TOYO KANETSU K.K.

Annual Report 2015
For the year ended March 31, 2015

CONTENTS

Consolidated Financial Highlights

2

To Our Shareholders

3

Board of Directors and Corporate Officers

6

Lines of Business

6

TKK Group Companies

7

Analysis of Operating Environment and Results

8

Business Risks

9

Financial Section
Consolidated Balance Sheet

11

Consolidated Statement of Income and Comprehensive Income

13

Consolidated Statement of Changes in Equity

14

Consolidated Statement of Cash Flows17

Notes to the Consolidated Financial Statements

19

Independent Auditor’s Report

53

Corporate Data

55

Directory55

Toyo Kanetsu K.K. and Consolidated Subsidiaries

Consolidated Financial Highlights
For the years ended March 31

Thousands of
U.S. dollars

Millions of yen

2015

2014

2013

2012

2011

2015

For the Years Ended March 31:¥52,457¥48,395¥45,504¥40,733¥48,718$436,595

Plant & Machinery Business

29,425

26,90324,027

23,62526,709244,902

Material Handling Systems Business

15,68915,158

14,966

11,624

17,590130,578

Other

7,341

6,333

6,511

5,484

4,419

61,098Operating Income

3,588

4,341

2,272

1,474

2,590

29,862Net Income

3,019

2,879

1,527

714

158

25,126Comprehensive Income

4,390

3,223

1,971

1,083

(35)

36,537

460

594

477

482

603

3,828

Current Assets¥33,463¥33,841¥37,149¥32,750¥33,792$278,510

Property, Plant and Equipment

13,577

12,912

13,655

12,57912,546

113,000

Investments and Advances

8,504

7,368

6,810

5,920

6,437

70,778Net Sales

Cash Dividends

At March 31:

Intangibles

382

393

465

244

281

3,179

Total Assets

55,92854,51558,07951,49353,056465,484

Current Liabilities

15,57016,724

23,16918,593

19,582

129,588

Total non-current Liabilities

3,777

4,000

4,048

3,275

3,735

31,435

Shareholders’ Equity

33,525

32,10529,53028,72429,205

279,026

Accumulated Other Comprehensive Income

2,814

1,471

1,174

794

426

23,420

240

212

158

107

108

1,997

Total Liabilities and Net Assets

55,92854,51558,07951,49353,056465,484

Order Backlog

32,25649,06546,45950,94050,807

268,464

Minority Interests

Yen

Per Share:
Net Income
Cash Dividends
Shareholders’ Equity

Number of Shareholders
Number of Employees

U.S. dollars

2015

2014

2013

¥26.08¥24.18¥12.53

2012
¥5.93

2011
¥1.31

$0.21

4.00

5.00

4.00

4.00

5.00

0.04

315.91

282.18257.71

244.77246.04

2.62

2015

2014

2013

2012

2011

15,22916,73817,277

17,18917,719

753

742

787

694

678

The U.S. dollar amounts in this annual report represent translations of Japanese yen at the rate of ¥120.15=$1.00, solely for readers’ convenience.

2

Toyo Kanetsu K.K. Annual Report 2015

2015

To Our Shareholders

I would like to begin this message by expressing my deepest
gratitude to all of our shareholders for their support of the Toyo
Kanetsu K.K. (TKK) Group.
I hope you will find this report on our business activities and results
for fiscal year 2015 informative and useful.
In fiscal year 2015 (ended march 31, 2015), the Toyo Kanetsu K.K.
(TKK) Group posted increased revenue in all business segments,
but profits declined in some segments, due mainly to a decreasein profitable projects. Operating income and ordinary income, bothof which had reached record levels in the previous fiscal year, saw
decreases, but earnings and profits nevertheless maintained a highlevel. In line with this business performance and our resulting
financial position, we set the dividend for the fiscal year at ¥4 pershare, which also reflects our commitment to providing stabledividend payouts.
To support long-term shareholder return, we have adopted a
flexible approach to the acquisition of treasury stock.
Accordingly, the Board of Directors resolved to allocate amaximum of ¥1.0 billion for the acquisition of up to 4.3 million shares between May and September 2015.
Fiscal year 2016 is the final year of the medium-term business plan (FY2014–2016) launched two years ago. The ultimate
goals of the plan are to build on customer trust to secure a stable level of orders, sales, and profit, and to realize ourconsolidated performance targets. We are committed to redoubling our efforts toward these goals.
By resolution of the Annual General Shareholders’ Meeting held on June 26, 2015, Toyo Kanetsu K.K. switched to a Company
with Committees system. By strengthening the audit and supervisory functions and further enhancing corporate governance,
this move will support our efforts to meet the expectations of shareholders and all other stakeholders by maximizing theGroup's corporate value.
I would like to ask all our shareholders for their continued, constant support and comprehension.

June 2015

Toru Yanagawa
President and Representative Director

Toyo Kanetsu K.K. Annual Report 2015

3

The TKK Group’s Medium-Term Business Plan (FY2014–2016)
To realize the management vision noted, on May 2013, we established a medium-term business plan forfiscal years 2014–2016.
The plan includes three core initiatives designed to fulfill our goal of securing stable orders, sales and profits
by winning the trust and confidence of our customers.

(1) Strengthen marketing and proposal capabilities for both new construction projects andmaintenance services(2) Enhance staff skills and technological capabilities to ensure our ability to continue providing
customers with the most trustworthy products and services(3) Strengthen capabilities and increase comprehensive strength through collaborative efforts

The key measures and issues to be addressed in each of our two core business segments are outlined below.

Plant & Machinery BusinessEconomic growth in emerging nations is among the factors contributing to the projected expansion in worldenergy demand. In the short term, however, a deterioration in the business environment is forecast. One of
the main reasons behind this is the slump in petroleum prices, which is contributing to delays in the
finalization of petroleum- and gas-related project planning. In response to this worsening of the situation
regarding orders, we are working to secure stable earnings and profits by improving our ordercompetitiveness through the five-point strategy outlined below, focusing on new LNG tank installation
projects and modification works on floating-roof tanks to improve earthquake resistance.

(1) Strengthen marketing capabilities and optimize orders scheme(2) Further enhance our management of quality, costs, and delivery timing(3) Promote technological development of design, processing, and construction methods that will
enhance cost-competitiveness(4) Accelerate the development of professional staff through on-site training and transfer oftechnologies and skills(5) Supplement and strengthen our sales, technological, production, and construction capabilities
through collaborations with the Group firms

Material Handling Systems BusinessTo deliver products and services that match increasingly sophisticated customer needs, we are pursuing
the six-point strategy outlined below, focusing on new installation and maintenance projects. This approachis not limited to our existing core markets such as consumer cooperatives, airports, and wholesale, retail,and mass merchandising operations, but extends also to sectors of the economy that have shown marked
growth, such as the Internet sales and online supermarket sectors. In this way, we are working to firmly
establish a business structure capable of delivering stable profits.

Effective from April 1, 2015, Toyo Kanetsu Solutions K.K., the central operator in our Material Handling
Systems Business, absorbed its subsidiary K-Techno Inc. (a sub-subsidiary of Toyo Kanetsu K.K.). This will

4

Toyo Kanetsu K.K. Annual Report 2015

allow our subsidiary to build a one-stop integrated value chain extending from presentation of solutions tomaintenance operations, enabling a swift and accurate response to increasingly sophisticated market needs
and improving customer satisfaction. By also promoting both high added value and increased efficiency inbusiness operations, the merger will help to consolidate our competitive advantage.

(1) Demonstrate our comprehensive strength by integrating management with our maintenance subsidiary(2) Develop strategic technologies and introduce products with strong appeal to growth markets(3) Strengthen marketing and proposal capabilities directed at customers in growth markets(4) Strengthen and promote collaborative marketing activities through collaborations with Group firms(5) Reform design, production and procurement functions and improve project response capabilities(6) Raise employee capabilities needed to support growth and improve basic technologies and skills

The consolidated performance targets of the Group’s medium-term business plan (FY2014–2016) indicate
average annual figures for the period of the three-year plan. However, to reflect performance trends in fiscal
years 2014 and 2015 and other relevant factors, the targets have been revised upward. Details of therevision are given below.

Annual averages for the three fiscal years from 2014 to 2016
Consolidated earnings targets

The original plan(announced in May 2014)

Revised plan on last
fiscal year
(announced in May 2015)

Revised plan for thisfiscal year
(announced in May 2016)

Net Sales¥44.0 billion¥47.0 billion¥49.2 billion

Operating Income¥2.3 billion¥3.1 billion¥3.36 billion

Operating Margin

5.2%

6.6%

6.8%

Ordinary Income¥2.5 billion¥3.4 billion¥3.69 billion

Net Income¥1.5 billion¥2.2 billion¥2.54 billion

Toyo Kanetsu K.K. Annual Report 2015

5

Board of Directors, Auditors and Corporate Officers
Directors

Corporate Officers

Chairman and Representative Director

Takeshi Mizukami

President and Representative Director

Toru Yanagawa

Director and Senior Corporate Officer

Sadao Arita
Shoji Fujiyoshi
Isao Shimomae
Masayuki Takeda
Keisuke Kodama

Director and Audit & Supervisory Committee Member

Kazuto Abe
Toshiaki Hiwatari
Tsuneo Nagai
Shigeharu Nakamura

Lines of Business
Plant & Machinery BusinessTotal engineering and construction for storage tanks
such as low-temperature tanks, cryogenic tanks,
high-pressure spherical tanks, floating roof tanks,cone roof tanks and dome roof tanks, including all
related ancillary works such as civil works, piping
and instrumentation.

Material Handling Systems BusinessEngineering, construction and related civil andconstruction work for all system equipment,
system devices and ancillary equipment related to
distribution center systems, truck terminal systems,
production line systems, airport baggage handlingsystems, postal sorting systems, food processing
center systems, food production factory systems,
apparel center systems and other systems.

6

Toyo Kanetsu K.K. Annual Report 2015

Senior Corporate Officer

Tetsuya Watanabe
Shiro Ito

Corporate Officer

Yukio Kurosaka
Yasuhiro Yamada
Hiroshi Ohgi

TKK Group Companies
Other Business

Plant & Machinery Business

Material Handling Systems Business

TOYO KANETSU K.K.
Toyo Kanetsu Builtec K.K.

Toyo Kanetsu Solutions K.K.

P.T. Toyo Kanetsu Indonesia

Toyo Service System K.K.

Toyo Koken K.K.

Toyo Kanetsu (Malaysia) SDN. BHD.
TOYO KANETSU
SINGAPORE PTE. LTD.
TKK-USA, Inc.

Domestic
Subsidiaries

Overseas
Subsidiaries

Major Subsidiaries and Affiliated Companies
Domestic

Overseas

Toyo Kanetsu Solutions K.K.

P.T. Toyo Kanetsu Indonesia

Establishment October 1, 2002

Establishment September 9, 1974

Capital¥400 million

Capital

US$2 million

Business

Planning, design, manufacturing,
construction and sales for material handlingsystems

Business

Manufacturing and sales of tanks and steel
framing

Toyo Kanetsu Builtec K.K.

Toyo Kanetsu (Malaysia) SDN. BHD.

Establishment April 1, 2014

Establishment April 13, 1992

Capital¥50 million

Capital

RM2 million

Business

Building construction business andprovisional equipment operations

Business

Manufacturing and sales of storage tanks;
manufacturing and sales of material
handling system equipment and devices

Toyo Service System K.K.

TOYO KANETSU SINGAPORE PTE. LTD.

Establishment September 19, 1986

Establishment August 8, 2006

CapitalBusiness

CapitalBusiness¥60 million
Building management, real estate, leasing
operations and OA-related operations

S$500,000
Manufacturing and sales of storage tanks,pressure vessels, and onshore and offshore
steel structures

Toyo Koken K.K.

TKK-USA Inc.

