2015
Integrated Report

Year ended
March 31, 2015

CORPORATE PHILOSOPHY

MissionEngineering for Sustainable

TOYO’s mission is to exert its best efforts
to solve the problems of its clients and to

Growth of the Global

harmonize its plant construction projects

Communitywith the environment and society. To
fulfill this mission and satisfy customers,

VisionGlobal Leading
Engineering Partner

each individual TOYO staff member isconstantly endeavoring to be innovative,
improve technologies, and utilize knowledge
and creativity to achieve client valueenhancement. The Company also seeks to

ValuesIntegrity, Creativity,
Diversity, Learning, Teampursue its business with integrity. Overall,
TOYO’s goal is to be a “Global Leading
Engineering Partner.”

Contents
02

To Our Stakeholders

04

Five-Year Highlights

06

Overview 1
Wide-ranging Business Development

20

HSSE+Quality

Financial Section

21

Safety24

Environment

26

Quality

27

Contribution to Society
Working with Local Communities

08

Overview 2
Global Operations to Increase28

Human Capital

30

Management’s Discussion andAnalysis

35

Business Risk and Other Risks

36

Consolidated Financial
Statements

42

Notes to Consolidated
Financial Statements

73

Independent Auditor’s Report

74

Corporate Data
Corporate Information

Customer Value

10

Major Orders Received in
Fiscal 201412

The Future of TOYO

77

Stock Information

A Discussion with Analysts

17

Corporate Governance

Editorial Policy
The TOYO Engineering Group (TOYO) operates its businesses in line

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This integrated report includes certain “forward-looking statements.” Thesewith its mission of “Engineering for Sustainable Growth of the Global

statements are based on management’s current expectations and are

Community,” under the principle of meeting customer needs by providing

subject to uncertainty and changes in circumstances. Actual results may

world-class engineering while contributing to a sustainable global society.

differ due to changes in economic, business, competitive, technological,

To enhance the understanding of our philosophy and activities among all

regulatory, and other factors.

of our stakeholders and to establish a deeper relationship of trust, we havecombined our Annual Report and Safety and Environmental Report intoa single volume, known as our “Integrated Report.” It provides both ourfinancial information (such as our management policies and financial results)
and non-financial information (such as the connections between TOYO’s
businesses and the environment and society).

To Our Stakeholders—

02

To Our Stakeholders

Amidst a strong plant market, TOYO was able to obtainrecord high new orders, increasing to ¥470.3 billion with a¥659.0 billion backlog of contracts. However, deteriorationin earnings and increasing expenditures in several projects
yielded disappointing results, with an operating loss of¥7.3 billion, and a net loss of ¥20.9 billion. TOYO has
recognized four root causes behind the losses in several
projects: 1) we took on some orders with consequently
difficult conditions during times when we had a lack oforders, 2) we underestimated risks at the proposal stage,3) a lack of key personnel caused a decline in work quality
with multi-office projects, and 4) there was a problem withmanagement of multi-office project execution. In particular,
there were cost increases on an FPSO* topsides projectat our Brazilian equity method affiliate, mainly causedby the delay in the client’s decision on design changes
and project schedule revisions until February 2015. We
overestimated the project management capability of ouraffiliates, and did not accurately confirm the effectivenessof the governance at our equity method companies.
*FPSO: Floating production storage and offloading

 fforts toward a Recovery of Financial
E
Performance (Main points of the Revival Plan)
Following the management change in April, TOYO
analyzed the causes of the earnings deterioration, andestablished a Revival Plan composed of four reforms:
1 Restructuring of the management system bychanging the mindset of our management team,sufficiently discussing issues and risks, reforming the
Executive Committee, and thoroughly implementing risk
management. We newly set up the Corporate Strategy
Unit along with a Group Operation Committee to enhance
project risk monitoring at overseas group companies andstrengthen their project execution capabilities.
2 Improvement of management process at proposal
stage by establishing an appropriate sales strategy froma long-term standpoint, balancing a fluctuating workloadwith sales activities to prevent a cycle of fluctuating orders,

improving the management process at the proposal stage
to enhance rational decision making and improving thequality of our proposals to prevent any gaps in the projectbudget after receiving the order.
3 Enhancement of project management capability byfurther improving our multi-office project execution systemwith group companies, creating a companywide support
system, including the establishment of a project office inToyo-Japan for mega-projects and developing key project
personnel, including passing on technical traditions toprevent loss recurrence.
4 Change of corporate culture by promoting communicationand ensuring openness to enable employees to overcome
the gap between organizations and their respective ranks,
speaking out, and seeking to improve organizational
performance.

Performance Targets for Fiscal 2015
Our consolidated forecast for fiscal 2015 includes neworders of ¥330.0 billion, net sales of ¥340.0 billion, and net
income of ¥3.0 billion. Annual dividends are forecasted
as a year-end dividend of ¥4.00. We have already been
awarded a U.S. ethylene plant project and an Indonesianrailway system project in April 2015. To achieve our
performance targets, TOYO will strive to strengthen our
proposal and project system, work on a financial recovery
through effective project execution and cost reductions,and ensure the soundness of our restructuring plan. TOYO
will steadily implement the four reforms of the Revival
Plan to stabilize our operations by recovering profitability
and improving our financial strength. Furthermore, we willconcentrate the collective strength of all our companies
and build a corporate group that our stakeholders will trustby sustainably increasing our corporate and shareholder
value. We ask for your continued understanding andsupport of TOYO in our future endeavors.
August 2015

Kiyoshi Nakao
President and Chief Executive Officer

TOYO ENGINEERING CORPORATION Integrated Report 2015

Summary of Consolidated Financial Results for
Fiscal 201403

In April 2015, TOYO refreshed its management and launched initiatives to revitalize the company. We strive
to establish strong management practices and to quickly return to a path of sustainable growth by reforming all areas of our management and business operations. I would like to explain about our efforts to recoverprofits and our outlook for the future to our shareholders.

Five-Year Highlights—

Toyo Engineering Corporation and Consolidated Subsidiaries

Years ended March 31

04
Five-Year Highlights

Financial Highlights:

2015

2014

2013

2012

Net sales¥311,454¥230,124¥228,723¥157,881

Gross profit

17,21425,15524,20024,918Operating income (loss)(7,356)

455

1,593

5,341

Income (loss) before income taxes(21,989)

5,673

2,982

4,941

Net income (loss)(20,965)

967

1,457

3,728

Total assets

261,609257,480

240,694

222,415

Total net assets

44,97974,831

71,091

69,265Long-term loans payable

23,60433,53526,477

24,582

Capital stock

18,19818,19818,19818,198New orders

470,369

365,137

290,444

269,188

Backlog of contracts
at end of the year

659,005

538,023

410,492

359,120

Net income (loss)¥(109.34)

¥

¥

7.60

¥ 19.43

Total net assets

234.20382.61363.15349.42

Cash dividends

4.00

3.00

5.00

6.00

Chemical fertilizers

20.5%

19.4%

16.6%

10.0%

Petrochemicals

42.1

30.3

18.8

15.3

Refinery

16.6

13.0

7.7

11.5

Energy-related

5.0

7.2

27.0

35.2

General manufacturing facilities
and information technology

4.3

9.2

16.7

20.3

Others

11.5

20.9

13.2

7.7

(Overseas sales ratio)

(87)

(84)

(81)

(73)

Number of employees*1

4,463

4,747

4,548

4,494

(Number of employees atparent company)*1

1,084

1,037

1,026

1,055

2,760

2,583

2,156

2,166

Crude oil equivalent (Kiloliters)

1,360

1,413

1,411

1,385

Domestic constructionwaste volumes (Tons)*3

11,764

666

832

2,222

29,50020,7009,900

17,300

Lost Time Incident Rate (LTIR)

0.08

0.07

0.09

0.09

Total Recordable
Incident Rate (TRIR)*5

0.22

0.22

0.22

0.24

Per share:
5.05

Net sales by sector (%):

Non-financial Highlights:*2

CO2 emissions (Tons)*2

Overseas constructionwaste volumes (Tons)*3*4*1. Excluding temporary employees*2. Applies to quantity of electricity and gas utilities consumed by offices (Head Office / Engineering Center). Taken from regular reports issued to the Ministryof Economy, Trade, and Industry.
*3. The total construction disposal weight, except construction surplus soil/sludge.
*4. Lost Time Incident Rate (LTIR) = Total Lost Time Incidents × 1,000,000 / Employee-Worked Man-Hours*5. Total Recordable Incident Rate (TRIR) = Number of Recordable Incidents × 1,000,000 / Employee-Worked Man-Hours
Note: U.S. dollar amounts are stated at ¥120.15 to U.S.$1.00, the exchange rate prevailing on March 31, 2015.

Thousands of
U.S. dollars (Note)

2011

2015
$2,592,209

26,573

143,270

6,815(61,223)

6,917(183,012)

3,773(174,490)

198,387

2,177,353

67,096374,357

15,163

196,454

18,198151,460

222,540

3,914,848

224,6935,484,852

Yen

U.S. dollars (Note)¥ 19.65$(0.91)340.43

1.94

5.00

0.03

(¥ billion)

311.4

Operating income (loss)(¥ billion)

6.8
5.3

228.7
155.6

230.1

157.8

1.5
0.4
`11

`11

`12

`13

`14

Net income (loss)

3.7

`12

`15

`14

-7.3

`15

(¥ billion)

Total assets

3.7

222.4
1.4

`13

(¥ billion)

240.6

257.4

261.6

`14

`15

198.3
0.9
`15

6.9%

`11

`12

`13

`14

22.8
23.8
18.7
-20.9

`11

`12

`13

20.0
7.8
(64)

New orders(¥ billion)

659.0
538.0

365.1

1,069

1,559

(¥ billion)

470.3

3,956

2,610

Backlog of contracts at
end of the year

269.1

290.4

359.1

410.4

222.5

224.6

846
12,500
0.05
0.53

`11

`12

`13

`14

`15

`11

`12

`13

`14

`15

TOYO ENGINEERING CORPORATION Integrated Report 2015

¥155,696

Net sales

05

Millions of yen

Overview

06

1

Overview 1

Wide-ranging
Business
Development

Oil & Gas Development Field——

We provide services related to
the life cycles of oil and gas fields,from planning to construction
and operation management, andsecondary / tertiary oil recovery, inpartnership with our customers. We
have provided services and executed
projects in Japan as well as in the
Middle East, Russia / CIS countries,
and Southeast Asia.

Oil & Gas Development Field—————

Since its foundation in 1961,
TOYO has implemented awide range of projects on the
global stage, mainly in theplant engineering field. Our
rich experience covers a broad
range of fields, such as thehydrocarbon field including oil& gas development and otherresources, oil refining and gas
processing, petrochemicals
and gas chemicals, fertilizers,
the infrastructure field including
power generation, transportation
systems, the effective use ofwater resources, and industrial
plant fields including
pharmaceuticals. We execute
projects in various countries
and regions together with ourgroup companies to provide
comprehensive solutions todiverse customer needs andproblems.

Oil / Gas Development |*EOR: Enhanced oil recovery

EOR* | FPSO

Infrastructure Field——

T he d e m an d f o r in f r a s t r u c t ur e
projects, such as power generation,transportation systems, and theeffective use of water resources, isgrowing in conjunction with economic
development in emerging economies.
TOYO uses its project management,
design and procurement, andconstruction management abilities—
cultivated in the plant engineering
field—to develop infrastructurebusiness that meets customer needs
and provides satisfaction.

Infrastructure Field

Power Generation |Transportation Systems |Effective Use of
Water Resources

TOYO’s Proprietary Technologies
Urea Synthesis Technology ACES21® andUrea Granulation Technology

Innovative Energy Saving Distillation System

—
—

—
—

TOYO licenses its ACES21® energy saving urea process andurea granulation technology. ACES21® reduces construction
costs by simplifying urea synthesis and reduces operating costsby minimizing the amount of energy needed to produce urea.
We also provide our proprietary urea granulation technology,
which is highly necessary for large-scale farming.

Distillation is a key part of the separation
process in petrochemicals and oil refining.

1,725 t/d ACES21®
urea plant of
PT. Pupuk Kujang(Indonesia)®

®, developed by TOYO, divides
the distillation column into a rectifying section
and a stripping section. In between placing acompressor, and producing the heat exchange
between the two sections,energy consumption is cut
in half. It is the ultimate
energy saving distillation
system.

FEED

Low Pressure
ColumnStripping
SectionBTMS
DIST
Rectifying
SectionHigh Pressure
ColumnOil Refining & Gas Processing Field——

Catalytic Reforming |Hydrocracking | Natural Gas
Processing | LNG*3 | GTL*4*1. FCC: Fluid catalytic cracking*2. RFCC: Residue fluid catalytic cracking*3. LNG: Liquefied natural gas*4. GTL: Gas to liquids*5. LPG: Liquefied petroleum gas

BUSI NE SS
FIELD
Petrochemical, Chemical &Pharmaceutical Field——

Petrochemical, Chemical &Pharmaceutical Field
Ethylene | EO/EG*, Urea |Ammonia |Aromatics, Methanol |Since its founding, TOYO hasadvanced technology in the
petrochemical and fertilizer fields asa licenser and through technologicalpartnerships. We have numerous
successes in a wide variety offields, such as ethylene, propylene,various polymers, aromatics,
urea, ammonia, and methanol. In
the pharmaceutical field, we are
aggressively involved mainly withhighly active pharmaceutical and biopharmaceutical plants.

Bio-pharmaceutical | Containment*EO/EG: Ethylene oxide / ethylene glycol

Methanol Synthesis Reactor [MRF-Z® ]High Efficient NGL Recovery Process [COREFLUX® ]

—
—

—
—

TOYO offers MRF-Z®, a multi-stage, indirect cooling, radialflow type synthesis reactor that can meet the large demand
for methanol. The MRF-Z® is a compact system—a methanol
plant with a capacity of 5,000 – 6,000 tons per day can berealized with a single train. This greatly contributes to reducing
construction and operating costs.

Natural gas includes ethane, propane, butane, and other gasesthat are commercially high in value. Commercial gas witha high added value and raw materials for chemicals can beobtained from these gasses. TOYO has developed COREFLUX®
technology, which achieves a high product recovery rate withlow energy consumption, for gas separation and refining.

3,000 t/d methanol plant of
Oman Methanol Company
L.L.C.

Gas processing plantof Oil and Natural Gas
Corporation

TOYO ENGINEERING CORPORATION Integrated Report 2015

FCC*1 / RFCC*2 |07

Oil Refining &Gas Processing Field

TOYO is involved in numerous oil
refining projects, from grassroots
refineries to hydrodesulphurization,
catalytic reforming, hydrocracking,and thermal cracking, as well as
natural gas originated production
facilities for LPG *5, LNG and GTL,
pipelines, facilities for receipt, storage
and discharge, and other gas andsupply chain-related projects.

Overview

08

2

Overview 2

GlobalOperations
to Increase
Customer Value—————

TOYO’s group companies
maintain close contact with
their countries, regions, andcustomers while mutually
cooperating to build a global
network that executes projects
based on the optimal formation
and with unified standards.
Through this network wegather information about themarket, human resources andtechnology. TOYO shares
this information throughout
the group so as to continue
providing solutions to customer
needs. Group companies use
their experience and previous
successes to achieve highq u a li t y a n d H S S E , m e e tschedules and budgets, andoffer effective project execution.
We continue striving to evenfurther develop our global
operations as we aim to bea corporate group that earns
solid customer trust.

Polyethylene Plant Project for
Sasol in the U.S.
Toyo-Korea is in charge of detailed
engineering, procurement, module
fabrication and construction
support services for an LLDPE *1
manufacturing facility with a capacityof 450,000 metric tons per year that
Sasol Limited is building in the U.S.
Toyo-Korea has had great successwith polyethylene projects using the
UNIPOL™ PE Process of Univation
Technologies, LLC. TOYO executed
the FEED*2 for this facility in 2013.
*1. LLDPE: Linear low density polyethylene*2. FEED: Front end engineering design

Toyo-

Korea
Completion of Three Projects
for Japanese and Foreign
Companies Entering China
Toyo-China has completed a plant fora China-based subsidiary of Daikin
Industries, Ltd., in the short delivery
time of 19 months. It was one of
the largest EPC* projects handledindependently. Also, Toyo-China
completed on time a specialty ester
manufacturing plant for OXEA and an
ethylene tank and related facilities for
Lanxess, both European companies.
*EPC: Engineering, procurement and construction

Toyo-

China
Regasification Facility Project for
Petronet LNG and GSPC LNG in
India
Toyo-India and Toyo-Japan
collaborated to win orders for two
regasification facility projects. The firstis for expanding the LNG receiving
capacity of a facility of Petronet
LNG Limited (India) to 15 million tons
per year. The second project is forconstructing a regasification facility
with a capacity of five million tons
per year for GSPC LNG Limited.
Toyo-India is currently independently
executing the EPC projects, which
are scheduled for completion in fiscal
2016.
Toyo-

India

Atlatec

TSPI

Large Gas Chemical Complex forState Concern “Turkmengas,”
Turkmenistan’s national gas
corporation

Japan

Toyo-

Korea

Toyo-

India

Toyo-

USA
Toyo-

CanadaLarge-scale Ethylene Complex
Project for PETRONAS
Under the initiative of Toyo-Japan,
four TOYO group companies (ToyoIndia, Toyo-Malaysia, IKPT, and TTCL)

are collaborating on a large-scale
EPC project. The project includes
an ethylene production plant with aproduction capacity of 1.29 million
tons per annum, as well as a pyrolysis
gasoline plant, butadiene extraction
plant, benzene extraction plant, andutility and offsite facilities.
Toyo-

Japan
Toyo-

India

Toyo-

Malaysia
IKPT
TTCL

Overseas Group Companies
Other Affiliates

Less than 1,000 people

Less than 1,000 – 2,000 people

More than 2,000 people

TOYO ENGINEERING CORPORATION Integrated Report 2015

Toyo-

09

Led by Toyo-Japan, Toyo-India
and Toyo-Korea participated in alarge gas chemical complex project
consisting of a large gas separation
unit, ethylene production unit,
polypropylene production unit, andother facilities for Turkmengas.
The gas separation facility uses
COREFLUX®, which can extract
ethane and LPG at high efficiency.

Major Orders Received in Fiscal 2014—10

Order over ¥200 billion

Major Orders Received in Fiscal 2014

Large-scale Ethylene Complex Project in Malaysia
TOYO has been awarded a contract for a Steam Cracker Complex (SCC) project in Malaysia by PRPC Refinery and Cracker
Sdn. Bhd., a subsidiary under the Petroliam Nasional Berhad (PETRONAS) Group, Malaysia’s national oil and gas company.
The SCC will be part of PETRONAS’ RAPID* project in Pengerang, Johor, Malaysia. It will feature a 1,290,000 t/y ethylene
production plant, a 660,000 t/y pyrolysis gasoline plant, a 185,000 t/y butadiene extraction plant, and a 175,000 t/ybenzene extraction plant, as well as utility and offsite facilities. The project is scheduled to be completed in mid-2019.
RAPID is part of the bigger PETRONAS Pengerang Integrated Complex development worth an estimated U.S. $27 billion,
which comprises of RAPID and its associated facilities including the Pengerang co-generation plant, re-gasification
terminal, air separation unit, raw water supply project, crude and product tanks as well as central and shared utilities andfacilities.
*RAPID: Refinery and petrochemicals integrated development

Order over ¥50 billion
Japan’s Largest Mega Solar Project
Kuni Umi Asset Management Co., Ltd., GE Energy Financial Services and TOYO have invested in Japan’s largest solar
photovoltaic power plant project. The 231.44 MW plant will be built in Setouchi, Okayama Prefecture, via special purpose
company Setouchi Future Creations LLC. Construction commenced in November 2014, and commercial operations arescheduled to start in the spring of 2019. TOYO and Shimizu Corporation will construct the mega solar photovoltaic power
plant and related facilities as well as bank reinforcement. Total project costs are expected to be about ¥110 billion. All
generated power will be sold to the Chugoku Electric Power Company, Inc. The project’s finances, which total about ¥90
billion, are being provided by a syndicate of leading Japanese banks.

Orders over ¥10 billion
Large-scale Photovoltaic Power Plant Project in Miyazaki
TOYO has been awarded a large-scale photovoltaic power plant project planned in Miyazaki Prefecture, Japan by Pacifico
Energy K.K. The plant will have a power generating capacity of 96 MW and is scheduled for completion in the spring of
2018. The power generated will be sold to the Kyushu Electric Power Co., Inc. TOYO is now executing the construction
projects in Kumenan City (32 MW) and Mimasaka (42 MW), Okayama Prefecture for Pacifico Energy K.K. Accordingly, TOYO
has been awarded large-scale photovoltaic power plant projects totaling 170 MW from Pacifico Energy.

Polyethylene Plant Project in the U.S.
Toyo-Korea was awarded a contract from Sasol Limited to provide detailed engineering, procurement, module fabrication,and construction support services for a 450,000 t/y LLDPE* plant. The plant is part of Sasol’s petrochemical complex to beestablished in Lake Charles, Louisiana, U.S. In 2013, TOYO carried out the Front End Engineering Design (FEED) services
for this plant, which is scheduled to be completed in 2017. The UNIPOL™ PE Process of Univation Technologies, LLC is
being applied to this project, making it TOYO’s 23rd project to feature the UNIPOL™ process.
*LLDPE: Linear low density polyethylene

Natural Gas-fired Cogeneration Power Plant Projects in Thailand
TOYO entered into the construction and supply contracts for natural gas-fired combined cycle cogeneration power plants
with twelve special purpose companies jointly owned by Mitsui & Co., Ltd., and Gulf Energy Development Company
Limited. We have received a notice to proceed for the first one of the twelve projects: the Gulf VTP Company Limited
Project, which will have a generation capacity of 130 MW. The contracts were for construction of 12 cogeneration power
plants (nine 120 MW and three 130 MW, total generation capacity 1,470 MW) in the suburbs of Bangkok. The projects were started
subsequently from February 2015, and all 12 plants are scheduled to be completed by July 2019.

11

Major Projects

■ 8

■ 9

■11

■ 4
■19

■15
■16

■20

■13

■ 5
■ 1
■17

■18
■6

■10
■14

■7
■2
■3

New Orders
		 Type

Location

Scope

■

1

Large-Scale Ethylene Complex

Malaysia

EPC

■

2

Photovoltaic Power Generation Plant (Setouchi, Okayama)

Japan

EPC

■

3

Photovoltaic Power Generation Plant (Hosoe, Miyazaki)

Japan

EPC

■

4

Polyethylene Plant

U.S.A.

