Integra ted
Repor t2023

Sumitomo Business Spirit
The origin of Sumitomo business spirit can be traced back to the “Monjuin Shiigaki”(The Aphorisms of Monjuin, made up of five articles), which was bequeathed by
the founder, Masatomo Sumitomo, around 1650. It was a letter that Masatomo

PHILOSOPHY
We aim to be a business group that helps preserve the global environment andcontributes to the sustainment and ongoing development of a prosperous society
through tireless technological innovation and wide-ranging business activities.

wrote to his family in his later years, wherein he describes the principles that must be
observed as a merchant, strongly expressing his Buddhist worldview. This is the originof the “Sumitomo Spirit,” and its philosophy is compiled in the form of “Business
Principles” under modern business rules as “Place prime importance on integrity
and sound management, and shall not pursue easy gains.” In other words, themanagement style of placing prime importance on integrity and sound management
without pursuing near term gains under any circumstances has been the essence of
the Sumitomo Business Spirit, which remains the Sumitomo Group’s business spirit

ENVIRONMENTAL PHILOSOPHY
Striving for harmony between the natural environment and its business activities, theSumitomo Osaka Cement Group is contributing to the creation of a prosperous society
and environmental preservation through the pursuit of production, power generationand logistics defined by minimal environmental impact.

handed down over 350 years to this day. This is the foundation of the Sumitomo
Osaka Cement Group’s corporate philosophy.

CODE OF CONDUCT
1. We will engage in sound business practices by placing prime importance on integrity.
2. We will act ethically and comply with all laws and regulations.

Business Principles

3. We will provide products and services that respond to the trust and expectations of customers
and society.

Article 1

Sumitomo shall achieve strength and prosperity by placing prime importanceon integrity and sound management in the conduct of its business.

Article 2

Sumitomo shall manage its activities with foresight and flexibility in order tocope effectively with the changing times. Under no circumstances, however,shall it pursue easy gains or act imprudently.
Sumitomo’s Business Rules, the “Business Principles” established in 1928

4. We will respond flexibly to changing times and conduct business efficiently as means ofenhancing our corporate value.
5. We will create safe and vibrant working environments where human rights are fully respected.
6. We will value and respect all employees.

CONTENTS
Sumitomo Business Spirit 

1

Philosophy / Environmental Philosophy / Code of Conduct 2

Sumitomo Osaka Cement Group’s Value Creation
3
History of Value Creation 
Overview of Sumitomo Osaka Cement Group Businesses  5
7
Message from the President 
11
Value Creation Process 
13Materiality 
15
Response to risks and opportunities Sumitomo Osaka Cement Group’s Growth Strategy
17
FY 2023-25 Medium-term Management Plan 
Message from the Director responsible for the Corporate
21
Planning and Administration Departments 
Sumitomo Osaka Cement Group Overview by Segment  23
29
R&D and IP 
Foundation to Support Value Creation
Sustainability for the Sumitomo Osaka Cement Group 
Environment Social 
Governance Monjuin Shiigaki (photo courtesy of Sumitomo Historical Archives)

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31
33
53
61

Consolidated Financial Data
Consolidated Financial Highlights 
Non-financial Information Highlights Consolidated Balance Sheets Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Changes in Net Assets Consolidated Statements of Cash Flows 

74
75
77
79
80
81

Company Information
Company Overview / Stock Information 
Network 

82
83

Third-Party Verification Report 84

Reference Guidelines
GRI Standards“Environmental Reporting Guidelines, 2018”
From Ministry of the Environment (Japan)“Guidance for Collaborative Value Creation 2.0”
from Ministry of Economy, Trade and Industry (Japan)

Reporting Scope
Reporting period: April 1, 2022 to March 31, 2023
Reporting entities:	Sumitomo Osaka Cement Co., Ltd. andGroup companies

Integrated Report 2023

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Sumitomo Osaka Cement Group’s Value Creation