Establishment February 11, 1957

Establishment June 7, 2003

Capital¥90 million

Capital

US$10,000

Business

Design, manufacturing and construction of
winches and hoists, lift ladders, conveyors,balancers, industrial robots and othermachineryBusiness

Manufacturing and sales of storage tanks,pressure vessels, and onshore and offshore
steel structures

Toyo Kanetsu K.K. Annual Report 2015

7

Analysis of Operating Environment and Results
In the fiscal year ended March 31, 2015 (fiscal year 2015),

Fire Service Act. In the area of new LNG tank installations,the continuing depreciation of the yen and the strength of

however, although demand steadily increased for LNG,

the stock market encouraged an improvement in thewhich helped to reduce CO2 emissions, falling LNG prices

employment situation and an upturn in capital investment,

and a better balance of supply and demand resulted in a

lifting the Japanese economy into a gradual recovery

tendency of reduced investment in LNG projects, leading tomode. On the other hand, with the threat of economic

intensified competition for orders. Leveraging ourrecession from rising raw material prices and theadvantages–a strong track record of achievement andconsumption tax rise, the positive trends were not sufficientinternational competitiveness–we focused efforts on sales

to dispel the persistent mood about future uncertainty.

activities and were able to secure orders for a range of tankprojects in Southeast Asia. Orders for major new installation

Regarding the Plant & Machinery Business, economic

projects, however, remained slack.

growth in emerging nations and world population growth
are expected to bring expanding energy demand. In the

Against this background, net sales in this segment grew by

short term, however, the operating environment leaves

9.4% year on year to ¥29,425 million due to progress inno room for complacency, with slumping petroleum

both existing orders for domestic repair works and in major

prices and other factors resulting in delays in the

new LNG tank installation projects overseas. Operating

finalization of petroleum- and gas-related project

profit increased by 4.5% to ¥2,789 million, while orders

planning. Additionally, we face heightened geopoliticalreceived declined by 53.8% to ¥13,269 million.

risk and intensified competition with rivals.
In the Material Handling Systems Business, demographic
aging, falling birthrates, and changing lifestyles havecombined with the spread of smartphones and otherphenomena to bring marked growth in the Internet
merchandising and online supermarket sectors, resulting
in an increase in new installation projects at distribution
centers. Together with the rise in new airport facility
installation and upgrading projects, which stems fromthe growth in low-cost airline flights and increased tourist
visits to Japan, this contributed to a recovering trend in(2) Material Handling Systems BusinessIn the intensely competitive environment of the material
handling systems market, major contributions to net sales
were made by airport baggage handling systems and theMultishuttle automated case storage system for the Internet
sales and logistics industries. However, decreased
operations in high-profit sectors and increased costs
associated with bringing new factory on line resulted in a
decline in profits. In our maintenance divisions, we devoted
energies to expanding operational capacity and achieved
good results in both net sales and profits.

demand for material handling systems.
As a result, net sales in this segment increased by 3.5%
Amid this operating environment, consolidated net sales

year on year to ¥15,689 million, while operating income

increased by 8.4% year on year to ¥52,457 million, while

declined by 65.1% to ¥401 million and orders received

operating income declined by 17.3% to ¥3,588 million

grew by 15.1% to ¥16,482 million.

due to decreased operations in high-profit sectors.
Ordinary income fell by 18.5% to ¥3,891 million, but net
income grew by 4.8% to ¥3,019 million. This growth was
due to factors including the absence of the previous
fiscal year’s impairment loss, and insurance income fordamage due to heavy snowfall. Orders received,
meanwhile, decreased by 33.0% to ¥31,205 million.

Results of the segment are as follows.
(1) Plant & Machinery BusinessIn the maintenance market, we secured a steady stream ofcontracts, notably for modification works to floating-roof
storage tanks made necessary by a partial revision of the8

Toyo Kanetsu K.K. Annual Report 2015(3) Other Businesses
In businesses other than those above, we concentrated on
improving results in a way that fit the characteristics of eachbusiness. As a result, net sales increased by 15.9% year on
year to ¥7,341 million, operating profit rose by 4.1% to¥800 million, and orders received declined by 58.9% to¥1,453 million.

Business Risks
The following risks may affect the business results, stock

Project execution

price and financial position of the TKK Group.

The business results of the TKK Group may be affectedby situations where, for customer reasons, projects are

Potential Risks Associated with International

suspended or postponed or the project content is

Activities and Overseas Advanceotherwise altered.

The TKK Group conducts some operations in overseas
markets, primarily those of the Plant & Machinery

Further, as our projects take the form of inclusive

Business. Further, its subsidiary manufactures tankcontracts, deterioration in project profitability may impact

materials in Indonesia. These overseas operations carryon business results in the event of a sudden change ininherent risks as stated below, and the TKK Group’s

the economic situation leading to unforeseen rises inbusiness results and financial position may be adversely

equipment and material prices, transportation costs,

affected by such risks.

construction costs or other expenses, or in the event ofa natural disaster, outbreak of disease, serious accident(1) Unexpected changes in laws and regulations

or other eventualities.

(2) Political and economic instability(3) Difficulties in securing human resources

Intense Competition for Winning Orders(4) Tax system revisions that could be unfavorable to

All of the major businesses of the TKK Group are being

the TKK Group(5) Social confusion arising from acts of terror, war
or any other factors

operated under the make-to-order type system and the
TKK Group is facing severe competition to win orders.
Depending on the circumstances, we recognize thepossibility that a competitor may disregard profitability

Exchange Rate Fluctuations

and enter into price competition with the TKK Group.

The TKK Group’s business activities include

Although the TKK Group strives to reduce all kinds ofmanufacturing products, selling materials andcosts and reinforce its price competitiveness, such

implementing construction operations overseas. Foreign-unreasonable downward pressure on the TKK Group’s

currency-denominated accounting items such as sales,earnings may adversely affect the TKK Group’s business

expenses and assets are translated into Japanese yen

results and financial position.

for the purpose of preparing consolidated financial
statements. The exchange rates used in currency

Disasters

conversion may affect the yen-denominated value. As

The TKK Group takes necessary measures such as amost of our payments and receipts are denominated indaily check, drill and establishment of a contact system

U.S. dollars or euros, a stronger yen will adversely affectto continue our business activities to prepare for fire,

the TKK Group’s business, while a weaker yen will

earthquakes or other large-scale natural disasters. In

favorably affect the TKK Group’s business.

addition, major personal and property damages areadequately covered by insurance against such disasters.

The TKK Group makes an effort to minimize the adverse

However, the TKK Group’s business results and financial

effects of such exchange rate fluctuations by flexibly

position may be adversely affected if projections areentering into forward exchange contracts or option

exceeded by the scale of the direct or indirect material

contracts, and by implementing structural solutions suchdamage or human injury, or by the burden of restorationas using overseas manufacturing bases and internationallycosts or other expenses.

procuring raw materials. However, an unexpected change
in exchange rates may adversely affect the TKK Group’sbusiness results and financial position.

Toyo Kanetsu K.K. Annual Report 20159

Financial Section
For the years ended March 31, 2014 and 2015

The following “Consolidated financial statements, etc.” is an English translation of the consolidated financial statements, etc. of Toyo
Kanetsu Kabushiki Kaisha (“the Company”). The Company provides this translation for your reference and convenience only and without
any warranty as to its accuracy or otherwise.

10

Toyo Kanetsu K.K. Annual Report 2015

Consolidated financial statements, etc.
(1) Consolidated financial statements(i) Consolidated balance sheet
Previous fiscal year
(As of March 31, 2014)(Millions of yen)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Lease investment assets
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Accounts receivable - other
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Tools, furniture and fixtures, net
LandConstruction in progress
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

*1

*4
*4
*4
*4, *5*2

Current fiscal year
(As of March 31, 2015)(Millions of yen)

13,000
8,151
1,338
3,999
61
5,340
1,227
173
278
325
(56)
33,841

*1

2,142
1,025
191
9,441
109
1
12,912
393

*4

6,471
26
330
853
(314)
7,368
20,67354,515*3*4*4*4, *5*2(Thousandsof U.S.
dollars)

10,907
10,256
1,444
3,700
65
3,853
1,091
1,137
455
605
(54)
33,46390,77885,35912,01830,794540
32,068
9,080
9,463
3,786
5,035
(449)
278,510

2,190
1,603
192
9,498
91
1
13,577382

18,227
13,341
1,598
79,051757
8113,000
3,179

7,379
81
524
865
(345)
8,504
22,46455,92861,414
674
4,361
7,199
(2,871)
70,778
186,966
465,484

Toyo Kanetsu K.K. Annual Report 201511

Previous fiscal year
(As of March 31, 2014)(Millions of yen)
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Accrued expenses
Income taxes payable
Deferred tax liabilities
Advances received
Provision for bonuses
Provision for loss on order received
Provision for warranties for completed construction
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

12

Toyo Kanetsu K.K. Annual Report 2015

*4
*4

*4

*5

2,211
2,346
535
52
3,482
635
–
5,821
295
405
320
618
16,724
863
1
568
1,776
392
300
97
4,000
20,725Current fiscal year
(As of March 31, 2015)(Millions of yen)

*4
*4

*3

*4

*5

18,5801,104
16,373(3,951)
32,105

*5

1,033
830
(618)
225
1,471
212
33,78954,515*5(Thousandsof U.S.
dollars)

2,646
2,518
728
0
3,304
1,215
22
3,635
285
362
255
594
15,57022,022
20,9576,059
027,498
10,112
183
30,253
2,372
3,012
2,122
4,943
129,588

615
0
888
1,611
350
224
87
3,777
19,348

5,118
0
7,390
13,408
2,913
1,864
724
31,435
161,032

18,5801,104
18,797(4,957)33,525

154,640
9,188
156,446(41,256)
279,026

2,035
995
(549)
334
2,814
240
36,58055,92816,937
8,281(4,569)2,779
23,4201,997
304,452
465,484

(ii)Consolidated statement of income and comprehensive income
Previous fiscal year
(From April 1, 2013
to March 31, 2014)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Gain on sales of scraps
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Provision of allowance for doubtful accounts
Miscellaneous loss
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on liquidation of subsidiaries and associates
Insurance income
Other
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on retirement of non-current assets
Other
Total extraordinary losses
Income before income taxes and minority interests
Income taxes - current
Income taxes - deferred
Total income taxes
Income before minority interests
Minority interests in income
Net income
Minority interests in income
Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to minority interests

Current fiscal year
(From April 1, 2014
to March 31, 2015)(Millions of yen)
48,395*1, *340,0448,350*2, *3
4,009
4,341(Millions of yen)
52,457*1, *344,562
7,895*2, *3
4,306
3,588(Thousandsof U.S.
dollars)
436,595
370,886
65,70935,83829,862

57
175
106
55
82
477

50
195
–
50
72
369

416
1,622
–
416
599
3,071

20
–
5
15
41
4,776

15
4
25
21
66
3,891

124
33
208
174
549
32,384

–
556
17
574

–
4,627
141
4,777

409
3
14
427
4,491
1,012
572
1,585
2,905
26
2,879
26
2,905

–
6
–
6
4,459
1,667
(236)
1,430
3,028
9
3,019
9
3,028

–
49
–
49
37,111
13,874(1,964)
11,901
25,201
74
25,12674
25,201

258
(1)
–
61
–
317
3,223

1,001
–
164
86
108
1,361
4,390

8,331
–
1,364
715
898
11,32736,5374,362
27

36,304
224

110
–
32
142
*5

*6

3,168
55

*4

*6

Toyo Kanetsu K.K. Annual Report 2015

13

(iii) Consolidated statement of changes in equity
Previous fiscal year (From April 1, 2013 to March 31, 2014)(Millions of yen)
Shareholders’ equity
Capital stock

Capital surplus

18,5801,104Balance at beginning ofcurrent period
Changes of items during
periodRetained earnings

Treasury shares

13,753

Total shareholders’equity(3,906)29,530

Dividends of surplus

(476)

(476)

Net income

2,879

2,879

217

217

Reversal of revaluation
reserve for land
Purchase of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period

(44)

(44)

–

–

2,620

(44)

2,575

18,5801,104

16,373(3,951)

32,105

Accumulated other comprehensive income
Valuationdifferenceonavailablefor-salesecurities
Balance at beginning ofcurrent period
Changes of items during
period1

1,048

Foreigncurrencytranslation
adjustment(650)

Remeasurements ofdefinedbenefit plans–

Total
accumulated
othercomprehensive income
1,174

Minority
interests

Total net
assets157

30,862

Dividends of surplus(476)

Net income

2,879

Reversal of revaluation
reserve for land
Purchase of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period14775

Deferred
Revaluation
gains or losses reserve foron hedges
landToyo Kanetsu K.K. Annual Report 2015

217
(44)
258

(1)

(217)

32

225

296

55

352

258

(1)

(217)

32

225

296

55

2,927

1,033

–

830

(618)

225

1,471

212

33,789Current fiscal year (From April 1, 2014 to March 31, 2015)(Millions of yen)
Shareholders’ equity

Balance at beginning ofcurrent period
Changes of items during
periodCapital stock

Capital surplus

18,580

1,104

Retained earnings

Total shareholders’equityTreasury shares

16,373(3,951)

32,105

Dividends of surplus

(594)

(594)

Net income

3,019

3,019

Purchase of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period(1,005)(1,005)

–

–

2,424

(1,005)

1,419

18,5801,104

18,797(4,957)33,525

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning ofcurrent period
Changes of items during
period1,033

Revaluation
reserve for
land
830

Foreigncurrencytranslation
adjustment(618)

Remeasurements of defined
benefit plans
225

Total
accumulated
othercomprehensive income
1,471

Minority
interests

Total net
assets212

33,789Dividends of surplus(594)

Net income

3,019

Purchase of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period(1,005)
1,001

164

68

108

1,343

27

1,371

1,001

164

68

108

1,343

27

2,790

2,035

995

(549)

334

2,814

240

36,580Toyo Kanetsu K.K. Annual Report 201515

Current fiscal year (From April 1, 2014 to March 31, 2015)(Thousands of U.S. dollars)
Shareholders’ equity

Balance at beginning ofcurrent period
Changes of items during
periodCapital stock

Capital surplus

154,640

9,188

Retained earnings

Total shareholders’equityTreasury shares

136,271(32,883)

267,207

Dividends of surplus(4,943)(4,943)

Net income

25,12625,126

Purchase of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period(8,364)(8,364)––

20,174(8,364)

11,810154,640

9,188

156,446(41,256)

279,026

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment

Remeasurements of defined
benefit plans

Total
accumulated
othercomprehensive income

8,597

6,908

(5,143)

1,872

12,243

Balance at beginning ofcurrent period
Changes of items during
periodTotal net
assets

1,764

281,223

Dividends of surplus(4,943)