EP■

5Natural Gas Fired Cogeneration Power Plants (1 of 12)

Thailand

EPC

■

6

Photovoltaic Power Generation Plant (Mimasaka, Okayama)

Japan

EPC

■

7

Photovoltaic Power Generation Plant (Kumenan, Okayama)

Japan

EPC

Ongoing■8Large Gas Chemical Complex

Turkmenistan

EP

■

9

Oil Sands SAGD Facilities

CanadaEPC■

10Ammonia Plant

BrazilEPC■

11

LNG Regasification Plants (Dahej/Mundra)

India

EPC

■

12

Oil Refinery Modernization (Heavy Residue Conversion Complex)

RussiaEP■

13

Ammonia and Urea Plant

NigeriaEP■

14

Refinery Utility Complex

BrazilEPC■

15Ethylene and Butadiene Extraction Plants

Egypt

EPC

■

16

Polyethylene Plant

Egypt

EPC

■

17

Ethylene Plant Expansion

Indonesia

EPC

Completed■

18

Urea Plant

Venezuela

EPC

■

19

Ethylene-vinyl Alcohol Copolymer Plant

U.S.A.

EPC■

20

Polyvinylidene Fluoride (PVDF) Manufacturing Plant

China

EPC

EP: Engineering and Procurement
EPC: Engineering, Procurement and Construction

TOYO ENGINEERING CORPORATION Integrated Report 2015

■12

The Future of TOYO—12The Future of TOYO

Kunio Sakaida

Hirosuke Tai

Masanori Wakae

Kiyoshi Nakao

Barclays Securities Japan Limited

Daiwa Securities Co., Ltd.

Mizuho Securities Co., Ltd.

TOYO Engineering

Research Department

Equity Research Department

Equity Research Department

President and Chief Executive Officer

The Future of TOYO–A Discussion with Analysts
TOYO is focusing on restructuring its management system to quickly return the company to a path of sustainablegrowth. What do industry analysts think of TOYO’s initiatives? President Kiyoshi Nakao held a discussion with threesenior analysts, from the research departments of Barclays Securities Japan, Daiwa Securities, and Mizuho Securities.
They have all been observing the plant engineering field for many years, and were invited to share their frank opinions.

The abilities to coordinate totally and execute the project are critical to reliably generate
results.— Mr. Wakae
Market disappointment originated from high expectations for TOYO.— Mr. Sakaida
13

Insightful Viewpoints into the Plant

Mr. Nakao Today we have with us threesell side analysts who have worked for many
years at securities companies. I would liketo ask each of you for your candid opinions
about TOYO. First, what points do you
especially pay attention to when you arelooking at an engineering company?
Mr. Wakae I recognize that plantengineering is basically a high-risk field. The
abilities to manage various risks, coordinate

need to raise their profit ratios through “soft”

totally and execute the project are criticalbusinesses, such as front end engineering

to reliably generate results. These are thedesign, and licensing, or reduce risk by

points I focus on when analyzing engineering

cooperating with other companies. As forcompanies. I focus more on the substance ofwhat Mr. Tai mentioned regarding people,

their profits than on the size of the business.

at TOYO, in addition to technical quality, we

Mr. Sakaida There are many cases ofsee human quality as an invaluable asset

Japanese engineering companies receiving

in supporting the growth of the company.

lump-sum turnkey orders, so you could

We have placed considerable emphasis on

say that all sales are risks. As Mr. Wakae

the development of human capital—suchmentioned, I realize that how a company

as cultivating human capital that can build aaccurately manages risk is the source of an

firm relationship with our customers—andengineering company’s profits. When I lookalso the creation of a corporate culture ofat the plant engineering field and individual

openness, as main initiatives in our current

companies, I put emphasis on something

Revival Plan.

that cannot be expressed by metrics—acompany’s way of thinking. This includes
such points as what projects they arefocusing on, and in which areas.

Risk Management and Corporate
CultureMr. Tai I also emphasize aspects that can’t

Mr. Sakaida With fertilizer plants as thebe expressed by metrics. Project profits anddriving force, TOYO has increased new orders

losses can’t be figured out from outside thegreatly since around fiscal 2012, reachingcompany, so honestly I’m not too interested

a record high in fiscal 2014. The stockin how performance forecast numbers look.

market had a positive assessment of TOYO’s

The most important things are people andincreased order volume and the anticipatedthe corporate culture. I try to get a sense ofincrease in profits. However, there weremanagement strategies and of what direction

problems with project execution, exemplified

a company wants to take through dailyby the fertilizer project for PT Pupuk

communication with the IR personnel andKalimantan Timur (Kaltim) in Indonesia. Theretalking with executives at briefings and social

was major disappointment from institutional

gatherings.

investors and the market, but I also think the

Mr. Nakao As you have all pointed out,market disappointment originated from therisk evaluation and management are crucial

high expectations for TOYO.

to the destiny of an engineering company.

Mr. Nakao The root cause of this loss was

For example, lump-sum turnkey contracts

that we underestimated the risks involved

are a sales point of Japanese engineering

at the proposal stage. Of course, we held acompanies, so they can’t simply be

proposal strategy meeting and conducted aabandoned. On the other hand, companies

prior examination of the project risks, but we—————————————

Kunio Sakaida
Barclays Securities Japan
LimitedResearch Department——
After joining Daiwa
Securities Co., Ltd., in 1989,
Mr. Sakaida worked as ananalyst at Credit Suisse Trust
Limited, Goldman Sachs
Japan Co., Ltd. and others.
Since May 2011, he has beenworking as a shipbuilding andplant engineering analyst at
Barclays Securities.

TOYO ENGINEERING CORPORATION Integrated Report 2015

Engineering FieldIt is important to diversify regions, income sources, and customers, and to aim for balanced
growth.— Mr. Sakaida

14

future of the company. Stimulating moreconversation both inside and outside the

The Future of TOYO

company will be positive for TOYO in the
future.

Expanding Business Fields
Mr. Tai Compared to the two other major
Japanese engineering companies, TOYO
does not seem to have any particularly
outstanding features. And the company
doesn’t have any especially attention—————————————

focused more on discussions regarding how

grabbing businesses either. However, I

to win the project order. Additionally, thoughthought it was interesting that at a previous

Indonesia is a rapidly changing country, we

briefing on the fertilizer business held for——

didn’t sufficiently discuss the impacts ofanalysts, you clearly explained the increasing

Mr. Tai joined the Daiwa

such changes on project execution. We were

demand for fertilizer and TOYO’s position

Institute of Research Groupalso rather eager to receive an order for awith respect to that demand.

After working in thelarge fertilizer plant. Now, we are thoroughly

Mr. Sakaida Two major companies have

OTC stock market (nowdiscussing such risks at the start of thisbeen concentrating on LNG plants in recent

JASDAQ), the tires andkind of project. It is essential that our review

years, with close to 70% of their orders being

he was placed in charge ofsystem be effective.

LNG-related. LNG has been a hot topic formachinery and shipbuilding

Mr. Sakaida I’m sensing that TOYO

the past several years, so the spotlight has& plant engineering in 2000.

employees feel great responsibility and are

been on those two companies.

the machinery, shipbuilding

very serious about their work, so they push

Mr. Nakao TOYO’s weakness at& plants and industrial

themselves to the limit in dealing with as

disseminating information may have also

electronics sectors at Daiwa

much as is possible at their rank. Losses

been a factor. Perhaps in order to increase

occurred when the situation reached aour company’s value, we need to callbreaking point. If problems and concerns had

attention to our successes externally, such as

been shared at an early stage through good

the fact that TOYO’s ACES21® urea process

communication, then maybe the losses could

technology is used in one-third of all fertilizer

have been reduced. The Revival Plan includes

plants globally, and that we have successfully

the promotion of all-around communication

launched 45 ethylene plants.

to change corporate culture. I think that is

Mr. Wakae The image of TOYO in the past

extremely important.

was one of strength in ethylene, fertilizer,

Mr. Nakao In executing a project, the PM*

and other downstream businesses, but

has great authority. However, some PMs

recently you have developed your businesskeep problems to themselves, thinking, “I’llin a wide range of fields, such as solar powertake care of it somehow,” or “If I just get

generation, transportation systems, andpast this part then everything else will work

pharmaceuticals. So it has become difficult

out.” If we can become aware of the problem

to form a mental picture of what kind of

through daily conversations between thecompany Toyo Engineering has become.

PMs and their bosses—the general managers

Mr. Nakao You are right in that TOYO’sor the project directors—then we can address

involvement in a variety of projects, instead

it quickly and prevent losses.

of being a specialized company, is viewed

Mr. Sakaida Stimulating communication

poorly by the stock market. But on the plus

not only improves risk management, but has

side, having a variety of products and being

other positive effects, such as stimulating

active in various regions allows us to be a

discussions between employees regarding

more dynamic company.

Hirosuke Tai
Daiwa Securities Co., Ltd.
Equity Research Department

in 1995.

automobile retail sector,

Currently, he is in charge of

Securities.

*PM: Project Manager

how to go about their work, or regarding theYou should conduct business in a positive atmosphere so as not to feel hesitant due todeterioration in performance.— Mr. Tai

15

Mr. Sakaida Diversifying regions, revenue
growth from a position of overall balanceis a sound way for a company to operate.
The stock market chases after hot topics,
and in the past two or three years it focusedon companies that specialized in LNG.
However, concentrating on specialized fields
greatly increases volatility. Looking from amanagement point of view, it is natural towant to decrease volatility in order to makeearnings more stable.
will make every effort to solidify our business
The Road to Restructuringbase and achieve a financial recovery. So—————————————

Masanori

what will we do in particular? While it’s

Wakae

Mr. Sakaida TOYO was established in 1961

important that we develop products andMizuho Securities Co., Ltd.

when the engineering division of Toyo Koatsu

areas that can meet future needs to develop

Industries Inc. (currently Mitsui Chemicals)

the company, at the moment it would be

separated and became independent. I

unwise to focus our capital and resources

believe that TOYO’s roots as a manufacturing

on new fields. If we can build customer

based engineering company live on in yourtrust by successfully completing projects

corporate culture and your employees’ ways

we are now involved in, then customers willof thinking.

contact us when they are planning their next

Mr. Nakao Perhaps we feel proud as owners

project. Furthermore, if we can be involvedof processes and technology here at TOYO.

in the customer’s product development andMany past Presidents came from engineering

investments, then that may result in a new

fields, so I think there is a strong tendency

product for us. By increasing our projects

toward contributing to development in thein this way, we can find our next productplant engineering field by providing cutting-line. The best sales activity is strengtheningedge technology. But perhaps valuing

customer trust.

technology over other items may lead to

Mr. Sakaida That’s true. You can link thea less strong sense of costs and profit.

successful completion of an underway

This was pointed out by many during our

project to future customer trust. In particular,

discussions on business restructuring.

the successful completion of the mega-

Mr. Tai President Nakao, what kind of

projects you received in the previous fiscal

restructuring do you have in mind for TOYO?

year will be important to TOYO’s future

I am concerned that, given the deterioration

growth. TOYO’s new order target is aroundin performance, your employees will feel

¥350.0 billion. That’s a modest benchmark

hesitant and their enthusiasm will decrease.
Three consecutive years of downward
performance revisions has not been goodfor your company’s image, but the losses
themselves are by no means at a level
where they are threatening the underlying
foundation of the company. There aremany hardworking people at TOYO, so I am
concerned that they will succumb to outsidepressure and lose motivation.
Mr. Nakao The major premise of our Revival
Plan is that for the next one or two years weEquity Research Department——
Mr. Wakae joined Wako
Securities Co., Ltd., (later
Shinko Securities Co., Ltd.,
now Mizuho Securities Co.,
Ltd.) in 1991.
At Shinko Securities, hebelonged to the Corporate
Research Department.
At Mizuho Securities, he isin charge of the shipbuilding
and plant engineering sector.

TOYO ENGINEERING CORPORATION Integrated Report 2015

sources and customers, and aiming forRationally assess the strong points and weak points of each overseas group company and createa feasible project execution system.— Mr. Nakao
I think you should focus on better disseminating information.— Mr. Tai
16
The Future of TOYO

considering your current sales levels. Even

handle projects in existing regions in ourpeople on the front line of sales should be

conventional business fields, such as

able to focus on receiving orders from key

chemicals and petrochemicals. Meanwhile,customers in the next three years, rather thanToyo-Japan would focus on mega-projects

looking to expand sales.

and new projects. Unfortunately, this ratio

Mr. Nakao I believe that, rather than putting

was less than 1. Now we need to rationallyemphasis on sales, smoothly executing work

assess the strong points and weak points ofthat is under way will begin to move theeach overseas group company and create acompany in the right direction, which will

viable project execution system. Our global

lead to future growth.

network and the employees at each overseas

Mr. Tai Maybe this was because of thegroup company are major strengths for

management team’s strong feelings, but I

TOYO, so I want to maximize those strengths.

was bothered by the apologetic tone taken
at the financial results briefings. But in an
extreme case, if investors don’t think there’s

Expectations for the President

any hope, then they should sell their stock.

Mr. Wakae Many people who become a

The most important subject for a company

president when business is good for theiris to meet the expectations of stakeholders,company tend to retire when performancebut it is not good to always be focused ondeteriorates. On the other hand, many who

the past. Employees as well think it is better

become a president when performancefor the president and management team to

is at its worst hand over the position tocreate a positive atmosphere.

their successor after having improved
performance. You may have taken a risk

Strengthening Overseas Group
Companies

here, but I hope in five years we will hearpeople say, “It was the right decision to make
Mr. Nakao president at that time.”

Mr. Wakae Toyo Engineering Corporation

Mr. Tai The one request I have of you is towill continue to turn a profit on a non-focus on better disseminating information.

consolidated basis, but looking at TOYO on

The stock market is a world all its own, anda consolidated basis, the overseas group

it is different from the world of corporatecompanies are not always profitable, somanagement. If you do not proactively

the balance of earnings is not favorable. If

disseminate information, then the market will

you can redevelop your group network andnot fully understand the true intentions ofchoose where to expand and where not to,your company. If you invigorate the exchangethen TOYO’s earnings structure will begin to

between the market and management, thenrebound well, I think.

assessments of TOYO should naturally rise.

Mr. Nakao That is exactly right. One of our

Mr. Nakao You’ve given me many valuable

management goals in NEXT TOYO 2015,

opinions. I think they will all prove valuable in

TOYO’s medium-term business plan, is the

TOYO’s restructuring. At any rate, this year

improvement of the EPC execution capability

is absolutely critical for us. We will resolutelyof each group company. We set our target

concentrate our efforts on returning to a pathratio of consolidated net profit to parentof continued growth as quickly as possible.

earnings for fiscal 2015 to 2.0. We planned

Thank you for your time today.

for group companies to independentlyCorporate Governance—17

Fundamental Concept
efficacy of our management monitoring and observation
capabilities. Furthermore, we are currently considering
Corporate Governance Codes, and we plan to makea public announcement as soon as preparations arecomplete.
Governance system chart (As of June 25, 2015)
Structure

Company with Board of
Corporate Auditors

Usage of an executive officer system

Yes

Number of Directors
Number who are Outside Directors(Independent Officers)

9Director term length

1 yearNumber of Auditors
Number who are Outside Auditors(Independent Officers)

4

Number of independent officers

5

3 (3)

2 (2)

Corporate Governance System
TOYO recognizes that it is essential to gain trust from ourstakeholders—including shareholders and customers—
and ensure transparency and fairness in management
decision making as we fulfill our responsibilities to society.
Therefore, we work to properly establish and effectively
administer the following corporate governance system.
The Board of Directors is composed of nine Directors,
including three Outside Directors; they deliberate anddetermine all important matters related to management
and the execution of business, and also monitor andsupervise one another with respect to the executionof Directors’ duties. Additionally, TOYO introduces an
executive officer system in order to strengthen the Boardof Directors’ monitoring and supervising capabilities, andto ensure a swift and effective business execution system.
Executive Officers (27 members, including concurrent posts ofCorporate Governance
Structurenine Directors) are appointed by the Board of Directors and,
under the CEO’s directions, execute the duties they havebeen delegated. Additionally, as an advisory board for the
President and CEO, the Executive Committee consistsof Executive Officers with specific roles (Senior Executive
Officers or above) and the heads of main divisions. Importantmatters related to the execution of business are reported
and deliberated in the Executive Committee.
The Board of Corporate Auditors consists of four
Auditors, including two Outside Auditors; they report anddeliberate on the Directors’ execution of their duties, thestatus of developing and operation of internal controls, andinternal audit guidelines such as quarterly settlements andend-of-year settlements as well as the contents and resultsof audits.

Shareholders Meeting
Appointment/
RemovalAppointment/Removal
Board of Directors
Appointment/Removal
President & CEO

Audit

Board of Corporate Auditors/
Corporate Auditors

Appointment/
Removal
Accounting Auditors
LiaisonLiaison

Audit
LiaisonExecutive Committee

Reports to
Crisis (Disaster)
Headquarters
Crisis Management Team

Compliance Committee

J-SOX Steering Committee
ReportProject Risk Management Committee

Internal Auditing Division
Audit

Group Operation Committee

Group Management Division
Supervise

Operation UnitsGroup Companies

TOYO ENGINEERING CORPORATION Integrated Report 2015

TOYO’s corporate philosophy is to make contributions
to our stakeholders, including shareholders andcustomers, and also to fulfill our responsibilities tosociety through operating our global engineering andconstruction business in fields such as energy, oil refining,
petrochemicals, chemicals, social infrastructure facilities,
industrial facilities of various types, and IT systems. We
establish and administer a fair management system toensure transparency and soundness in management,
disclose corporate information in an appropriate andtimely manner in order to be properly accountable toour stakeholders, and we work to thoroughly prevent
unfair transactions, such as insider trading. Additionally,
with regards to management decision making, we givedue consideration to general shareholder returns. We
strive to fully establish and operate an internal control
system—including compliance and risk management, thefoundations of corporate governance—as we increase the18Outside Directors and Outside Auditors

Corporate Governance

TOYO, as a “company with a Board of Corporate Auditors,”
has three Outside Directors among nine Directors, and two
Outside Auditors among four Corporate Auditors.
TOYO does not have specific rules on independencewith regards to the election of outside officers. However,
we judge selections using comprehensive evaluations—such as considering the candidates’ background andrelation with the Company; paying close attention toensure independence and neutrality; checking to assurethat a dominant influence will not be exerted on TOYO’s
management; assessing that conflicts of interest will notoccur with ordinary shareholders; and judging whether

we can expect to receive accurate suggestions andopinions from the standpoint of management decisions,specialization, and soundness and transparency incorporate governance.
TOYO believes that by receiving opinions from highly
independent outside officers, management executives
will be accountable and transparency can be ensured
in management. In view of the content and structure ofour business, we believe that the current system and its
operation are effective in ensuring corporate governanceto function properly.

Outside Directors

Reason for election

Kenyu Adachi(Independent Officer)

Having spent many years at Japan’s Ministry of Economy, Trade and Industry, Kenyu Adachi has rich experience andconsiderable insight into administration throughout the industrial sector, focusing on fields such as natural resources andenergy as well as trade. Using these skills, and from a position of independence, he provides TOYO’s management with
impartial and accurate suggestions and opinions regarding various issues in the management of the Company, and provides
appropriate supervising. He has been elected with expectations that he will continue to perform his duties as an Outside
Director appropriately.

Masami Tashiro(Independent Officer)

Possessing extensive international experience at financial institutions as well as rich experience and considerable insight as amanager, Masami Tashiro has been elected with expectations for his accurate suggestions and opinions concerning all aspectsof the Company’s management, delivered from a position of independence and with a global perspective.

Yusuke Yamada(Independent Officer)

Possessing specialized knowledge related to securities, finance, and capital markets as well as rich experience and considerable
insight as a manager, Yusuke Yamada has been elected with expectations for his accurate suggestions and opinions concerning
all aspects of the Company’s management, delivered from a position of independence.

Outside Auditors

Reason for election

Yoshiyuki Funakoshi(Independent Officer)

Having spent many years in the management of a chemical company, Yoshiyuki Funakoshi has wide-ranging experience andhigh-level insight concerning management. He has been elected with expectations for appropriate auditing from an independent
position and viewpoint that utilizes these abilities.

Kiyohito Uchida(Independent Officer)

Possessing knowledge of law and experience as a lawyer, Kiyohito Uchida has been elected with expectations for his impartial
monitoring and oversight to the management from an independent position and viewpoint that utilizes these abilities.

Policies of Compensation for Directors and Corporate Auditors
TOYO’s Directors’ compensation is within limits decided
at the Shareholders Meeting, and, with the exception of
Outside Directors, is basically determined according toa table by each Director’s job title, with comprehensive
consideration to financial results and contributions for the
relevant period, including factors such as the performancebased portion of the Company’s results based on
current consolidated net income for that fiscal year. With

regards to Outside Directors, with consideration for the
independence of these positions, compensation is fixedand is not linked to factors such as financial results.
With regards to Corporate Auditors, in order toensure the independence and neutrality of Auditors,
compensation is set with consideration of the level of
Directors’ compensation, full-time or part-time status, andtitle and rank; it is not linked to financial results.

Internal Controls
Based on the recognition that internal controls are
the foundation of corporate governance, Directors
appropriately establish, operate, and assess the system
of internal controls. Also, Directors carry out continuous
inspection and improvement of internal controls, andperiodically revise the Fundamental Policies of Internal
Controls System. Additionally, as the Company ensures

the reliability of compliance, risk management, andfinancial reports through internal controls, we also pay
sufficient attention to ensuring work effectiveness andefficiency. TOYO establishes the system so that the Boardof Directors will make decisions based on appropriate
information and business will be executed according tothese decisions.

19

Risk Management

As the core principles of Corporate Activities, TOYO hasestablished a Code of Conduct, Compliance Manuals, andrelated rules in order to comply with laws and regulations aswell as social justice and ethics. Also, TOYO has established theCompliance Committee. The Compliance Committee performs
compliance-related awareness and promotion activities,
and ensures the operation and monitoring of compliancesystems. Moreover, compliance-related inspections by theInternal Auditing Division and Corporate Auditors are carriedout regularly, and the compliance system is being continuallystrengthened. Additionally, TOYO has developed a risk hotline
system for compliance as a framework for properly reportingto the Board of Directors and the Board of Auditors, andestablished internal / external contacts for consultation andreporting. In our internal rules, we prohibit unfair treatment ofwhistle-blowers on the grounds of the act of reporting.