History of Value Creation

We will contribute to the sustainment and ongoing development of a prosperous society based on the credentials
and technology cultivated in the Cement business.
In November 1907, the Company was founded as Iwaki Cement Co., Ltd. in Yokohama. In the following year, the Company built the current Yotsukura Kogyosho in Yotsukura-cho, Iwaki City, Fukushima Prefecture, and commenced the cement manufacturing business.
In October 1963, the Company changed its name to Sumitomo Cement Co., Ltd., joining the Sumitomo Group, and became a member of the Hakusuikai in the following year. Subsequently, in October 1994, Sumitomo Osaka Cement Co., Ltd. was established following
a merger with Osaka Cement Co., Ltd., and has been operating to this day. Since the Company’s establishment over 100 years ago, we have consistently taken on the part of the responsibilities for the business in the public sector to develop social infrastructures throughour supply of cement. Further, the Company is currently engaged in a variety of businesses, ranging from the Mineral Resources business branched off from the Cement business, the Cement-Related Products business, the Optoelectronics business utilizing in-houseoptoelectronics and nanotechnology, to the Advanced Materials business.

Sumitomo Cement Co., Ltd.
1907

1940

1960

1966

Founded as Iwaki
Cement Co., Ltd.

Merged with Fukoku
Cement Co., Ltd.

Merged with Kawasaki
Cement Co., Ltd.

Newly established Ako Plant(Current Tochigi Plant)(Current Gifu Plant)

Sumitomo Osaka Cement Co., Ltd.

1925

1963

Merged with Hinode Cement Co., Ltd.

Changed the company nameto Sumitomo Cement Co., Ltd.
Joined the Sumitomo Group(Current Hachinohe Cement Co., Ltd.)

1994

100

The
th
anniversary
since its
foundation

Sumitomo Cement Co., Ltd. andOsaka Cement Co., Ltd. merged
Changed the company name to
Sumitomo Osaka Cement Co., Ltd.

Osaka Cement Co., Ltd.

Established the Sustainable Measures Committee
Announced 2050 “Carbon Neutral” Vision “SOCN2050”

2021
Commenced operation of cement terminal in Australia throughjoint investment with local subsidiary

2023

2007

1916

1952

1961

1963

Founded as Cement Divisionof Osaka Yogyo Co., Ltd.

Newly established
Ibuki Plant

Newly established Kochi Plant

Changed the company name to
Osaka Cement Co., Ltd.

Invested in Yunnan Kungang & K.Wah
Cement Construction Materials Co., Ltd.
in Yunnan Province, China

2012(production stopped
in 2003)

1926

2020

Commenced processing of disaster
waste originated in broad regions dueto the Great East Japan Earthquake

Established Osaka Yogyo
Cement Co., Ltd.

1900

1990

2000

• Announced the medium- to long-term vision“SOC Vision2035” and, FY 2023-25 Medium-termManagement Plan
• Merged the CSR Committee and Sustainable
Measures Committee, and established theSustainability Committee

As a “company with a strong presence,”
we will strive to enhance corporate value
by taking on the challenge of reforming
our business portfolio for the realization of
becoming an environmental solution company.

Products and Technologies

1927

1949

1954

2002

2009

2019

Commenced to manufacture and rolled
out Japan’s first high-strength cement

Commenced to manufacture Japan’s first
ready-mixed concrete

Newly established Hamamatsu Plant, which
employs Japan’s first large-scale lepol-type kiln

Completed New Technology ResearchLaboratory “Nano Tera Technology Center”

Commenced operation of biomass power
generation facilities at Tochigi Plant

Completed construction of large silo for
cement storage at Kochi Plant

Narihirabashi Plant

Hamamatsu Plant

New Technology Research Laboratory

Biomass power generation facilities

Kochi Plant

Constructed the Osaka
City Subway using thehigh-strength cement

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Sumitomo Osaka Cement Group’s Value Creation

Overview of Sumitomo Osaka Cement Group Businesses
Since the Company’s establishment over 100 years ago, we, as Sumitomo Osaka Cement Group, have consistently taken on the part of the responsibilities for the business in the public sector to develop social infrastructures through our supply of cement. Further, theCompany is currently engaged in a variety of businesses, ranging from the Mineral Resources business branched off from the Cement business, the Cement-Related Products business, the Optoelectronics business utilizing in-house optoelectronics and nanotechnology, to the
Advanced Materials business.