Net income

25,126

Purchase of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current
period16

Minority
interests

Toyo Kanetsu K.K. Annual Report 2015

(8,364)
8,331

1,364

565

898

11,177224

11,410

8,331

1,364

565

898

11,177

224

23,22016,937

8,281(4,569)2,779

23,4201,997

304,452

(iv) Consolidated statement of cash flows
Previous fiscal year
(From April 1, 2013
to March 31, 2014)(Millions of yen)
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Amortization of long-term prepaid expenses
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in net defined benefit liability
Decrease (increase) in net defined benefit asset
Increase (decrease) in provision for loss on order
received
Increase (decrease) in provision for warranties forcompleted construction
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on liquidation of subsidiaries andassociates
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on sales of non-current assets
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in lease investment assets
Decrease (increase) in inventories
Decrease (increase) in advance payments
Decrease (increase) in accounts receivable - other
Increase (decrease) in notes and accounts payable trade
Increase (decrease) in advances received
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

Current fiscal year
(From April 1, 2014
to March 31, 2015)(Thousandsof U.S.
dollars)(Millions of yen)

4,491
752
1
409
62
(22)
5
(42)

4,459
806
3
–
62
29
(19)
(76)

37,111
6,708
24
–
516
241
(158)
(632)

(70)

(50)

(416)

168

(65)

(540)

(233)
20
(167)

(246)
15
(301)

(2,047)124(2,505)

(110)

–

–

(9)
0
(9)
6

(8)
–
(9)
9

(66)
–
(74)
74

2,107

(2,083)(17,336)

(593)
3,090
66
35

(173)
1,621
(121)
(933)

(1,439)13,491(1,007)(7,765)(1,674)

219

1,822

(4,976)
288
3,602
227
(17)
(1,206)
2,606(2,200)
(279)
657
249
(14)
(1,105)(213)(18,310)(2,322)
5,468
2,072
(116)
(9,196)(1,772)

Toyo Kanetsu K.K. Annual Report 201517

Previous fiscal year
(From April 1, 2013
to March 31, 2014)(Millions of yen)
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of securities
Proceeds from sales and redemption of securities
Purchase of non-current assets
Proceeds from sales of non-current assets
Purchase of investment securities
Proceeds from sales and redemption of investment
securities
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
Repayments of long-term loans payable
Purchase of treasury shares
Cash dividends paid
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

18

Toyo Kanetsu K.K. Annual Report 2015

*1

Current fiscal year
(From April 1, 2014
to March 31, 2015)(Millions of yen)(Thousandsof U.S.
dollars)

(129)
116
(99)
99
(723)
259
(603)

(87)
160
(399)
399
(1,379)
15
(603)

(724)
1,331
(3,320)3,320(11,477)
124(5,018)

638

812

6,758

41
(402)

(37)
(1,120)(307)(9,321)

(440)
300
(142)
(10)
(474)
(767)

(122)
480
(535)
(1,005)(592)(1,774)(1,015)
3,995(4,452)(8,364)(4,927)(14,764)

374

586

4,877

1,811
15,082
16,893(2,521)
16,893
14,372(20,982)
140,599
119,617*1

NotesBasis of presenting the consolidated financial statements
1. Basis of presenting the consolidated financial statements
The accompanying consolidated financial statements of the Company and its domestic consolidated subsidiaries
are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain
respects as to application and disclosure requirements of International Financial Reporting Standards, and arecompiled from the consolidated financial statements prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan. The accounts of overseas-consolidated subsidiaries are based on theirfinancial statements prepared in conformity with generally accepted accounting principles and practices
prevailing in the respective countries in which the subsidiaries are incorporated.
2. United States dollar amounts
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥120.15=U.S. $1.00, the approximate rate of exchange prevailing at March 31, 2015, has been used in translation. The
inclusion of such amounts is not intended to imply that the Japanese yen has been or could be readily converted,
realized or settled in U.S. dollars at this rate or any other rates.
Significant accounting policies for preparation of the consolidated financial statements
1. Disclosure of scope of consolidation
Number of consolidated subsidiaries: 9 companies
Names of major consolidated subsidiaries are omitted since those names are described in “TKK Group
Company.”
As of April 1, 2015, Toyo Kanetsu Solutions K.K., a consolidated subsidiary of the Company, absorbed
K-Techno Inc., a consolidated subsidiary of the Company, through an absorption-type merger.
2. Disclosure about application of the equity method
Not applicable
3. Disclosure about fiscal years, etc. of consolidated subsidiaries
Of the Company’s consolidated subsidiaries, P.T. Toyo Kanetsu Indonesia, TKK-USA Inc., TOYO KANETSU
SINGAPORE PTE. LTD. and Toyo Kanetsu (Malaysia) SDN. BHD. have a closing date of December 31. In
preparation of consolidated financial statements, their financial statements as of December 31 are used. However,for major transactions that occurred between that date and the consolidated balance sheet date, the necessary
adjustments are made in the consolidated financial statements.
4. Disclosure of accounting policies(1) Accounting policy for measuring significant assets(i) Securitiesa) Held-to-maturity bonds: Stated at amortized cost (straight-line method)b) Available-for-sale securities
Available-for-sale securities with available fair market values are stated at fair value based on the market
price or the like on the consolidated balance sheet date (valuation differences are directly charged or
credited to net assets, and cost of securities sold is determined by the moving-average method).
Available-for-sale securities without available fair market value are valued at cost determined by themoving-average method.
(ii)

Derivatives
Derivatives are valued at fair value.

Toyo Kanetsu K.K. Annual Report 2015

19

(iii) Inventoriesa) Finished goods: Primarily, at cost using the first-in first-out method(The value on the balance sheet is written down to reflect a decline in profitability.)b) Work in process and supplies: Primarily, at cost using the specific identification method(The value on the balance sheet is written down to reflect a decline in profitability.)c) Raw materials: Primarily, at cost using the weighted-average method(The value on the balance sheet is written down to reflect a decline in profitability.)(2) Accounting policy for depreciation of significant assets(i) Property, plant and equipment
The Company and its domestic consolidated subsidiaries use the declining balance method, and overseas
consolidated subsidiaries use the straight-line method in accordance with provisions of accounting standards
in their respective countries.
However, the Company and its domestic consolidated subsidiaries use the straight-line method to depreciatebuildings (excluding facilities attached to buildings) acquired on or after April 1, 1998.
The estimated useful lives of major items are as follows:
Buildings and structures
3 to 57 years
Machinery and equipment
3 to 17 years(ii) Intangible assets
Intangible assets are amortized using the straight-line method.
Software for internal use is amortized using the straight-line method over the estimated useful life asinternally determined (5 years).
(3) Accounting policy for significant provisions(i) Allowance for doubtful accounts
To cover losses from bad debts for notes and accounts receivable - trade, loans receivable and others, anallowance for doubtful accounts is provided based on historical experience of bad debts for general
receivables. For specific receivables such as highly doubtful receivables, the collectibility is individuallyconsidered and the estimated amount of uncollectible accounts is provided as the allowance.
(ii) Provision for bonuses
To pay bonuses to employees, out of the estimated amount to be paid in the following fiscal year, an amountattributable to the current fiscal year is recorded.
(iii) Provision for loss on order received
To make provision for losses on orders received, as for existing construction, for which an amount of loss canbe reasonably estimated at the end of the current fiscal year, an expected amount of loss in future is recorded
as the provision.
(iv) Provision for warranties for completed construction
To cover costs of warranty against defects and after-sales service for completed construction, an amount isrecorded based on the historical loss rate as well as consideration of an amount for individual constructionthat is expected to incur in future at the end of the current fiscal year.
(4) Method for accounting for retirement benefits(i) Method of attributing estimated retirement benefits to periods
For the purpose of attributing estimated retirement benefits over the period up to the end of the current fiscal
year in the calculation of retirement benefit obligations, the benefit formula method is applied.
(ii) Method of amortizing actuarial gain or loss and past service cost
Past service costs are recorded as an expense in the year they are incurred.
With regard to actuarial gain or loss, the amount is amortized by the straight-line method over a certain term
within the average remaining service period of the eligible employees (5 years) for each applicable fiscal year,
and expensed from the year following the year in which the gain or loss is recognized.
(5) Accounting policies for significant revenues and expenses(i) Recognition of revenues and costs of completed construction contracts
The percentage-of-completion method is applied to construction showing certainty of performance on the
progress made up until the end of the current fiscal year (the cost-to-cost method is applied to estimate theextent of progress toward completion), and the completed-contract method is applied to other construction.
(ii) Standards for recognition of revenues and expenses related to finance lease transactions
Sales and costs are recognized at the time of receiving lease payments.

20

Toyo Kanetsu K.K. Annual Report 2015

(6) Accounting policy for hedging(i) Method of hedge accounting
In principle, the deferral accounting is applied. The assignment method is applied to forward foreign exchange
contracts that meet requirements thereof, and the exceptional treatment is applied to interest rate swaps thatmeet requirements thereof.
(ii) Hedging instruments and hedged items
Hedging instrument: ........... Forward foreign exchange contracts, Interest rate swaps
Hedged item: ...................... Forecast transactions denominated in foreign currencies and borrowings(iii) Hedging policy
In accordance with the “Rules on Handling of Derivative Transactions” established by the Company, theCompany and its consolidated subsidiaries (collectively, the “Group”) do not enter into any derivativetransaction for speculative purposes but use derivative transactions only to hedge exchange rate fluctuation
risk and interest rate fluctuation risk.
(iv) Method of assessing the hedging effectiveness
The Group confirms effectiveness by comparing and examining cash flows of hedging instruments andhedged items in advance. However, the Group omits assessment of effectiveness on interest rate swaps towhich the exceptional treatment is applied.
(7) Accounting policy for goodwill
Goodwill is amortized evenly over the period of 5 years.
(8) Scope of cash and cash equivalents in consolidated statement of cash flows
Cash and cash equivalents include cash in hand, readily available deposits and short-term investments withmaturities of three months or less from the purchase date whose value is not subject to significant fluctuation
risk.
(9) Other significant information for preparation of the consolidated financial statements
Accounting policy for consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of taxes.

Notes - Changes in accounting policies
Application of accounting standard for retirement benefits
The Company has applied the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, May 17,
2012. Hereinafter, the “Statement No. 26.”) and “Guidance on Accounting Standard for Retirement Benefits”(ASBJ Guidance No. 25, March 26, 2015. Hereinafter, the “Guidance No. 25.”), in terms of the provisions of themain clauses of Paragraph 35 of the Statement No. 26 and Paragraph 67 of the Guidance No. 25, effective from thecurrent fiscal year. The Company has reviewed the calculation methods of retirement benefit obligations andservice cost, changed the method of attributing estimated retirement benefits to periods from a straight-line basis toa benefit formula basis, and changed the method of determining the discount rate from the discount rate based on
the period approximate to the expected average remaining service period of the eligible employees to the method inwhich the discount rate is determined using a single weighted average discount rate reflecting the estimated timing
and amount of benefit payments. Application of the Statement No. 26 and Guidance No. 25 is in line with thetransitional measures provided in Paragraph 37 of the Statement No. 26.
This change did not affect the assets, liabilities and net assets as of the end of the current fiscal year.
In addition, the change did not affect operating income, ordinary income or income before income taxes andminority interests.
The change did not affect net assets per share.

Toyo Kanetsu K.K. Annual Report 201521

Notes - Changes in presentation
Consolidated balance sheet“Accounts receivable - other,” which was included in “other” under current assets until the previous fiscal year, hasbeen set down separately from the current fiscal year since significance of the amount has increased. In order toreflect this change in the method of presentation, the amount in the consolidated financial statements for theprevious fiscal year has been reclassified.
As a result, ¥499 million ($4,153 thousand) included in “other” under current assets in the consolidated balance
sheet as of the end of the previous fiscal year has been reclassified to “accounts receivable - other” of ¥173 million($1,439 thousand) and “other” of ¥325 million ($2,704 thousand).
Consolidated statement of income and consolidated statement of comprehensive income“Provision of allowance for doubtful accounts,” which was included in “miscellaneous loss” under non-operating
expenses for the previous fiscal year, has been set down separately from the current fiscal year since significance of
the amount has increased. In order to reflect this change in the method of presentation, the amount in the
consolidated statement of income and consolidated statement of comprehensive income for the previous fiscal year
has been reclassified.
As a result, ¥21 million ($174 thousand) included in “miscellaneous loss” under non-operating expenses in the
consolidated statement of income and consolidated statement of comprehensive income for the previous fiscal year
has been reclassified to “provision of allowance for doubtful accounts” of ¥5 million ($41 thousand) and“miscellaneous loss” of ¥15 million ($124 thousand).
“Gain on sales of investment securities” under extraordinary income (¥8 million ($66 thousand) for the current
fiscal year), which was set down separately for the previous fiscal year, has been included in “other” under
extraordinary income from the current fiscal year since significance of the amount has decreased. In order to reflect
this change in the method of presentation, the amount in the consolidated statement of income and consolidated
statement of comprehensive income for the previous fiscal year has been reclassified.
As a result, ¥21 million ($174 thousand) included in “gain on sales of investment securities” under extraordinary
income in the consolidated statement of income and consolidated statement of comprehensive income for theprevious fiscal year has been reclassified to “other.”“Loss on retirement of non-current assets” included in “other” under extraordinary losses for the previous fiscal
year has been set down separately from the current fiscal year since significance of the amount has increased. Inorder to reflect this change in the method of presentation, the amount in the consolidated statement of income andconsolidated statement of comprehensive income for the previous fiscal year has been reclassified.
As a result, ¥16 million ($133 thousand) included in “other” under extraordinary losses has been reclassified to“loss on retirement of non-current assets” of ¥3 million ($24 thousand) and “other” of ¥14 million ($116 thousand).
Retirement benefits
In accordance with the amendments to the “Guidance No. 25,” the method of presenting notes on retirement
benefits under the multi-employer plan has been changed, and the relevant amount in the consolidated financial
statements for the previous fiscal year has been reclassified.
Details of the reclassification and the amount of the main item in the consolidated financial statements for theprevious fiscal year are stated in the notes.