Business Risks
To manage business profits and financial risks, TOYO has
implemented the following measures:Stage before order is received (Proposal selection andestimation)

TOYO has developed and operates a system in orderto formulate reasonable measures for risks throughexamination of the technology and contents for each
proposal, considering the potential severity of impact andlikelihood of occurrence and to ensure transparency andchecks-and-balance functions in formulating process.

Stage after order is received (Project execution)
TOYO has established a project management system
in order to maintain and increase profitability of
projects through improved project execution planningthat incorporates risk countermeasures reflecting risk
assessment and preconditions at the proposal stage,
proper allocation and utilizing risk contingencies by periodic
reporting and monitoring during project execution and theaccurate claim and acquisition of changes to orders.

Management of Group Companies
Through the Group Management Division and GroupOperation Committee’s set of interrelated activities, we
promote strengthening of the project execution capabilities

of group companies and thorough management ofconsolidated profits targets.

Other Risk and Crisis Management
According to internal rules for crisis management, TOYO
has put in place a crisis management system and its outline
as follows. During ordinary times, the Crisis Management
Team as a permanent organization detects and understands
potential dangers at an early stage and, after the occurrenceof a crisis, the Crisis (Disaster) Headquarters which is directly
under the President and CEO makes necessary decisions

on all matters concerning crisis response. Also, TOYO
has procedures for responding to dangers to executives,
employees and related personal overseas, and accidentsof plant and equipment concerning TOYO’s projects. Also,
TOYO has a Business Continuity Plan for responding to risks
that should be anticipated as a company’s responsibility,
such as damage from earthquakes and other disasters.

Auditing by Internal Auditing Division and Corporate Auditors
TOYO has established an Internal Auditing Division thatis directly controlled by the President. As it assesses thelegality and rationality of company operations, the Internal
Auditing Division provides advice and counsel regarding
operational effectiveness and efficiency. Additionally, it
independently assesses the maintenance and operation ofinternal controls related to financial reports, and it reports
these results to the J-SOX Steering Committee, which isimmediately under the President.
Corporate Auditors audit Directors’ execution of duties
through attending important meetings, including those of
the Board of Directors, and listening to information from
Directors, executives, and employees regarding operations

and the execution of duties, and surveying the progress of
the Company’s operations and finances.
In addition, through actions such as exchanging opinions
on various topics—including explanations of observations
related to the Company’s operations, their respective
yearly auditing plans and critical items for auditing, auditing
methods, inspection and quality control systems of auditing,and audit results—the Board of Corporate Auditors,
Accounting Auditors, and the Internal Auditing Division
conduct their auditing in cooperation with one another,
striving for close communication while maintaining due
concern for independence.

TOYO ENGINEERING CORPORATION Integrated Report 2015

Compliance Risk

HSSE+Quality—

20

Responsibility for Safety and Environment

HSSE+Quality

We, TOYO, having set our mission as “Engineering for
Sustainable Growth of the Global Community,” aim torealize a global society that is sustainable, contributing
to our clients by conserving the environment andharmonizing with human evolution. To accomplish thisduring the process of performing engineering services,
we consider it our Corporate Social Responsibility (CSR)
to fulfill provisions regarding quality and HSSE (Health,
Safety, Security and Environment).
In particular, we place the highest priority on safety. In
the process of providing business solutions to our valued
clients, we take the utmost care to prevent the loss ofvaluable human life. We strive to ensure awareness inevery member of the organization that respect for humanlife takes precedence over any amount of effort, timeand expenditure during business operations. We firmly
believe that safety is not just relevant to construction site

Safety, Quality and Environment(SQE) Management Structure
TOYO has set up the SQE Committee, which
reports directly to the President, to review
companywide SQE management activities. The
Committee establishes the operating policies
and assesses and approves the results of SQEactivities.
The SQE Promotion Committee promotes
companywide activities in line with the basic
policies of the SQE Committee, and also promotes
specific SQE activities of individual Operating
Divisions and individual Project Execution
Divisions.
The SQE Management Unit monitors the SQE
activities performed by individual Operating
Divisions and individual Project Execution
Divisions, and conducts SQE audits and reports
the results to the SQE Promotion Committee andthe SQE Committee.
The SQE Promotion Committee and the SQEManagement Unit cooperate systematically on theaxis of the SQE Committee, which is connected
directly to the management, to implement the
PDCA cycle of the individual Operating Divisions
and individual Project Execution Divisions, forcontinual improvement of the SQE management
system and performance.

staff, but should be a foundation for every member ofthe organization.
While providing specialized services, TOYO iscommitted to energy saving and natural resources
conservation designs. In addition, during construction
work, we follow practices that take account of
the reduction of environmental impact such as
harmlessness, reduction and recycle of waste, andprevention of pollution.
In order to maximize the capability of our overseas
group companies and simultaneously integrate our
global operations as we move towards the creation of
the next generation of the engineering business, we willcontinue to challenge new frontiers. Thus, we aim tobecome the most trusted “Global Leading Engineering
Partner” for our clients by offering know-how andproviding solutions to our client’s needs.

SQE Management Structure

President
Direction

SQE Management Unit

SQE Committee（Management review）• HSE Management Division• Quality Management
Division
Reporting aboutwork-related
issues andtheir solutions

SQE Promotion
Committee

SQE monitoring and audit

Units, divisions, departments and sections（Engineering, Procurement, Construction,and Head Office management）

Project Execution Divisions

Safety

21
TOYO ENGINEERING CORPORATION Integrated Report 2015

An industrial establishment promises foremost to pay attention to safety inthe surrounding community and throughout society. TOYO strictly pledges
that loss of human life must absolutely be prevented and applies all efforts
and initiatives to safety. Time and value dedicated to safety initiatives are
given the utmost priority.
“Safety” is a key component of the TOYO brand. In order to boost ourbrand globally, we actively promote various safety measures and shallactively strive to consolidate a firm safety culture.

Safety Record
TOYO’s safety record for 2010 to 2014 is as follows:
The Total Recordable Incident Rate (TRIR) shows a continuing downward
trend, indicating a decreasing number of incidents. TOYO aims for zeroaccidents as a safety management objective. Hence our target is to further
reduce the Lost Time Incident Rate (LTIR) and the TRIR.

Safety Record over the Past 5 Years (One million hour base)
Year(Jan. to Dec.)

EmployeeWorked
Man-Days(Thousands)

EmployeeWorked
Man-Hours(Thousands)(A)

LTIR*1

Number of Incidents
Fatalities

Lost Time
Incidents(LTI)

MedicalTreatment(No LostTime)

LTI Total (B)Recordable(C)

TRIR*2

2010

12,012

117,295

1

5

56

6

62

0.05

0.53

2011

8,521

80,783

1

6

12

7

19

0.09

0.24

2012

12,739120,760

3

8

16

11

27

0.09

0.22

2013

10,790105,164

0

7

16

7

23

0.07

0.22

2014

9,201

89,777

1

6

13

7

20

0.08

0.22

*1. Lost Time Incident Rate (LTIR) = (B) × 1,000,000 / (A)*2. Total Recordable Incident Rate (TRIR) = (C) × 1,000,000 / (A)Lost Time Incident Rate (LTIR)

Total Recordable Incident Rate (TRIR)(Rate)(Rate)

0.14

0.60

0.53

0.12

0.50

0.10

0.09

0.09

0.06

0.40

0.08

0.08

0.07

0.30

0.24

0.05

0.20

0.04

0.22

0.22

0.22

2012

2013

2014

0.10

0.02
0.00

0.00
2010

2011

2012

2013

2014

(Year)

2010

2011(Year)

Toyo-Japan
22

Safety Management Rules

HSSE+Quality

TOYO has established Global
Standards to ensure that safety
management is implemented at thesame level, irrespective of country
and region, throughout TOYO groupcompanies.

Toyo-India

Toyo-China

Global Standards
Primary requirements of unified rules:•HSSE control general•Risk assessment•Health control•Traffic control•Action on emergency•Safety record

Toyo-Malaysia•Safety audit•Award and penalty

Toyo-Korea

Toyo-Canada

TOYO Group Safety Meeting
The designated heads of HSSE at
TOYO group companies conductperiodic meetings at pre-decided
locations, exchange experienceand ideas, and maintain close
communication regarding theimprovement of safety management
activities.

TOYO group company heads participating in themeeting (Held in 2015 at Toyo-India)

Toyo-Japan • Toyo-China
Toyo-India • Toyo-Malaysia• Toyo-Korea • IKPT (Indonesia)••

Safety Campaign
TOYO holds the Safety Campaign
at all its group companies andconstruction sites. The Campaign
calls attention to safety awareness forone month, starting on July 1 every
year. Various safety programs takeplace during this period.

Safety mass meeting at site

Safety belt/harness training

Campaign opening ceremony at group company

Rescue training at group company

Major Campaign Programs•

President Message

Introduction of site safety
Lectures on heatstroke• Safety belt/harness training• Morning radio exercise• Introduction of campaigns at group companies
•
•

•
•

Display of posters, banners and panels
Safety awards

Focused on the morning hours:

Others 2.5%

A “near-miss” is an incident which
was prevented just before theoccurrence of human or physicaldamage.
TOYO is proactively collecting thenear-miss data at sites, analyzing it,
and utilizing the results in our safety
management to prevent accidents.
Data on 7,390 near-miss occurrences
was collected from 2008 to 2014
and analyzed. Major findings are aspresented to the right:

Countermeasures

Night 3.5%

• Ensure conducting the morning meeting,Around noon 7.9%

TBM*1 and KYK*2 before work start.

Time of Occurrence
Afternoon 38.1%• Make all workers aware of safety conditions at

the workplace before work start.
• Check health conditions before work start.

Morning 45.5%

Focused on fall and tumble:
Fall 33.0%

Countermeasures• Ensure using harness and fall protection.

Others 20.1%
Pinch 5.2%
Touch High / Low
Temp. Object 5.8%

• Maintain a safety access route.

Anticipated Accidents(Human factor-related)• Don’t hurry or run.

Crash 17.8%
Tumble / Stumbling /Tripping 18.1%

Focused on neglecting rules, lack of

Neglecting Rules
15.8%

arrangement
Countermeasures

Lack of Arrangement
12.6%
Others 42.1%• Conduct induction training and re-training.

Causes(Human factor-related)

Insufficient
Confirmation 10.0%• Ensure order and clear up of work area.
• Ensure safety patrol and introduce award andpenalty system.

Skip Safety Check
9.9%
Lack of Preparation
9.6%*1. TBM (Tool Box Meeting): Activity to confirm outline, procedure and remarkable matter of work at work place.
*2. KYK (Risk Prediction Activities): Activity to predict latent risks of work and take countermeasures at work place.

Lessons Learned from Accidents-Falling Down
Situation

In a substation, during the handlingof movable scaffolding for ventilation
work, a worker fell from a floor
opening in the electrical panels
setting area. Though the opening wascovered by a plate, it was not fixedand shifted from the opening when
the scaffolding hit the plate.

Causes• Imperfection of opening cover• Lack of risk assessment• Lack of worker training
and supervision
Countermeasures• Improvement of opening
protection• Ensure risk assessment• Re-train all persons concerned

TOYO ENGINEERING CORPORATION Integrated Report 2015

Early morning 2.5%

23

Near-missEnvironment

24
HSSE+Quality

Considering that the preservation of the global environment and preventionof global warming are recognized as common issues facing all of humanity,
TOYO has established the following philosophy:• Contribute to sustainable development capable of both environmental
protection and the development of mankind.
• Provide engineering services in harmony with the global environment
as a global company.
In order to realize this philosophy, TOYO will continue actively resolving theenvironmental issues of our clients in the future.

Applying Technology to Preserve the Environment
TOYO, by promoting the development, application and improvement oftechnologies that contribute to the preservation of the environment, offers thetechnology that best suits our clients and a variety of solutions that contributeto the preservation of the environment as well as the prevention of pollution.
Photovoltaic Power Plant

TOYO has enhanced its development
and promotion of social infrastructure
projects in accordance with its
medium-term business plan.
As a result, as of March 2015,
we have received orders for fourmega solar photovoltaic power plant
projects in Japan, which are currently
under way.
Photovoltaic power generation
produces renewable energy, andis expected to play an increasingly
important role from the viewpoint ofpreserving the global environment.
TOYO will continue to work on
photovoltaic power plant projects aspart of its infrastructure business.

Overview of Mega Solar Photovoltaic Power Plant Projects
ClientSite

Power Generation(MW)

ScheduledCompletion Time

Kumenan City, KumePacifico Energy Kumenan G.K.

gun, Okayama Prefecture,Japan

Pacifico Energy Mimasaka Musashi
G.K.

Mimasaka City, Okayama
Prefecture, Japan

Pacifico Energy Hosoe G.K.

Miyazaki City, Miyazaki
Prefecture, Japan

Setouchi Future Creations LLC

Setouchi City, Okayama(Setouchi Kirei Mirai-dukuri)

Prefecture, Japan

32

Spring of 2016

42

Summer of 201696

Spring of 2018

231

Spring of 2019

Expected view at completion(Left: Miyazaki City’s photovoltaic power generation, Right: Setouchi City’s photovoltaic power generation)

25

Efforts for Reducing Environmental Load

TOYO ENGINEERING CORPORATION Integrated Report 2015

Percentage of construction waste by disposal method

Construction Waste Disposal(Ton)

Project sites in Japan

12,000The percentage of construction waste
by disposal method (recycle, landfill, andincineration) is shown in the figure to
the right.
For fiscal 2014, it was 99% recycle,
1% landfill and 0% incineration waste.
Fiscal 2014 saw a marked increasein the amount of recyclable woodchip
waste from civil engineering works
for photovoltaic power generation,
which resulted in a higher recycling
rate compared to previous fiscal
years.

6,000■ Incineration■ Landfill■ Recycle

4,000

2,000

1

0

■

■

■

2011

2012

99

2010

95

5

2009

0

2008

■

80

2007

■

■

71

94.9

73

2006

79

92

2005

■

■

■

26

■

3

■

■

■

■

93

25

■

■

■

■

6

17

5

7

■

■

1

■

19

■

1

0.1

■

■

89

0

■

■

10

■

2

1

1

■

4

■

■

2014 (Year)

2013

Overseas project sites

The total amount of construction waste disposal in calendar year 2014 atoverseas project sites, excluding surplus soil/sludge, was 29,500 tons. The
increase of project sites caused the increase of overall construction volume,
which in turn caused the increase of overall waste amount.
TOYO will continue to summarize construction waste disposal weights toutilize the data for reducing environmental load.

Weight of construction waste disposal and percentage by category (Overseas project sites)(Proportions of individual waste categories to the total disposal weight except construction surplus soil/sludge in each year shown as percentage)(Ton)

25,00071%

Disposal (Ton)(Except construction
surplus earth/sludge)■2009 51,80 0

75%

32%

35%

20,00015,000■2010 12,50 0

1%

3%

0%

1%

0%

1%

4%

8%

Metal waste

7%

6%

8%

4%

5%

1%

5%
Wood waste

7%

20%

Camp garbage,
Waste plastic,
Glass andceramic waste

7%0%

Hazardous waste

0%

1%

1%

5%

Concrete waste,
Asphalt/Concrete waste,
Mixture, Other wreckage

12%

14%

7%

0

19%

42%

28%

5,000

9,90 0■2013 20,70 0■2014 29,50 0

77%

10,00021%

70%■2011 17,30 0■2012

Miscellaneous (Categories)

Quality

ISO 9001: Certificate (unified accreditation, including major global subsidiaries)

ISO14001: Certificate

ISO/IEC 27001: Certificate

Feedback Knowledge Management System (FKMS)
As part of continual improvement of the Quality Management System, TOYO
has been accumulating examples of problems and best practices for about
30 years from executed projects in the FKMS. The FKMS accepts and shares
examples of problems and best practices from TOYO group companies.
Thereby, they can be extended and utilized among all TOYO group companies
immediately for suggestions and preventive actions in all subsequent projects
and proposals.

GS（Global Standards）

SQE Training
We regularly hold new employee training, TOYO Academy classes for young
and mid-level employees, QM (Quality Management) training for mid-level
employees, and internal project quality manager training. We use common QM
training materials and aim to improve TOYO’s overall quality.
QM training

Canada（CA）

Malaysia（MY）

China（CN）

TOYO has established unified standards used commonly with global
subsidiaries as Global Standards (GS). We have continued to use them, as well
as Local Standards (LS) specific to individual overseas group companies andimproved TOYO’s overall quality management. We will continue to further
improve TOYO Standards while providing clients with reliable quality.

Korea（KR）

LS（Local Standards）

TOYO's Standards

India（IN）

HSSE+Quality

TOYO acts for further quality, environmental, and information security
management based on the following ISO certificates, which are international
standards.

Japan（JP）

26

ISO ApprovalContribution to Society—

Working with Local Communities

Consideration for the Neighborhood
We fully explain about the project to people living near the site before starting
construction. During the construction period, we give consideration to theenvironment and to safety by spraying water to keep down dust and by
installing protective safety fences. As the traffic volume increases temporarily
during construction due to the number of delivery vehicles, we visit schools in
the neighborhood to offer traffic safety courses and support education.

Seminars for Technology Transfers
In response to requests from other countries, TOYO offers seminars related
to project management, environmental technologies and other subject areas.
Cooperating mainly with the business courses at the Japan Center of JICA (Japan
International Cooperation Agency), we offer three-week technical training courses toapproximately 50 trainees from private enterprises in the requesting countries.
These courses have been offered in Kazakhstan, Uzbekistan, Malaysia, Vietnam,
Indonesia, Myanmar, Mozambique and other countries.

Accepting Trainees
TOYO has accepted trainees in various areas in response to requests fromgovernments and public institutions of other countries. The content of the
training varies according to the requests. There are long-term courses that
include OJT and run for two years, while short-term intensive courses run about
two weeks. We have accepted trainees from Russia, Kazakhstan, Uzbekistan,Cambodia, Malaysia, Vietnam, Venezuela and other countries.
In particular, TOYO has accepted 340 trainees from Iraq since 2005 to
support reconstruction after the war. Trainees were from a diverse range oforganizations, such as the Iraqi Ministry of Oil, oil refining companies, gas
distributors, petroleum distributors, engineering companies and more. All
attended the courses with dedication and enthusiasm.

Localization
With a view towards industrial development and employment stability in eachcountry, we have taken steps to localize industries. Starting with Toyo-India
in 1978, we have since established TTCL (Thailand), Toyo-Korea, Toyo-China
and Toyo-Malaysia and have employed local engineers and transferred plantengineering technologies.
Our overseas group companies and other affiliates that are engaged inlocalization have now increased to ten, including those established in the UnitedStates, Brazil, Canada, Italy and Indonesia in addition to the above. These
companies not only conduct business in their respective areas, but have also
grown to conduct businesses in other countries.

TOYO ENGINEERING CORPORATION Integrated Report 2015

TOYO has been engaged in numerous overseas projects ever since winninga fertilizer plant construction contract in India in 1963–shortly after ourestablishment. As such, we have maintained deep ties with overseas
businesses and have implemented various support activities.

27

TOYO’s Social Contribution Activities

Human Capital—

28

TOYO works to develop our human capital—the source of our value creation.

Human Capital

Hisashi Osone, Senior Executive Officer

To an engineering company, people are not simply human resources. They
are precious human capital capable of creating new value. Under this belief,
TOYO has long used the term “human capital” instead of “human resources.”
High-level specialized skills and knowledge, superior project management
capabilities, and the kind of leadership and backgrounds suitable for global
business are required for human capital.
TOYO has thoroughly prepared comprehensive stratified training anddevelopment systems in order to cultivate a great deal of talented humancapital capable to meet these requirements. We also support the growth of ouremployees by creating opportunities for them to actively try new things.
For the realization of these initiatives, TOYO has a Human Capital
Development Committee directly under the President. It was created in 2003
with three goals: (1) to create a group of human capital who can sophisticate
the level of businesses and enhance competitive strength, (2) to realize
improvements in employees’ work satisfaction and motivation, and (3) toenergize the corporate climate. In the Committee, management policies andcompanywide issues are taken up in a timely manner, and training subjects thatmatch the direction of our businesses are considered throughout the company.
Human capital at Toyo-Japan has been our primary focus, but moving ahead,
we plan to expand this strategy to the entire group, including overseas groupcompanies.

TOYO’s Human Capital Development
At TOYO, we believe that a
combination of classroom learningand practical training, such as OJT(On the Job Training), is the best way todevelop human capital. Classroom
learning involves business knowledge
and management skills andknowledge, taught through stratified
training. These trainings include
new employees, newly appointed
managers, middle managers, andnext-generation management
candidates. In practical training, we
provide training opportunities on thefront lines of business, including OJT
at our overseas group companies.
Additionally, we have various andeffective human capital development
programs for cultivating thecapabilities of our local employees
at overseas group companies. These
programs include OJT instruction
from engineers sent from ToyoJapan, personnel exchanges with
Toyo-Japan and training using texts
from TOYO Academy (our company
university).

India

China

Korea

MalaysiaJapan

Maintaining a common global human capital platform
Common grasp of capabilities and characteristics, creation of a common human resource database
Common system for assessment
Common hiring and training plans
Personnel interaction
Common seminars

Plan proposals at
each company

Local human capital systems foreach location

Hiring of personnel,
training, andretention at eachcompany
・Regular sharing of
human capital
activity reports

Human capitalsystem at
Head Officein Japan

Advice and support
from Head Officein Japan
Human capital at local subsidiaries is basically left to each subsidiary, but the Head Office offers
aggressive support through activities such as regularly holding human capital division head meetings
as well as issuing human capital activity reports.
We must prioritize cultivation of human capital that can flourish locally before utilizing humancapital globally.

29

TOYO Academy

TOYO ENGINEERING CORPORATION Integrated Report 2015

TOYO Academy has been held as an in-house seminar for roughly 30 years forthe development of engineers with world-class technical skills. Most importantis the acquisition of practical knowledge and know-how that can’t be learned
outside the company from in-house instructors who are active in the forefrontof the industry. The Academy also serves as a place where senior engineers canpass on their technical skills and know-how to younger engineers.