CementBusiness Overview

Assorted cements

The segment engages in the manufacture and sale of assorted
cements and cement-related solidification materials. This business
contributes to social infrastructure development through sophisticatedtechnological capabilities and extensive quality control. It also actively
works to develop a recycling-based society primarily through efforts
to expand its collection of recyclable materials as an alternative to raw
materials and thermal energy in cement manufacturing.

Cement-related solidificationmaterials
Recycling
Supply of electrical power
Ready-mixed concrete

Net sales (Billions of yen)
193.7

188.8

Optoelectronics

Products and Services

7,579
126.6

8,247

Business Overview

Optical communications
components and opticalmeasurement equipment

Taking advantage of cutting-edge optical communications
technology, Sumitomo Osaka Cement is involved mainly in thedevelopment, manufacture and sale of LN modulators, whichcarry out the role of converting electric signals to optical signals,
a critical component for high-capacity optical communications
systems.

Net sales (Billions of yen)

Operating income (loss) (Millions of yen)

187.5

Products and Services

9,673

Operating income (loss) (Millions of yen)
195

140.3

68.6%

(2,382)

5.8

5.9

5.7

FY2019FY2020

FY2021

Mineral Resources

FY2022FY201812.6

FY201912.0

FY2020FY2019

19.1

17.6

3.8

2.4

(572)

Operating income (Millions of yen)
12.3

FY2021

13.4

FY20222,360

FY20182,385

FY2019

20.7

22.1

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FY2019Integrated Report 2023

FY2020

FY2021

FY2022

1,840

FY20202,264

FY2021FY2019FY2020

FY2021

FY2022FY2018Advanced Materials

Leveraging one of the largest scales of high-quality and abundantlimestone resources in Japan, Sumitomo Osaka Cement supplies
limestone used as an industrial resource in a wide range offields, including steelmaking, chemistry, aggregate and cement
resources. Demand for high-purity limestone mined from mines
throughout Japan is high, with the product shipped not only inJapan but exported to markets across Asia.

Net sales (Billions of yen)
2,448

Ratio to net sales

12.0

6.5%

FY2022FY201811.4

FY2019FY2019FY2020

FY2021

FY2022Business Overview

Ceramic components forsemiconductor manufacturing
equipment
Nanoparticle materials

Leveraging skills in proprietary nanoparticle manufacturing
technology, Sumitomo Osaka Cement pursues the development,
manufacture and sale of functional materials such as cosmetics
materials, paints and coatings, and antibacterial agents. In
addition, our ceramics that utilize special functional particles havebeen adopted for use in semiconductor manufacturing equipment
and other applications.

21.7

Operating income (Millions of yen)

14.6

FY2021

1.2%

Products and Services

5,384

10.7

FY2020

Ratio to net sales

FY2022

2,370

1,850

2,067

FY2018FY2019FY20203,304

FY2021

Ratio to net sales

10.6%

FY2022Business Overview
This business encompasses the manufacture and sale of concrete
repairing and reinforcing materials for concrete structures.
Combining a wealth of experience with technological capabilities
gained in the Cement business, the Group supports maintenanceand renovation of social infrastructure by providing a one-stop
service, including those of our subsidiaries and affiliates, frommaterial manufacturing to on-site construction.

Other
Business Overview
Operations here include real estate leasing of Group-owned
idle land, information processing services and electricalequipment work.

