
example, rapid developments in specific parts supply regions
and product fields may affect supply capacity at parts companies
and lead to delivery delays. This in turn could impact the Group’s
shipment plans or lead to deterioration in margins owing tosharp increases in the price of components.

Risks Associated with Fluctuations in
Exchange Rates
Fluctuations in foreign exchange rates can have an impact on
the yen value of the Nisshinbo Group’s revenues, expenses,
receivables and payables arising from business transactions thatare denominated in foreign currencies and on foreign currencytranslation adjustments in the financial statements related tooverseas consolidated subsidiaries, which prepare their statements in foreign currencies. While the Group takes steps to mitigate the risk of exchange rate fluctuations, not all this risk can be
avoided. Fluctuations in exchange rates may therefore affect theGroup’s financial results, with periods of yen appreciation puttingpressure on profits.

Risks Associated with Unforeseen
Revisions to Laws and Regulations
Products supplied by the Japan Radio Group (Japan Radio Co.,
Ltd. and its consolidated subsidiaries) are subject to a range oflaws and regulations governing areas such as national security.
These laws include export restrictions, import regulations andenvironmental and recycling laws. The Japan Radio Group has
established clear internal regulations regarding compliance withthese laws. However, unforeseen revisions to laws and regulations may limit the Group’s business activities and lead to anincrease in costs.

Risks Associated with Overseas Business
Development
The Nisshinbo Group owns many production bases overseas.
Risks inherent to this international presence include unforeseenchanges in laws and regulations, unfavorable political or economic factors and social turmoil.

Risks Associated with Financial Covenants
Related to Capital Procurement
The Nisshinbo Group has secured funding from multiple financial institutions. The Company and some consolidated subsidiaries have entered into commitment line contracts and termloan contracts. These companies are bound by certain financial
covenants.

Risks Associated with Disasters and Accidents
The Nisshinbo Group takes steps to manage risk related todisasters and accidents. However, a large earthquake or othermajor disaster or a sudden accident such as a fire may causesignificant damage to the Group’s manufacturing facilities, leading
to the suspension of production activities that causes shipment
delays. The Group may also incur considerable costs to restore
damaged buildings or facilities.
In addition, the outbreak and spread of a new infectious
disease may have an impact on the Group’s operations.

For the years ended March 31(millions of yen)

2010

2011

2012

2013

2014

2015

242,409

325,555

379,340

450,693494,350

523,758

Operating Income

3,570

19,843

4,170

13,394

13,175

13,744Net Income

1,896

11,185

9,416

6,418

9,012

13,694Equity193,639

211,557

213,751

242,623

276,865

306,938

Total Assets

358,110479,852

534,584

551,933

611,311

678,486

Shareholders’ Equity Ratio (%)

51.1

38.0

34.7

37.9

39.1

38.2

Return on Assets (%)

0.5

2.7

1.9

1.2

1.5

2.1

Return on Equity (%)

1.0

6.1

5.1

3.2

4.0

5.5

Payout Ratio (%)

167.7

27.5

36.1

31.5

27.8

42.0

Capital Expenditures

13,027

12,80015,705

20,12319,89636,909Depreciation and Amortization

12,96013,15814,55018,96921,48623,111

184,098,939

178,798,939

178,798,939

178,798,939

10.38

63.32

53.83

36.74

51.60

80.33

1,034.04

1,036.80

1,063.19

1,198.67

1,369.78

1,634.07

Cash Dividends

15.00

15.00

15.00

15.00

15.00

15.00

Number of Employees

12,48818,292

22,30422,08322,052

21,387

Net Sales＊

Common Shares Issued

178,798,939 178,798,939

Per Share (in yen):
Net Income
Shareholders’ Equity＊ Payout Ratio is on a non-consolidated basis.

Net Sales(billions of yen)

600
500
400
300
200
100
0
10.3

11.3

12.3

13.3

14.3

15.3

Net Income

Net Income per Share(billions of yen)

15

(yen)

100
80

10

60
40

5

20
0

0
10.3
44

11.3

12.3

13.3

14.3

15.3

10.3

11.3

12.3

13.3

14.3

15.3
45

Consolidated Balance Sheets(March 31, 2015 and 2014)ASSETS

2015(millions of yen)(thousands of
US dollars) (Note 1)

2014

2015

Current assets:(thousands of
US dollars) (Note 1)

2015

2014

2015

¥71,281¥48,653$594,008

Commercial paper

30,00030,000250,000

Current portion of long-term debt (Note 5)

7,094

20,75059,11770,68066,412

589,000

197

166

1,642

14,573

8,855

121,441

85,45075,433712,083

Accrued expenses

15,82013,833

131,833

Accrued income taxes

5,468

2,835

45,567

LIABILITIES AND EQUITYCurrent liabilities:

Cash and cash equivalents¥36,706¥24,825$305,883

Time deposits (Note 5)

8,981

3,208

74,8424933

Marketable securities (Note 4)(millions of yen)

Short-term bank loans (Note 5)

PayablesReceivables
Notes receivable, trade
Accounts receivable, trade (Note 5)
Unconsolidated subsidiaries and affiliates
Other
Less allowance for doubtful accounts

Notes and accounts payable, trade (Note 5)
8,116

9,243

67,633

143,792

134,229

1,198,267

1,155

1,278

9,625

5,784

4,427

48,200158,847

149,177

1,323,725

(943)

(827)

(7,858)

157,904

148,350

1,315,867

Inventories (Note 3)

94,07489,425783,950

Deferred tax assets (Note 7)

7,758

3,020

64,650

Other current assets
Total current assets

5,043

3,606

42,025

310,470

272,4432,587,250

Unconsolidated subsidiaries and affiliates
Other

Deferred tax liabilities (Note 7)

17

1

142

Other current liabilities

11,04812,156

92,067

Total current liabilities

226,178

203,661

1,884,817

Long-term liabilities:
Long-term debt (Note 5)

38,95329,722

324,608

Liabilities for retirement benefits (Note 6)