OJT at Overseas Sites
Through OJT at overseas sites, young engineers experience fieldwork, such as
construction and operations, at plant construction sites overseas. Accepting
responsibility and working hands-on there is a valuable opportunity to apply
the knowledge gained from work and training in Japan. Additionally, we offer
practical OJT at our overseas group companies such as Toyo-Korea and ToyoIndia where trainees can acquire detailed engineering skills.

Promoting Diversity
TOYO’s people must all share five values defined as our corporate philosophy,
and one of them is diversity (in human capital). At TOYO, we continue to build awork environment where people of different races, nationalities, and genders
can work together on good terms. We also support our female employees
in demonstrating their abilities according to their individual situation, such asallowing shorter working hours for working mothers or putting career-oriented
support staff on a main career track.

Topic

Promotion of Women’s
Career Building

Inside the company

Interview with a Female
Engineer

Tomoko Kitamura | Engineer, Piping and Civil Engineering Division
I’ve gained experience at a number of construction sites overseas since joining thecompany. My current job is material design for piping engineering—an essential partof plant construction. I do everything from selecting materials for piping, preparing
specifications, evaluating vendors for purchasing and so on. A wide variety of HR
programs that support women are available at TOYO, including a child care leavesystem, a family care leave system, and a “Welcome Return” system (temporary
absence from work during accompanying one’s partner abroad). Another one
of TOYO’s exceptional points is that the company makes every effort to create afemale-friendly work environment, such as being able to speak with superiors about
the content of work and the restriction of business trips upon returning to work after
giving birth.
Under my personal motto “a smile a day,” my goals are to offer my skills as a
specialist of piping material design in cooperating with engineers from various
departments on plants that we can be proud of on a global level. Also, I hope togrow as global human capital, and in the long-term, to work my way up to engage inthe management team.

Management’s Discussion and Analysis—

30
Management’s Discussion and Analysis

Business Overview
In fiscal 2014, the year ended March 31, 2015, TOYO
received new orders including large-scale projects inenergy-related fields, such as power generation, and thepetrochemical field, thanks to a favorable plant engineering
market. Specifically, these included new orders for an
ethylene complex project in Malaysia, natural gas-fired
cogeneration power plant projects in Thailand, as well asJapan’s largest mega solar project in Setouchi and anothermega solar power plant project in Kumenan City.
In terms of project execution, progress was made withprojects such as a large-scale fertilizer plant in Nigeria, utility
facilities for the COMPERJ refinery in Brazil, an ethylene
plant in Egypt, and an oil refinery modernization project inRussia. However, there was deterioration in performancein several projects, such as a polyethylene plant in Egypt, afertilizer plant project in Indonesia, and two petrochemicalplants in the U.S., as well as the FPSO (Floating Production
Storage and Offloading) topsides project in Brazil, which is
being executed by Estaleiros do Brasil Ltda. (EBR), a wholly
owned subsidiary of our joint venture TS Participações e
Investimentos S.A. (TSPI).
The group’s performance in fiscal 2014 was much lower
than the results that were forecast at the beginning of
the fiscal year, and we deeply regret that this is the third
consecutive term in which we have made a downward
revision. TOYO’s management team intends to steadily
implement necessary measures to prevent recurrenceof losses on projects, and we will strive for recovery of
our profitability on a company-wide basis and restore theconfidence of all stakeholders as soon as possible.

Consolidated Financial Results
Net sales¥311.4 billion (Up 35.3% year on year)

Operating loss

¥7,356 million (Previous fiscal year: Operating income of ¥455 million)

Ordinary loss

¥25.2 billion (Previous fiscal year: Ordinary income of ¥4.9 billion)

Net loss¥20.9 billion (Previous fiscal year: Net income of ¥967 million)

New orders¥470.3 billion (Up 28.8% year on year)

Cash dividends¥4.00 per share (Annual)Fiscal 2014 Performance Outline
In fiscal 2014, net sales were ¥311.4 billion, up 35.3% year
on year, but there was an operating loss of ¥7,356 million,
compared to an operating income of ¥455 million in theprevious fiscal year, due to losses generated by multiple
projects and the FPSO topsides project of EBR, TSPI’s
subsidiary in Brazil. There was an ordinary loss of ¥25.2
billion, compared to an ordinary income of ¥4.9 billion
in the previous fiscal year, and net loss of ¥20.9 billion,
compared to a net income of ¥967 million in the previous
fiscal year. New orders received in fiscal 2014 were a large-

scale ethylene complex project in Malaysia, four mega solar
projects (including the largest mega solar project in Japan) andnatural gas-fired cogeneration power plants in Thailand.
These orders were the result of the enhancement of sales
promotions together with TOYO’s group companies in theinfrastructure field, on which we have focused our efforts.
As a result, new orders rose to a record high of ¥470.3
billion (up 28.8% year on year) in fiscal 2014, including orders
received independently by the Head Office and domestic
and overseas group companies.

31

Breakdown
by region

350 350350 350300 300(¥ billion)

350 350250 250

Breakdown
by segment
details

300 300
250 250300 300

300 300
200 200

200 200
250 250250 250150 150150 150200 200
100 100

100 100

200 200

150 150150 150
50 50

50 50
100 100
0

100 100
0 0

50 50

50 50

0

0

(¥ billion)

350 3500002012/3

2013/3

2014/3

2015/3

2012/3

2013/3

2014/3

Japan

42.3

44.4

36.2

40.9

Chemical fertilizers

15.8

37.9

44.7

2015/3
63.7

Southeast Asia

38.7

69.3

54.5

69.3

Petrochemicals

24.1

43.1

69.8

131.2

Southwest Asia,
Middle East and Africa

Oil refinery

18.2

17.6

29.9

51.7

26.0

31.8

42.4

70.2

Energy-related

55.6

61.8

16.6

15.6

Russia and Central Asia

5.6

6.4

10.6

26.2

North America*

-

-

17.7

52.1

General manufacturing
facilities

19.8

27.2

9.1

4.9

Central and South America

22.6

52.8

42.8

29.4

IT

12.2

11.0

12.1

8.4

China

18.9

17.2

13.7

10.0

Real estate

2.6

2.2

2.1

2.0

Others

3.7

6.8

12.2

13.3

Others

9.5

27.9

45.8

33.9

Total

157.8

228.7

230.1

311.4

Total

157.8

228.7

230.1

311.4

(¥ billion)

Breakdown
by segment
details*We disclosed the region of North America starting from 2014/3.

Backlog of contracts
Breakdown
by region

700 700
600 600

600 600

700 700
500 500

700 700

600 600

600 600

500 500

400 400

400 400

500 500
300 300

500 500
300 300

400 400
200 200

400 400
200 200

300 300
100 100

300 300
100 100

200 200

200 200

0Japan(¥ billion)
700 700

100 100

Southeast Asia
Southwest Asia,
Middle East and Africa

0

0

0

0

0

2012/3

2013/3

2014/3

2015/3

2012/3

2013/3

2014/3

30.7

244

20.8

123.9

Chemical fertilizers

74.8

151.3

138.6

39.5

107.0

123.7

113.4

276.8

Petrochemicals

78.1

105.5

210.8

376.6

100 100

Oil refinery

002015/3

11.5

51.8

109.1

65.2

71.2

90.6

117.8

54.0

Energy-related

94.1

41.5

14.9

135.8

Russia and Central Asia

7.4

31.3

112.9

96.3

North America*

-

-

86.0

68.6

General manufacturing
facilities

31.4

7.2

1.1

4.4

Central and South America

121.5

96.0

65.9

31.6

IT

3.1

4.0

3.9

0

China

19.5

14.3

8.3

4.6

Others

66.1

49.1

59.6

37.5

Total

359.1

410.4

538.0

659.0

Others

1.8

30.1

12.9

3.2

Total

359.1

410.4

538.0

659.0

*We disclosed the region of North America starting from 2014/3.

TOYO ENGINEERING CORPORATION Integrated Report 2015

Net sales32(¥ million)

Management’s Discussion and Analysis

Consolidated Statement of Income Summary
Net sales
311,454
Net sales
230,124

Cost of sales
204,968
Gross profit
25,155

Selling, general andadministrative
expenses
24,699Non-operating
income5,751
Non-operating
expenses
1,264

Operatingincome455

Ordinary
income4,942

Extraordinary
income2,020
Extraordinary loss
1,289
Income tax(current anddeferred)
4,621
Minority interests
in income84

Cost of sales
294,240

Gross profit
17,214

Net income
967

Selling, general andadministrative
expenses
24,570Operatingloss（7,356）

Non-operating
income3,360
Non-operating
expenses
21,284

Ordinaryloss（25,280）

Net loss（20,965）

Extraordinary
income7,949
Extraordinary loss
4,657
Income tax(current anddeferred)(1,076)
Minority interests
in loss
52

Previous fiscal year
(April 1, 2013 to March 31, 2014)

Current fiscal year
(April 1, 2014 to March 31, 2015)

Net cash used in operating activities was ¥4.1 billion,
compared to net cash provided by operating activities of¥21.2 billion in the previous fiscal year. While notes andaccounts payable—trade increased to ¥29.3 billion due
to an increase in trade payables, the loss was caused bya ¥21.9 billion loss before income taxes (compared to an
income before income taxes of ¥5.6 billion in the previous fiscal year),a decrease in notes receivable, accounts receivable fromcompleted construction contracts to a ¥13.9 billion deficit,
and a decrease in advances received on uncompleted
construction contracts to a ¥14.0 billion deficit.

In cash flows from investing activities, there was a
net cash provided by investing activities of ¥9.5 billion,
compared to a net cash used by investing activities of ¥1.6
billion in the previous fiscal year. The main reason for this
was, despite a decrease in short-term loans receivableto ¥5.5 billion, there was an increase to ¥17.0 billion inproceeds from sales of property, plant and equipment.
Net cash used in financing activities was ¥14.3 billion,
compared to a net cash provided by financing activities of¥3.1 billion in the previous fiscal year, due to a ¥12.6 billion
decrease in the proceeds and repayment of loans.
As a result, cash and cash equivalents at end of period
decreased ¥6.4 billion from the beginning of period, to¥90.4 billion. This total includes ¥10.1 billion received on
deposit from our joint venture construction work project.

(¥ million)

Consolidated Statement of Cash Flows Summary
Cash and cash
equivalents at
beginning of
periodCash and cash
equivalents at endof period

Cash flows fromfinancing activities

90,462(14,341)

96,934
Cash flows Cash flows used infrominvesting activities
operating
9,587
activities(4,192)

Effect ofexchange ratechange on
cash and cash
equivalents

2,473

Current fiscal year
(April 1, 2014 to March 31, 2015)

33

Total liabilities were up ¥33.9 billion year on year to ¥216.6
billion. Despite a decrease of ¥12.2 billion in advances
received on uncompleted construction contracts, theincrease was caused by an increase of ¥30.2 billion in notes
payable, accounts payable for construction contracts andother, as well as ¥15.4 billion in liabilities from application ofequity method.
Net assets were down ¥29.8 billion year on year to ¥44.9
billion, due to the net loss of ¥20.9 billion and an ¥8.5 billion
increase of deferred losses on hedges.
(¥ million)

Consolidated Balance Sheet Summary

Total assets
257,480

Total assets
261,609

Total liabilities
and net assets
257,480

Previous fiscal year
March 31, 2014

Net assets
44,979Current fiscal year
March 31, 2015

Shareholders’ equity
70,095
Accumulated othercomprehensive
income3,277
Minority interests
1,458

Net assets
74,831

Property,plant and equipment
16,247
Intangible assets
2,133
Investments
and other assets
28,666

Noncurrent liabilities
46,146

Noncurrent liabilities
42,484

Fixed assets
47,047

Fixed assets
55,439Previous fiscal year
March 31, 2014

Current liabilities
170,483

Current liabilities
140,164

Current assets
214,561

Current assets
202,041

Property,plant and equipment
30,363
Intangible assets
5,085
Investments
and other assets
19,990Total liabilities
and net assets
261,609

Shareholders’ equity
46,249
Accumulated othercomprehensive
income(1,350)Minority interests
79

Current fiscal year
March 31, 2015

TOYO ENGINEERING CORPORATION Integrated Report 2015

Total assets increased ¥4.1 billion year on year, to ¥261.6
billion. The main cause was, despite a decrease of ¥14.1
billion in total property, plant and equipment due to salesof assets relating to the Real Estate segment, there wasa ¥14.1 billion increase of notes receivable, accounts
receivable from completed construction contracts as wellas an increase of ¥8.6 billion in total investments and otherassets, including investment securities and deferred tax
assets.

34
Management’s Discussion and Analysis

TOYO’s dividend policy is to endeavor to distribute profits
to shareholders in accordance with operating performance.
We also strive to maintain stable dividends from a mediumto long-term perspective while taking into consideration theneed for internal reserves that underpin our business base.
Our internal reserves are allocated to different reserves
for strategic investment in new business fields, for R&D

investment, and in preparation for possible business riskrelated losses, and we intend to use these funds effectively
to ensure growth going forward. The interim dividend forfiscal 2014 was ¥4.00 per share, but regrettably, due to ourcurrent position, we have determined that we must forego
the year-end dividend.

Fiscal 2015 Performance Forecast Outline (Consolidated)
Net sales¥340.0 billion

Operating income¥2.5 billion

Ordinary income¥4.5 billion

Net income¥3.0 billion

New orders¥330.0 billion

Cash dividends¥4.00 per share

Forecast for Fiscal 2015
In fiscal 2015, in TOYO’s core plant market, domestic
capital investment is expected in energy-related fields
such as power generation. Overseas, the future of energy
development and capital investment plans in countries that
produce gas and oil remains unclear, due to the sudden
drop in the price of crude oil. However, although newdevelopment plans for shale gas and oil in North America
appear conservative, plans for capital investment in gasutilizing petrochemical and fertilizer fields are continuing.
On the other hand, in India and Southeast Asia, the plungein the price of crude oil is leading to reduced energy
and raw material costs, and is likely to have a favorable
effect on stimulating the economy. With a backdrop ofincreased demand for energy, materials and food supplies
accompanying economic development, ongoing demand isanticipated for plant construction in the petrochemical andfertilizer fields and infrastructure development.
In consideration of the above, TOYO has set its goal for
new orders in fiscal 2015 at ¥330.0 billion, based on a policyof temporarily slowing our growth strategy in order to focus

on restructuring and emphasizing profitability. Under thisstrategy, we will seek orders, targeting petrochemical andfertilizer plant projects in emerging economies, as wellas infrastructure projects such as power generation andtransportation systems. Since April of this year, we havealready received orders for an ethylene plant project in the
U.S., a railway system project in Indonesia, two natural gasfired cogeneration power plants in Thailand, and a mega
solar project in Japan.
Looking at performance in fiscal 2015, taking into accountthe progress of projects based on the backlog of contracts
at the end of the year, TOYO expects net sales of ¥340.0
billion, operating income of ¥2.5 billion, ordinary incomeof ¥4.5 billion, and net income of ¥3.0 billion. The annual
cash dividend will be a year-end dividend of ¥4.00 per
share. In order to achieve these targets, the group intends
to thoroughly restructure and will endeavor to strengthen
its project proposal system based on revival plans, steadily
accomplishing projects and implementing cost reductions
to return to profitability.

Business Risk and Other Risks—

35

a significant bearing on investors’ decisions. This is notintended to be a complete list of these potential risks, but
examples recognized by TOYO.

Business Risks
In the execution of our business operations, we promotesales activities to obtain new orders for the purpose of
ensuring an appropriate amount of work, and have createdand maintain various risk management systems to prevent
project losses, from the proposal stage until the completionof the project, as part of our corporate governance.

However, we are aware of the possibility that the risks
listed below may occur, and may have a negative impact
on our operating results and financial condition stemmingfrom a large decrease in order volume or the suspension,
termination, or significant decline in project profitability:

1. Emergency situations such as war, civil commotion, riots, revolution, coup d’etat, terrorism, significant security concerns, and force majeure events suchas the spread of infectious disease, extraordinary natural phenomena, unusual weather or other acts of nature, in the country or region where a project iscarried out.
2. Notable changes in a country’s commerce, trade, manufacturing or financial policies, such as license approvals, customs clearance, immigration controls,
foreign exchange systems, communications, taxes and others.
3. Remarkable foreign exchange rate fluctuations.
4. Sudden increases in prices of equipment and materials, transportation, construction and others, tightening demand and supply.
5. Concerns over credit risk of main suppliers or contracted partners.
6. Significant or global contraction in capital investment activities in TOYO’s business fields, or a sharp decrease in opportunities to obtain new orders due tointensified competition.

To address these risks, TOYO will examine possible
countermeasures by carefully gathering information
beforehand and working to fully understand the situation.
We will strive to mitigate these risks through such measures
as enrolling in trade insurance, signing exchange contracts,setting contract conditions with customers (including
diversifying our contracts, setting quotations of contract price, andsetting payment conditions and risk sharing conditions with thecustomer), and decentralizing the suppliers of our equipment

and materials, and construction contractors.

Compliance Risks
TOYO’s business follows a wide range of laws andregulations, including domestic and international labor laws,
privacy protection laws, tax laws, import and export control
regulations, and unfair competition prevention laws. Thereis a possibility that changes to these laws, unforeseeableinterpretations of these laws, or the like will increase theburden of compliance. By thorough familiarization of
TOYO’s codes of conduct, compliance manual and otherdocuments, development and operation of an internalreporting system, and awareness building and promotion
activities by the Compliance Committee, TOYO is working
diligently to bolster our compliance system. In the casewhere an act that violates the law or is questionable may
occur, it would lead TOYO to confront problems such as
an increased burden, an interruption in sales, or a lossof credibility, which may negatively impact businessperformance.

Investment Risks
We strive to reduce the aforementioned risks in the business
operations of TOYO’s group companies by creating theappropriate collaboration system in which the division thatadministrates group companies can accurately understandand manage their situation. For our business operations
through our Brazilian equity method affiliate, situations

where we cannot receive the corresponding return on
investment, or where additional funding is needed due tochanges in the political and economic climate of Brazil ortrust problems with our business partners may negatively
impact TOYO’s business performance.

TOYO ENGINEERING CORPORATION Integrated Report 2015

The following is a list of potential risks associated with
the information concerning TOYO’s operating results andfinancial condition in this integrated report that may have

Financial Section—

Consolidated Balance Sheets
Toyo Engineering Corporation and Consolidated Subsidiaries

March 31, 2015 and 201436
Financial Section

Thousands of U.S.
dollars (Note 1)

Millions of yen

2015

2014

¥ 90,753¥ 73,814$ 755,330

62,55648,362520,649

Short-term investment securities (Note 20)

2,354

25,025

19,592

Costs on uncompleted construction contracts (Note 7)

33,744

34,462

280,848

Deferred tax assets (Note 23)

2,928

2,977

24,369Accounts receivable—other

15,474

12,931

128,789

Other

8,738

7,434

72,725(1,988)(2,969)(16,545)

214,561

202,041

1,785,776

Buildings and structures (Note 4)

16,574

26,762

137,944

Machinery, vehicles, tools, furniture and fixtures

5,680

5,708

47,274

Land (Note 4)

9,398

17,506

78,218

Lease assets

291

1,824

2,421

8

7

66

(15,705)(21,447)(130,711)

16,24730,363

135,222

6

1,619

49

Assets2015

Current assets:
Cash and deposits (Note 17)
Notes receivable, accounts receivable fromcompleted construction contracts

Allowance for doubtful accounts
Total current assets

Property, plant and equipment:

Construction in progress
Accumulated depreciation and impairment loss
Total property, plant and equipment

Intangible assets:
Goodwill

2,126

3,466

17,694

2,133

5,085

17,752

Investment securities (Notes 3, 20)

18,702

16,533

155,655

Long-term loans receivable

4,580

4,576

38,119Deferred tax assets (Note 23)

5,559

443

46,267

Other (Note 3)

4,175

3,288

34,748

Other
Total intangible assets

Investments and other assets:(4,351)(4,851)(36,213)

Total investments and other assets

28,66619,990238,585

Total non-current assets

47,04755,439391,568¥261,609¥257,480$2,177,353

Allowance for doubtful accounts

Total assets
See notes to consolidated financial statements.