Ratio to net sales

2.3%

Operating income (Millions of yen)

1,248
FY2018FY2018FY2022Business Overview

Repairing and reinforcing
products for concrete structures
Materials for coping with heavy
metal pollution
Cathodic protection for concrete
structures (ELGARD SYSTEM)
Artificial marine reefs

18.5

FY2021

Limestone
Aggregate
Calcium carbonate
Dolomite
Silica powder

Cement-Related Products Products and Services

Net sales (Billions of yen)

FY2020

Products and Services

Net sales (Billions of yen)
12.8

FY201899(129)(19,542)
FY2018271

Ratio to net sales

FY2018

Ratio to net sales

1,824

1,657

1,818

1,511

FY2019FY2020

FY2021

FY202210.8%

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Sumitomo Osaka Cement Group’s Value Creation

Message from the President
We aim to be “a company with a strong presence”
by bringing out our differentiation and originality
by “providing solutions to environmental issues.”

Formulation of the medium- to longterm vision “SOC Vision2035”
The Group has had a clearly defined philosophy,
which we have cultivated over a long period of time,
but when formulating the current medium-term
management plan, we indicated our ideal vision for theGroup in 2035 as a new medium- to long-term vision.
When considering why we have indicated our
medium- to long-term vision, first, thinking about
how the Group can contribute to society with thereason for the Company’s existence, we want all
employees to look toward the future with sharedvalues.
Second, we want to undertake structural reforms
for the Group’s sustainable growth.
Third, we want the younger generation who will
be in charge of the Group in future to have a dreamfor the Company’s future.

1. Shared values

President, Representative Director

Hirotsune Morohashi

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The Group has, to date, supported social
infrastructure with cement, and we have made themain reason for the Company’s existence to be oneof contributing to a recycling-based society, recycling
waste as raw material or as thermal energy. However,
we believed that the Group, which is engaged inbusinesses other than the Cement business, needed
to clarify the shared values of all employees to achieve
further growth of the Company in future.
Those shared values are contributing to society by“providing solutions to environmental issues.”This“providing solutions to environmental issues”
encompasses a number of meanings.

1) We will further contribute to a recycling society byrecycling more waste than before
2) We will take better care of the naturalenvironment, such as the ecosystem, while carryingout the limestone resources business and Tsushima
leopard cat protection activities3) We will supply low power consumption devices
and system solutions that address the evolving
smart society and provide a better living
environment4) We will shift to thermal energy and create new
businesses in response to the demands of adecarbonized society
These will be understood in our philosophy to“care for the global environment, and contributeto the sustainment and ongoing development ofa prosperous society.” We would like to indicatethat we are “a company with a strong presence”
in society, by bringing out our differentiation andoriginality, which is linked to the key phrase of“providing solutions to environmental issues” in our
respective businesses.

2. Business portfolio reform
The Group’s business structure is centered on the
Cement business, and in fiscal 2022 operating
income, ordinary income and profit all recorded aloss due to the sharp increase in energy prices. As wecontinue to work on restructuring our business, weare unfortunately unable to expect major growth indomestic cement demand over the long-term future,so the Group is unable to grow sustainably by only
relying on the Cement business.

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Sumitomo Osaka Cement Group’s Value Creation

Message from the President

Therefore, we need to change the business portfolio,
expanding business areas other than the Cementbusiness, particularly the Optoelectronics business andAdvanced Materials business, which is anticipated togrow, and to create new businesses that can meetthe demands of a decarbonized society, so that suchbusinesses are on a par with the Cement business.
For 2035, we would like to aim for a specificnumerical target of ¥400.0 billion in companywide net sales. We are aiming for a target of 50:50
between the Cement business and non-cementbusinesses by growing our Optoelectronics andAdvanced Materials Businesses and creating new
businesses. In particular, since we much create new
businesses from scratch, this will not be an easy task,
so we will aggressively invest resources for this.
On the other hand, there are still opportunities for
the Cement business in overseas markets. Even in
Japan, the Company must always have a stablesource of revenue and advance business model
reforms, while developing our social contribution andcontinuing to lead the industry in the decarbonization
field. In particular, with regard to the decarbonization
field, initiatives towards our carbon neutral vision“SOCN2050” are extremely important and wecontinue to invest for such purposes without easing
our resolve.