42,53343,092354,441

Deferred tax liabilities (Note 7)

43,972

41,321

366,433

Other long-term liabilities (Note 5)

19,912

16,650165,934

145,370

130,785

1,211,416

27,58827,588229,900

Total long-term liabilities
Property, plant and equipment (Note 5):

Commitments and contingencies (Note 11)Land45,65452,227

380,450

Buildings and structures

171,969

172,584

1,433,075

Equity (Note 12):

Machinery, equipment and tools

310,818

297,684

2,590,150

Shareholders’ equity:

4,490

4,193

37,416

Construction in progress
Less accumulated depreciation
Property, plant and equipment, net

Common stock:532,931526,688

4,441,091

Authorized—371,755,000 shares(348,046)(352,441)(2,900,383)

Issued 2015 and 2014—178,798,939 shares

184,885

174,247

1,540,708

Capital surplus

20,401

20,404

170,008

Retained earnings

161,791

150,347

1,348,259(23,478)—(195,650)

Less treasury stock at cost
2015— 20,354,072 shares
2014—4,149,386 shares
Total shareholders’ equity—(3,553)—

186,302

194,786

1,552,517

50,99832,707424,983

Accumulated other comprehensive income:Net unrealized gain on available-for-sale securities
Investments and other assets:

Deferred gain (loss) on derivatives under hedge accounting

Investment securities (Notes 4 and 5)

102,666

82,081

855,550

Investments in and advances to unconsolidated subsidiaries and affiliates

25,032

22,374

208,600

64

(42)

533

Foreign currency translation adjustments

22,674

15,265

188,950

Post retirement liability adjustments(1,127)(3,485)(9,391)

72,60944,445605,075

222

264

1,850

Deferred tax assets (Note 7)

9,526

8,831

79,383

Goodwill

16,01323,378133,442

Stock acquisition rights

Other
Total investments and other assets
Total assets

Total accumulated other comprehensive income

29,89427,957249,117

Minority interests

47,80537,370398,375

183,131

164,621

1,526,092

Total equity

306,938

276,865

2,557,817¥678,486¥611,311$5,654,050

Total liabilities and equity¥678,486¥611,311$5,654,050

See Notes to Consolidated Financial Statements.
46

47

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income(Years ended March 31, 2015 and 2014)(Years ended March 31, 2015 and 2014)(millions of yen)

Net sales(thousands of
US dollars) (Note 1)

2015

2014

2015

¥523,758¥494,350$4,364,650(millions of yen)(thousands of
US dollars) (Note 1)

2015

2014

2015

¥20,806¥10,874$173,383

18,578

7,699

154,817

106

(107)

883

Foreign currency translation adjustments

8,185

19,982

68,208

Post retirement liability adjustments

3,345

—

27,875

722

1,143

6,017

Income before minority interests
Other comprehensive income:Costs and expenses:

Net unrealized gain on available-for-sale securities

Cost of sales

415,608

395,084

3,463,400

Selling, general and administrative expenses

94,40686,091

786,717510,014481,175

4,250,117

Deferred gain (loss) on derivatives under hedge accounting

Equity in earnings of affiliates
Operating income

13,744

13,175

114,533

Comprehensive income

30,93628,717

257,800¥51,742¥39,591$431,183¥41,857¥35,978$348,808

9,885

3,613

82,375

Other income (expenses):Comprehensive income:Interest and dividend income

2,745

2,288

Interest expenses(1,024)(1,578)(8,533)

ParentEquity in earnings of affiliates

3,280

4,900

27,333

Minority interests

Other, net (Note 10)

22,875(786)(4,268)(6,550)

4,215

1,342

35,125

17,95914,517

149,658

Current

6,891

4,134

57,425

Deferred(9,738)(491)(81,150)(2,847)

3,643(23,725)

20,806

10,874

173,383

Income before income taxes and minority interests

See Notes to Consolidated Financial Statements.

Income taxes (Note 7):

Income before minority interests
Minority interests in net income

7,112

1,862

59,266¥13,694¥9,012$114,117(yen)(US dollars)

Net income¥80.33¥51.60$0.67

Cash dividends

15.00

15.00

0.13

Net income

Per share:

See Notes to Consolidated Financial Statements.

48

49

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows(Years ended March 31, 2015 and 2014)(Years ended March 31, 2015 and 2014)(millions of yen)

Balance at April 1, 2013
Cash dividends, ¥15.00
per share
Net income
Purchase of treasury
stock
Disposal of treasury
stock
Other
Net changes
Balance at March 31, 2014
Balance at April 1, 2014
Cumulative effect ofchanges in accounting
policies
Restated balance
at April 1, 2014
Cash dividends, ¥15.00
per share
Net income
Purchase of treasury
stock
Disposal of treasury
stock
Adjustment due toincrease in consolidated subsidiaries
Net changes
Balance at March 31, 2015

Commonstock

CapitalsurplusRetainedearnings¥27,588¥20,401¥143,955

Treasurystock
at costNet
Deferred
unrealized
gain (loss)
Foreign
Post
Stock
gain ononcurrency retirement
acquisition
available- derivatives translation
liability
rightsfor-sale under hedge adjustments adjustments
securities accounting¥(3,534) ¥25,247¥65¥(4,347)¥—¥282

Minority
interests

Total equity¥32,966¥242,623(2,620)9,012

3(2,620)
9,012
(32)

(32)

13

16
0

0
19,612(3,485)

(18)

4,404

27,866¥27,588¥20,404¥150,347¥(3,553) ¥32,707

7,460¥(42) ¥15,265(107)¥(3,485)¥264¥37,370¥276,865¥27,588¥20,404¥150,347¥(3,553) ¥32,707¥(42) ¥15,265¥(3,485)¥264¥37,370¥276,865

101

489¥37,471¥277,354

388¥27,588¥20,404¥150,735¥(3,553) ¥32,707¥(42) ¥15,265¥(3,485)¥264(2,620)13,694(3)(2,620)13,694(20,032)(20,032)

107

104

(18)
¥27,588¥20,401

18,291

106

7,409

2,358

(42)