37

Liabilities and Net Assets

2015

2014

2015

¥ 86,007¥ 55,764$ 715,830

8,233

10,58068,522Current liabilities:
Notes payable, accounts payable for construction
contracts and other
Short-term loans payable (Notes 4, 6)
Income taxes payable
Advances received on uncompleted construction contracts
Provision for bonuses

472

1,164

3,928

44,28856,519368,605

555

1,124

4,619

Provision for warranties for completed construction

123

79

1,023

Provision for loss on construction contracts (Note 7)

3,924

3,497

32,659Forward exchange contracts

15,373

1,152

127,948

Other

11,505

10,281

95,755

170,483

140,164

1,418,918

23,60433,535

196,454

Lease obligations

64

488

532

Deferred tax liabilities (Note 23)

9

360

74

4,693

3,677

39,059Total current liabilities
Non-current liabilities:
Long-term loans payable (Notes 4, 6)

Net defined benefit liability (Note 22)
Provision for loss on business of subsidiaries and affiliates
Liabilities from application of equity method
Provision for repairs
Other

508

—

4,228

15,447—

128,564

—

808

—

1,818

3,613

15,131

46,14642,484

384,069

216,630

182,649

1,802,996

Capital stock (Note 16)

18,19818,198151,460

Capital surplus

20,75920,759172,775

Retained earnings

7,724

31,54664,286

Treasury stock

(432)

(408)

(3,595)46,24970,095384,927

Valuation difference on available-for-sale securities

2,299

1,288

19,134

Deferred gains or losses on hedges(9,717)(1,133)(80,873)

Foreign currency translation adjustment

4,759

2,427

39,608Remeasurements of defined benefit plans

1,308

695

10,886(1,350)3,277(11,235)

Total non-current liabilities
Total liabilities
Net assets:
Shareholders’ equity

Total shareholders’ equity
Accumulated other comprehensive income:

Total accumulated other comprehensive income
Minority interests

79

1,458

657

Total net assets

44,97974,831

374,357¥261,609¥257,480$2,177,353

Contingent liabilities (Note 5)
Total liabilities and net assets

TOYO ENGINEERING CORPORATION Integrated Report 2015

Thousands of U.S.
dollars (Note 1)

Millions of yen

Consolidated Statements of Income
Toyo Engineering Corporation and Consolidated Subsidiaries

Years ended March 31, 2015 and 201438
Financial Section

Thousands of U.S.
dollars (Note 1)

Millions of yen

2015¥311,454
294,240
17,2142014¥230,124
204,968
25,1552015$2,592,209
2,448,938
143,270

Selling, general and administrative expenses (Notes 8, 9)

24,57024,699204,494

Operating income (loss)(7,356)455(61,223)

Interest income

939

824

7,815

Dividends income

160

209

1,331

Foreign exchange gains

388

649

3,229

Net sales
Cost of sales (Notes 9, 10)Gross profit

Non-operating income:Equity in earnings of affiliates
Reversal of allowance for doubtful accounts
Miscellaneous income
Total non-operating income

—

2,232

—

1,218

1,398

10,137

652

437

5,426

3,360

5,751

27,965Non-operating expenses:
Interest expenses
Equity in losses of affiliates
Miscellaneous expenses
Total non-operating expenses
Ordinary income (loss)

740

1,008

6,158

19,712—

164,061

831

256

6,916

21,284

1,264

177,145(25,280)

4,942(210,403)

Extraordinary income:
6,175

—

51,394Gain on sales of investment securities

—

501

—
7,557

Gain on sales of property, plant and equipment (Note 11)
Gain on sales of shares of subsidiaries

908—

Gain on sales of investments in capital of subsidiaries and affiliates

98

—

815

Reversal of reserve for repairs

766

—

6,375

Gain on change in equity
Total extraordinary income

—

1,518

—

7,949

2,020

66,158

—

1,289

—

138

—

1,148

Extraordinary loss:
Impairment loss (Note 14)
Loss on sales of property, plant and equipment (Note 12)
Amortization of goodwill (Note 13)

1,453

—

12,093

Loss on sales of shares of subsidiaries

2,522

—

20,99034—

282

Loss on valuation of share of subsidiaries

508

—

4,228

4,657

1,289

38,759(21,989)

5,673(183,012)

Income taxes—current

1,203

4,439

10,012

Income taxes—deferred(2,279)181(18,967)

Total income taxes(1,076)

4,621(8,955)(20,913)

1,051(174,057)

84
967

432
$ (174,490)

Provision for loss on business of subsidiaries and affiliates
Total extraordinary loss
Income (loss) before income taxes

Income (loss) before minority interests
Minority interests in income
Net income (loss) (Note 27)
See notes to consolidated financial statements.

52¥ (20,965)¥

Consolidated Statements of Comprehensive Income
Toyo Engineering Corporation and Consolidated Subsidiaries

Years ended March 31, 2015 and 2014
39

2015
Income (loss) before minority interests

2015

2014

¥(20,913)¥1,051$(174,057)

Valuation difference on available-for-sale securities

1,010

623

8,406

Deferred gains or losses on hedges(7,660)463(63,753)

Foreign currency translation adjustment

1,587

2,195

13,208Remeasurements of defined benefit plans

613

—

5,101

Share of other comprehensive income of affiliates accounted forusing equity method

(172)

(244)

(1,431)Other comprehensive income:

Total other comprehensive income(4,621)

3,036(38,460)

Comprehensive income (Note 15)¥(25,534)¥4,088$(212,517)(25,593)

4,000(213,008)

58

88

482

Comprehensive income attributable to:
Owners of the parent
Minority interests
See notes to consolidated financial statements.

TOYO ENGINEERING CORPORATION Integrated Report 2015

Thousands of U.S.
dollars (Note 1)

Millions of yen

Consolidated Statements of Changes in Net Assets (Note 16)
Toyo Engineering Corporation and Consolidated Subsidiaries

Years ended March 31, 2015 and 201440
Financial Section

Millions of yen

Balance at April 1, 2013

Capitalstock

CapitalsurplusRetainedearnings

Treasurystock

Valuationdifference
on availablefor-salesecurities¥18,198¥20,759¥31,537¥(383)¥ 665

Deferred
gains orlosses onhedgesForeigncurrency Remeasurementsof definedtranslation
benefit plansadjustment

Minority
interests

Total
net
assets¥ (647)¥ (468)¥1,429¥71,091¥ —Dividends from surplus

(959)

(959)

Net income

967

967

Purchase of treasury stock
Disposal of treasury stock

0

(24)

(24)

0

0

Net changes of items
other than shareholders’equityBalance at March 31, 2014

¥18,198¥20,759¥31,546

623

(486)

2,895

695

28

3,756

¥(408)¥1,288¥(1,133)¥2,427¥695¥1,458¥74,831

Deferred
gains orlosses onhedgesMinority
interests

Total
net
assets¥(1,133)¥ 1,458¥ 74,831

Millions of yen

Balance at April 1, 2014

Capitalstock

CapitalsurplusRetainedearnings

Treasurystock

Valuationdifference
on availablefor-salesecurities¥18,198¥20,759¥ 31,546¥(408)¥1,288Cumulative effects ofchanges in accounting
policies
Balance at beginning ofyear applied the changein accounting policies¥2,427¥ 695(1,514)

18,19820,75930,032

Dividends from surplus(1,342)Net loss(20,965)(1,514)

(408)

1,288

(1,133)

2,427

695

1,458

(20,965)

Net changes of items
other than shareholders’equity¥18,198¥20,759¥ 7,724

73,317(1,342)(23)

Purchase of treasury stock

Balance at March 31, 2015

Foreigncurrency Remeasurementsof definedtranslation
benefit plansadjustment¥(432)

(23)

1,010

(8,584)

2,332

613

¥2,299¥(9,717)¥4,759¥1,308¥(1,378)(6,006)79¥ 44,979

Thousands of U.S. dollars (Note 1)

Balance at April 1, 2014

Capitalstock

Capitalsurplus$151,460$172,775 $ 262,555

Cumulative effects ofchanges in accounting
policies
Balance at beginning ofyear applied the changein accounting policies

Retainedearnings

Valuationdifference
on availablefor-salesecurities

Deferred
gains orlosses onhedgesForeigncurrency Remeasurementsof definedtranslation
benefit plansadjustment

Minority
interests$(3,395) $10,719$ (9,429)$ 20,199$ 12,134 $ 622,813

Treasurystock$ 5,784(12,600)

151,460

172,775

249,954

Dividends from surplus(11,169)

Net loss(174,490)

Purchase of treasury stock
Net changes of items
other than shareholders’equityBalance at March 31, 2015 $151,460 $172,775 $ 64,286
See notes to consolidated financial statements.

Total
net
assets(12,600)(3,395)

10,719(9,429)20,1995,784

12,134

610,212(11,169)(174,490)

(191)

(191)

8,406

(71,444)

19,4095,101$(3,595) $19,134 $(80,873)$39,608$10,886(11,468)$(49,987)657 $ 374,357

Consolidated Statements of Cash Flows
Toyo Engineering Corporation and Consolidated Subsidiaries

Years ended March 31, 2015 and 201441

Cash flows from operating activities:
Income (loss) before income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Impairment loss
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for loss on construction contracts
Interest and dividends income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sales of property, plant and equipment
Equity in (earnings) losses of affiliates
Loss (gain) on change in equity
Loss (gain) on sales of investment securities
Loss (gain) on sales of shares of subsidiaries
Loss (gain) on valuation of investment securities
Loss (gain) on valuation of shares of subsidiaries
Decrease (increase) in notes receivable, accounts receivable fromcompleted construction contracts
Decrease (increase) in costs on uncompleted construction contracts
Decrease (increase) in accounts receivable—other
Increase (decrease) in notes and accounts payable—trade
Increase (decrease) in advances received on uncompleted
construction contracts
Increase (decrease) in reserve for repairs
Increase (decrease) in provision for loss on business of subsidiaries
and affiliates
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Net decrease (increase) in time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments for sales of shares of subsidiaries resulting in change inscope of consolidation
Proceeds from sales of shares of subsidiaries resulting in change inscope of consolidation
Net decrease (increase) in short-term loans receivable
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Repayments of finance lease obligations
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 17)
See notes to consolidated financial statements.

2015

2014

2015

¥ (21,989)
2,489
1,686
(1,363)—
2,127
409(1,100)740
584(6,157)
19,712
—
(20)
1,613
—
34

¥ 5,673
2,633
452(1,347)
1,289(454)(1,150)(1,033)
1,008
(85)
(242)
(2,232)(1,518)
(501)
—
1
—

$(183,012)
20,715
14,032(11,344)—
17,702
3,404(9,155)
6,158
4,860(51,244)
164,061—(166)
13,424—282(13,986)529(1,738)29,353

7,475
13
9,573
(6,215)(116,404)
4,402(14,465)
244,302(14,039)(685)

10,307
103(116,845)(5,701)508(2,659)(3,952)
2,059(767)(1,532)(4,192)—
2,842
26,5912,108(1,018)(6,437)
21,244

4,228(22,130)(32,892)
17,136(6,383)(12,750)(34,889)

(528)
(575)
17,022
(903)
(274)
38

447
(756)
311
(1,329)(1,193)578(4,394)(4,785)
141,672(7,515)(2,280)
316

(196)

—

(1,631)852(5,554)
(291)
9,587

—
—
302
(1,638)

7,091(46,225)(2,421)79,791(2,608)1,800(11,877)(243)(1,342)(69)(14,341)
2,473(6,472)
96,934¥ 90,462(2,665)
10,848(3,629)
(339)
(959)
(88)
3,167
2,486
25,25971,675¥96,934(21,706)
14,981(98,851)(2,022)(11,169)(574)(119,359)
20,582(53,866)
806,774$ 752,908

TOYO ENGINEERING CORPORATION Integrated Report 2015

Thousands of U.S.
dollars (Note 1)

Millions of yen

Notes to Consolidated Financial Statements
Toyo Engineering Corporation and Consolidated Subsidiaries
42
Financial Section

1. BASIS OF PREPARATION
Toyo Engineering Corporation (the “Company”) and its domestic consolidated subsidiaries maintain their accounting
records and prepare their financial statements in accordance with accounting principles generally accepted in Japan,
and its overseas consolidated subsidiaries maintain their books of account in conformity with those of their respective
countries of domicile. The accompanying consolidated financial statements have been compiled from the accounts
prepared by the Company in accordance with the provisions set forth in the Financial Instruments and Exchange Law
of Japan and with accounting principles generally accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards. Certain reclassifications havebeen made to present the accompanying consolidated financial statements in a format which is familiar to readers
outside Japan.
For the convenience of readers, the accompanying consolidated financial statements and the relevant notes havealso been presented in U.S. dollars by translating all Japanese yen amounts at the exchange rate of ¥120.15 to U.S.$1.00
prevailing on March 31, 2015.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its significant
subsidiaries. Investment in significant affiliates is accounted for by the equity method. As of March 31, 2015, thenumbers of consolidated subsidiaries and affiliates accounted for by the equity method were 13 and 7, respectively.
Toyo Engineering Korea Limited, Toyo Engineering Corporation, China and 5 other subsidiaries are consolidated using
their financial statements as of their respective fiscal year end, which falls on December 31, and necessary adjustments
are made to their financial statements to reflect any significant transactions from January 1 to March 31. Intercompany
accounts and transactions are eliminated in consolidation. The difference between the acquisition cost and the equity inthe net assets at the time of acquisition is amortized in principle within twenty years on a straight-line basis.
(b) Securities

All debt and equity securities other than equity securities issued by subsidiaries and affiliates are classified into oneof three categories: trading, held-to-maturity, or available-for-sale securities. Trading securities are bought and heldprincipally for the purpose of selling them in the near term. Held-to-maturity securities are those securities which theCompany and its consolidated subsidiaries have the ability and intent to hold until maturity. All securities not included in
trading or held-to-maturity are classified as available-for-sale securities.
Trading securities are recorded at fair value. Held-to-maturity securities are recorded at amortized cost, adjusted
for the amortization or accumulation of premiums or discounts. Unrealized gains or losses on trading securities areincluded in earnings. Short-term investment securities classified as available-for-sale securities are recorded at fair value
with changes in unrealized holding gain or loss, net of the applicable income taxes, included directly in net assets. Nonmarketable securities classified as available-for-sale securities are recorded at cost.
Cost of securities sold is determined by the moving-average method.
(c) Derivative Financial Instruments

The Company and certain consolidated subsidiaries enter into various derivative transactions in order to manage
certain risk arising from adverse fluctuations in foreign currency exchange rates and interest rates. Derivative financial
instruments are carried at fair value with changes in unrealized gain or loss charged or credited to operations, except
for those which meet the criteria for deferral hedge accounting under which unrealized gain of loss is deferred as acomponent of net assets.
Deferral hedge accounting is adopted for derivatives which is qualified as hedges, under which unrealized gainor loss is deferred. Hedging instruments are derivative transactions such as foreign exchange forward contract andinterest rate swap, and hedged items are primarily forecast sales denominated in foreign currencies, and receivables andpayables denominated in foreign currencies. Hedge effectiveness is not assessed if the substantial terms and conditionsof the hedging instruments and the hedged forecasted transactions are the same. The Company and its consolidated
subsidiaries manages its derivative transactions in accordance with its internal “Policies and Procedures for Risk
Management.”(d) Costs on Uncompleted Construction Contracts

Costs on uncompleted construction contracts is stated at cost, determined by the identified-cost method.

43

Depreciation of property, plant and equipment is principally computed by the declining-balance method based on theestimated useful lives of the assets.
However, buildings and rental properties acquired after April 1, 1998 are depreciated on a straight-line method.
The useful lives of property, plant and equipment are as follows:		 Buildings and structures:
3 to 50 years
		 Machinery, vehicles, tools, furniture and fixtures: 2 to 20 years
Amortization of intangible assets of the Company and its consolidated subsidiaries is calculated principally by straight line method.
Software is amortized on a straight-line method over 3 to 5 years of the estimated available period.
(f) Leases

Depreciation of assets on finance leases which do not transfer ownership of the leased assets to the lessee are calculatedby the straight-line method over the lease period with their residual value zero.
(g) Allowance for Doubtful Accounts

The Company and its consolidated subsidiaries have provided an allowance for doubtful accounts at an estimated amountof probable and reasonably possible bad debts and an estimated amount computed on the actual percentage of credit
losses.
(h) Provision for Bonuses

Provision for bonuses to employees is provided at the expected payment amount for the fiscal year.
(i) Provision for Warranties for Completed Construction

Provision for warranties for completed construction is provided based on past experience.
(j) Provision for Loss on Construction Contracts

Provision for loss on construction contracts is provided in case the material loss is expected for a certain large-scale
contract work.
(k) Provision for Repairs

The Company and its consolidated subsidiaries have provided provision for repair at estimated amount for preparing theexpenditure for major repairs.
The Company provides a portion of estimated expenditure equally divided to each fiscal term from decision of repair
plan to end of repair work.
(l) Provision for Loss on Business of Subsidiaries and Affiliates

Provision for loss on business of subsidiaries and affiliates is provided based on the financial position of the subsidiaries andaffiliates.
(m) Retirement Benefits

Net defined benefit liability at year-end is stated based on the fair value of plan assets and the projected benefit obligation.
As to calculation of the projected benefit obligation, the expected benefit payments at the year-end have been recorded
mainly at the amount calculated based on benefit formula. The difference arising from the adoption of the new standard ofaccounting of ¥3,695 million ($30,753 thousand) is amortized over 15 years by the straight-line method. Actuarial gain orloss is amortized by the straight-line method over 9 years within the average of the estimated remaining service years of theemployees in the year following the year of recognition. Prior service cost is amortized as incurred over 13 years within the
average of the estimated remaining service years when incurred.
Unamortized actuarial gain or loss, prior service cost and amortization of unrecognized retirement benefit obligation attransition are provided with tax effect at remeasurements of defined benefit plans under total other comprehensive incomeof net assets.
(n) Foreign Currency Translation

Both short-term and long-term receivables and payables in foreign currencies are translated at the rates of exchange in
effect at the balance sheet date and differences arising from the translation of the accounts of foreign subsidiaries andaffiliates are included in the consolidated statements of income.
The balance sheet accounts of the consolidated foreign subsidiaries are translated at the rates of exchange in effectat the balance sheet date, except for capital stock and capital surplus, which are translated at their historical exchange
rates. Revenues, expenses and net income for the year are translated at the rates of exchange in effect at the balance
sheet date. Differences arising from translation of the accounts of foreign subsidiaries and affiliates are presented as“Foreign currency translation adjustment” and “Minority interests” in the accompanying consolidated balance sheets.

TOYO ENGINEERING CORPORATION Integrated Report 2015(e) Depreciation and Amortization

44
Financial Section(o) Recognition of Revenues

Revenues and costs of construction contracts of which the percentage of completion can be reliably estimated, arerecognized by the percentage-of-completion method. The percentage of completion is calculated at the cost incurred asa percentage of the estimated total cost. The completed-contract method continues to be applied for contracts for which
the percentage of completion cannot be reliably estimated.
(p) Cash and Cash Equivalents

For the purposes of the consolidated statements of cash flows, the Company and its consolidated subsidiaries consider
all highly liquid investments with insignificant risk of changes in value purchased with an original maturity of threemonths or less to be cash equivalents.
(q) Consumption Tax

Transactions subject to consumption tax are recorded at amounts exclusive of consumption taxes.
(r) Consolidated Tax Return

The Company files a consolidated tax return with domestic subsidiaries.
(s) Capitalization of Interest Expenses

Interest expenses incurred for real estate development projects conducted by certain subsidiaries have been capitalized
as a part of the development cost of such projects.
(t) Advances Received on Uncompleted Construction Contracts

Advances received on uncompleted construction contracts from customers are shown as a liability, not as a deduction
from the amount of costs on uncompleted construction contracts.
(u) Income Taxes

Deferred tax assets and liabilities are determined based on the differences between carrying amounts of existing assets
and liabilities in the financial statements and their respective tax bases. Deferred tax assets and liabilities are measured
using the enacted tax rates and laws which will be in effect when the differences are expected to be reversed.
(v) Per Share Information

Net income per share is computed based on the weighted average number of shares outstanding during each year. Diluted net
income per share is not presented since there was no potential for dilution by the issuance of common stock.
Total net assets per share is computed based on outstanding shares at the balance sheet date.
(w) Research and Development Costs

Research and development costs are charged to income when incurred.
(x) Impairment of Fixed Assets

The Company and its consolidated subsidiaries have grouped their fixed assets into each company for EPC Business,each object for Real Estate and Idle Assets.
The recoverable amounts of the asset groups were measured by applying net selling prices which were assessed
based on the current market price of land and other salable prices or value in use which was computed by using realestate appraisal value, etc., for the year ended March 31, 2015.
(Accounting change)

The Company has applied the “Accounting Standard for Retirement Benefits” (Accounting Standards Board of Japan(“ASBJ”) Statement No. 26 of May 17, 2012) and “Guidance on Accounting standard for Retirement Benefits” (ASBJ
Guidance No. 25 of March 26, 2015) about the main clause of Article 35 of the standard and the main clause of Article
67 of the guidance from the fiscal year ended March 31, 2015. As the calculation method of projected benefit obligationand service cost considered, the period attribution method of the expected amount of retirement benefits changed fromstraight line attribution to benefit formula, and the method of deciding the discount rate about base bond term alsochanged from the method based on the expected average remaining service period of the employee to the method using
weighted average discount rate reflecting the expected timing and amount of the benefit payments.
In accordance with transitional accounting as stipulated in Article 37 of the standard, the effect of the changes
on accounting policies arising from initial application is recognized as retained earnings in accumulated othercomprehensive income at the beginning of the fiscal year ended March 31, 2015.
As a result, net defined benefit liability ¥2,222 million ($18,493 thousand) increased and retained earnings ¥1,514
million ($12,600 thousand) decreased in the consolidated balance sheet at the beginning of the fiscal year ended March
31, 2015. The effect on the operating loss in the fiscal year ended March 31, 2015, and ordinary loss, and the net loss
before income tax is insignificant.
The effects on per share are stated in Note 27.

45“Accounting Standard for Business Combinations” (ASBJ Statement No. 21), “Accounting Standard for Consolidated
Financial Statements” (ASBJ Statement No. 22), “Accounting Standard for Business Divestitures” (ASBJ Statement
No. 7), “Accounting Standard for Earnings Per Share” (ASBJ Statement No. 2), “Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10) and “Guidance on
Accounting Standard for Earnings Per Share” (ASBJ Guidance No. 4) were revised on September 13, 2013. However,these accounting standards have not yet been adopted as of March 31, 2015.
These accounting standards were revised mainly focusing on 1) the treatment of the parent company’s changes ininterest of its subsidiary while the parent company’s control is continuing because of additional acquisition of shares ofthe subsidiary; 2) the treatment of acquisition-related expenses; 3) the presentation of net income and the change fromminority interests to non-controlling interests; and 4) the treatment of provisional accounting.
The Company and its domestic subsidiaries will adopt these accounting standards effective the fiscal year ending
March 31, 2016.
At present, the Company is in the process of evaluating the impact on the consolidated financial statements from theadoption of these revised accounting standards.
(Changes in Presentation)(Consolidated Balance Sheets)
Forward exchange contracts, which had previously been included in other under current liabilities is separately presented
under current liabilities from the fiscal year ended March 31, 2015, because its materiality has increased.
To conform to the current presentation, the forward exchange contracts of ¥1,152 million, which had been previously
included in other under current liabilities is reclassified to forward exchange contracts as of March 31, 2014.
(Consolidated Statements of Cash Flow)
Increase (decrease) in reserve for repairs, which had previously been included in other under Cash flows from operating
activities, is separately presented under Cash flows from operating activities from the fiscal year ended March 31, 2015,
because its materiality has increased.
To conform to the current presentation, the increase (decrease) in reserve for repairs of ¥103 million, which had beenpreviously included in other under Cash flows from operating activities is reclassified to increase (decrease) in reserve forrepairs as of March 31, 2014.