3. Thoughts for younger people whowill be in charge of the future
The numerical targets for 2035 are very big targets sothey are not something that can be achieved by only
extending our trajectory to date.
In formulating the current Medium-termManagement Plan, we first considered our vision
for the company in 2035, and thought of what
we needed to do in each business to achieve that.
By solving many of the issues discovered at theformulation stage, we will be able to grow the
Company significantly and the Group has great
potential to achieve this.
That is why we want younger employees tosteadily join in the planning with their dreams.
We want to give them an opportunity. While

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circumstances are currently quite tough, we hope toquickly restore performance, invest for the growth of
employees and to further increase salary levels.

SOC Vision2035“SOC Vision2035” and “FY2023-25 Medium-termManagement Plan” are signposts.
Always return to our origins, think about the vision,and push forward without hesitation.

The SOC in “SOC Vision2035” is the abbreviationof Sumitomo Osaka Cement, and we have given
it the following meaning. “S” refers to “Social
contribution,” “O” refers to “Originality,” and “C”
refers to “Change & Challenge.” The SOC Groupaims to provide solutions to environmental issues tomeet the demands of the times with originality as
we change toward 2035. We will improve people’s
life and contribute to society. It also means we will
challenge beyond that for our carbon neutral vision“SOCN2050.”

FY 2023-25 Medium-termManagement Plan
In the past, medium-term management plans havesummarized the current issues for each division andthe measures to address those issues during the next
three year period, in what was planning taking abottom-up approach. That approach is important,
and we have also incorporated such thinking when
formulating the current plan. However, that by itself
mostly addresses only the case of large external
environmental changes and it does not convey toexternal stakeholders how the Group wants tobecome in future, how it will proceed and for whattarget and the reason for the Company’s existence insociety. In addition, without a medium- to long-term
vision, employees also sometimes lose confidence intheir day to day work, and could also feel uncertainty
about the future.
In light of this, this time we have defined a solid
medium- to long-term vision, and indicated the extent
to which we must achieve the current Medium-termManagement Plan for this to be realized. So-calledbackcasting method. I have indicated the Group’s
vision, and that initiatives are needed by each division
to achieve this, and I hope that everyone will seriously
think about what specific action to take during thenext three years.

That “SOC Vision2035” and the “FY 2023-25
Medium-term Management Plan” will become
important signposts. Further environmental changes
and major difficult circumstances are likely to arise
in future. At such time, I hope that we return to our
origins, think about the vision and proceed without
hesitation.

Management targets and indicators
We said that we are targeting company-wide net
sales of ¥400.0 billion in 2035, and we are targeting
operating income of at least ¥40.0 billion, ROE of atleast 10% and ROIC of at least 6.5%.
Improving a company with less than 1xPBR has
become an issue. For the Company to continue
businesses into the future, we must improve fromless than 1x PBR, and improving ROE is the mostimportant element to achieve this. However, we will
not only increase profit, but invest in the next growth
and return profits to shareholders to ensure assets do
not become excessively large.
In the Medium-term Management Plan, we set
targets that we want to achieve in 2025 as steps

towards the management targets aimed for 2035.
We are targeting company-wide net sales of ¥265.0
billion, operating income of ¥21.4 billion, ROE of atleast 8.0%, and ROIC of at least 5.0%, so in the next
three years we will restore the performance of theloss-making Cement business and the Optoelectronics
business as well as aggressively investing in Advanced
Materials business and overseas business. In
addition, while sowing seeds for new businesses,
we will ensure that we can reap the benefits inthe next stage. For these purposes, we will also
proactively enhance human resources, research anddevelopment, intellectual property and DX.
The Company has, to date, often placed its
judgement criteria on its internal logic and based on
past successful experiences, and it appears that theperspective of how we provide value to customers,
and particularly society, has been weak. The
formulation of the current plan was based on strong
consideration given to how we are perceived fromoutside.
Amid the pronounced change in the external
environment, we will think about things with diverse
values and continue our sustained growth, so pleasebe inspired by the SOC that lies ahead.