10,334(18)
38,456¥161,791 ¥(23,478) ¥50,998¥64¥22,674¥(1,127)¥222¥47,805¥306,938(Thousands of US dollars) (Note 1)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock
at costNet
Deferred
unrealized
gain (loss)
Foreign
Post
Stock
gain ononcurrency retirement
acquisition
available- derivatives translation
liability
rightsfor-sale under hedge adjustments adjustments
securities accounting$229,900 $170,033 $1,252,892 $(29,608) $272,558
Balance at April 1, 2014
Cumulative effect ofchanges in accounting
3,233
policies
Restated balance at$229,900 $170,033 $1,256,125 $(29,608) $272,558
April 1, 2014
Cash dividends, $0.13(21,833)
per share
114,117
Net income
Purchase of treasury(166,933)
stock
Disposal of treasury
(25)
891
stock
Adjustment due toincrease in consoli(150)
dated subsidiaries
152,425
Net changes
Balance at March 31, 2015 $229,900 $170,008 $1,348,259 $(195,650) $424,983$(350) $127,208 $(29,041)

Minority
interests$2,200 $311,416 $2,307,208842$(350) $127,208 $(29,041)

Total equity

4,075$2,200 $312,258 $2,311,283(21,833)
114,117(166,933)
866

61,742

19,650$533 $188,950

883$(9,391)(350)

86,117(150)
320,467$1,850 $398,375 $2,557,817

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile net income to net cash provided by operating activities:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Equity in earnings of affiliates
Provision for (reversal of) doubtful receivables
Provision for accrued pension and retirement benefits
Payment of accrued pension and retirement benefits(Gain) loss on sale of property, plant and equipment
Impairment of long-lived assets
Gain on sale of investment securities and investments in and advances
to unconsolidated subsidiaries and affiliates
Loss on write-down of investment securities and investments in andadvances to unconsolidated subsidiaries and affiliates
Other
Changes in operating assets and liabilities:
Receivables
Inventories
PayablesOther, net
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment
Proceeds from sale of investment securities and investments in and advances
to unconsolidated subsidiaries and affiliates
Payment for purchase of property, plant and equipment
Payment for purchase of investment securities and investments in andadvances to unconsolidated subsidiaries and affiliates
Increase in time deposits
Cash paid for newly consolidated subsidiaries, net of payment for purchaseof companies
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of long-term debt
Repayment of long-term debt
Increase in short-term bank loans
Cash dividends paid
Payment for purchase of treasury stock
Proceeds from treasury stock sold of consolidated subsidiaries
Decrease in other long-term liabilities
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash
Net increase in cash and cash equivalents
Cash and cash equivalents of newly consolidated subsidiaries
at beginning of year
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

(millions of yen)(thousands of
US dollars) (Note 1)

2015

2014

2015

¥17,959¥14,517$149,658(4,408)
23,111
7,239(3,280)219
4,716(6,216)(3,313)
1,668(5,018)21,486
6,584(4,900)(278)
7,240(8,703)286
1,257(36,733)
192,592
60,325(27,333)
1,825
39,300(51,800)(27,608)
13,900(1,539)(1,195)(12,825)

132
4,233

498
1,708

1,100
35,275(7,870)(4,848)
4,934
4,383
37,120(7,128)(3,453)3,493(319)
26,075(65,584)(40,400)
41,11636,525309,333

12,282

673

102,350

6,104(32,508)

5,052(18,902)50,867(270,900)(552)(5,495)(1,397)(1,112)(4,600)(45,792)—(1,102)(21,271)(2,585)(1,591)(19,862)—(9,183)(177,258)

28,205(33,174)
22,032(2,620)(20,032)
—
(833)
184
(6,238)22,737(39,604)
18,148(2,620)(32)
180(1,042)(88)(2,321)

235,042(276,450)
183,600(21,833)(166,933)—(6,942)
1,533(51,983)

1,606
11,217

2,530
6,422

13,38393,475664
24,825¥36,706—
18,403¥24,825

5,533
206,875$305,883

See Notes to Consolidated Financial Statements.

See Notes to Consolidated Financial Statements.

50

51

Notes to Consolidated Financial Statements

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in theJapanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles
and practices generally accepted in Japan, which are different incertain respects as to application and disclosure requirementsof International Financial Reporting Standards.
In addition, the accompanying notes include information
which is not required under generally accepted accounting prin-52

ciples and practices in Japan but is presented herein as additional information.
The United States dollar ($) amounts included herein are
given solely for convenience and are stated, as a matter of arithmetical computation only, at the rate of ¥120=$1, the approximate exchange rate at March 31, 2015. The translations should
not be construed as representations that the Japanese yenamounts have been, could have been, or could in the future be,converted into United States dollars.

to which the market value has been less than cost, the financial
condition and near-term prospects of the issuer and the Company’s intent and ability to retain securities for a period of time
sufficient to allow for any anticipated recovery in market value.
When such a decline exists, the Company recognizes an
impairment loss to the extent of such decline.

(g) Property, plant and equipment

2. Summary of Significant Accounting Policies

Property, plant and equipment are stated at cost. Depreciationis computed principally on the straight-line method over theirestimated useful lives. Contributions in aid of purchases ofproperty, plant and equipment from national and local governments are deducted from the acquisition costs of related assets
in accordance with tax regulations.

(a) Consolidation(c) Foreign currency financial statements(h) Goodwill

The consolidated financial statements include the accounts ofNisshinbo Holdings Inc. (hereinafter the “Company”) and its
significant subsidiaries (together, the “Group”).
Under the control or influence concept, those companies inwhich the Parent, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant
influence are accounted for by the equity method.
Investments in unconsolidated subsidiaries and affiliatedcompanies are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries
and affiliated companies are stated at cost. If the equity methodof accounting had been applied to the investments in thesecompanies, the effect on the accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions havebeen eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Groupis eliminated.