22

Toyo Kanetsu K.K. Annual Report 2015

Notes - Consolidated balance sheet*1.

Use of a certain part of the Company’s current deposits is restricted by a bank in return for its issuing a bankguarantee, which was provided by the Company to the Ministry of Economy and Planning of the United ArabEmirates in connection with corporate registration in the country. In addition, use of a certain part of theCompany’s time deposits is restricted by a bank in return for its issuing a bank guarantee, which was provided
by the Company to the Department of Labour in Negara Brunei Darussalam in order for the Company toacquire foreign work permits available in the country.
The restricted deposits are as follows:
Previous fiscal year
(As of March 31, 2014)
Current deposit
Time deposit*2.

¥1 million(50,000 AED)
¥24 million(300,000 BND)

¥1 million(50,000 AED)
¥33 million(380,000 BND)

$8 thousand$274 thousand

Accumulated depreciation of property, plant and equipment are as follows:
Previous fiscal year
(As of March 31, 2014)¥13,448 million*3.

Current fiscal year
(As of March 31, 2015)

Current fiscal year
(As of March 31, 2015)¥13,166 million$109,579 thousand

Both inventories and provision for loss on order received with regard to construction contracts that are
expected to result in losses are presented without offsetting one against the other. Of the inventories withregard to construction contracts that are expected to result in losses, the amount corresponding to theprovision for loss on order received is as follows:
Previous fiscal year
(As of March 31, 2014)

Work in process¥– million

Current fiscal year
(As of March 31, 2015)¥0 million$0 thousand*4. Assets pledged and liabilities secured
Assets pledged and liabilities secured as collateral are as follows:
Assets pledged
Previous fiscal year
(As of March 31, 2014)
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Land
Total

Current fiscal year
(As of March 31, 2015)¥547 million[¥525 million]
0
[0]
0
[0]
5,523
[5,458]¥498 million[¥475 million]
0
[0]
0
[0]
5,523
[5,458]$4,144 thousand[$3,953 thousand]
0
[0]
0
[0]
45,967[45,426]

6,071[5,984]

6,022[5,934]50,120[49,388]

Liabilities secured
Previous fiscal year
(As of March 31, 2014)
Short-term loans payable
Long-term loans payable
Total

Current fiscal year
(As of March 31, 2015)¥810 million[¥810 million]
587
[500]

¥1,025 million[¥956 million]
480
[480]

$8,531 thousand[$7,956 thousand]
3,995[3,995]

1,398[1,310]1,505[1,436]

12,526[11,951]

In the above table, figures in brackets present mortgages on factory foundation and the relevant debts. The amountsof land are after revaluation.

Toyo Kanetsu K.K. Annual Report 2015

23

*5.

In accordance with the “Act on Revaluation of Land” (Act No. 34 promulgated on March 31, 1998), theCompany revalues its land for business use and, as for the valuation difference, records an amount equivalent
to tax relating to the valuation difference as “deferred tax liabilities for land revaluation” in the liabilities
section and an amount after deducting said amount as “revaluation reserve for land” in the net assets section.
Method of revaluation – The Company revalues the land by the calculation method where a value based on theassessed value of fixed asset tax set forth in Article 2, Item 3 and road rating set forth in Article 2, Item 4 of
the “Order for Enforcement of the Act on Revaluation of Land” (Cabinet Order No. 119 promulgated on
March 31, 1998) is reasonably adjusted.

Date of revaluation – March 31, 2002
Previous fiscal year
(As of March 31, 2014)
Difference between the year-end value ofrevaluated land and the book value after therevaluation¥(3,299) million

Current fiscal year
(As of March 31, 2015)¥(3,265) million$(27,174) thousand

Notes - Consolidated statement of income and consolidated statement of comprehensive income*1.

Provision for loss on order received included in cost of sales
Previous fiscal year
(From April 1, 2013
to March 31, 2014)¥16 million*2.

Salaries and allowances
Bonuses
Provision for bonuses
Retirement benefit expenses
Provision of allowance for doubtful accounts¥1,437 million
341
105
116
(5)

$532 thousand

Current fiscal year
(From April 1, 2014
to March 31, 2015)¥1,462 million
429
97
88
4

$12,168 thousand
3,570
807
732
33

Total of research and development expenses included in general and administrative expenses andmanufacturing costs
Previous fiscal year
(From April 1, 2013
to March 31, 2014)¥199 million*4.

¥64 million

Major components of selling, general and administrative expenses
Previous fiscal year
(From April 1, 2013
to March 31, 2014)*3.

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

Current fiscal year
(From April 1, 2014
to March 31, 2015)¥327 million$2,721 thousand

Insurance income

The amount is presented on a net basis by offsetting loss due to disaster against proceeds from insurance income
due to disaster.
The amount consists primarily of a net amount by offsetting loss on the snow disaster occurred at the Company’s
Chiba Plant in the previous fiscal year against proceeds from insurance income corresponding to the loss.

24

Toyo Kanetsu K.K. Annual Report 2015

*5.

Impairment loss

The Group recorded impairment loss on the asset groups as follows:
Previous fiscal year (From April 1, 2013 to March 31, 2014)
Location

Use

Type

Kamagaya City, Chiba

Idle assets

Land and buildings

In principle, the Group’s assets for business use are grouped on the basis of the business, and the Group’s idle assets
are grouped by each asset.
For the fiscal year ended March 31, 2014, an impairment loss (¥409 million) was recorded under extraordinary
losses since the Company recognized that land, buildings and other non-current assets owned by the Company
continued to be idle. The amount consists of buildings and structures of ¥233 million, tools, furniture and fixturesof ¥0 million and land of ¥176 million.
The recoverable amount of this asset group was measured based on the net realizable value.
Current fiscal year (From April 1, 2014 to March 31, 2015)
Not applicable*6.

Reclassification adjustments and tax effects relating to other comprehensive income
Previous fiscal year
(From April 1, 2013
to March 31, 2014)

Valuation difference on available-for-sale securities:
Amount recorded during the period
Reclassified amountCurrent fiscal year
(From April 1, 2014
to March 31, 2015)¥423 million(21)¥1,306 million–$10,869 thousand–

Pre-adjustment of tax effectTax effect amount

401
(143)

1,306
(304)

10,869(2,530)

Valuation difference on available-for-salesecurities

258

1,001

8,331

Deferred gains or losses on hedges:
Amount recorded during the period

(2)

–

–

Pre-adjustment of tax effectTax effect amount

(2)
1

–
–

–
–

Deferred gains or losses on hedges

(1)

–

–

Revaluation reserve for land:
Amount recorded during the period
Reclassified amount

–
–

–
–

–
–

Pre-adjustment of tax effectTax effect amount

–
–

–
164

–
1,364

Revaluation reserve for land

–

164

1,364

Foreign currency translation adjustment:
Amount recorded during the period
Reclassified amount

108
(86)

86
–

715
–

Pre-adjustment of tax effectTax effect amount

22
39

86
–

715
–

Foreign currency translation adjustment

61

86

715

Remeasurements of defined benefit plans, net of tax:
Amount recorded during the period
Reclassified amount

–
–

262
(118)

2,180
(982)

Pre-adjustment of tax effectTax effect amount

–
–

143
(34)

1,190
(282)

Remeasurements of defined benefit plans,
net of tax

–

108

898

Total other comprehensive income

317

1,361

11,327

Toyo Kanetsu K.K. Annual Report 201525

Notes - Consolidated statement of changes in equity
Previous fiscal year (From April 1, 2013 to March 31, 2014)
1.
Matters concerning class and total number of issued shares, and class and number of treasury shares
Number of shares at
beginning of period(Thousands of shares)
Number of shares Number of shares atdecreased in period
end of period

Number of shares
increased in period

Issued shares
Common shares

138,730––

138,730

Total

138,730––

138,730

Common shares

19,584152–

19,736

Total

19,584152–

19,736

Treasury shares(Note)

2.

The number of common shares in treasury increased by 152 thousand shares due to purchase of missing shares of 116
thousand shares and purchase of shares less than one unit of 35 thousand shares.

Matters concerning dividends(1) Cash dividends paid
Resolution

Class of shares

Total cash
dividends

Ordinary General Meeting of
Shareholders on June 27,
2013

Common shares¥476
million(2)

Dividends per
share
¥4

Record date

Effective date

March 31, 2013

June 29, 2013

Dividends whose record dates are in the current fiscal year but whose effective dates fall in the next
fiscal year

Resolution

Class ofsharesTotal cash
dividends

Source ofdividends

Dividends per
share

Ordinary General
Meeting ofCommon¥594
Retained
Shareholders on Junesharesmillionearnings
27, 2014(Note)The dividends per share include special dividends of ¥1.

¥5

Record date

Effective date

March 31, 2014

June 30, 2014

Current fiscal year (From April 1, 2014 to March 31, 2015)
1.
Matters concerning class and total number of issued shares, and class and number of treasury shares
Number of shares at
beginning of period

Number of shares
increased in period

Number of shares
decreased in period(Thousands of shares)
Number of shares at
end of period

Issued shares
Common shares

138,730––

138,730

Total

138,730––

138,730

Common shares

19,736

3,960–

23,697

Total

19,736

3,960–

23,697

Treasury shares(Note)

2.

The number of common shares in treasury increased by 3,960 thousand shares due to purchase of treasury shares basedon a resolution by the Board of Directors of 3,940 thousand shares and purchase of shares less than one unit of 20
thousand shares.

Matters concerning dividends(1) Cash dividends paid
Resolution

26

Total cash
dividends

Dividends per
share

¥594
million¥5[$4,943[$0.04]thousand]The dividends per share include special dividends of ¥1 ($0.00).

Ordinary General Meeting of
Shareholders on June 27,
2014(Note)Class of shares

Toyo Kanetsu K.K. Annual Report 2015

Common shares

Record date

Effective date

March 31, 2014

June 28, 2014

(2)Dividends whose record dates are in the current fiscal year but whose effective dates fall in the next
fiscal year

Resolution

Class ofsharesTotal cash
dividends

Source ofdividends

Dividends per
share

Record date

Effective dateOrdinary General
Meeting of
Shareholders on June
26, 2015

Commonshares¥460
million[$3,828
thousand]Retainedearnings¥4[$0.03]

March 31, 2015

June 29, 2015

Notes - Consolidated statement of cash flows*1.

Reconciliation of ending balance of cash and cash equivalents with account balances per balance sheet
Previous fiscal year
(From April 1, 2013
to March 31, 2014)

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

Cash and deposits
Time deposits with maturity over 3 months
Restricted deposits
Commercial paper (Securities)
Money held in trust (Securities)¥13,000 million
(80)
(25)
499
3,500

¥10,907 million
–
(35)
–
3,500

$90,778 thousand
–
(291)
–
29,130Cash and cash equivalents

16,893

14,372

119,617

Notes - Leases(Borrower)
Operating lease transactions
Future lease payments under non-cancelable operating leases
Previous fiscal year
(As of March 31, 2014)

Due within 1 year

¥6 million$49 thousand

9

13

108

23

19

158

¥13 million

Due over 1 year
Total

Current fiscal year
(As of March 31, 2015)(Lender)
Finance lease transactions(1) The components of lease investment assets
Current assets
Previous fiscal year
(As of March 31, 2014)

Current fiscal year
(As of March 31, 2015)

Lease payments receivable¥1,469 million¥1,594 million

Estimated residual value

69

71

590

(200)

(221)

(1,839)

1,338

1,444

12,018Amount equivalent to interest income
Lease investment assets$13,266 thousand(2)

Amounts expected to be collected on lease payments receivable of lease investment assets after consolidatedbalance sheet dateCurrent assets(Millions of yen)Previous fiscal year (As of March 31, 2014)
Within 1 year
Lease investment
assets

501

Over 1 year
to 2 years

Over 2 years
to 3 years

Over 3 years
to 4 years

Over 4 years
to 5 years

Over 5 years

356

262

247

102

–

Toyo Kanetsu K.K. Annual Report 201527

(Millions of yen)
Current fiscal year (As of March 31, 2015)
Within 1 year
Lease investment
assets491

Over 1 year
to 2 years

Over 2 years
to 3 years

Over 3 years
to 4 years

Over 4 years
to 5 years

Over 5 years

397

383

238

83

–

(Thousands of U.S. dollars)
Current fiscal year (As of March 31, 2015)
Within 1 year
Lease investment
assets4,086Over 1 year
to 2 years