TOYO ENGINEERING CORPORATION Integrated Report 2015

(Accounting standards issued but not yet effective)46

3. INVESTMENTS and other assets
Financial Section

Among investment securities and other in investment and other assets, the amounts of shares of unconsolidated
subsidiaries and affiliates as of March 31, 2015 and 2014 are as follows:
Thousands of
U.S. dollars

Millions of yen

Years ended March 31,
Investments and other assets
Investment securities
Other

2015

2015

2014

¥10,347428¥ 9,577552$ 86,117
3,562

4. Short-Term LOANS PAYABLE and Long-term LOANS PAYABLE
The following assets at March 31, 2015 and 2014 were pledged as collateral:Thousands of
U.S. dollars

Millions of yen

Years ended March 31,
Collateral
Buildings
Land
Total

2015

2015

2014

¥ 1,2311,186¥ 2,418¥ 1,292
1,150¥ 2,442

Thousands of
U.S. dollars

Millions of yen

Years ended March 31,
Debts with collateralLong-term debts
Current portion of long-term debts
Total

2015
¥
¥

2015

2014
—
—
—

—
$ 10,245
9,870$ 20,124

¥
¥

323
161
323

$
$

—
—
—

In the pledged asset, buildings of ¥1,231 million ($10,245 thousand) and ¥1,196 million, and land ¥1,186 million($9,870 thousand) and ¥1,150 million, as of March 31, 2015 and 2014 respectively, were pledged for issuing theperformance bonds. There is not any corresponding obligation as of March 31, 2015.
The following schedule shows the maturities of long-term loans payable subsequent to March 31, 2015:
Years ended March 31,
2016
2017
2018
2019
2020
2021 and thereafter

Millions of yen

Thousands of
U.S. dollars¥ 4,760
9,750
5,484
4,548
1,685
2,135

$ 39,617
81,14845,64237,852
14,024
17,7695. CONTINGENT LIABILITIESThe Company and its subsidiaries were contingently liable as guarantors to others in the aggregate amount of ¥2,996
million ($24,935 thousand) and ¥4,116 million at March 31, 2015 and 2014, respectively.

47

In order to maintain access to a stable and effective source of operating capital, the Company has entered into
commitment-line contracts with eight trading banks.
Thousands of
U.S. dollars

Millions of yen

Years ended March 31,
Commitment Line
Amount of commitment line contract
Used amount
Balance of unused commitment line

2015

2014

2015

¥20,0115,604¥14,406¥22,716
9,016¥13,699$166,550
46,641$119,900

7. COSTS ON UNCOMPLETED CONSTRUCTION CONTRACTS
Costs on uncompleted construction contracts and provision for loss on construction contracts related to the construction
contracts with substantial anticipated losses are not offset as follows:
Millions of yen

Years ended March 31,
Costs on uncompleted construction contracts

2015¥2,5752014¥1,425

Thousands of
U.S. dollars

2015$21,431

8. Selling, General and Administrative Expenses
The main components of selling, general and administrative expenses for the year ended March 31, 2015 and 2014 are as
follows:
Millions of yen

Years ended March 31,
Salaries
Provision for bonuses
Retirement benefit expenses
Depreciation
Research and development costs

2015¥11,048
463
874
530
762

2014
¥10,182
451
671
632
912

Thousands of
U.S. dollars

2015$91,951
3,853
7,274
4,411
6,342

9. RESEARCH AND DEVELOPMENT COSTS
Research and development costs included in cost of sales and selling, general and administrative expenses for the years
ended March 31, 2015 and 2014 amounted to ¥762 million ($6,342 thousand) and ¥912 million, respectively.

10. PROVISION FOR LOSS ON CONSTRUCTION CONTRACTS
Gross amount of increase in provision for loss on construction contracts as of March 31, 2015 and 2014 are as follows:
Millions of yen

Years ended March 31,
Amount of provision for loss on construction contracts

2015¥3,3892014¥3,278

Thousands of
U.S. dollars

2015$28,206

TOYO ENGINEERING CORPORATION Integrated Report 2015

6. COMMITMENT LINE CONTRACTS

48
Financial Section

11. Gain on sales of property, plant and equipment
Breakdown of gain on sales of property, plant and equipment is as follows:
Thousands of
U.S. dollars

Millions of yen

2015
¥ 461
5,714
¥6,175

Years ended March 31,
Building
Land
Total

2014
¥—
—
¥—

2015
$ 3,836
47,557$51,394

12. LOSS on sales of property, plant and equipment
Breakdown of loss on sales of property, plant and equipment is as follows:
Thousands of
U.S. dollars

Millions of yen

2015
¥138

Years ended March 31,
Land

2014
¥—

2015
$1,148

13. AMORTIZATION OF GOODWILL
In accordance with Section 32 of “Practical Guidelines on Accounting Standard for Capital Consolidation Procedures in
Preparing Consolidated Financial Statements” (JICPA Accounting Practice Committee Statement No.7, November 28,2014), as a write-down of its investment in a subsidiary being recognized, the Company recognized the full amortizationof goodwill associated with the subsidiary for the year ended March 31, 2015.

14. IMPAIRMENT LOSS
(1) Impairment losses on long-lived assets for the fiscal year ended March 31, 2014 for each asset group are as follows:
Millions of yen

2014
Location
India
Chiba, Japan

Used States
Other
Rental commercial facilities

Category of assets
Goodwill
Land, Buildings and Other

Impairment Loss
¥695
594

(2) The recognition of impairment loss
The book values of goodwill were reduced to their recoverable amounts and the reduction amounts were recorded as
impairment loss in extraordinary loss on consolidated statement of income ended March 31, 2014, because of the lower
performance of consolidated subsidiary in India than expected at the additional purchase of the stock.
The book values of land, buildings and other were reduced to their recoverable amounts because of the performanceof rental commercial facilities.
The reduction amounts were recorded as impairment loss in extraordinary loss on consolidated statement of income
ended March 31, 2014.
(3) The method of assets grouping
Long-lived assets concerning to EPC business are grouped by companies individually and long-lived assets concerning toreal estate leasing and management are grouped by properties individually.
(4) The calculation of recoverable amounts
About the recoverable amounts of calculation, the future cash flow of amortization is discounted by 4.7%. Concerning
to land, buildings and other, the net sale value is determined by values based on the Japanese Real Estate Appraisal
Standards.

49

Thousands of
U.S. dollars

Millions of yen

2015

Years ended March 31,
Valuation difference on available-for-sale securities:
Amount arising during the year
Reclassification adjustments for gains and losses realized in net income
The amount of valuation on available-for-sale securities before tax effectTax effect
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges:
Amount arising during the year
Reclassification adjustments for gains and losses realized in net income
The amount of deferred gains or losses on hedges before tax effectTax effect
Deferred gains or losses on hedges
Foreign currency translation adjustment:
Amount arising during the year
Reclassification adjustments for gains and losses realized in net income
The amount of foreign currency translation adjustment before tax effectTax effectForeign currency translation adjustment
Remeasurements of defined benefit plans adjustment:
Amount arising during the year
Reclassification adjustments for gain and loss realized in net income
The amount of remeasurements of defined benefit plans adjustment
Tax effectRemeasurements of defined benefit plans adjustment
Share of other comprehensive income of associates accounted forusing equity method:Amount arising during the year
Total other comprehensive income

2015

2014

¥ 1,387
(20)
1,366
(356)
1,010

¥ 900
—
900
(277)
623

$ 11,543(166)
11,369(2,962)
8,406(10,871)—(10,871)
3,210(7,660)

711
—
711
(248)
463

(90,478)—(90,478)
26,716(63,753)

1,587
—
1,587
—
1,587

2,195
—
2,195
—
2,195

13,208—
13,208—
13,208

973
(89)
884
(270)
613

—
—
—
—
—

8,098
(740)
7,357
(2,247)
5,101

(172)
¥ (4,621)(244)¥3,036(1,431)$(38,460)

16. SUPPLEMENTARY INFORMATION FOR CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSFor the year ended March 31, 2015(a) Type and number of outstanding shares
Number of shares
Type of shares

Issued stock:
Common stock
Total
Treasury stock:
Common stock
Total

Balance at beginningof yearIncrease in shares
during the year

Decrease in shares
during the year

Balance at end ofyear

192,792,539
192,792,539

—
—

—
—

192,792,539
192,792,539

1,024,116
1,024,116

52,61952,619

——1,076,735
1,076,735

Note: Treasury stock increased by 52,619 shares due to the repurchase of shares less than one unit.

TOYO ENGINEERING CORPORATION Integrated Report 2015

15. OTHER COMPREHENSIVE INCOME

50
Financial Section(b) Dividends(b) Dividends from surplus
Date ofapproval

Resolution
approved byType ofsharesAnnualgeneralJune 25, meeting of Common
2014shareholders
stock
November 13,
Board ofCommon2014
directors
stock

AmountAmount per
share

Amount per
Shareholders’share
cut-off date
(U.S. Dollars)

Amount(Millions of yen)(Thousands of
U.S. dollars)

575

4,785

3.0

0.02

766

6,375

4.0

0.03

(Yen)

Effective
date

March 31, June 26,
2014
2014
September 30, December 1,
2014
2014

For the year ended March 31, 2014(a) Type and number of outstanding shares
Number of shares
Balance at beginningof yearType of shares

Issued stock:
Common stock
Total
Treasury stock:
Common stock
Total

Increase in shares
during the year

Decrease in shares
during the year

Balance at end ofyear

192,792,539
192,792,539

—
—

—
—

192,792,539
192,792,539

965,838
965,838

58,96858,968690
690

1,024,116
1,024,116

Notes: 1. Treasury stock increased by 58,968 shares due to the repurchase of shares less than one unit.
		 2. Treasury stock decreased by 690 shares due to the sale of shares less than one unit.
(b) Dividends(b-1) Dividends from surplus
Date ofapproval

Resolution
approved byType ofsharesAnnualgeneralJune 26, meeting of Common
2013shareholders
stock

Amount per
Shareholders’share
cut-off date(Millions of yen)
(Yen)

Effective
date

March 31,2013

June 27,2013

Amount959

5.0(b-2) Dividends with a shareholders’ cut-off date during the fiscal year ended March 31, 2014 but an effective date
subsequent to the fiscal year ended March 31, 2015.
Date ofapproval

Resolution
approved byType ofsharesAmount per
Shareholders’share
Paid from (Millions of yen)
cut-off date
(Yen)

AnnualgeneralJune 25, meeting of Common Retained
2014
shareholders
stock
earnings

Amount575

3.0

March 31,2014

Effective
date

June 26,
2014

51

A reconciliation between the balance of cash and deposits reflected in the accompanying consolidated balance sheets andthat of cash and cash equivalents in the accompanying consolidated statements of cash flows as of March 31, 2015 and2014 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and deposits
Time deposits with maturities over three months
Short-term investments with maturities within three months
included in securities
Cash and cash equivalents

2015¥90,753(2,290)2014¥73,814(1,572)

2015$755,330(19,059)

1,999¥90,462

24,692¥96,934

16,637$752,908

The amounts of assets and liabilities of Toyo Business Engineering Corporation, over which the Company lost control
during the fiscal year ended March 31, 2015, the total consideration and net cash and cash equivalents received arisingfrom the sales of shares are as follows:

Current assets
Non-current assets
Current liabilities
Minority interests
Company’s interests after losing control
Gain on sales of shares
Total consideration received
Cash and cash equivalents of subsidiary over which control is lost
Net cash and cash equivalents received

Millions of yen

Thousands of
U.S. dollars

2015¥ 3,709
1,751(2,629)(1,387)
(917)
908
1,435
(583)
¥ 852

2015
$ 30,869
14,573(21,880)(11,543)(7,632)
7,557
11,943(4,852)$ 7,091

The amounts of assets and liabilities of Tec Estate Corporation, over which the Company lost control during the fiscal year
ended March 31, 2015, the total consideration and net cash and cash equivalents paid arising from the sales of shares are
as follows:

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Loss on sales of shares
Total consideration received
Cash and cash equivalents of subsidiary over which control is lost
Net cash and cash equivalents paid

Millions of yen

Thousands of
U.S. dollars

2015
¥ 787
3,029
(579)
(292)
(2,522)423(619)¥ (196)2015$ 6,550
25,210(4,818)(2,430)(20,990)
3,520(5,151)$ (1,631)

TOYO ENGINEERING CORPORATION Integrated Report 2015

17. CONSOLIDATED STATEMENTS OF CASH FLOWS

52
Financial Section

18. LEASESThe Company and its consolidated subsidiaries have adopted “Accounting Standard for Lease Transactions.”(a) Finance Leases
Finance leases are capitalized, and recorded on the balance sheet based on finance lease contracts.
(b) Operating Leases
Operating leases are not capitalized. The followings are future minimum lease payments and receivables:(b-1) Operating Leases (as Lessee)
Future minimum lease payments subsequent to March 31, 2015 and 2014 for noncancelable operating leases are
summarized as follows:
Millions of yen

Years ended March 31,
Within one year
Over one year
Total

2015
¥493
271
¥765

2014
¥ 705
550
¥1,256

Thousands of
U.S. dollars

2015$4,1032,255$6,367(b-2) Operating Leases (as Lessor)
Future minimum lease receivables subsequent to March 31, 2015 and 2014 for noncancelable operating leases are
summarized as follows:
Millions of yen

Years ended March 31,
Within one year
Over one year
Total

2015
¥—
—
¥—

2014
¥ 768
2,424
¥3,192Thousands of
U.S. dollars

2015
$—
—
$—

(c) Operating Sub-leases
Future minimum lease payments for noncancelable operating sub-leases are summarized as follows:(c-1) Lease Investment Assets and Lease Receivables
Millions of yen

Years ended March 31,
Current assets
Investment and other assets

2015
¥0
0

2014
¥ 37
112

Thousands of
U.S. dollars

2015
$0
0

(c-2) Lease Obligations
Millions of yen

Years ended March 31,
Current liabilities
Non-current liabilities

2015
¥0
0

2014
¥ 37
112

Thousands of
U.S. dollars

2015
$0
0

19. FINANCIAL INSTRUMENTS
For the year ended March 31, 2015
1. Condition of Financial Instruments
The Company and its consolidated subsidiaries hold their temporary cash surplus through low-risk financial assets and raise
funds through borrowing from banks.
Derivative financial instruments are utilized for reducing the risk of exchange rate fluctuations, interest rate fluctuations, andcredit. Therefore, there are no derivatives for speculative purpose.

53

2. Fair Value of Financial Instruments
Book value, fair value, and net unrealized gain or loss of financial instruments consist of the following:
It does not include items for which it is extremely difficult to determine the fair value.
Millions of yen

At March 31, 2015
(1) Cash and deposits(2) Notes receivable, accounts receivable fromcompleted construction contracts
Less: Allowance for doubtful accounts
Notes receivable, accounts receivable fromcompleted construction contracts, net(3) Accounts receivable—otherLess: Allowance for doubtful accounts
Accounts receivable—other, net(4) Short-term investment securities and investment securities
Held-to-maturity securities
Available-for-sale securities
Total of assets(1) Notes payable, accounts payable for construction contracts and other(2) Short-term loans payable(3) Long-term loans payable (including current portion)
Total of liabilities
Derivatives
not designated as hedging instruments
designated as hedging instruments
Total derivatives

Unrealized
gain / (loss)

Book value

Fair value¥ 90,753¥ 90,753¥ —62,45762,453(4)

15,474(71)
15,403

15,403

(0)

1,999
6,748
177,362
86,0073,473
28,364
117,845

1,999
6,748
177,357
86,003
3,473
28,477
117,953

(0)
—
(4)
(4)
—
112
108

(136)
(11,826)¥ (11,962)(136)(11,826)¥ (11,962)

—
—
¥ —

62,556(98)

Notes receivable, accounts receivable from completed construction contracts and accounts receivable—other listed
above are offset by the corresponding figures of allowance for doubtful accounts listed above. Net receivables and payables
derived as a result of derivative transactions are presented. Values in parentheses show contra-asset account, net liabilities andunrealized loss.

TOYO ENGINEERING CORPORATION Integrated Report 2015

Notes receivable, accounts receivable from completed construction contracts are exposed to credit risks of customers
and risks of exchange rate fluctuations. The Company deals with these risks by organizing careful reviews on being awarded
contracts, letters of credit, and export credit insurance. The Company minimizes exchange fluctuation risks by organizing theircorresponding forward-exchange contracts, in principle.
Short-term investment securities and investment securities are exposed to volatility risks of market price. The Company
deals with these risks by periodic monitoring, as they mainly consist of short-term held-to-maturity bonds and stocks of ourbusiness partner.
Notes payable, accounts payable for construction contracts and other are mostly due within one year.
Borrowings from banks are raised mainly for capital investment or working capital. For some long-term loans payable, theCompany entered into interest swap agreements to minimize risks of interest rate fluctuations.
Regarding derivatives, forward-exchange contracts are used to minimize exchange fluctuation in foreign-currency
operations, and interest-swap contracts are used to minimize interest rate fluctuations.
The fair value of financial instruments is based on their quoted market prices, if available, or reasonably estimatedamounts if there is no market price. Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in different fair value. In addition, the notional amounts below are not necessarily
indicative of the actual market risk involved in derivative transactions.

54
Financial Section

Thousands of U.S. dollars

At March 31, 2015
(1) Cash and deposits(2) Notes receivable, accounts receivable fromcompleted construction contracts
Less: Allowance for doubtful accounts
Notes receivable, accounts receivable fromcompleted construction contracts, net

Fair value$ 755,330$ 755,330$ —519,825

519,791(33)

128,789(590)
128,198

128,198(0)

16,63756,163
1,476,171
715,830
28,905
236,071
980,815

16,63756,163
1,476,129
715,796
28,905
237,012
981,714

(0)
—
(33)
(33)
—
932
898

(1,131)(98,426)(99,558)(1,131)(98,426)(99,558)——$ —520,649(815)(3) Accounts receivable—otherLess: Allowance for doubtful accounts
Accounts receivable—other, net(4) Short-term investment securities and investment securities
Held-to-maturity securities
Available-for-sale securities
Total of assets(1) Notes payable, accounts payable for construction contracts and other(2) Short-term loans payable(3) Long-term loans payable (including current portion)
Total of liabilities
Derivatives
not designated as hedging instruments
designated as hedging instruments
Total derivatives

Unrealized
gain / (loss)

Book value$$

Millions of yen

At March 31, 2014
(1) Cash and deposits(2) Notes receivable, accounts receivable fromcompleted construction contracts
Less: Allowance for doubtful accounts
Notes receivable, accounts receivable fromcompleted construction contracts, net

Book value¥ 73,814

Unrealized
gain / (loss)¥ 73,814¥ —48,04548,030(14)

12,931(1)
12,92912,929(0)

24,692
5,378
164,860
55,7646,640
37,47599,88024,692
5,378
164,846
55,754
6,640
37,741
100,136

(0)
—
(14)
(10)
—
266
255

135
(235)
(99)

135
(235)
(99)

—
—
¥ —

48,362(317)(3) Accounts receivable—otherLess: Allowance for doubtful accounts
Accounts receivable—other, net(4) Short-term investment securities and investment securities
Held-to-maturity securities
Available-for-sale securities
Total of assets(1) Notes payable, accounts payable for construction contracts and other(2) Short-term loans payable(3) Long-term loans payable (including current portion)
Total of liabilities
Derivatives
not designated as hedging instruments
designated as hedging instruments
Total derivatives

Fair value¥¥

Notes receivable, accounts receivable from completed construction contracts and accounts receivable—other listed
above are offset by the corresponding figures of allowance for doubtful accounts listed above. Net receivables and payables
derived as a result of derivative transactions are presented. Values in parentheses show contra-asset account, net liabilities andunrealized loss.

55

Liabilities(1) Notes payable, accounts payable for construction contracts and otherBook values for items which are settled in a short-term are used as fair values of these items because they are nearly equal tosuch book values. Fair values of other items are based on the present value discounted by the proper discount rate coupledwith period for settlement and credit risks.
(2) Short-term loans payable
Book values are used as fair values because they are nearly equal to such book values.
(3) Long-term loans payable (including current portion)
The present values of the principal and total interest, discounted by the rate assumed to be applied to the new borrowings
under the same conditions, are used as the fair values.
Derivative Transactions
See “21. DERIVATIVE TRANSACTIONS.”(Note 2) Financial instruments of which it is extremely difficult to determine the fair value
Unlisted securities that amounted to ¥2,356 million ($19,608 thousand) as of March 31, 2015 and ¥2,455 million as ofMarch 31, 2014 are excluded from the above table because they are deemed extremely difficult to determine the fairvalues; they do not have market prices and it is not possible to conduct alternative methods such as the estimation of
their future cash flows. For the fiscal year ended March 31, 2015, ¥34 million ($282 thousand) is recognized as impairment
associated with unlisted securities.
(Note 3) Redemption schedule for monetary assets with maturity date and short-term investment andinvestment securities
At March 31, 2015
Cash and deposits
Notes receivable, accounts receivablefrom completed construction contracts
Accounts receivable—otherHeld-to-maturity securities
Available-for-sale securities
Total

At March 31, 2015
Cash and deposits
Notes receivable, accounts receivablefrom completed construction contracts
Accounts receivable—otherHeld-to-maturity securities
Available-for-sale securities
Total

Within one year

Millions of yen
After one year
After five years
through five years
through ten years

After ten years¥ 90,753

¥

—

¥—

¥—

56,511
15,3501,999
354¥164,969

6,045
123
—
—
¥6,169

—
—
—
—
¥—

—
—
—
—
¥—

Within one year

Thousands of U.S. dollars
After one year
After five years
through five years
through ten years

After ten years$ 755,330

$

—

$—

$—

470,337
127,756
16,6372,946$1,373,025

50,312
1,023——$51,344

—
—
—
—
$—

—
—
—
—
$—

TOYO ENGINEERING CORPORATION Integrated Report 2015

(Note 1) Computational method and related issues
Assets(1) Cash and deposits
Book values are used as fair values because they are nearly equal to such book values.
(2) (3) Notes receivable, accounts receivable from completed construction contracts and accounts
receivable—otherBook values for items which are settled in a short-term are used as fair values of these items because they are nearly equal tosuch book values. Fair values of other items are based on the present value discounted by the proper discount rate coupledwith period for settlement and credit risks.
(4) Short-term investment securities and investment securities
Fair value of stock items are based on the market prices and bond items are based on the market prices or their priceprovided by the financial institution.