The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange
rate. Revenue and expense accounts of consolidated foreignsubsidiaries are translated into yen at the average exchange
rate.
Translation adjustments are presented under minority interests and foreign currency translation adjustments as a component of equity.

The difference between the cost and underlying fair value ofthe net assets of investments in subsidiaries at acquisition is included in goodwill and amortized on a straight-line basis over
five years.
Effective April 1, 2010, the Company changed its accounting
method for excess of fair value of acquired net assets over costto be recognized as other income.

(b) Foreign currency transactions(f) M arketable and investment securities

All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into
Japanese yen at the exchange rates at the balance sheet date.
The foreign exchange gains and losses from translation arerecognized in the income statement to the extent that they are
not hedged by forward exchange contracts.
Investments in and advances to unconsolidated subsidiaries
and affiliates in foreign currencies are translated at the historicalrates effective at the dates of transaction from which such accounts were originated.

The Group classifies all of its marketable and investment securities as available-for-sale, which are reported at fair value, withunrealized gains and losses included in equity as net unrealized
gain on available-for-sale securities. Other investment securities without quoted market prices are stated at cost. Realized
gains or losses on the sale of securities are based on the average
cost of a particular security held at the time of sale.
Marketable and investment securities are regularly reviewed for other-than-temporary declines in carrying amountbased on criteria that include the length of time and the extent(i) Impairment of long-lived assets(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits
placed with banks on demand and highly liquid investmentswith insignificant risk of changes in value which have maturities
of six months or less when purchased.

(e) Inventories
Inventories are measured principally at the lower of cost or net
realizable value, cost being substantially determined by the actual cost method or the average cost method.

Long-lived assets are evaluated for impairment using an estimate of undiscounted cash flows whenever events or changes
in circumstances indicate that the carrying amount of such assets may not be recoverable. If the estimate of undiscounted
cash flow is less than the carrying amount of the asset, an impairment loss is recorded based on the fair value of the asset.
Fair value is determined primarily by using the anticipated cash
flows discounted at a rate commensurate with the risk involved.
For assets held for sale, an impairment loss is further increased
by costs to sell. Long-lived assets to be disposed of other thanby sale are considered held and used until disposed of.

(j) Retirement benefits and pension plans
The Company, domestic consolidated subsidiaries and certain
foreign consolidated subsidiaries have defined benefit plans anddefined contribution plans that cover substantially all employees. Under the defined benefit plans, the annual provision for
retirement benefits is calculated to state the asset and liability
for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date.
Retirement benefits to directors and corporate auditors
are provided at the amount that would be required if all directors and corporate auditors retired at the balance sheet date.

(k) Stock options
The accounting standard for stock options requires companies
to recognize compensation expense for employee stock options based on the fair value at the date of grant and over thevesting period as consideration for receiving goods or services.
The standard also requires companies to account for stock options granted to non-employees based on the fair value of either the stock option or the goods or services received. On thebalance sheet, the stock option is presented as a stock acquisition right as a separate component of equity until exercised.
The standard covers equity-settled, share-based paymenttransactions, but does not cover cash-settled, share-based payment transactions. In addition, the standard allows unlistedcompanies to measure options at their intrinsic value if theycannot reliably estimate fair value.

(l) Research and development costs
Research and development costs are charged to income as
incurred.

(m) Income taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statements of income.
The asset and liability approach is used to recognize deferred
tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax laws to
the temporary differences.

(n) Derivative financial instruments
The Group uses a variety of derivative financial instruments,
including foreign currency forward contracts, currency swaps,
commodity swap contracts and interest rate swaps, as a meansof hedging exposure to foreign currency and interest rate risks.
The Group does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows: (a) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains orlosses on derivative transactions are recognized in the con­solidated statements of income, and (b) for derivatives used forhedging purpose if derivatives qualify for hedge accounting­because of high correlation and effectiveness between thehedging instruments and hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.

53

The interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not remeasured at market value, but the differential paid or received under the swap
agreements is recognized and included in interest expense.

(o) Asset retirement obligation
The asset retirement obligation is defined as a legal obligation
imposed either by law or contract that results from the acquisition, construction, development and the normal operation ofsuch tangible fixed assets under the Japanese accounting
standard.
The asset retirement obligation is recognized as the sum of
the discounted cash flows required for the future asset retirement and is recorded in the period in which the obligation isincurred if a reasonable estimate can be made.
The asset retirement cost is allocated to expense throughdepreciation over the remaining useful life of the assets.

(p) Changes in accounting policy
On May 17, 2012, the Accounting Standards Board of Japan(ASBJ) issued ASBJ Statement No. 26, “Accounting Standard for
Retirement Benefits” and on March 26, 2015 ASBJ issued the
Guidance No. 25, “Guidance on Accounting Standard for Retirement Benefits”, which replaced the Accounting Standard for
Retirement Benefits that had been issued by the Business Accounting Council in 1998 and the other related guidance.
Under the revised accounting standard, the Group has applied the new method of calculating retirement benefit obligations and service costs. The method of determination of the
discount rate has revised to a single weighted average discountrate reflecting the estimated timing and amount of benefit payment, and the method of attributing benefits to accounting periods changed from the straight-line method to the standard
pension benefit formula basis. In accordance with transitional
accounting as stipulated in article 37 of the Accounting Standard for Retirement Benefits, for the amendments relating todetermination of retirement benefit obligations and service
costs, the effect of changes in accounting policies arising frominitial application is recognized as an adjustment to retained
earnings at the beginning of the fiscal year.
As the effect of this revised accounting standard, the asset
and liability for retirement benefits on the consolidated balance sheet have decreased by ¥447 million ($3,725 thousand)and ¥885 million ($7,375 thousand), respectively, from the­beginning of the fiscal year under review, and deferred tax­a ssets, deferred tax liabilities, retained earnings, minority in­terests have increased by ¥173 million ($1,442 thousand), ¥121
million ($1,008 thousand), ¥388 million ($3,233 thousand)and ¥101 million ($842 thousand), respectively. Oper­ating income, ordinary income and net income before taxes for the
fiscal year have decreased by ¥358 million ($2,983 thousand),
respectively.