Over 2 years
to 3 years

Over 3 years
to 4 years

Over 4 years
to 5 years

Over 5 years

3,304

3,187

1,980

690

–

Notes - Financial instruments
1.
Status of financial instruments(1) Policy on treatment of financial instruments
The Group raises funds necessary to run its business smoothly by borrowing from banks. In the case where theGroup has temporary surplus funds, it invests them only in safe financial instruments.
The Group uses derivative transactions to hedge various risks described in (2) in accordance with the “Rules on
Handling of Derivative Transactions” established by the Company and has a policy not to enter into any
speculative transaction.
(2) Content and risks of financial instruments and risk management system therefor
The Group’s notes and accounts receivable - trade are subject to credit risk of its customers, and its certain
receivables denominated in foreign currencies are subject to exchange rate fluctuation risk. The Group mitigatesthe credit risk of its customers by periodically confirming whether there is any overdue receivable using an aging
schedule and other documents and the exchange rate fluctuation risk such as by borrowing in foreign currencies
as needed.
The Company’s securities are subject to credit risk of its investees, but the Company invests surplus funds in safe
short-term money trusts with high ratings thorough prescribed internal procedures.
The Group’s investment securities are subject to credit risk of its investees and market price fluctuation risk.
They are equity securities of listed companies with which the Group has business relationships, most of which
are categorized as available-for-sale securities, and the Group periodically ascertains the fair value thereof.
Certain bond securities include hybrid financial instruments that were accounted for with embedded derivatives.
The Group’s notes and accounts payable - trade and accrued expenses are subject to liquidity risk, and its certain
payables denominated in foreign currencies are subject to exchange rate fluctuation risk. The Group mitigates theliquidity risk by periodically preparing a schedule of cash receipts and disbursements and other documents andthe exchange rate fluctuation risk by forward exchange contracts and other means as needed.
Of borrowings, short-term loans payable are primarily for daily business transactions, and long-term loans
payable are primarily for temporary advances on large-scale projects. Variable-rate borrowings are subject tointerest rate fluctuation risk, for most of the long-term loans payable, the Group uses interest rate swaps as
hedging instruments for respective contracts in order to hedge the fluctuation risk of the interest rates to be paid
and fix interest expenses. The Group limits interest rate swaps to those to which the exceptional treatment can beapplied and omits assessment of hedge effectiveness thereon. The Group mitigates the liquidity risk by
periodically preparing a schedule of cash receipts and disbursements and other documents.
The Group executes and manages derivative transactions in accordance with the Company’s Rules on Handlingof Derivative Transactions and, when using derivatives, enters into transactions with financial institutions withhigh ratings to mitigate credit risk. Please see “Accounting policy for hedging” of “Disclosure of accounting
policies” in “Significant accounting policies for preparation of consolidated financial statements” describedabove for the hedging instruments, hedging policy, method of assessing the hedging effectiveness and otherinformation on hedge accounting.
(3) Supplementary explanation concerning fair values of financial instruments
Fair values of financial instruments comprise values based on market prices and reasonably measured values
where market prices are unavailable. As several variable factors are incorporated in calculating the relevant fairvalue, the resulting amount may vary depending on the different preconditions employed. In addition, thecontract amounts of derivative transactions, mentioned in “Notes - Derivatives” in Notes, should not be
considered indicative of the sizes of the market risks involved in the derivative transactions.

28

Toyo Kanetsu K.K. Annual Report 2015

2.
Fair values of financial instruments
Carrying amounts on the consolidated balance sheet, fair values and differences therebetween of the financial
instruments as of March 31, 2014 and 2015, are as shown below. However, financial instruments whose fair values
are deemed to be extremely difficult to determine are not included therein (Note 2).
Previous fiscal year (As of March 31, 2014)(Millions of yen)
Carrying amount on
the consolidatedbalance sheet(1) Cash and deposits(2) Notes and accounts receivable - trade
Allowance for doubtful accounts (*)

Difference

13,0008,151(47)

13,000

–

8,103

8,103

–

3,999
5,471

3,999
5,466

–
(5)

Total assets

30,57530,569(5)Notes and accounts payable - trade
Short-term loans payable
Accrued expenses
Long-term loans payable(including within 1 year)

2,211
2,346
3,482

2,211
2,346
3,482

–
–
–

1,398

1,405

7

Total liabilities

9,440

9,447

7

–
–
–

–
–
–

–
–
–

(3) Securities(4) Investment securities
(1)
(2)
(3)
(4)

Fair value

Derivatives(1)
Those not qualifying for hedge accounting(2)
Those qualifying for hedge accounting

Total derivatives–––(*) Amounts of allowance for doubtful accounts separately included in notes and accounts receivable - trade are excluded.

Toyo Kanetsu K.K. Annual Report 201529

Current fiscal year (As of March 31, 2015)(Millions of yen)
Carrying amount on
the consolidatedbalance sheet(1) Cash and deposits(2) Notes and accounts receivable - trade
Allowance for doubtful accounts (*)

Difference

10,907
10,256(44)

10,907–

10,212

10,212

–

3,700
6,453

3,700
6,457

–
3

Total assets

31,274

31,2783

Notes and accounts payable - trade
Short-term loans payable
Accrued expenses
Long-term loans payable(including within 1 year)

2,646
2,518
3,304

2,646
2,518
3,304

–
–
–

1,343

1,351

8

Total liabilities

9,813

9,821

8

–
–
–

–
–
–

–
–
–

–

–

–

(3) Securities(4) Investment securities
(1)
(2)
(3)
(4)

Fair value

Derivatives(1)
Those not qualifying for hedge accounting(2)
Those qualifying for hedge accounting
Total derivatives(Thousands of U.S. dollars)
Carrying amount on
the consolidatedbalance sheet(1) Cash and deposits(2) Notes and accounts receivable - trade
Allowance for doubtful accounts (*)

Difference

90,77885,359(366)

90,778–84,99384,993–30,79453,70730,79453,741–
24

Total assets

260,291

260,324

24

Notes and accounts payable - trade
Short-term loans payable
Accrued expenses
Long-term loans payable(including within 1 year)

22,022
20,95727,49822,022
20,95727,498–––

11,177

11,24466

Total liabilities

81,672

81,739

66

–
–
–

–
–
–

–
–
–

(3) Securities(4) Investment securities
(1)
(2)
(3)
(4)

Fair value

Derivatives(1)
Those not qualifying for hedge accounting(2)
Those qualifying for hedge accounting

Total derivatives–––(*) Amounts of allowance for doubtful accounts separately included in notes and accounts receivable - trade are excluded.

30

Toyo Kanetsu K.K. Annual Report 2015

(Notes) 1.

Calculation method of fair values of financial instruments and matters concerning short-term investment securities
and derivatives
Assets(1) Cash and deposits and (2) Notes and accounts receivable - trade
Because these accounts are settled in a short period, their fair values approximate their book values. Therefore,
the fair values are based on the book values.
(3) Securities
Because this account has a short-term maturity, its fair value approximates its book value. Therefore, the fairvalue is based on the book value.
(4) Investment securities
Fair value of this account is based on the price on exchanges, the price provided by counterparty financial
institutions or other prices. Please refer to “Notes - Securities” for the notes.
Liabilities(1) Notes and accounts payable - trade, (2) Short-term loans payable and (3) Accrued expenses
Because these accounts are settled in a short period, their fair values approximate their book values. Therefore,
the fair values are based on the book values.
(4) Long-term loans payable (including within 1 year)
Fair value of this account is determined by discounting the total amount of principal and interest at theinterest rate available for a similar borrowing. Fair values of long-term loans payable with variable rates, towhich the exceptional treatment for the interest rate swap is applied, are determined by discounting the total
amount of principal and interest accounted for with the relevant interest rate swaps at the reasonably
estimated interest rates applied to similar borrowings.
Derivatives
Please refer to “Notes - Derivatives” in Notes.

2.
3.

“Assets (4) Investment securities” do not include unlisted equity securities (carrying amount on the consolidatedbalance sheet of ¥925 million ($7,698 thousand)) because there is no market price and their future cash flows
cannot be estimated and accordingly it is extremely difficult to ascertain their fair values.
Projected redemption amounts for monetary claims and securities with maturities after the consolidated balance
sheet datePrevious fiscal year (As of March 31, 2014)(Millions of yen)
Due within one
year

Due after fiveDue after one year
years through ten
through five years
years
–
–
–

–
–
–

Due over ten
years

Cash
Notes and accounts receivable - trade
Securities
Investment securities
Held-to-maturity bonds

12,975
8,103
3,999

–
–
–

–

1,700

–

–

Total

25,079

1,700

–

–

Current fiscal year (As of March 31, 2015)(Millions of yen)
Due within one
year
Cash
Notes and accounts receivable - trade
Securities
Investment securities
Held-to-maturity bonds
Available-for-sale securities
Total

Due after fiveDue after one year
years through ten
through five years
years

Due over ten
years

10,876
9,961
3,700

–
251
–

–
–
–

–
–
–

–

1,100

–

–

–

199

–

–

24,537

1,551

–

–

Toyo Kanetsu K.K. Annual Report 201531

Due within one
year
Cash
Notes and accounts receivable - trade
Securities
Investment securities
Held-to-maturity bonds

90,52082,90430,794

–
2,089
–

–
–
–

–

9,155
1,656

–

–

–

–

–

204,219

12,908––Available-for-sale securities
Total

4.

(Thousands of U.S. dollars)
Due after fiveDue after one year
Due over ten
years through ten
through five years
years
years
–
–
–

Scheduled repayment amounts of long-term loans payable and other interest-bearing liabilities
Previous fiscal year (As of March 31, 2014)
Over 1 year
to 2 years

Over 2 years
to 3 years

Over 3 years
to 4 years

728

60

60

Over 1 year
to 2 years

Over 2 years
to 3 years

Over 3 years
to 4 years

60

60

15

Over 1 year
to 2 years

Over 2 years
to 3 years

499

499

Long-term loans payable(Millions of yen)Over 4 years
to 5 years
15

Current fiscal year (As of March 31, 2015)

Long-term loans payable

Long-term loans payable(Millions of yen)Over 4 years
to 5 years
480(Thousands of U.S. dollars)Over 3 years
Over 4 years
to 4 years
to 5 years
124

3,995

Notes - Securities
1.

Held-to-maturity bonds
Previous fiscal year (As of March 31, 2014)(Millions of yen)
Type

Securities for which the fair value
exceeds the carrying amount on the
consolidated balance sheet

Securities for which the fair value
does not exceed the carrying amounton the consolidated balance sheet

32

Toyo Kanetsu K.K. Annual Report 2015

Fair value

Difference(1) Government
bonds and municipal
bonds, etc.

100

101

1

(2) Corporate bonds

–

–

–

(3) Other

500

503

3

Subtotal

600

604

4

(1) Government
bonds and municipal
bonds, etc.

–

–

–

(2) Corporate bonds(3) Other
Subtotal

Total

Carrying amount on
the consolidatedbalance sheet

–

–

–

1,100

1,089

(10)

1,100

1,089

(10)

1,700

1,694

(5)

Current fiscal year (As of March 31, 2015)(Millions of yen)
Type

Securities for which the fair value
exceeds the carrying amount on the
consolidated balance sheet

Fair value

Difference(1) Government
bonds and municipal
bonds, etc.

100

100

0

(2) Corporate bonds

–

–

–

1,000

1,003

3

1,100

1,104

4

–

–

–

(3) Other
Subtotal

Securities for which the fair value
does not exceed the carrying amounton the consolidated balance sheet

Carrying amount on
the consolidatedbalance sheet(1) Government
bonds and municipal
bonds, etc.
(2) Corporate bonds

100

99

(0)

(3) Other

100

99

(0)

200

199

(0)

1,300

1,303

3

Subtotal
Total(Thousands of U.S. dollars)
Type

Securities for which the fair value
exceeds the carrying amount on the
consolidated balance sheet

Difference

832

832

0

(2) Corporate bonds

–

–

–

8,322

8,347

24

9,155

9,188

33

–

–

–

(3) Other(1) Government
bonds and municipal
bonds, etc.
(2) Corporate bonds

832

823

(0)

(3) Other

832

823

(0)

1,664

1,656

(0)

10,81910,84424

Subtotal
Total

Fair value(1) Government
bonds and municipal
bonds, etc.

Subtotal

Securities for which the fair value
does not exceed the carrying amounton the consolidated balance sheet

Carrying amount on
the consolidatedbalance sheet

Toyo Kanetsu K.K. Annual Report 2015

33

2.

Available-for-sale securities (securities classified as other securities under Japanese GAAP)
Previous fiscal year (As of March 31, 2014)(Millions of yen)Type(1) Stocks

Carrying amount on
the consolidatedbalance sheet

Acquisition cost

Difference

3,429

1,735

1,694

(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

(iii) Other

–

–

–

(3) Other–––

Subtotal

3,429

1,735

1,694

(1) Stocks

342

424

(82)

(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

(iii) Other

–

–

–

(3) Other

–

–

–

342

424

(82)

(2) Bonds

Securities for which the carrying
amount on the consolidated balance
sheet exceeds the acquisition cost(2) Bonds

Securities for which the carrying
amount on the consolidated balance
sheet does not exceed the acquisition
cost

Subtotal(Note)

34

Total
3,771
2,159
1,611
“Available-for sale securities” in the above table do not include unlisted equity securities (carrying amount on the
consolidated balance sheet of ¥1,000 million) because they have no market value and accordingly it is extremely
difficult to ascertain their fair values. In addition, “Available-for sale securities” do not include commercial papers
and other securities (¥3,999 million) because they have short term maturities and their fair values approximate theirbook values.