56
Financial Section

At March 31, 2014
Cash and deposits
Notes receivable, accounts receivablefrom completed construction contracts
Accounts receivable—otherHeld-to-maturity securities
Available-for-sale securities
Total

Within one year

Millions of yen
After one year
After five years
through five years
through ten years

After ten years¥ 73,814

¥

—

¥—

¥—

41,403
12,884
24,692333¥153,129

6,959
46
—
—
¥7,006

—
—
—
—
¥—

—
—
—
—
¥—

(Note 4) Schedule for repayment of bonds and long-term loans payable
See “4. SHORT-TERM LOANS PAYABLE AND LONG-TERM LOANS PAYABLE.”

20. INVESTMENT SECURITIESThe book value, unrealized gain and loss and the related fair value of held-to-maturity securities at March 31, 2015 aresummarized as follows:
Millions of yen

At March 31, 2015
Securities whose fair value does not exceed their carrying value:
Commercial paper
Total

Book
Value

Fair
Value

¥1,999¥1,999Unrealized
Gain¥1,999¥1,999¥(0)¥(0)

Thousands of U.S. dollars

At March 31, 2015
Securities whose fair value does not exceed their carrying value:
Commercial paper
Total

Book
Value

Fair
Value

$16,637$16,637$16,637$16,637

Unrealized
Gain

$(0)
$(0)

The cost, unrealized gain and loss and the related book value of available-for-sale securities with available fair values
at March 31, 2015 are summarized as follows:
Millions of yen

At March 31, 2015
Securities whose carrying value exceeds their acquisition costs:
Equity securities
Subtotal
Securities whose carrying value does not exceed their acquisition
costs:
Other
Subtotal
Total

Book
Value

Acquisition
Cost

Unrealized
Gain¥6,393¥6,393¥2,863¥2,863¥3,530¥3,530¥ 354
354¥6,748¥ 354
354¥3,218¥——¥3,530Thousands of U.S. dollars

At March 31, 2015
Securities whose carrying value exceeds their acquisition costs:
Equity securities
Subtotal
Securities whose carrying value does not exceed their acquisition
costs:
Other
Subtotal
Total

Book
Value

Acquisition
Cost

Unrealized
Gain$53,208$53,208$23,828$23,828$29,379$29,379$ 2,946
2,946$56,163$ 2,946
2,946$26,783$——$29,379

57

Selling amount and gain on sales of securities at March 31, 2015 are as follows:

At March 31, 2015
Equity securities

Sum of gainon sales

Sales

¥32

Sum of loss
on sales¥20¥—

Thousands of U.S. dollars

At March 31, 2015
Equity securities

Sales

Sum of gainon sales$266

Sum of loss
on sales$166$—

For the fiscal year ended March 31, 2015, ¥34 million ($282 thousand) under securities (share of subsidiaries ¥34
million ($282 thousand), and other of ¥0 million ($0 thousand)) are recognized as impairment loss associated withunlisted securities.
The book value, unrealized gain and loss and the related fair value of held-to-maturity securities at March 31, 2014 aresummarized as follows:
Millions of yen

At March 31, 2014
Securities whose fair value exceeds their carrying value:
Government bonds
Subtotal
Securities whose fair value does not exceed their carrying value:
Government bonds
Other
Subtotal
Total

Book
Value

Fair
Value

Unrealized
Gain¥13,999¥13,999¥13,999¥13,999

¥0
¥0

9,999
693
10,693¥24,692

9,999
693
10,692¥24,692

(0)
—
(0)
¥(0)

The cost, unrealized gain and loss and the related book value of available-for-sale securities with available fair values
at March 31, 2014 are summarized as follows:
Millions of yen

At March 31, 2014
Securities whose carrying value exceeds their acquisition costs:
Equity securities
Subtotal
Securities whose carrying value does not exceed their acquisition
costs:
Other
Subtotal
Total

Book
Value

Acquisition
Cost

Unrealized
Gain¥ 5,045¥ 5,045¥ 2,875¥ 2,875¥2,169¥2,169

¥

¥

¥

333
333
¥ 5,378333
333¥ 3,209——¥2,169Selling amount and gain on sales of securities at March 31, 2014 are as follows:
Millions of yen

At March 31, 2014
Equity securities

Sales

¥577

Sum of gainon sales¥501

Sum of loss
on sales¥—TOYO ENGINEERING CORPORATION Integrated Report 2015

Millions of yen

58
Financial Section

21. DERIVATIVE TRANSACTIONS
For the year ended March 31, 2015
1. Derivatives not designated as hedging instruments(1) Currency-related
Millions of yen
All notionalamounts

Non-market transaction:
Foreign exchange forward contracts
Selling
USD
CAD
EUR
Buying
USD
EUR
Total

Notional
amounts due
over one year

Fair value

Unrealized
gain / (loss)¥10,869
459
2,672

¥ 964
50
—

¥ 16
(2)
124

¥ 16
(2)
124

402
1,833
¥16,237——¥1,014(3)(270)¥(136)(3)(270)¥(136)

Thousands of U.S. dollars

Non-market transaction:
Foreign exchange forward contracts
Selling
USD
CAD
EUR
Buying
USD
EUR
Total

All notionalamounts

Notional
amounts due
over one year

$ 90,461
3,820
22,2383,345
15,255$135,139

Fair value

Unrealized
gain / (loss)$8,023
416
—

$

$

—
—
$8,439(24)(2,247)$(1,131)

133
(16)
1,032

133
(16)
1,032

(24)
(2,247)$(1,131)

59

Main hedged
items

Deferral hedge accounting method:
Foreign exchange forward
contracts
Selling
USD
EUR
SGD
CAD
Buying
USD
EUR
SEK
KRW
JPY
Alternative method:
Foreign exchange forward
contracts
Selling
USD
CAD
Buying
USD
EUR
SEK
Total

Accounts
receivable andaccounts
payableAccounts
receivable andaccounts
payableAll notionalamounts

Millions of yen
Notional
amounts due
over one year

¥141,107
3,786
391
540

¥ 74,854
2,274
—
27

¥(16,026)
68
(44)
(6)

67,37024,513
34
5,437
158

38,75910,377
—
1,536
—

6,534
(1,364)(0)(34)
011,971
656

—
610

2,438
942
185
¥259,534———¥128,439

Fair value

N/A

Computational
method of fairvaluesBased on prices
offered by
the financial
institution

Based onforwardexchange
contract prices

TOYO ENGINEERING CORPORATION Integrated Report 2015

2. Derivatives designated as hedging instruments(1) Currency-related

60
Financial Section

Main hedged
items

Deferral hedge accounting method:
Foreign exchange forward
contracts
Selling
USD
EUR
SGD
CAD
Buying
USD
EUR
SEK
KRW
JPY
Alternative method:
Foreign exchange forward
contracts
Selling
USD
CAD
Buying
USD
EUR
SEK
Total

Accounts
receivable andaccounts
payableAccounts
receivable andaccounts
payableThousands of U.S. dollars
Notional
All notionalamounts due
amountsover one year
Fair value$1,174,423
31,5103,254
4,494$ 623,004
18,926—224$(133,383)
565
(366)
(49)

560,715
204,019282
45,251
1,315

322,588
86,367—
12,784—54,382(11,352)
(0)
(282)
0

99,633
5,459

—
5,076

20,2917,840
1,539$2,160,083———$1,068,988

N/A

Computational
method of fairvalue

Based on prices
offered by
the financial
institution

Based onforwardexchange
contract prices(2) Interest-related

Accounting method:
Special method forinterest rate swap

Transaction
type

Main hedged
itemsInterest swap
contracts
floating for
fixed rateswap

Long-termloans payable

Total

Accounting method:
Special method forinterest rate swap

Total

Transaction
type

Main hedged
itemsInterest swap
contracts
floating for
fixed rateswap

Long-termloans payable

Millions of yen
Notional
All notionalamounts due
amountsover one year

¥9,400¥8,120¥9,400¥8,120Thousands of U.S. dollars
Notional
All notionalamounts due
amountsover one year

$78,235$67,582$78,235$67,582

Fair value

N/A

Fair value

N/A

Computational
method of fairvalue

Based on prices
offered by thefinancial
institution

Computational
method of fairvalue

Based on prices
offered by thefinancial
institution

61

For the year ended March 31, 2014

Millions of yen
All notionalamounts

Non-market transaction:
Foreign exchange forward contracts
Buying
USD
EUR
Total

¥

63
1,279
¥ 1,342

Notional
amounts due
over one year

Fair value

¥

¥

¥

—
381
381

¥

2
132
135

Unrealized
gain / loss

¥

2
132
¥135

2. Derivatives designated as hedging instruments(1) Currency-related

Main hedged
items

Deferral hedge accounting method:
Foreign exchange forward
contracts
Selling
USD
EUR
SGD
CAD
JPY
BuyingUSD
EUR
GBP
Alternative method:
Foreign exchange forward
contracts
Selling
USD
Buying
USD
EUR
SEK
Total

Accounts
receivable andaccounts
payableAccounts
receivable andaccounts
payableAll notionalamounts

Millions of yen
Notional
amounts due
over one year

¥44,449
414
391
1,722
256

¥10,257
153
154
1,106
256

¥(2,644)
(0)
(16)
4
(8)

19,592
14,027
1

2,501
440
—

690
1,740
0

7,494

—

911
830
42
¥90,134———¥14,868

Fair value

N/A

Computational
method of fairvaluesBased on prices
offered by
the financial
institution

Based onforwardexchange
contract prices(2) Interest-related

Accounting method:
Special method forinterest rate swap

Total

Transaction
type

Main hedged
itemsInterest swap
contracts
floating for
fixed rateswap

Long-termloans payable

Millions of yen
Notional
All notionalamounts due
amountsover one year

¥17,150¥15,270¥17,150¥15,270

Fair value

N/A

Computational
method of fairvalue

Based on prices
offered by thefinancial
institution

TOYO ENGINEERING CORPORATION Integrated Report 2015

1. Derivatives not designated as hedging instruments(1) Currency-related

62
Financial Section

22. RETIREMENT BENEFITSThe Company and parts of consolidated subsidiaries have either funded or unfunded defined benefit plans and lump-sum
payment plans and the defined contribution plans.
The Company and parts of consolidated subsidiaries provide lump-sum or pension which is based on salary andservice time in the defined benefit plans and introduce cash balance-style pension plans in a part of defined benefit plans.
In this institution, hypothetical individual employee accounts which are equal to the source of deposit and pension byeach buyer are established. In this account, the interest credit which is based on the movement of market interest rate
and the contribution credit which is based on the salary level are accumulated.
In lump-sum payments plans, the lump-sum based on the salary and service time as retirement benefits is provided.
Defined contribution plans and lump-sum payments for parts of consolidated subsidiaries adopt the simplified method
which calculates retirement benefit liabilities and retirement benefit expenses.
(1) Changes in defined obligations
Thousands of
U.S. dollars

Millions of yen

April 1
Cumulative effects of changes in accounting policies
Balance at beginning of year applied the change in accounting
policies
Service cost
Interest cost
Actuarial gains and losses
Benefit paid
Other
March 312015
¥15,721
2,222

2014¥15,735—

2015$130,844
18,493

17,944985
319
322(1,394)283¥18,461

15,735776
366
162(1,330)11
15,721

149,346
8,198
2,655
2,679
(11,602)2,355$153,649(2) Changes in plan assets
Thousands of
U.S. dollars

Millions of yen

April 1
Expected return on plan assets
Actuarial gains and losses
Contributions by the employer
Benefit paid
Other
March 312015
¥12,044
307
1,011
1,408
(1,163)
159¥13,767

2014¥11,013
265
550
1,338
(1,123)—¥12,0442015$100,241
2,555
8,414
11,718(9,679)1,323$114,581(3) Reconciliation of defined benefit obligations and plan assets to net defined benefit liability
The reconciliation of the defined benefit obligations and plan assets to net defined benefit liability recognized in the
consolidated balance sheets as of March 31, 2015 and 2014 are as follows:
Thousands of
U.S. dollars

Millions of yen

Funded defined benefit obligations
Plan assets
Subtotal
Unfunded defined benefit obligations
Net amount of liabilities and assets recognized in consolidatedbalance sheets
Liabilities (net defined benefit liability)
Net amount of liabilities and assets recognized in consolidatedbalance sheets

2015¥ 16,507(13,767)
2,739
1,953

2014
¥ 14,015(12,044)
1,970
1,706

2015
$ 137,386(114,581)
22,796
16,254

4,693
4,693

3,677
3,677

39,05939,059

4,693

3,677

39,059

63(4) Retirement of benefit expenses

Service cost
Interest cost
Expected return on plan assets
Amortization of retirement benefit obligation at transition
Amortization of actuarial loss
Amortization of past service cost
Other
Net periodic pension cost

2015
¥ 985
319
(307)
246
126
(177)
4
¥1,198

2014
¥ 776
366
(265)
246
151
(183)
10
¥1,102Thousands of
U.S. dollars

2015$ 8,198
2,655(2,555)2,047
1,048(1,473)33$ 9,970(5) Remeasurements of defined benefit plans
Millions of yen

Past service cost
Transition obligations
Actuarial loss
Total

2015
¥(180)
246
818
¥ 884

2014
¥ —
—
—
¥ —

Thousands of
U.S. dollars

2015$(1,498)
2,047
6,808
$ 7,357(6) Accumulated remeasurements of defined benefit plans
The unrecognized past service cost, transition obligation and unrecognized actuarial gains and losses recognized inaccumulated other comprehensive income (amount before income tax effect) for the fiscal year ended March 31, 2015
and 2014 are as follows:
Millions of yen

Unrecognized past service cost
Transition obligations
Unrecognized actuarial loss
Total

2015
¥ 167
(8)
1,796
¥1,955

2014
¥ 348
(255)
977
¥1,070Thousands of
U.S. dollars

2015$ 1,389(66)
14,947$16,271(7) Major breakdown of plan assets
2015
Components of net periodic benefit cost
Securities
StocksCash and deposits
Other
Total

41 %
31 %
12 %
16 %
100 %

2014
43 %
31 %
10 %
16 %
100 %

(8) Basis of actuarial calculation
Basis of calculation of projected benefit obligation for the years ended 2015 and 2014 are as follows:
Discount rate
Expected rate of return on plan assets
Expected salary increase rate

2015
Mainly 0.9 %Mainly 2.0 %Mainly 3.2 %2014
Mainly 2.0 %Mainly 2.0 %Mainly 3.2 %Defined Contribution
The amounts of defined contribution of the Company and subsidiaries are ¥404 million ($3,362 thousand), ¥100 million atMarch 31, 2015 and 2014 respectively.

TOYO ENGINEERING CORPORATION Integrated Report 2015

Millions of yen

64
Financial Section

23. INCOME TAXESThe statutory tax rates applicable to the Company and its domestic subsidiaries for the year ended March 31, 2015 and2014 were approximately 35.4%. Income taxes of the foreign subsidiaries are based generally on the tax rates applicablein their countries of incorporation.
(1) Significant components of the deferred income tax assets and liabilities
Thousands of
U.S. dollars

Millions of yen

2015
Deferred tax assets (gross):
Operating loss carryforwards
Deferred gains or losses on hedges
Net defined benefit liability
Provision for loss on construction contracts
Provision of allowance for doubtful accounts
Provision for bonuses
Other
Total deferred tax assets (gross)
Deferred tax assets-Deferred tax liabilities
Total deferred tax assets
Deferred tax liabilities (gross):
Undistributed earnings of subsidiaries and affiliates
Valuation difference on available-for-sale securities
Other
Total deferred tax liabilities (gross)
Deferred tax assets-Deferred tax liabilities
Deferred tax liabilities
Net deferred tax assets

2014

2015

¥ 3,293
3,264
1,307
902
548
127
1,305
¥10,748(2,259)¥ 8,488

¥

—
84
1,116
526
767
333
1,709
¥ 4,538(1,117)¥ 3,421$ 27,407
27,166
10,878
7,507
4,560
1,057
10,861$ 89,454(18,801)$ 70,645

976
1,052
240
2,269
(2,259)(9)¥ 8,479

694
696
96
1,487
(1,117)370¥ 3,050

8,123
8,755
1,997
18,884(18,801)(74)$ 70,570

Note: The Company and its consolidated subsidiaries had temporary differences excluded from calculation of deferred
tax assets of ¥5,250 million ($43,695 thousand) and ¥11,676 million at March 31, 2015 and 2014, respectively,
which are available to be offset against future taxable income.
(Changes in Presentation)
Tax consequence associated with deferred gains or losses on hedges, which had previously been included in other underdeferred tax assets, deferred gains or losses on hedges is presented separately under deferred tax assets because its
materiality has increased.
To conform to the current presentation, the deferred gains or losses on hedges of ¥84 million, which had been previously
included in other under deferred tax assets is reclassified to deferred gains or losses on hedges as of March 31, 2014.

65

Year ended March 31,
Statutory tax rate in Japan
Adjustments:
Permanently nondeductible expenses
Permanently nontaxable dividends received
Per capita levy on corporate inhabitant tax
Temporary differences excluded from calculation of deferred tax assets
Amortization of goodwill
Tax credit
Difference in tax rates for foreign subsidiaries
Adjustment of tax in prior years
Difference in tax base between corporate income tax and enterprise tax
Operating loss carryforwards for subsidiaries
Equity in earnings of affiliates
Gain on change in equity
Decrease in deferred tax assets, net of liabilities, at fiscal year-end due tochange in statutory tax rate
Other
Effective tax rate

2015

2014

*

37.8%
4.3
(19.5)
0.5
48.7
9.5
11.0
8.8
0.2
0.3
1.3
(13.0)(10.1)
4.8
(3.1)
81.5%

*As net loss before tax income is provided, the amount is abbreviated.
(3) The modification of deferred tax assets and deferred tax liabilities by tax rate changes
As the “Act for Partial Amendment of the Income Tax Act“ and “Act for Partial Amendment of the Local Tax Act” tookeffect from March 31, 2015, the effective statutory tax rates, which are used to measure deferred tax assets and deferred
tax liabilities, have been changed from 35.4% to 32.8% (from April 1, 2015 to March 31, 2016) and to 32.1%(after April 1, 2016).
As a result, net deferred tax assets decreased by ¥423 million ($3,520 thousand), and corresponding to this movement,
deferred income tax increased by ¥305 million ($2,538 thousand), valuation difference on available-for-sale securities
increased by ¥79 million ($657 thousand), remeasurements of defined benefit plans increased by ¥48 million ($399
thousand), deferred gains or losses on hedges decreased by ¥246 million ($2,047 thousand) as of March 31, 2015.

24. RENTAL PROPERTIESFor the year ended March 31, 2014
The Company and some of its consolidated subsidiaries own their commercial facilities and residences (including land)
for rent in Chiba prefecture. For the year ended March 31, 2014, the Company and some of its consolidated subsidiaries
recorded ¥720 million of rental revenues and ¥594 million of impairment loss.
Book value, increase (decrease) in value, and fair value of rental properties are listed below.
Millions of yen
Book value
at March 31,
2013

Increase(decrease)in book value

Book value
at March 31,
2014

Fair value
at March 31,
2014¥15,090¥(976)¥14,113¥17,646

Notes: 1. Book value is calculated by deducting accumulated depreciation and accumulated impairment loss from its
acquisition cost.
		
2. The major items in “Increase (decrease) in value” consist of ¥594 million of impairment loss of commercial
facilities and ¥398 million of depreciation of buildings.
		
3. Computational method of fair value		
Mainly based on Real Estate Appraisal Standards.

TOYO ENGINEERING CORPORATION Integrated Report 2015(2) The effective tax rates on income before income taxes in the accompanying consolidated statements of income are
not equal to the above-mentioned statutory tax rate for the following reasons:

66
Financial Section

25. SEGMENT INFORMATIONThe operating segments of the Group are components for which discrete financial information is available and whose
operating results are regularly reviewed by the Executive Committee to make decisions about resource allocation and toassess performance.
The Companies’ reportable operating segments consist of the following three business groups:
		 EPC Business—	Research and development, design, engineering, procurement, and construction of a variety ofplants, such as oil, gas, petrochemical, and general chemical.
		 IT Business— 	Solution business based on other companies’ ERP package products and product business basedon our subsidiary ERP package products, etc.
		 Real Estate— Rent of commercial facilities and residences, and administration.
The Company partially sold the shares of Toyo Business Engineering on December 19, 2014, which was in the “ITbusiness” segment. Accordingly, IT business, which consisted of Toyo Business Engineering, was excluded from thescope of consolidation effective December 31, 2014; therefore, the net sales, segment profits, and others in IT businesshad been stated as the actual performance until December 31, 2014.
The Company sold all shares of Tec Estate Corporation on March 19, 2015, which was in the “Real Estate” segment.
Accordingly, Real Estate segment, which mainly consisted of Tec Estate Corporation, was excluded from the scope of
consolidation effective March 19, 2015, and the net sales, segment profits, and others had been stated as the actual
performance until March 19, 2015.
(The Calculation Method of Net Sales, Gain or Loss, Assets, Liabilities and Other Amounts)
The accounting policies of the segments are substantially the same as those described in the summary of significant
accounting policies in Note 2 and intersegment sales are recorded at the market value.
As stated in accounting change of the summary of significant accounting policies in Note 2, the calculation methodof project benefit obligation and service cost was changed in the fiscal year ended March 31, 2015. Accordingly, thecalculation method of project benefit obligation and service cost in segment information was also changed. The effect on
segment profit (losses) are immaterial, as a result of this accounting change.
Millions of yen

Year ended March 31, 2015
I Net sales and segment profits:
Net sales(1) Net sales to outside customers(2) Inter-segment net sales
Total
Segment profits (losses)
II Segment assets
III Others
Depreciation
Amortization of goodwill
Amount invested in equity method
affiliates
Increase in fixed assets

EPC Business

IT Business

Real Estate

Total

Adjustments

Consolidated¥301,062
129
301,191(8,367)¥253,256¥8,426
50
8,476
178
¥
—

¥ 1,966
179
2,145
812
¥
—

¥311,454
359
311,813(7,376)¥253,256

¥

—
(359)
(359)
19
¥8,352¥311,454—
311,454(7,356)¥261,609

¥

1,549
1,697

¥ 476
—

¥

¥

¥

¥

9,952
966

—
463

445
—
—
20

2,471
1,697
9,952
1,450

53
—
—
(5)

2,525
1,697
9,952
1,445

67

Year ended March 31, 2015
I Net sales and segment profits:
Net sales(1) Net sales to outside customers(2) Inter-segment net sales
Total
Segment profits (losses)
II Segment assets
III Others
Depreciation
Amortization of goodwill
Amount invested in equity method
affiliates
Increase in fixed assets

EPC Business

IT Business

Real Estate

Total$2,505,717
1,073
2,506,791(69,637)$2,107,831$70,129416
70,545
1,481$—$ 16,362
1,489
17,852
6,758$—$2,592,209
2,987
2,595,197(61,389)$2,107,831— $2,592,209(2,987)—(2,987) 2,592,209
158(61,223)$69,513 $2,177,353$

12,892
14,124$ 3,961—$$$

82,829
8,039

—
3,853

3,703
—

20,565
14,124—
166

Adjustments

Consolidated

$

441
—

82,82912,068$21,015
14,124—(41)

82,82912,026

Notes: 1. “Adjustments” for Segment profits and Depreciation represent the elimination of inter-segment transactions.
		