(q) Changes in accounting estimates
The estimated remaining useful lives of certain buildings (including the related facilities) and structures at the Mitaka factory ofJapan Radio Co., Ltd., a consolidated subsidiary, are shortened
due to the sale plan of the land located at the factory site.
The effect of depreciation expenses increase is the respective reduction of operating income, ordinary income and net
income for the fiscal year by ¥337 million ($2,808 thousand).

4. Marketable and Investment Securities
The carrying amounts and aggregate fair values of available-for-sale securities included in marketable and investment securities at
March 31, 2015 and 2014 were as follows:(millions of yen)

2015

2014

2015

¥23,342¥27,901$194,516

Unrealized gains

77,09752,933642,475

Unrealized losses

(220)

(799)

(1,833)¥100,219¥80,035$835,158

Cost

Fair value

Aggregate cost of non-marketable securities accounted for under the cost method totaled ¥2,451 million ($20,425 thousand) and¥2,055 million at March 31, 2015 and 2014, respectively.

5. Short-Term Bank Loans and Long-Term Debt
The annual interest rates applicable to the short-term bank loans at March 31, 2015 and 2014 were 0.4% to 5.6%. Long-term debt at
March 31, 2015 and 2014 consisted of the following:(millions of yen)(thousands of US dollars)

2015

2014

2015

¥10,078¥10,770$83,983

Loans from banks maturing serially to 2019, ranging from 0.5% to 6.0%

34,71938,438289,325

Capital lease obligations, due through 2023

1,250

1,264

10,41746,04750,472

383,725(7,094)(20,750)(59,117)¥38,953¥29,722$324,608

Long-term debt with collateral:
Loans from banks maturing serially to 2025, ranging from 0.7% to 3.8%
Long-term debt without collateral:

Less current portion

3. Inventories
Annual maturities of long-term debt were as follows:

Inventories at March 31, 2015 and 2014 were as follows:(millions of yen)Finished products(millions of yen)(thousands of US dollars)(thousands of US dollars)Year ending March 31,

2015

2014

2015

¥33,729¥29,948$281,075

2016¥7,094$59,1176,10650,883Work in process

37,80838,094315,067

2017

Materials and supplies

22,537

21,383

187,808

2018

4,376

36,467$783,950

2019

968

8,067

¥94,074¥89,4252020 and thereafter

54(thousands of US dollars)

27,503229,191¥46,047$383,725

55

At March 31, 2015 and 2014, net book value of assets pledged as collateral for short-term bank loans and long-term debt was asfollows:

Property, plant and equipment

Changes of the liability for employees’ retirement benefits for the years ended March 31, 2015 and 2014 were as follows:(millions of yen)(thousands of US dollars)

2015

2014

2015

Projected benefit obligation
Balance at beginning of year

(millions of yen)(thousands of US dollars)

2015

2014

2015

¥105,484¥107,866$879,033¥14,310¥17,045$119,250

Accounts receivable, trade

242

9,600

2,017

Cumulative effect of changes in accounting policies

(438)

—

(3,650)Investment securities

744

527

6,200

Service cost

5,310

5,036

44,250¥15,296¥27,172$127,467

Interest cost

1,480

1,634

12,333

Recognized actuarial (gain) loss

1,420

(921)

11,833

Actual payment of retirement benefits(5,414)(10,525)(45,116)

Exchange differences

1,094

3,239

9,117

Decrease due to transfer of benefit obligation to defined contribution
pension plan and other(7,325)(845)(61,042)¥101,611¥105,484$846,758

At March 31, 2015 and 2014, in addition, pledged assets as collateral for liabilities other than the above were as follows:

2015(millions of yen)(thousands of US dollars)

2014

2015

Balance at end of year

Assets pledged:
Property, plant and equipment
Investment securities
Time deposits¥9,096¥7,817$75,800

821

466

6,842

1

1

8

¥9,918¥8,284$82,650

2015(millions of yen)(thousands of US dollars)

2014

2015

Liabilities with collateral:
Other long-term liabilities¥6,901

Notes and accounts payable, trade¥7,466$57,508

1,182

1,025

9,850

¥8,083¥8,491$67,358

Fair value of plan assets
Balance at beginning of year

¥64,057¥58,219$533,808

Expected return on plan assets

1,616

1,110

13,467

Recognized actuarial gain

5,002

4,713

41,683Contributions to the defined pension plan

2,840

3,456

23,666

Payment(2,881)(5,337)(24,008)

938

1,896

7,817

Exchange differences
Decrease due to transfer of benefit obligation to defined contribution
pension plan
Balance at end of year

(5,197)—(43,308)¥66,375¥64,057$553,125

Reconciliation of ending balance of retirement benefit obligation and pension assets, and the book value of liabilities and assets for
retirement benefits for the years ended March 31, 2015 and 2014 were as follows:

6. Retirement Benefits and Pension Plans
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined basedon the rate of pay at termination, years of service and certain
other factors.
The Group provides defined benefit plans and defined contribution plans.

The liability for retirement benefits for directors and corporate auditors at March 31, 2015 and 2014 was ¥39 million($325 thousand) and ¥29 million, respectively. The retirement
benefits for directors and corporate auditors are paid subject
to the approval of the shareholders.