Toyo Kanetsu K.K. Annual Report 2015

Current fiscal year (As of March 31, 2015)(Millions of yen)Type(1) Stocks

Carrying amount on
the consolidatedbalance sheet

Acquisition cost

Difference

5,043

2,056

2,986

(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

(iii) Other

–

–

–

(2) Bonds

Securities for which the carrying
amount on the consolidated balance
sheet exceeds the acquisition cost(3) Other

–

–

–

5,043

2,056

2,986

110

178

(68)

(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

199

200

(0)

Subtotal(1) Stocks(2) Bonds

Securities for which the carrying
amount on the consolidated balance
sheet does not exceed the acquisition
cost(iii) Other(3) Other
Subtotal
Total

–

–

–

310

378

(68)

5,353

2,435

2,918

(Thousands of U.S. dollars)Type(1) Stocks

Carrying amount on
the consolidatedbalance sheet

Acquisition cost

Difference

41,972

17,111

24,852(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

(iii) Other

–

–

–

(2) Bonds

Securities for which the carrying
amount on the consolidated balance
sheet exceeds the acquisition cost(3) Other–––

41,972

17,111

24,852

915

1,481

(565)

(i) Government
bonds andmunicipal bonds,
etc.

–

–

–

(ii) Corporate
bonds

–

–

–

1,656

1,664

(0)

–

–

–

Subtotal(1) Stocks(2) Bonds

Securities for which the carrying
amount on the consolidated balance
sheet does not exceed the acquisition
cost(iii) Other(3) Other
Subtotal
Total

2,580

3,146

(565)

44,552

20,26624,286

Toyo Kanetsu K.K. Annual Report 2015

35

(Note)3.

“Available-for sale securities” in the above table do not include unlisted equity securities (carrying amount on the
consolidated balance sheet of ¥925 million ($7,698 thousand)) because there is no market value and accordingly it isextremely difficult to ascertain their fair values. In addition, “Available-for sale securities” do not include jointly
operated designated money trusts (¥3,500 million ($29,130 thousand)) because they have short term maturities andtheir fair values approximate their book values.

Available-for-sale securities that were sold
Previous fiscal year (From April 1, 2013 to March 31, 2014)
Type(1) Shares(2) Bonds(i) Government bonds and municipal bonds,
etc.
(ii) Corporate bonds(iii) Other(3) Other
Total

Sales amount138

Total gain on sales
21(Millions of yen)
Total loss on sales
12

–

–

–

–
–
–

–
–
–

–
–
–

138

21

12

Current fiscal year (From April 1, 2014 to March 31, 2015)
Type(1) Shares(2) Bonds(i) Government bonds and municipal bonds,
etc.
(ii) Corporate bonds(iii) Other(3) Other
Total

Type
(1) Shares(2) Bonds(i) Government bonds and municipal bonds,
etc.
(ii) Corporate bonds(iii) Other(3) Other
Total

4.

Sales amount
12(Millions of yen)
Total loss on sales
–

–

–

–

–
–
–

–
–
–

–
–
–

12

8

–

Sales amount99

Total gain on sales
66(Thousands of U.S. dollars)
Total loss on sales
–

–

–

–

–
–
–

–
–
–

–
–
–

99

66

–

Securities subject to the recognition of impairment loss
During the previous fiscal year, impairment losses on unlisted equity securities categorized as available-for-salesecurities of ¥0 million were recognized.
During the current fiscal year, no impairment loss was recognized.

Notes - Derivatives
1. Derivative transactions to which hedge accounting is not applied
Not applicable
2. Derivative transactions to which hedge accounting is applied(1) Currencies
Not applicable

36

Total gain on sales
8

Toyo Kanetsu K.K. Annual Report 2015

(2) Interest rates
Previous fiscal year (As of March 31, 2014)(Millions of yen)Classification

Type of derivativetransaction, etc.

Interest rate swap
Exceptionaltransactions
treatment of interest
Receive variable,
rate swaps
pay fixed(Note)

Principal hedged
itemsLong-term loans
payableContract
amount1,055

Portion ofcontract
amount over
one year
695

Fair value
calculation
methodFair value(Note)(Note)

The fair value of interest rate swaps that are accounted for using exceptional treatment is included in that ofcorresponding long-term loans payable, as those interest rate swaps are treated as an adjustment to long-term loans
payable as hedged items.

Current fiscal year (As of March 31, 2015)(Millions of yen)Classification

Type of derivativetransaction, etc.

Interest rate swap
Exceptionaltransactions
treatment of interest
Receive variable,
rate swaps
pay fixed

Principal hedged
itemsLong-term loans
payableContract
amount1,175

Portion ofcontract
amount over
one year
615

Fair value(Note)

Fair value
calculation
method(Note)(Thousands of U.S. dollars)

Classification

Type of derivativetransaction, etc.

Interest rate swap
Exceptionaltransactions
treatment of interest
Receive variable,
rate swaps
pay fixed(Note)

Principal hedged
itemsLong-term loans
payableContract
amount9,779

Portion ofcontract
amount over
one year
5,118

Fair value(Note)

Fair value
calculation
method(Note)

The fair value of interest rate swaps that are accounted for using exceptional treatment is included in that ofcorresponding long-term loans payable, as those interest rate swaps are treated as an adjustment to long-term loans
payable as hedged items.

Notes - Retirement benefits
Current fiscal year (From April 1, 2014 to March 31, 2015)
1. Summary of retirement benefit plans adopted
The Company and certain consolidated subsidiaries have defined benefit corporate pension plans, and an
employees’ pension fund plan under the multi-employer plan, as defined benefit plans, and certain consolidated
subsidiaries have a small and medium sized enterprise retirement allowance cooperative plan and lump-sum
retirement plans.
In addition, the Company and certain consolidated subsidiaries have defined contribution corporate pension plans.
For the employees’ pension fund plan under the multi-employer plan, since the amount of pension plan assets
corresponding to contributions by the respective companies cannot be reasonably calculated, the plan is accounted
for similar to defined contribution plans.

Toyo Kanetsu K.K. Annual Report 201537

2. Defined benefit plans(1) Reconciliation between beginning balance and ending balance of retirement benefit obligations
Previous fiscal year
(From April 1, 2013
to March 31, 2014)
Beginning balance of retirement benefit
obligations
Service cost
Interest expenses
Unrecognized net actuarial gain or loss
Retirement benefits paid
Other
Ending balance of retirement benefit
obligations(2)¥3,101 million

Ending balance of pension plan assets

173
48
5
(330)
(2)

176
48
36
(304)
17

1,464
399
299
(2,530)
141

3,101

3,075

25,593

Previous fiscal year
(From April 1, 2013
to March 31, 2014)¥2,984 million
28
185
169
(328)
3,040

Current fiscal year
(From April 1, 2014
to March 31, 2015)¥3,040 million$25,301 thousand
28
233
312
2,596
169
1,406
(301)
(2,505)
3,249

27,041Retirement benefit obligations and pension plan assets at the end of the fiscal year and reconciliation of net
defined benefit liability and net defined benefit asset on consolidated balance sheet
Previous fiscal year
(From April 1, 2013
to March 31, 2014)

Retirement benefit obligations under
funded system
Pension plan assets
Retirement benefit obligations under
unfunded system
Net amount of assets and liabilities
stated in the consolidated balance sheet
Net defined benefit liability
Net defined benefit asset
Net amount of assets and liabilities
stated in the consolidated balance sheet

38$25,809 thousand

Reconciliation between beginning balance and ending balance of pension plan assets

Beginning balance of pension plan assets
Expected return on plan assets
Unrecognized net actuarial gain or loss
Amount of employer contribution
Retirement benefits paid

(3)

¥3,206 million

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

Toyo Kanetsu K.K. Annual Report 2015

Current fiscal year
(From April 1, 2014
to March 31, 2015)¥3,047 million¥2,995 million$24,927 thousand(3,040)(3,249)(27,041)7(253)(2,105)

54

79

657

61

(173)

(1,439)

392
(330)

350
(524)

2,913
(4,361)61(173)(1,439)(4)Retirement benefit expenses and components thereofService cost
Interest expenses
Expected return on plan assets
Amortization of net actuarial gain orloss

Previous fiscal year
(From April 1, 2013
to March 31, 2014)¥173 million
48(28)

Retirement benefit expenses pertaining
to defined benefit plans

Current fiscal year
(From April 1, 2014
to March 31, 2015)¥176 million$1,464 thousand
48
399
(28)
(233)

(66)

(121)

(1,007)

127

74

615

(5)

Remeasurements of defined benefit plans, net of tax on consolidated statement of income and comprehensive
income
The components of remeasurements of defined benefit plans, net of tax (before deducting tax effect) are as follows:
Previous fiscal year
(From April 1, 2013
to March 31, 2014)
Past service cost
Actuarial gains and losses
Total

Current fiscal year
(From April 1, 2014
to March 31, 2015)¥– million–¥– million
143$– thousand
1,190

–

143

1,190

(6) Remeasurements of defined benefit plans on consolidated balance sheet
The components of remeasurements of defined benefit plans (before tax effects deduction) are as follows.
Previous fiscal year
(From April 1, 2013
to March 31, 2014)
Unrecognized past service cost
Unrecognized net actuarial gain or loss
Total

Current fiscal year
(From April 1, 2014
to March 31, 2015)¥– million(351)¥– million(505)$ – thousand(4,203)

(351)

(505)

(4,203)(7) Pension plan assets(i) Major components of pension plan assets
Ratio of major components for total pension plan assets is as follows:
Previous fiscal year
(From April 1, 2013
to March 31, 2014)

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

Bonds
SharesGeneral account
Other

31%
31
34
4

31%
34
31
4

Total

100

100

(ii) Method of establishing expected long-term rates of return on plan assets
In order to determine the expected long-term rates of return on plan assets, the current and forecast
distribution of plan assets and the current and expected long-term rates of return from the diverse assets thatcomprise the plan assets are taken into consideration.
(8) Matters relating to the basis for actuarial calculations
Main basis for actuarial calculations

Discount rate
Expected long-term rates of return on pension plan
assetsPrevious fiscal year
(From April 1, 2013
to March 31, 2014)

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

1.5%

1.5%

1.0%

1.0%

Toyo Kanetsu K.K. Annual Report 201539

3. Defined contribution plans
The required contribution from the Company and its consolidated subsidiaries into the defined contribution pension
plans was ¥38 million in the previous fiscal year and ¥40 million ($332 thousand) in the current fiscal year.
4. Multi-employer plan
The required contribution amount to the employees’ pension fund plan under the multi-employer plan, which isaccounted for in the same manner as a defined contribution plan, was ¥160 million in the previous fiscal year and¥152 million ($1,265 thousand) in the current fiscal year.
(1)

Funded status of multi-employer planPrevious fiscal year
(As of March 31, 2013)

Plan assets
Sum of actuarial obligations calculated forfinance status of pension plan and minimum
reserve (Note)

Current fiscal year
(As of March 31, 2014)¥69,155 million¥74,916 million$623,520 thousand¥98,620 million¥100,891 million$839,708 thousand

Net amount¥(29,465) million¥(25,975) million$(216,188) thousand(Note) For the previous fiscal year, the item was set down as the “amount of benefit obligations in pension financing.”(2) Group’s proportion of total contributions to planPrevious fiscal year 3.95%(From April 1, 2013 to March 31, 2014)
Current fiscal year 3.82%(From April 1, 2014 to March 31, 2015)(3) Supplementary explanation
Major factors for the net amount in (1) above are the balance of past service liabilities (¥24,384 million as of March
31, 2013 and ¥23,226 million ($193,308 thousand) as of March 31, 2014) and deficit amount (¥5,081 million as ofMarch 31, 2013 and ¥2,749 million ($22,879 thousand) as of March 31, 2014) for pension financing calculation.
The principal and interest of past service liabilities in this plan are amortized equally over 20 years, and the Group
recorded special contributions applied to such amortization (¥78 million for the previous fiscal year and ¥74 million($615 thousand) for the current fiscal year) as expenses in the consolidated financial statements.
The deficit amount in pension financing (¥5,081 million as of March 31, 2013 and ¥2,749 million ($22,879
thousand) as of March 31, 2014) will be filled up as needed by an increase in the rate of special contributions orother methods based on recalculation of pension financing.
The proportions in (2) above are not consistent with the proportions actually funded by the Group.

Notes - Share options, etc.
Not applicable40

Toyo Kanetsu K.K. Annual Report 2015

Notes - Tax effect accounting
1. Significant components of deferred tax assets and liabilities
Previous fiscal year
(As of March 31, 2014)
Deferred tax assets
Tax loss carry-forward
Accrued business tax
Net defined benefit liability
Provision for bonuses
Allowance for doubtful accounts
Provision for loss on order received
Loss on valuation of investment securities
Loss on valuation of investments in capital
Impairment loss
Depreciation
Asset retirement obligations
Other
Subtotal
Valuation reserve
Total deferred tax assets
Deferred tax liabilities
Revaluation reserve for land
Valuation difference on available-for-salesecurities
Extraordinary income from lease
Other¥1,022 million
53
135
105
122
133
330
46
204
72
107
200

Current fiscal year
(As of March 31, 2015)¥978 million
89
108
94
100
107
289
42
186
79
72
197

$8,139 thousand
740
898
782
832
890
2,405
349
1,548
657
599
1,639

2,534
(2,111)

2,345(1,668)19,517(13,882)

422

677

5,634

1,776

1,611

13,408

574

879

7,315

0
111

–
172

–
1,431

Total deferred tax liabilities
2,462
2,663
22,163(Note)The net deferred tax assets as of March 31, 2014 and March 31, 2015 are included in the items below of theconsolidated balance sheet.