2. “Segment profits” represents operating income from Consolidated Statement of Income.
		
3. Segment assets adjustments include ¥8,352 million ($69,513 thousand) of non-allocated corporate assets,
which is chiefly the Company’s investment securities attributed to the administrative department.
		
4. Amortization of goodwill include the amortization of goodwill captured in extraordinary loss.
Millions of yen

Year ended March 31, 2014
I Net sales and segment profits:
Net sales(1) Net sales to outside customers(2) Inter-segment net sales
Total
Segment profits (losses)
II Segment assets
III Others
Depreciation
Amortization of goodwill
Amount invested in equity method
affiliates
Increase in fixed assets

EPC Business

IT Business

Real Estate¥215,996
167
216,163(885)¥227,927¥12,062
113
12,176453¥ 5,718

¥

¥

1,513
463
9,103
1,643

681
—
—
681

Total

Adjustments

Consolidated¥ 2,065
180
2,245
907
¥17,202¥230,124
461
230,585475¥250,849

¥

—
(461)
(461)
(19)
¥6,631¥230,124—
230,124455¥257,480

¥

¥

¥

¥

424
—
—
18

2,619
463
9,103
2,343

(1)
—
—
(20)

2,618
463
9,103
2,322

Notes: 1. “ Adjustments” for Segment profits and Depreciation represent the elimination of inter-segment transactions.
		
2. “Segment profits” represents operating income from Consolidated Statement of Income.
		
3. Segment assets adjustments include (¥313) million of inter-segment eliminations and ¥6,944 million of
non-allocated corporate assets, which is chiefly the Company’s investment securities attributed to theadministrative department.

TOYO ENGINEERING CORPORATION Integrated Report 2015

Thousands of U.S. dollars

68(1) Information by Geographical Segments Based on the Location of Projects
Financial Section

Millions of yen

Year ended March 31, 2015
Net salesJapan

BrazilIndonesia

Nigeria

Other

Total

¥40,906¥20,621¥40,255¥32,099¥177,572¥311,454(Changes in presentation)
Nigeria, which had been included in other, is presented separately at the fiscal year ended March 31, 2015, because theamount is above 10 percent of net sales on the consolidated statements of income.
To conform to the current presentation, Nigeria of ¥6,756 million, which had been previously included in other, isreclassified to Nigeria as of March 31, 2014.

Thousands of U.S. dollars

Year ended March 31, 2015
Net salesJapan

BrazilIndonesia

Nigeria

Other

Total

$340,457$171,627$335,039$267,157$1,477,919$2,529,209

Japan

Indonesia

Millions of yen

Year ended March 31, 2015
Property, plant and equipment¥11,630¥2,944

Other

Total

¥1,672¥16,247(Changes in presentation)
Indonesia, which had been included in other, is presented separately at March 31, 2015, because the amount is above 10
percent of net sales on consolidated statements of income.
To conform to the current presentation, Indonesia of ¥2,691 million, which had been previously included in other, isreclassified to Indonesia as of March 31, 2014.
Thousands of U.S. dollars

Year ended March 31, 2015
Property, plant and equipment

Japan

Indonesia

Other

Total

$96,795$24,502$13,915$135,222

Japan

BrazilIndonesia¥36,258¥34,002

Millions of yen

Year ended March 31, 2014
Net sales¥39,367

Nigeria¥6,756

Other

Total

¥113,738¥230,124(Changes in presentation)
Thailand, which had been presented separately is included in other at the fiscal year ended March 31, 2015, because theamount is below 10 percent of net sales on the consolidated statements of income.
To conform to the current presentation, Thailand of ¥28,554 million, which had been previously stated separately, isreclassified to other as of March 31, 2014.
Millions of yen

Year ended March 31, 2014
Property, plant and equipment

Japan¥26,148

Indonesia¥2,691

Other

Total

¥1,523¥30,363

69(2) Information by Major Clients
TOYO ENGINEERING CORPORATION Integrated Report 2015

Millions of yen

Year ended March 31, 2015
Indorama Eleme Fertilizer & Chemicals Limited

Net Sales

Segment¥32,316

EPC

Thousands of U.S. dollars

Year ended March 31, 2015
Indorama Eleme Fertilizer & Chemicals Limited

Net Sales

Segment$268,963

EPC

Millions of yen

Year ended March 31, 2014
PETROLEO BRASILEIRO S.A. (PETROBRAS)
PT Pupuk Kalimantan TimurNet Sales

Segment¥29,184
23,505EPC
EPC(3) Impairment loss on fixed assets by reportable segment
Millions of yen

Year ended March 31, 2014
Impairment loss

EPC Business

IT Business

Real Estate

¥695

¥—

¥594

Total

Adjustments

Consolidated¥—¥1,289¥1,289(4) Amortization and remaining balance of goodwill by reportable segment
The following table presents the amortization and balance of goodwill as of and for the years ended March 31, 2015 and2014 by reportable segments:
Millions of yen

Year ended March 31, 2015
Goodwill
Amortization of goodwill
Balance at March 31, 2015
Negative goodwill
Amortization of negative goodwill
Balance at March 31, 2015

EPC Business

IT Business

Real Estate

Total¥1,697
6

¥—
—

¥—
—

¥1,697
6

10
¥ 106

—
¥—

—
¥—

10
¥ 106

Thousands of U.S. dollars

Year ended March 31, 2015
Goodwill
Amortization of goodwill
Balance at March 31, 2015
Negative goodwill
Amortization of negative goodwill
Balance at March 31, 2015

EPC Business

IT Business

Real Estate$14,124
49

$—
—

$—
—

$14,124
49

83
882

—
$—

—
$—

$

$

Total

83
882

Millions of yen

Year ended March 31, 2014
Goodwill
Amortization of goodwill
Balance at March 31, 2014
Negative goodwill
Amortization of negative goodwill
Balance at March 31, 2014

EPC Business

IT Business

Real Estate

Total

¥ 463
1,619

¥—
—

¥—
—

¥ 463
1,619

10
¥ 117

—
¥—

—
¥—

10
¥ 117

70
Financial Section

26. RELATED PARTY TRANSACTIONS
Affiliate
For the year ended March 31, 2015
Millions of yen
Name: N EDL CONSTRUCOES DE
Summary of Transaction
Title of
DUTOS DO NORDESTE LTDA. transactions
amountaccount
Address:
BrazilCapital and investments:
2,524 thousands BRL
Loan forLong-term
Business:
operating¥—loans
Construction
fund
receivable
Equity ownership percentage:
Holding 42% directly
Relation with related party:
Loan for operating fund
For the year ended March 31, 2014
Name: N EDL CONSTRUCOES DE
DUTOS DO NORDESTE LTDA.
Address:
BrazilCapital and investments:
2,524 thousands BRL
Business:
Construction
Equity ownership percentage:
Holding 42% directly
Relation with related party:
Loan for operating fundThousands of U.S. dollars
Accountbalance

Transaction
amountTitle ofaccount

Accountbalance¥3,707$—Long-term
loans
receivable$30,853

Summary oftransactions

Transaction
amountMillions of yen

Loan for
operatingfund

Title ofaccount

Long-term
loans
receivable¥—

Accountbalance¥3,707

Notes:		1. Interest rate on loan is determined by considering effective market rates.
		 2. The Company reserved ¥3,707 million ($30,853 thousand) of allowance for doubtful accounts at March 31,
2015, against the loan above.
For the year ended March 31, 2015
Millions of yen
Name: T OYO-THAI CORPORATION
Summary ofTransaction
Title of
Account
PUBLIC COMPANY LIMITED*transactions
amountaccountbalance
Address:
Thailand
Capital and investments:
560,000 thousands TBH
Ordering ofBusiness:
Account
designing¥3,247¥3,085Construction
andpayableEquity ownership percentage:
construction
Holding 22.2% directly
Relation with related party:
Ordering of Designing andConstruction

Thousands of U.S. dollars
Transaction
amountTitle ofaccount

Accountbalance$27,024

Account
payable$25,676

Note: T OYO-THAI CORPORATION PUBLIC COMPANY LIMITED changed its name to TTCL Public Company Limited from April 9,
2015.

71

Millions of yen

Thousands of U.S. dollars

Summary oftransactions

Transaction
amountTitle ofaccount

Accountbalance

Transaction
amountTitle ofaccount

Accountbalance

Guarantee
obligation¥2,764——$23,004——

Note: The Company was responsible for the guarantee obligation in the execution of project at March 31, 2015, against
the affiliate above.
For the year ended March 31, 2014
Name: T OYO SETALEMPREENDIMENTOS LTDA.
Address:
BrazilCapital and investments:
38,904 thousands BRL
Business:
Construction
Equity ownership percentage:
Holding 50% indirectly
Relation with related party:
Guarantee obligation

Millions of yen
Summary oftransactions

Transaction
amountTitle ofaccount

Accountbalance

Guarantee
obligation¥3,382———

Note: The Company was responsible for the guarantee obligation in the execution of project at March 31, 2014, against
the affiliate above.
For the year ended March 31, 2015
Name: E staleiros do Brasil Ltda.
Address:
BrazilCapital and investments:
57,749 thousands BRL
Business:
Construction
Equity ownership percentage:
Holding 50% indirectly
Relation with related party:
Loan for operating fundMillions of yen
Summary oftransactions

Loan for
operatingfund
Accruedinterest
incomeGuarantee
obligation*1

Transaction
amountTitle ofaccount¥5,002

Shorttermloans*238

Othercurrent
assets—5,948

Thousands of U.S. dollars
Accountbalance

Transaction
amountTitle ofaccount

Accountbalance$41,631

Shorttermloans*2$41,631

1

316

Other
current
assets8—49,504——¥5,002

Notes: 1. Guarantee obligation is provided for the bank loan of the affiliate above.
		 2. O
 n the consolidated financial statements, short-term-loans of ¥5,002 million ($41,631 thousand) are deducted.

TOYO ENGINEERING CORPORATION Integrated Report 2015

For the year ended March 31, 2015
Name: T OYO SETALEMPREENDIMENTOS LTDA.
Address:
BrazilCapital and investments:
38,904 thousands BRL
Business:
Construction
Equity ownership percentage:
Holding 50% indirectly
Relation with related party:
Guarantee obligation

72
Financial Section

Significant affiliates
The significant affiliates were Moeco Thai Oil Development Co., Ltd., TOYO-THAI CORPORATION PUBLIC COMPANY
LIMITED, Modec and Toyo Offshore Production Systems Pte. Ltd., and TS Participações e Investimentos S.A., whose
condensed financial information as of and for the year ended March 31, 2015 is as follows:
Millions of yen

Thousands of
U.S. dollars

Years ended March 31,
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
Total net assets

2015¥142,990
28,106
149,318
8,943
12,8342015$1,190,095
233,924
1,242,763
74,431
106,816

Net sales
Loss before income taxes
Net loss

211,300(7,959)¥ (13,447)

1,758,635(66,242)$ (111,918)

Note: T OYO-THAI CORPORATION PUBLIC COMPANY LIMITED changed its name to TTCL Public Company Limited from
April 9, 2015.
The significant affiliates were Moeco Thai Oil Development Co., Ltd., TOYO-THAI CORPORATION PUBLIC COMPANY
LIMITED and Modec and Toyo Offshore Production Systems Pte. Ltd., whose condensed financial information as of andfor the year ended March 31, 2014 was as follows:
Millions of yen

Years ended March 31,
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
Total net assets

2014¥ 59,285
15,17443,703
4,073
26,683

Net sales
Income before income taxes
Net income

132,30212,421¥ 7,758

27. AMOUNTS PER SHARE
Yen

Years ended March 31,
Net assets per share
Net income (loss) per share2015¥ 234.20(109.34)

U.S. dollars

2014¥382.61
5.05

2015$ 1.94(0.91)Net income per share is computed based on the net income available for distribution to shareholders of common stockand the weighted average number of shares of common stock outstanding during each year.
Net assets per share are computed based on the number of common stock outstanding and the net assets excluding
minority interests at the year end.
As changes in accounting policy states, the Company has applied the “Accounting Standard for Retirement Benefits”
in accordance with transitional accounting as stipulated in Article 37 of the Standard.
As a result, net assets per share decreased by ¥7.90 in the fiscal year ended March 31, 2015. The effects on net loss
per share and diluted net income per share are immaterial.

73
TOYO ENGINEERING CORPORATION Integrated Report 2015

Corporate Data—

Corporate Information

74

Corporate Data

Corporate Data

Corporate Name:

Toyo Engineering Corporation (TOYO)Founded:May 1, 1961

Number of Employees: 4,463 (Consolidated, As of March 31, 2015)
Corporate Philosophy: Mission: Engineering for Sustainable Growth of the Global Community
Vision:Global Leading Engineering Partner

Values: Integrity, Creativity, Diversity, Learning, Team
Business Activities:		 Engineering and Construction for Industrial Facilities• R&D support, design, engineering, procurement, construction, commissioning, technical assistance for industrial
facilities: oil, gas, oil & gas development, petrochemicals, chemicals, water treatment, transportation systems,
power generation, nuclear power, advanced production systems, pharmaceutical, fine chemical, distribution
systems, biotechnology, environment and others• IT engineering services and system software supply

History
1961 • TOYO was established. Capital: 300 million yen

1985 • Toyo-Thai Corporation Ltd. established.

1962 • An agreement for engineering service and1986 • Toyo U.S.A., Inc. established.

		 technical assistance was concluded with

• Toyo Engineering & Construction Sdn. Bhd.

		 Lummus Co. (U.S.A.).

		 established in Malaysia.

1963 • The first overseas contract for a fertilizer plant1987 • Toyo Engineering Korea Limited established.

		 with The Fertilizer Corporation of India Ltd. was awarded.

1989 • Capital: 12,219 million yen

1964 • The first urea plant contract in the former Soviet Union was

1990 • Head Office/Engineering Center (Baytec Building) started

		awarded.

		 operation in Narashino, Chiba.

1965 • TOYO was awarded its first ethylene plant contract

1993 • Capital: 13,017 million yen

		 (Osaka, Japan).

1994 • TOYO received ISO 9001 registration.

1969 • TOYO was awarded the contract for the first ammonia plant1999 • Toyo Business Engineering Corporation established.

		 in the former Soviet Union.

2004 • TOYO received ISO 14001 registration.

1970 • TOYO was awarded the contract for two ammonia plants• Toyo Engineering Corporation, China established.

		 in the former East Germany.

2006 • Capital: 18,198 million yen

1972 • International Procurement & Service Corporation2007 • Relocation of Tokyo head office.

		 (Currently Toyo Engineering Europe, S.r.l.) established.

2008 • TOYO invested in Atlatec, S.A. de C.V. in Mexico.

1973 • A contract for a urea plant for China was awarded.

2009 • TOYO formulated the Group MVV (Mission, Vision,

1975 • Capital: 1,890 million yen

		Values).

1976 • Toyo Engineering India Limited established.

2010 • TOYO acquired Tri Ocean Engineering Limited

1978 • Capital: 2,970 million yen

		 in Calgary, Alberta, Canada (Currently Toyo-Canada).

1980 • Capital: 3,300 million yen

2011 • The 50th Anniversary• TOYO was listed on the second section of the Tokyo• TOYO invested in PT. Inti Karya Persada Tehnik (IKPT)		 Stock Exchange.

		 in Indonesia.

1982 • Capital: 5,040 million yen

2012 • TS Participações e Investimentos S.A. established in Brazil.

• TOYO was listed on the first section of the Tokyo
		 Stock Exchange.

• Consolidated Group logo developed.
2015 • Kiyoshi Nakao was elected as President and CEO.

75

Board of Directors, Corporate Auditors and Executive Officers

TOYO ENGINEERING CORPORATION Integrated Report 2015

Chairman

Senior Corporate Auditor

Executive Officers

Makoto Fusayama *1

Makoto Shimagaki

Motoyoshi Kamoshima
Yutaka Kita

President & CEO

Corporate Auditors

Takayoshi Imanishi

Kiyoshi Nakao

Hiroshi Inoue

Koji Kojima*1

Yoshiyuki Funakoshi
Executive Vice President

Kiyohito Uchida*5*5Takaya Naito *1

Haruo Nagamatsu

C Takaya Naito

Senior Executive Officers

Hideki Shida

Keiichi Matsumoto

Teruhiko Inoue

Masayuki Yoshizawa

Akhilesh Kumar

Toru Osanai

Masayuki Uchida*2

Masaru Takezawa

Keisuke Ishii

Tadashi Hori

Shinichi Okazaki

Hisashi Osone

Eiji Hosoi*4

Kenyu Adachi*4

Shoji Koshikawa*4

Hiroshi Sato

Masami Tashiro
Yusuke Yamada

Tomohisa Abe
Masahiko Kita

A Kiyoshi Nakao
B Makoto Fusayama

Directors

Masaaki YamaguchiA

Itsuya Yanagi

Eiichi Ide

*3

B

*1

Representative Director*2

CCO (Chief Compliance Officer) andCTO (Chief Technology Officer)*3

CFO (Chief Financial Officer)*4

Outside Director*5Outside Auditor(As of June 25, 2015)

C

76

Worldwide Network

Corporate Data
CA
LG

O

US

Y

HO

AR

M

N

TE

TO

R

R

EY

N

TOK
CARA

YO,

CHI

BA

CAS

SEOU LSH AN GH AI

B E IJ INU LO
SAO PA

JAKA

G

RTA

KU
A
BA LA L
NG
UM
KO
PU
R
K

M
U
M
BA

• TOKYO HEAD OFFICETokyo, Japan
—
—
—
—
—
—
—
—
—
—
—
—

Overseas Offices• Beijing, China• Jakarta, Indonesia• Dubai, United Arab Emirates• Tehran, Iran• Moscow, Russia
—
—
—
—
—
—
—
—
—
—
—
—

OVERSEAS GROUP COMPANIES• Toyo Engineering Korea Limited
Seoul, Korea• Toyo Engineering Corporation (China)
Shanghai, China• PT. Inti Karya Persada Tehnik (IKPT)Jakarta, Indonesia• Toyo Engineering & Construction Sdn. Bhd.

MOS COW

MI

LA

N

I

Chiba, Japan

I
BA
DU
RAN
TEH HOBAR
AL K• HEAD OFFICE / ENGINEERING CENTER• Toyo Engineering India Private Limited
Mumbai, India• Saudi Toyo Engineering Company
Al Khobar, Saudi Arabia• Toyo Engineering Europe, S.r.I.
Milan, Italy• Toyo Engineering Canada Ltd.
Calgary, Canada• Toyo U.S.A., Inc.
Houston, U.S.A.

• Toyo Ingeniería de Venezuela, C.A.
Caracas, Venezuela
—
—
—
—
—
—
—
—
—
—
—
—

OTHER AFFILIATES• TS Participações e Investimentos S.A.
Sao Paulo, Brazil• TTCL Public Company Limited
Bangkok, Thailand• Atlatec, S.A. de C.V.
Monterrey, Mexico

Kuala Lumpur, Malaysia
—
—
—
—
—
—
—
—
—
—
—
—

DOMESTIC GROUP COMPANIESTEC Air Service Corporation
Travel and insurance services
TEC Business Services Corporation
Staffing service, contracted business service,translation and interpretation service, facility
management service
TEC Project Services Corporation
EPC and maintenance services for plants andfacilities, environmental technology
Chiba Data Center Corporation
Data entry, scanning services and commercial printing
Toyo Business Engineering Corporation
System consulting and solutions provider
TEC Accounting & Consulting Ltd.
Business support and consulting for accounting andaccounting system development

Stock Information—(As of March 31, 2015)

77¥18,198 million

Stock Exchange Listing

Tokyo Stock Exchange

Authorized Shares

500,000,000

Capital Stock Issued

192,792,539

Number of Shareholders

17,032Administrator of

Sumitomo Mitsui Trust Bank, Limited

Shareholders’ Register

1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan

Number of shares

Percentage of total(thousands)(%)

Mitsui & Co., Ltd.

43,77022.83

Japan Trustee Services Bank, Ltd.

25,703

13.40

The Master Trust Bank of Japan, Ltd. Trust Account

6,532

3.40

Taisei Corporation

5,000

2.60

Japan Trustee Services Bank, Ltd. Trust Account

3,930

2.04

Sumitomo Mitsui Banking Corporation

2,350

1.22

Japan Trustee Services Bank, Ltd. Trust Account 9

2,288

1.19

Japan Trustee Services Bank, Ltd. Trust Account 4

2,125

1.10

Japan Re Fidelity

1,876

0.97

Evergreen

1,580

0.82

Major Shareholders:

TOYO ENGINEERING CORPORATION Integrated Report 2015

Capital Stock(Mitsui Chemicals, Inc. Retirement Benefit Trust Account re-entrusted by Chuo Mitsui Asset Trustand Banking Company, Ltd.)

Others0.95

Individuals

Financial institutions

26.63

Type of
Shareholder
(%)

32.29

Foreign shareholders
12.10

Domestic companies
28.03

Stock chart
(Yen)
700
600

Stock Price

500
400
300
200
100
0

60,000

Trading Volume (Thousands of Shares)

30,000

0

4

5

6

7

8

9

10

FY2012

11 12

1

2

3

4

5

6

7

8

9

10

FY2013

11 12

1

2

3

4

5

6

7

8

9

10

FY2014

11

12

1

2

3

Toyo Engineering Corporation
2-8-1 Akanehama,Narashino-shi, Chiba 275-0024, Japan
Tel: 81-47-451-1111 Fax: 81-47-454-1800
http://www.toyo-eng.com/jp/en/©2015 Toyo Engineering Corp.
Printed in Japan