(millions of yen)

2015

2014

2015

Funded retirement benefit obligation¥66,371¥71,307$553,092

Fair value of plan assets(66,375)(64,057)(553,125)

(4)

7,250

(33)

Unfunded retirement benefit obligation

35,24034,177

293,666

Net amount of liabilities and assets in consolidated balance sheet¥35,236¥41,427$293,633

Liabilities for retirement benefits¥42,494¥43,063$354,116

Assets for retirement benefits
Net amount of liabilities and assets in consolidated balance sheet

56(thousands of US dollars)(7,258)(1,636)(60,483)¥35,236¥41,427$293,633

57

A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2015 and 2014 and the actual effective
tax rates reflected in the accompanying consolidated statements of income was as follows:

The components of net periodic retirement benefit costs for the years ended March 31, 2015 and 2014 were as follows:(millions of yen)(thousands of US dollars)

2015

2014

2015

¥5,310¥5,036$44,250

Net changes in valuation allowance

Defined benefits plans:Service cost

Normal effective statutory tax rate

35.6%

38.0%

(43.9)(13.5)

Interest cost

1,480

1,634

12,333

Amortization of goodwill

14.4

16.1

Expected return on plan assets(1,616)(1,110)(13,466)

Loss of investment in subsidiary in liquidation(14.1)—

Amortization of prior service cost

(296)

(302)

(2,467)Lower income tax rates applicable to income in certain foreign countries

(7.2)

(8.7)

Recognized actuarial loss

811

1,953

6,758

Equity in earnings of affiliates(6.5)(12.3)¥5,689¥7,211$47,408

Additional taxes on retained earnings in foreign subsidiaries

4.8

6.5

Other

1.0

(1.0)

(15.9%)

25.1%

Retirement benefits paid due to restructuring of business operations for the years ended March 31, 2015 and 2014 were ¥241 million($2,008 thousand) and ¥4,065 million, respectively.

Actual effective tax rate

Assumptions used for the years ended March 31, 2015 and 2014 were set forth as follows:

As a result of changes in the corporate tax rate, the deferred tax assets using enacted tax rates in effect for the years in which differences are expected to reverse at 33.1% for the year ending March 31, 2016 and at 32.3% for the years ending March 31, 2017 andthereafter.

2015

2014

Discount rate

0.5%–1.0%

1.0%–2.0%

Expected rate of return on plan assets

0.0%–4.0%

0.0%–4.5%

Rate of expected salary increase

1.9%–8.3%

2.0%–8.3%

8. Leases
The Group leases certain machinery, computer equipment and other assets.
Total rental expenses for the years ended March 31, 2015 and 2014 were ¥892 million ($7,433 thousand) and ¥665 million,
respectively.

7. Income Taxes
The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at March
31, 2015 and 2014 were as follows:

9. Derivatives
The Group enters into foreign currency forward contracts, currency swap contracts and commodity swap contracts to hedge
exchange risk associated with certain assets and liabilities denominated in foreign currencies and also into interest rate swap

(millions of yen)(thousands of US dollars)

2015

2014

2015

Loss on devaluation of inventories¥1,372¥1,637$11,433

Tax loss carryforwards

18,024

24,104150,200

Unrealized gain caused by intercompany transactions

1,368

1,277

11,400Accrued employees’ bonuses

2,046

2,147

17,050Not hedged:

Accrued severance benefits

12,025

13,513

100,208

Impairment of long-lived assets and depreciation in excess of tax limitation

1,780

1,853

14,833

Interest rate swap:

788

894

6,567

Software costs

1,471

1,731

12,258Loss of investment in subsidiary in liquidation

2,531

—

21,092

Other

4,598

4,327

38,317(23,992)(36,216)(199,933)¥22,011¥15,267$183,425

Deferred tax assets:

Devaluation of investment securities

Less valuation allowance

Unrealized gain on available-for-sale securities¥(25,078)¥(18,885)$(208,983)

Deferred gains on sale of property(6,427)(5,334)(53,558)

Assets recognized in business combination(10,315)(15,141)(85,958)

Other(6,896)(5,378)(57,468)¥(48,716)¥(44,738)$(405,967)¥(26,705)¥(29,471)$(222,542)

Net deferred tax

contracts to manage its interest rate exposures on certain liabilities. Such contracts outstanding at March 31, 2015 and 2014
were as follows:(millions of yen)Fixed rate payments, floating rate receipt(thousands of US dollars)

2014

2015

2015

Contract
amountFair value

Unrealized
gain (loss)

Contract
amountFair value

Unrealized
loss

Contract
amountFair value

Unrealized
gain (loss)

¥103

¥(3)

¥(3)

¥309

¥(10)

¥(10)

$858

$(25)

$(25)

¥2,926

¥(19)

¥(19)

¥1,268

¥(17)

¥(17)

$24,383$(158)$(158)¥2,461

¥(27)

¥(27)

¥2,128¥(9)¥(9)$20,508$(225)$(225)

¥806

¥6

¥6

¥1,345¥(6)¥(6)$6,717

$50

$50

¥—

¥—

¥—

¥231

¥(1)

¥(1)

$—

$—

$—

Commodity swap:
Purchased raw materials
Foreign currency forward contracts:
Sold
Purchased
Currency swap:
Receive EUR · Pay US$

Deferred tax liabilities:

58

2014

2015

59

(millions of yen)(thousands of US dollars)

2014

2015

2015
Hedged:Contract
Contract amount due
amountafter oneyear

Fair value

Contract
Contract amount due
amountafter oneyear

Fair value

Contract
amountContract
amount due
after oneyear

Fair value

¥(76)

$—

$—

$—

13. Segment Information
Information about industry segments of the Company and its consolidated subsidiaries for the years ended March 31, 2015 and 2014
was as follows:

Commodity swap:
Purchased raw materials(millions of yen)

¥—

¥—

¥—

¥957

¥—

2015

Foreign currency forward contracts:
Sold
Purchased

Textiles

¥391

¥—

¥(1)

¥259

¥—

¥(1)

$3,258$—$(8)¥1,798¥—¥96¥1,300¥—¥19$14,983$—$800

Sales to customers
		 Total sales
Segment profit (loss)
		 [Operating income (loss)]

Other income (expenses) — Other, net consisted of the following:

Segment assets:

2015

Electronics

Real Estate

Other Eliminations/
Consolidated
Businesses
Corporate¥47,361 ¥161,887 ¥31,280 ¥28,608 ¥8,943 ¥209,116
197

24

742

670

237

123

¥9,246 ¥27,317
2,266

2,723

¥47,558 ¥161,911 ¥32,022 ¥29,278 ¥9,180 ¥209,239 ¥11,512 ¥30,040¥(476) ¥(2,069)