Previous fiscal year
(As of March 31, 2014)
Current assets㸫Deferred tax assets¥278 million

Current fiscal year
(As of March 31, 2015)¥455 million$3,786 thousand

Non-current assets㸫Deferred tax assets

26

81

674

Current liabilities㸫Deferred tax liabilities

–

22

183

Non-current liabilities㸫Deferred tax liabilities

568

888

7,390

㸫Deferred tax liabilities for land revaluation

1,776

1,611

13,408

Toyo Kanetsu K.K. Annual Report 201541

2. Main components causing significant differences between the statutory effective tax rate and the actual effective
tax rate after application of tax effect accounting
Previous fiscal year
(As of March 31, 2014)

Current fiscal year
(As of March 31, 2015)

Statutory effective tax rate
Adjustments
Increase/decrease in valuation reserve
Expenses not deductible for income tax purposes, such asentertainment expenses
Income not included for income tax purposes, such as dividends
received
Per capita levy of inhabitant taxes
Effect of differences in tax rates applicable to subsidiaries fromtax rate applicable to the Company
Adjustment of deferred tax assets at end of period resulting
from tax rate changes
Amortization of goodwill
Other

38.01%

35.64%(5.46)(6.04)

1.06

0.91(0.34)(0.44)

0.73

0.73

0.39

(0.60)

0.39

1.26

0.53
(0.02)

0.50
0.11

Actual effective tax rate

35.30

32.07

3. Changes in the amounts of deferred tax assets and deferred tax liabilities due to changes in the rates of income
taxes
On March 31, 2015, the “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 9 of 2015) and the “Actfor Partial Amendment of the Local Tax Act, etc.” (Act No. 2 of 2015) were promulgated, and as a result,corporation tax rates were lowered, among other changes, from the fiscal year beginning on or after April 1, 2015.
Consequently, the statutory tax rate used for calculating deferred tax assets and deferred tax liabilities has been
reduced from the previous rate of 35.64% to 33.10% for temporary differences expected to be reversed in and after
the fiscal year beginning on April 1, 2015, and to 32.34% for temporary differences expected to be reversed in thefiscal year beginning on April 1, 2016.
As a result of this change in tax rates, the amount of deferred tax liabilities (amount net of deferred tax assets)
decreased by ¥33 million ($274 thousand), the amount of income taxes - deferred increased by ¥56 million ($466
thousand), the amount of valuation difference on available-for-sale securities increased by ¥89 million ($740
thousand).
In addition, deferred tax liabilities for land revaluation decreased by ¥164 million ($1,364 thousand), andrevaluation reserve for land increased by the same amount.
Notes - Asset retirement obligations
Of asset retirement obligations, items recorded on the consolidated balance sheeta) Outline of asset retirement obligations
The asset retirement obligations of the Group are obligations in certain facilities for rent under the Ordinanceon Prevention of Asbestos Hazards.
b) Calculation method for determining asset retirement obligation amountThe amount of asset retirement obligations was calculated assuming an estimated period of use of 31 years
from acquisition, and using a discount rate from 2.2%.
c) Increase (decrease) in total asset retirement obligations
Previous fiscal year
(From April 1, 2013
to March 31, 2014)42

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

Beginning balance
Reversal¥300 million–¥300 million(75)$2,496 thousand(624)

Ending balance

300

224

1,864

Toyo Kanetsu K.K. Annual Report 2015

Notes - Real estate for lease, etc.
The Company and certain subsidiaries rent out a space such as in their business places as well as land mainly forrental housing and buildings in the Tokyo metropolitan area and other areas. Rental profit related to the real estate
for rent, etc. for the previous fiscal year was ¥305 million (rent income is recorded in net sales, and rent expenses
are recorded in cost of sales). Rental profit related to the real estate for rent, etc. for the current fiscal year was ¥355
million ($2,954 thousand) (rent income is recorded in net sales, and rent expenses are recorded in cost of sales).
Carrying amounts on the consolidated balance sheet, changes during period for the previous and current fiscal years
and fair values of the real estate for rent, etc. are as follows:(Millions of yen)
Current fiscal year
(From April 1, 2014
to March 31, 2015)

Previous fiscal year
(From April 1, 2013
to March 31, 2014)
Carrying amount on the consolidatedbalance sheet
Balance at
beginning of period

5,471

5,296

Increase (decrease)during period

(175)

806

Balance at end of
period

5,296

6,103

3,685

4,090

Fair value at end of period(Thousands of U.S. dollars)
Current fiscal year
(From April 1, 2014
to March 31, 2015)

Previous fiscal year
(From April 1, 2013
to March 31, 2014)
Carrying amount on the consolidatedbalance sheet
Balance at
beginning of period

45,53444,078

Increase (decrease)during period(1,456)

6,708

Balance at end of
period44,07850,794

Fair value at end of period
30,66934,040(Notes) 1. Carrying amount on the consolidated balance sheet is calculated by subtracting accumulated depreciation andimpairment loss from acquisition cost.
2. The increase (decrease) during period for the previous fiscal year primarily consist of a decrease in rentable space(¥144 million) and decrease due to depreciation (¥30 million). The increase (decrease) during period for thecurrent fiscal year primarily consist of an increase in rentable space (¥829 million ($6,899 thousand)) and decrease
due to depreciation (¥22 million ($183 thousand)).
3. Fair value of property whose amount has significance at the end of the period is an amount based on a value
investigation report by an external real property appraiser, and that of other property whose amount has little
significance is an amount based on an index which is believed to reflect a market value appropriately.

Toyo Kanetsu K.K. Annual Report 201543

Notes - Segment information, etc.
[Segment information]
1. Description of reportable segments
The reportable segments of the Company are components for which discrete financial information is available
and whose operating results are regularly reviewed by the Board of Directors of the Company to make decisions
about resource allocation and assess their performance.
The Group develops comprehensive business strategies and engages in business activities for respective products
and services of divisions by product and service in the Company and of Toyo Kanetsu Solutions K.K., asubsidiary of the Company.
Accordingly, the Company is comprised of segments by product and service, and its reportable segments consistof “Plant & Machinery Business” and “Material Handling Systems Business.”“Plant & Machinery Business” designs, builds, and executes construction works of, storage tanks for LNG, LPG,
crude oil and other gas and liquid and provides maintenance services and other operations for these tanks.
“Material Handling Systems Business” develops, designs, and executes construction works of, logistics systems
focusing on sorting, picking and conveying systems and provides maintenance services and other operations forthese systems.
2. Method of measurements of sales, profit (loss), asset, liability, and other items for each reportable segment
The accounting procedures for the reporting operating segments are nearly the same as those stated in“Significant accounting policies for preparation of the consolidated financial statements.” Profits of thereportable segments are based on operating income. Intersegment transactions are based on actual transaction
amounts.
3. Disclosure of sales, profit (loss), asset, liability, and other items for each reportable segment
Previous fiscal year (From April 1, 2013 to March 31, 2014)(Millions of yen)
Reportable segments
Plant &
MachineryBusiness
Sales
Sales to externalcustomers
Transactions withother segments

Other(Note)

Total

Adjustment

Total

26,90315,15842,062

6,333–

48,395

–

㸫

–

513

(513)

–
48,395

Total

26,90315,15842,062

6,846

(513)

Segment profit

2,670

1,150

3,820

768

(248)

4,341

Segment assets

12,0389,841

21,88011,663

20,97154,515

334

182

517

225

9

752

316

245

562

121

9

693

Other items
Depreciation
Increase in property,
plant and equipment,
and intangible assets(Note)

44

Material
Handling
Systems Business“Other” includes the building construction business, manufacturing and sales of industrial facilities and equipment, realestate rental operations, leasing operations and other operations.

Toyo Kanetsu K.K. Annual Report 2015

Current fiscal year (From April 1, 2014 to March 31, 2015)(Millions of yen)
Reportable segments
Plant &
MachineryBusiness
Sales
Sales to externalcustomers
Transactions withother segments

Material
Handling
Systems Business

Other(Note)

Total

Adjustment

Total

29,425

15,68945,115

7,341–

52,457

–

㸫

–

466

(466)

–
52,457

Total

29,425

15,68945,115

7,808

(466)

Segment profit

2,789

401

3,191

800

(403)

3,588

Segment assets

14,374

10,461

24,836

12,356

18,73655,928

310

254

564

231

10

806

489

891

1,381

124

3

1,509

Other items
Depreciation
Increase in property,
plant and equipment,
and intangible assets(Thousands of U.S. dollars)
Reportable segments
Plant &
MachineryBusiness
Sales
Sales to externalcustomers
Transactions withother segments

Material
Handling
Systems Business

Other(Note)

Total

Adjustment

Total

244,902130,578

375,488

61,098–436,595

–

㸫

–

3,878

(3,878)–436,595

Total

244,902130,578

375,488

64,985(3,878)Segment profit

23,212

3,337

26,5586,658(3,354)29,862

Segment assets

119,633

87,066

206,708

102,838

155,938

465,484

2,580

2,114

4,694

1,922

83

6,708

4,069

7,415

11,493

1,032

24

12,559Other items
Depreciation
Increase in property,
plant and equipment,
and intangible assets(Note)“Other” includes the building construction business, manufacturing and sales of industrial facilities and equipment, realestate rental operations, leasing operations and other operations.

Toyo Kanetsu K.K. Annual Report 201545

4. Differences between total amounts for reportable segments and amounts in the consolidated financial statements
and main details of these differences (matters relating to difference adjustments)
Profit(Millions of yen)
Current fiscal year

Previous fiscal year

Reportable segments total

3,820

3,191

Profit of “other”

768

800

Corporate expenses (Note)

(264)

(425)

16

22

4,341

3,588

Other adjustments
Operating income in the consolidated
financial statements
Profit(Thousands of U.S. dollars)
Current fiscal year

Reportable segments total

26,558

Profit of “other”

6,658

Corporate expenses (Note)(3,537)

Other adjustments

183

Operating income in the consolidated
29,862
financial statements(Note) Corporate expenses mainly represent expenses related to administrative divisions such as the general affairs division,
which are not attributable to the reportable segments.
(Millions of yen)
Asset

Previous fiscal year

Reportable segments total

Current fiscal year
21,88024,836

Assets of “other”

11,663

12,356

Corporate assets (Note)

20,996

18,761Other adjustments

(25)

(25)

54,51555,928(Thousands of U.S. dollars)
Asset
Reportable segments total

206,708

Assets of “other”

102,838

Corporate assets (Note)

156,146

Other adjustments(Note)

46

Current fiscal year

(208)

465,484
Corporate assets mainly represent assets related to divisions managing cash and deposits, investment securities andother assets of the Company, which are not attributable to the reportable segments.

Toyo Kanetsu K.K. Annual Report 2015

[Information associated with reportable segments]
Previous fiscal year (From April 1, 2013 to March 31, 2014)
1. Information for each product and service(Millions of yen)
Storage tank, etc.

Maintenanceservices ofstorage tanks

Logistics systemequipment, etc.

18,831

8,072

15,158

Oceania

AfricaSales to external customers

Other

Total

6,333

48,395

2. Information about geographical area
(1) Sales(Millions of yen)
Japan

Southeast Asia

37,142(Note)

Middle East

7,078

153

3,724

Total

Other
242

53

48,395

Sales are classified by country or region on the basis of construction sites.

(2) Property, plant and equipment(Millions of yen)
Japan

Southeast Asia
11,490Oceania

Total

1,421

0

12,912

3. Information for each of main customers
This information has been omitted since sales to a specific customer account for less than 10% of net sales in the
consolidated statement of income.
Current fiscal year (From April 1, 2014 to March 31, 2015)
1. Information for each product and service(Millions of yen)
Storage tank, etc.

Maintenanceservices ofstorage tanks

Logistics systemequipment, etc.

18,883

10,542

15,689

Sales to external customers

Other

Total

7,341

52,457(Thousands of U.S. dollars)
Storage tank, etc.

Maintenanceservices ofstorage tanks

Logistics systemequipment, etc.

157,161

87,740130,578

61,098

Oceania

AfricaOther

Sales to external customers

Other

Total
436,595

2. Information about geographical area
(1) Sales(Millions of yen)Japan
36,758Southeast Asia

Middle East

14,724

7

939

0

Total
26

52,457(Thousands of U.S. dollars)Japan
305,934(Note)Southeast Asia
122,546

Middle East
58

Oceania

Africa

7,815

Total

Other
0

216

436,595

Sales are classified by country or region on the basis of construction sites.

Toyo Kanetsu K.K. Annual Report 201547

(2) Property, plant and equipment(Millions of yen)
Japan

Southeast Asia
12,049

Oceania
1,527

Total
0

13,577(Thousands of U.S. dollars)

Japan

Southeast Asia
100,282

Oceania

12,709Total
0

113,000

3. Information for each of main customers
This information has been omitted since sales to a specific customer account for less than 10% of net sales in
the consolidated statement of income.
[Disclosure of impairment loss on non-current assets for each reportable segment]
Previous fiscal year (From April 1, 2013 to March 31, 2014)(Millions of yen)
Reportable segments
Plant & Machinery
Business
Impairment loss
(Note)–

Material Handling
Systems Business–

The amount of “adjustment” is an amount related to corporate assets.