¥425

¥264

¥515

¥12,704¥6,669¥49,735 ¥177,473 ¥22,587 ¥36,648 ¥7,803 ¥233,337 ¥44,369 ¥37,285

2015

Depreciation and amortization¥1,470¥10,542¥1,009¥1,631¥407¥5,733¥1,687¥276

Increase in property, plant andequipment and intangible assets¥3,212¥10,042¥504¥5,588¥258¥17,997¥506¥37¥(286)$27,608(1,668)(1,257)(13,900)

Gain on sale of securities

1,539

1,195

12,825Business structure improvement expenses(3,714)(4,065)(30,950)

(256)

145

(2,133)¥(4,268)—¥(6,982) ¥523,758¥69,249 ¥678,486

Other:

2014¥3,313¥— ¥523,758(6,982)¥(110) ¥(4,178) ¥13,744(thousands of US dollars)

Impairment of long-lived assets¥(786)

Precision
Chemicals
Instruments(millions of yen)

Gain (loss) on sale of property, plant and equipment

Other, net

PapersSales and Segment Profit (loss):
Intersegment sales

10. Other Income (Expenses) — Other, Net

Automobile
Brakes¥356¥23,111¥(1,235) ¥36,909(millions of yen)2014$(6,550)

TextilesAutomobile
BrakesPapers¥51,349¥148,699¥31,686

Precision
Chemicals
Instruments

Electronics

Real Estate¥187,743¥10,567

Other Eliminations/
Consolidated
Businesses
Corporate

Sales and Segment Profit (loss):
Sales to customers

11. Commitments and Contingencies

Intersegment sales¥90 million, respectively.
Commitments for capital expenditures outstanding at
March 31, 2015 and 2014 were in the approximate amountsof ¥2,363 million ($19,692 thousand) and ¥3,057 million,
respectively.

12. Subsequent Events(a) Year-end cash dividends
On May 12, 2015, the Board of Directors of Nisshinbo Holdings
Inc. declared year-end cash dividends (¥7.5 per share) in theamount of ¥1,188 million ($9,900 thousand).

(b) Stock option
At the general shareholders meeting held on June 26, 2015, theCompany’s shareholders approved a stock option plan to grant

The Group has acquired all shares of TS Holdings Co., Ltd. on
May 18, 2015, of which the purchase cost is ¥6,000 million($50,000 thousand).

¥26,841¥—¥494,350

193

44

746

1,351

267

93

2,479

1,514

(6,687)—¥148,743¥32,432¥30,006¥9,077¥187,836¥13,046¥28,355¥(6,687)¥494,350¥552¥(1,814)¥42¥1,075¥106¥9,352¥7,781¥(67)¥(3,852)¥13,175¥47,837¥167,264¥22,311¥29,857¥8,215¥208,527¥47,274¥32,533¥47,493¥611,311

Depreciation and amortization¥1,504¥9,732¥1,041¥1,459¥605¥4,751¥1,767¥275¥352¥21,486

Increase in property, plant andequipment and intangible assets¥1,036¥8,735¥416¥980¥1,080¥7,287¥550¥834¥(1,022)¥19,896

Segment profit (loss)
		 [Operating income (loss)]
Segment assets:
Other:

stock purchase rights up to 200 thousand shares of the Company’s common stock to directors and key employees in the
period from August 1, 2017 to July 31, 2022.

(c) Acquisition of a new subsidiary company¥8,810¥51,542

		 Total sales
Contingent liabilities at March 31, 2015 and 2014 for trade notes
discounted with banks amounted to ¥509 million ($4,242 thousand) and ¥659 million, respectively.
Contingent liabilities at March 31, 2015 and 2014 for loans
guaranteed amounted to ¥100 million ($833 thousand) and¥28,655(thousands of US dollars)

2015
TextilesAutomobile
BrakesPrecision
PapersChemicals
Instruments

Electronics

Real Estate

Other Eliminations/
Consolidated
Businesses
Corporate

Sales and Segment Profit (loss):
Sales to customers
Intersegment sales$394,675 $1,349,058 $260,667 $238,400 $74,525 $1,742,633
1,642

200

6,183

5,583

1,975

1,025

$77,050 $227,642
18,883

22,692$— $4,364,650(58,183)—

		 Total sales$396,317 $1,349,258 $266,850 $243,983 $76,500 $1,743,658$95,933 $250,334$(58,183) $4,364,650

Segment profit (loss)
		 [Operating income (loss)]$(3,967)$55,575$(917)$(34,817) $114,533

Segment assets:$414,458 $1,478,942 $188,225 $305,400 $65,025 $1,944,475 $369,742 $310,708$577,075 $5,654,050$(17,242)$3,542$2,200$4,292$105,867

Other:

60

Depreciation and amortization$12,250$87,850$8,408$13,592$3,392$47,775$14,058$2,300$2,967

Increase in property, plant andequipment and intangible assets$26,767$83,683$4,200$46,567$2,150$149,975$4,217$308$(10,292) $307,575$192,592

61Independent Auditor’s Report

History

1907

Established Nisshin Cotton Spinning Co., Ltd.

1938

Merged with Nisshin Rayon Co., Ltd. (now the Miai Plant)

1940

Established Toa Jitsugyo Co., Ltd. (name changed to Nisshin Toa Inc. in 1990)

1945

Acquired Meiji Plant, Nanshin Seiki Co., Ltd. (now the Fuji Plant)

1949

Established Nihon Postal Franker Co., Ltd. (name changed to Nisshinbo Postal Chemical Co., Ltd. in 2006)

1958

Established Nippon Kohbunshikan Co., Ltd. (name changed to Nippon Kohbunshi Co., Ltd. in 1986)(acquired by Nisshinbo Mechatronics Inc. in 2010)

1962

English name of company changed to Nisshin Spinning Co., Ltd.

1972

Established Nisshinbo Do Brasil Industria Textil LTDA. (Brazil)

1985

Acquired Nisshin Denim Inc.