Current fiscal year (From April 1, 2014 to March 31, 2015)
Not applicable48

Toyo Kanetsu K.K. Annual Report 2015

Adjustment(Note)

Other
–

409

Total
409

[Amortization and unamortized balance of goodwill for each reportable segment]
Previous fiscal year (From April 1, 2013 to March 31, 2014)(Millions of yen)
Reportable segments
Plant & Machinery
Business

Material Handling
Systems Business

Other

Adjustment(Note)

Total

Amortization in thecurrent fiscal year

–

–

62

–

62

Ending balance

–

–

186

–

186

(Note)

The amount of “other” is an amount related to manufacturing and sales of industrial facilities and equipment.

Current fiscal year (From April 1, 2014 to March 31, 2015)(Millions of yen)
Reportable segments
Plant & Machinery
Business

Material Handling
Systems Business

Other

Adjustment(Note)

Total

Amortization in thecurrent fiscal year

–

–

62

–

62

Ending balance

–

–

124

–

124

(Thousands of U.S. dollars)
Reportable segments
Plant & Machinery
Business

Material Handling
Systems Business

Other

Adjustment(Note)

Total

Amortization in thecurrent fiscal year

–

–

516

–

516

Ending balance

–

–

1,032

–

1,032

(Note)

The amount of “other” is an amount related to manufacturing and sales of industrial facilities and equipment.

Toyo Kanetsu K.K. Annual Report 201549

[Information associated with related parties]
Subsidiaries and others
1.
Related party transactions
Not applicable2.

Notes concerning the parent company or important affiliated companies
Not applicable

Notes - Per share information
Previous fiscal year
(From April 1, 2013
to March 31, 2014)

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

Net assets per share¥282.18¥315.91$2.62

Net income per share¥24.18¥26.08$0.21(Note)(Note)

1.
2.

The amount of diluted net income per share is not provided because there are no potential shares.
The basis for calculation for net income per share is as follows:
Previous fiscal year
Current fiscal year
(From April 1, 2013
(From April 1, 2014
to March 31, 2014)
to March 31, 2015)

Net income
Net income not relating to common shareholders
Net income pertaining to common shares
Average number of outstanding common shares¥2,879 million¥3,019 million––$25,126 thousand
–

2,879

3,019

25,126

119,110thousands shares

115,788
thousands shares

Notes - Significant events after reporting period
Purchase of treasury shares
The Company’s Board of Directors made a resolution on May 13, 2015 for the Company to acquire its own
shares according to the particulars stated below pursuant to the provision of Article 156 of the Companies Act, asapplied by replacing the relevant terms pursuant to the Act’s provision of Article 165, Paragraph 3.
(1) Reason for repurchase of own shares
To implement a flexible capital policy that responds to the changing business environment.
(2) Details of matters relating to transaction(i) Type of the shares to be acquired
Common shares(ii) Total number of shares to be repurchased
Up to 4,300 thousand shares(iii) Total price of repurchase
Up to ¥1,000 million ($8,322 thousand)(iv) Repurchase period
May 14, 2015 to September 17, 2015(v) Repurchase method
Purchase on the stock exchange via a trust bank
The purchase of treasury shares above was completed on May 27, 2015.
(i) Type of the shares acquired
Common shares(ii) Total number of shares acquired
4,126 thousand shares(iii) Total price of repurchase¥999 million ($8,314 thousand)50

Toyo Kanetsu K.K. Annual Report 2015

(v)Annexed consolidated detailed schedules

Annexed consolidated detailed schedule of corporate bonds
Not applicable
Annexed consolidated detailed schedule of borrowings
Classification

Beginning balanceEnding balance(Millions of yen)[Thousands of U.S.
dollars](Millions of yen)[Thousands of U.S.
dollars]

Average interest
rate (%)

Repayment due¥2,346[$19,525]¥2,518[$20,957]

0.65–

Current portion of long-term loans
payable535[4,452]728[6,059]

1.17–

Lease obligations due within one
year

52
[432]

0
[0]

–

–

Long-term loans payable (excluding
current portion)

863[7,182]615[5,118]

0.98

1
[8]

0
[0]

–

3,799
[31,618]

3,863[32,151]–

Short-term loans payable

Lease obligations (excluding
obligations due within one year)
Total(Notes) 1.
2.
3.

Between 2016 and 20202016–

In calculating the average interest rate, the weighted average interest rate on the ending balance of loans payable,
is shown.
The average interest rate of lease obligations is not provided because the amount of lease obligations in the
consolidated balance sheet includes the interest equivalent.
Repayment of long-term loans payable and lease obligations (excluding the current portion) scheduled within five
years after the balance sheet date are as follows:
Due after 1 year
through 2 years

Long-term loans
payableLease obligations¥60 million[$499 thousand]0

Due after 2 years
through 3 years

Due after 3 years
through 4 years¥60 million[$499 thousand]¥15 million[$124 thousand]––Due after 4 years
through 5 years¥480 million[$3,995 thousand]–Annexed consolidated detailed schedule of asset retirement obligations
A schedule of asset retirement obligations has been omitted since matters to be stated in the schedule are stated as
notes prescribed in Article 15-23 of the Ordinance on Terminology, Forms, and Preparation Methods ofConsolidated Financial Statements.

Toyo Kanetsu K.K. Annual Report 201551

(2) Other information
Quarterly information for the current fiscal year
First quarter(Cumulative)(Cumulative period)
Net sales(From April 1, 2014
to June 30, 2014)

Third quarter(Cumulative)(From April 1, 2014
(From April 1, 2014
to September 30, 2014) to December 31, 2014)

Current fiscal year
(From April 1, 2014 toMarch 31, 2015)(Millions of yen)

10,39426,06939,01952,457

Income before income taxes
and minority interests(Millions of yen)

956

2,448

3,109

4,459

533

1,597

1,955

3,019

4.54

13.72

16.85

26.08

First quarter

Second quarter

Third quarter

Fourth quarter

Net income(Millions of yen)
Net income per share(Yen)(Accounting period)
Net income per share(Yen)(Cumulative period)

4.54
First quarter(Cumulative)(From April 1, 2014
to June 30, 2014)

9.25
Second quarter(Cumulative)

3.11
Third quarter(Cumulative)(From April 1, 2014
(From April 1, 2014
to September 30, 2014) to December 31, 2014)

9.25
Current fiscal year
(From April 1, 2014 toMarch 31, 2015)

Net sales(Thousands of U.S. dollars)

86,508

216,970

324,752

436,595

Income before income taxes
and minority interests(Thousands of U.S. dollars)

7,956

20,37425,875

37,111

Net income(Thousands of U.S. dollars)

4,436

13,291

16,271

25,126

Net income per share (U.S. dollars)

0.03

0.11

0.14

0.21

First quarter

Second quarter

Third quarter

Fourth quarter

0.03

0.07

0.02

0.07

(Accounting period)
Net income per share (U.S. dollars)

52

Second quarter(Cumulative)

Toyo Kanetsu K.K. Annual Report 2015

(TRANSLATION)
INDEPENDENT AUDITOR’S REPORT
June 26, 2015
To the Board of Directors of
Toyo Kanetsu Kabushiki Kaisha
GYOSEI & CO.
Representative Partner
Engagement Partner
Certified Public Accountant

Takayuki Nakagawa (seal)

Representative Partner
Engagement Partner
Certified Public Accountant

Tetsuo Noguchi(seal)Engagement Partner
Certified Public Accountant

Satoshi Ogawa(seal)

Audit of Financial Statements
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act of Japan, we haveaudited the accompanying consolidated financial statements of Toyo Kanetsu Kabushiki Kaisha (the “Company”)
and its subsidiaries, which comprise the consolidated balance sheet as of March 31, 2015, and the consolidated
statements of income and comprehensive income, the consolidated statement of changes in equity, cash flows forthe fiscal year from April 1, 2014 to March 31, 2015, and significant accounting policies for preparation of theconsolidated financial statements, other notes, and annexed consolidated detailed schedules, all expressed inJapanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for designing and operating such internal
control as management determines is necessary to enable the preparation and fair presentation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal
controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of the Company and its subsidiaries as of March 31, 2015, and the consolidated

Toyo Kanetsu K.K. Annual Report 201553

results of their operations and their cash flows for the year then ended in conformity with accounting principles
generally accepted in Japan.
Audit of Internal Control
Pursuant to the second paragraph of Article 193-2 of the Financial Instruments and Exchange Act of Japan, we haveaudited management’s report on internal control over financial reporting of the Company as of March 31, 2015.
Management’s Responsibility for the Report on Internal Control
Management is responsible for designing and operating effective internal control over financial reporting and forthe preparation and fair presentation of its report on internal control in accordance with assessment standards forinternal control over financial reporting generally accepted in Japan. There is a possibility that misstatements may
not be completely prevented or detected by internal control over financial reporting.
Auditor’s Responsibility
Our responsibility is to express an opinion on management’s report on internal control based on our internal control
audit. We conducted our internal control audit in accordance with auditing standards for internal control overfinancial reporting generally accepted in Japan. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether management’s report on internal control is free from material
misstatement.
An internal control audit involves performing procedures to obtain audit evidence about the results of theassessment of internal control over financial reporting in management’s report on internal control. The procedures
selected depend on the auditor’s judgment, including the significance of effects on reliability of financial reporting.
An internal control audit includes examining representations on the scope, procedures and results of the assessmentof internal control over financial reporting made by management, as well as evaluating the overall presentation ofmanagement’s report on internal control.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Audit Opinion
In our opinion, the management’s report on internal control referred to above, which represents that the internal
control over financial reporting of the Company as of March 31, 2015 was effective, presents fairly, in all material
respects, the results of the assessment of internal control over financial reporting in accordance with assessment
standards for internal control over financial reporting generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.
The above represents a translation, for convenience only, of the original report issued in the Japanese language.

54

Toyo Kanetsu K.K. Annual Report 2015

Corporate Data
Date of Establishment

May 16, 1941

Common Stock¥18,580 million

Authorized Shares

297,000,000

Capital Stock Issued

138,730,741

Number of Shareholders

15,229Security Traded

Tokyo Stock Exchange Market, First Section

Transfer Agent and Registrar

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

Annual Meeting

The annual meeting of shareholders is normally held in June in Tokyo, Japan

Directory
Head Office
19-20, Higashisuna 8-chome, Koto-ku, Tokyo 136-8666, Japan
Tel: +81-3-5857-3333 Fax: +81-3-5857-3170
URL: http://www.toyokanetsu.co.jp/

Osaka Sales Office
1-9-2, Senrioka-Higashi, Settsu, Osaka 566-0011, Japan

Plant & Machinery Business
Tel: +81-72-645-2520 Fax: +81-72-645-2532

Plant & Machinery Business
Tel: +81-3-5857-3109 Fax: +81-3-5857-3173

Material Handling Systems Business

Material Handling Systems Business(Toyo Kanetsu Solutions K.K. West Japan Sales Office)Tel: +81-72-645-2530 Fax: +81-72-645-2532(Toyo Kanetsu Solutions K.K. Head Office)Tel: +81-3-5857-3126 Fax: +81-3-5857-3180

Chiba Plant
2 Tsukiji, Kisarazu, Chiba 292-0835, Japan
Tel: +81-438-36-7161 Fax: +81-438-36-8211

Domestic Subsidiaries

Overseas Subsidiaries

Toyo Kanetsu Solutions K.K.

P.T. Toyo Kanetsu Indonesia

19-20, Higashisuna 8-chome, Koto-ku, Tokyo 136-8666, Japan
Tel: +81-3-5857-3126 Fax: +81-3-5857-3180
URL: http://www.tksl.co.jp/(Jakarta Head Office)Midplaza Building 1, 8th Floor, Jl. Jend. Sudirman Kav. 10-11,
Jakarta 10220, Indonesia
Tel: +62 (21) 570-7805 / 7739 Fax: +62 (21) 570-3950

Toyo Kanetsu Builtec K.K.
19-20, Higashisuna 8-chome, Koto-ku, Tokyo 136-8666, Japan
Tel: +81-3-3640-5164 Fax: +81-3-6800-3156
URL: http://www.web-tkb.com

Toyo Service System K.K.
19-20, Higashisuna 8-chome, Koto-ku, Tokyo 136-8666, Japan
Tel: +81-3-5857-3200 Fax: +81-3-5857-3201
URL: http://www.toyoservice.co.jp

Toyo Koken K.K.

TOYO KANETSU SINGAPORE PTE. LTD.
38, Robinson Road, #17-00, The Corporate Office,Singapore 068906
Tel: +62 6228 0561 Fax: +62 6223 1735

Toyo Kanetsu (Malaysia) SDN. BHD.
Sublot 51, 1st Floor, Medan Jaya Commercial Centre,
97000 Bintulu, Sarawak, Malaysia
Tel: +60 (86) 338122 Fax: +60 (86) 338123

19-20, Higashisuna 8-chome, Koto-ku, Tokyo 136-8666, Japan
Tel: +81-3-5857-3161 Fax: +81-3-5857-3198
URL: http://www.toyokoken.co.jp

Toyo Kanetsu K.K. Annual Report 201555

19-20, Higashisuna 8-chome, Koto-ku,
Tokyo 136-8666, Japan
Tel: +81-3-5857-3333 Fax: +81-3-5857-3170
URL: http://www.toyokanetsu.co.jp/global/