1989

Established Kohbunshi (Thailand) Ltd. (Thailand)(name changed to Nisshinbo Mechatronics (Thailand) Ltd. in 2011)

Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated ﬁnancial statements based on our audit. 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 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 the auditor’s judgment, including
the assessment of the risks of material misstatement of the consolidated ﬁnancial statements, whether due tofraud or error. The purpose of an audit of the consolidated financial statements is not to express an opinion
on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor considers
internal controls relevant to the entity’s preparation and fair presentation of the consolidated ﬁnancial
statements in order to design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide abasis for our audit opinion.

1993

Established Pudong Kohbunshi (Shanghai) Co., Ltd. (China)(name changed to Nisshinbo Mechatronics (Shanghai) Co., Ltd. in 2010)

1995

Established Nisshinbo Automotive Corporation (U.S.A.)

OpinionIn our opinion, the consolidated ﬁnancial statements referred to above present fairly, in all material respects,
the ﬁnancial position of Nisshinbo Holdings Inc. and its consolidated subsidiaries as at March 31, 2015, andtheir ﬁnancial performance and cash ﬂows for the year then ended in conformity with accounting principles
generally accepted in Japan.

2003

Established Saeron Automotive Beijing Corporation (China)

2004

Established Continental Automotive Corporation (Lian Yun Gang) Co., Ltd. (China)

2005

Made tender offer for additional shares of New Japan Radio Co., Ltd.

2006

Acquired additional shares of Japan Radio Co., Ltd. and Nagano Japan Radio Co., Ltd.

Convenience translations
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented forthe convenience of readers, and, in our opinion, the accompanying consolidated financial statements havebeen properly translated on the basis described in Note 1 to the consolidated ﬁnancial statements.

2007

Acquired all shares of Daiwa Shiko Co., Ltd.

2008

Acquired all shares of Nisshinbo Brake Sales Co., Ltd. (acquired by Nisshinbo Brake Inc. in 2010)2009

Spun off five businesses — Textiles, Automobile Brakes, Papers, Precision Instruments, and Chemicals — andconverted to holding company; corporate name changed to Nisshinbo Holdings Inc.

2010

Established Nisshinbo-Yawei Precision Instruments & Machinery (Jiangsu) Co., Ltd. (China)(formerly Jiangsu Yawei Nisshinbo Precision Instruments & Machinery Co., Ltd.)To the Board of Directors of Nisshinbo Holdings Inc.
We have audited the accompanying consolidated ﬁnancial statements of Nisshinbo Holdings Inc. and its
consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2015, and theconsolidated statements of income, comprehensive income, changes in equity and cash ﬂows for the year thenended, and a summary of signiﬁcant accounting policies and other explanatory information, all expressed inJapanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated ﬁnancial statementsin accordance with accounting principles generally accepted in Japan, and for designing and operating suchinternal control as management determines is necessary to enable the preparation and fair presentation of theconsolidated ﬁnancial statements that are free from material misstatement, whether due to fraud or error.

VERITAS & Co.
June 26, 2015

Established Nisshinbo Urban Development Co., Ltd.
1996

Established Nisshinbo Somboon Automotive Co., Ltd. (Thailand)

1997

Established Nisshinbo Automotive Manufacturing Inc. (U.S.A.)

1998

Established P.T. Gistex Nisshinbo Indonesia (Indonesia)(name changed to P.T. Nisshinbo Indonesia in 2010)

1999

Established Saeron Automotive Corporation (South Korea)

2000

Purchased additional shares of P.T. Nikawa Textile Industry (Indonesia)
Established Continental Teves Co., Ltd. through merger with Continental Teves AG & Co. oHG(name changed to Continental Automotive Co., Ltd. in 2007)

2002

Established Nisshinbo (Shanghai) Co., Ltd. (China)
Acquired all shares of Iwao & Co., Ltd.

Acquired additional shares in Japan Radio Co., Ltd., making it a consolidated subsidiary
Nagano Japan Radio Co., Ltd. also became a consolidated subsidiary as a result
2011

Established Nisshinbo Saeron (Changshu) Automotive Co., Ltd. (China)
Established Nisshinbo Singapore Pte. Ltd. (Singapore)

Tokyo, Japan

Acquired all shares of TMD Friction Group S.A. (Luxembourg)

62

2012

Established Nisshinbo Business Management (Shanghai) Co., Ltd. (China)

2013

Established Nisshinbo Commercial Vehicle Brake Ltd. (Thailand)

2014

Established Nisshinbo-Continental Precision Machining (Yangzhou) Co., Ltd. (China)

63

Corporate Data
(As of March 31, 2015)

Common Stock

FoundedFebruary 5, 1907

Authorized
Issued371,755,000 shares
178,798,939 shares¥27,588 million (US$230 million)

Head Office
2-31-11, Ningyo-cho, Nihonbashi,  Chuo-ku,
Tokyo 103-8650, Japan

Shareholders
11,431

Tel: +81-3-5695-8833
Fax: +81-3-5695-8970

Composition of Shareholders

Osaka Branch

Securities
firms

2-4-2, Kitakyuhouji-machi, Chuo-ku,
Osaka 541-0057, Japan

11.4%

3.6%

Tel: +81-6-6267-5501
Fax: +81-6-6267-5529

Japanese financial
institutions

34.9%

Japanese
individuals andothersNagoya Branch

13.0%

5-2-38, Sakae, Naka-ku,
Nagoya 460-0008, Japan
Tel: +81-52-261-6151
Fax: +81-52-263-9480

Other Japaneseinstitutions

Foreigninstitutions

18.0%

Employees
Parent Company
Subsidiaries
Total

Treasury stock

208
21,17921,387

19.1%

Listings
Tokyo, Nagoya, Fukuoka and Sapporo

Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan

Stock Price and Trading Volume(yen)(million shares)

1,600

35

Stock price (left)

1,400

30

1,200

25

1,000

20

800
15

600
400

10

Trading volume (right)

5

200

0

0
9/12

64

12/12

3/13

6/13

9/13

12/13

3/14

6/14

9/14

12/14

3/15

6/15