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Sumitomo Osaka Cement Group’s Value Creation

Value Creation Process

We aim to enhance corporate value and create a sustainable society.
We aim to be a business group that helps preserve the global environment andPhilosophy

contributes to the sustainment and ongoing development of a prosperous society

2035
medium- tolong-term
visionthrough tireless technological innovation and wide-ranging business activities.

Social issues• Intensifying natural
disasters

INPUT

Business Activities

FY2023-25 Medium-term Management Plan

Financial capital• Aging social infrastructure

Total assets

¥356.5 billion• Creating a recycling-basedsociety

Net assets

¥184.5 billion

Equity ratio

51.2%• Building ICT/IoT-driven
society• Climate change issues

Opportunities

Manufacturing capital
Cement production volume9,546,000 tons

• Increase revenue through advancement
into overseas markets

OUTPUT
Improving profitabilityof existing businesses

Building foundations
for growth• Recovery of profitability in Cementbusiness• Improve profitability by gaining
market share for next-generation
optical communication components• Expand scale and strengthen profitability
by concentrating resources on theelectronics materials business forsemiconductor manufacturing equipment• Overseas business expansion(Australian business)• New business development in the
decarbonization field

Clinker production volume8,240,000 tons
Cement plants

• OUTPUT

6 plants(4 plants owned by the Company, Hachinohe Cement
Co., Ltd. and Wakayama Slag Cement Co., Ltd.)• Reduce greenhouse gas emissions

Cement Business

Optoelectronics Business

Human capital• Increase revenue through recycling
promotion

Employees (Non-consolidated)1,243

Mineral Resources Business

Employees (Consolidated)2,896• Business expansion through investment
in increased production, and securingresources for business sustainability*1.2T (Tbps): 1.2 trillion bits of data transfer per second

Cement-Related Products Business• Environmentally friendly product• Business expansion by concentrating
resources on the electrostatic chuck business• Expansion of products other thanelectrostatic chucks including zinc oxide forcosmetics, functional paints, etc.

Intellectual capital
Number of patents held

Risks• Decrease in the domestic cement
demand• Enforcement of greenhouse gas emission
regulations• Variable energy prices• Market contraction due to technology
innovation• Trade friction between the US and China• Recovery of profitability, foundationbuilding and promotion of decarbonization

R&D expenses

1,873¥3.4 billion

Social capital

Efficient operations and logistics platform
Rich mineral content and high- purity limestone

Advanced Materials BusinessTechnologies and competitive edge
Cement, concrete, and technology related to
optoelectronics/advanced materials
Competitive patent portfolios

Strengths
Natural capital

Human talent
8 minesVolume of waste and byproducts received
4,922,000 tons

Integrated Report 2023

Stable supply system

Logistics network comprising 58
service stations and 21 cementtankers and trucks under our control

Owned mines 11development/respond to new needs, andentry into urban construction and civilengineering work•G ain market share of LN modulator (1.2T/1.6T)• Create contract manufacturing model in
the non-communication area

[Economic value]
Medium-term Management
Plan targets
Net sales ¥265.0 billion

Operating income ¥21.4 billion
ROE

8.0% or higher

ROIC

5.0% or higher

Sumitomo Business Spirit
Human resources with a high level of expertise

Stable financial position

to be a company withstrong presence① Presence as a challenger withthorough differentiation andunique style② An environmental solution company
that meets the needs of the times*③ Challenge to coal phase-out[Social value]

Stable dividends
Swift and accurate disclosure*An environmental solution company: a company thatprovides solutions (products and solutions) to environmental
issues towards the realization of a recycling-based society
and decarbonized society

Target figures for 2035
• Net sales

Customers
Stable supply ofhigh-quality products
Response to customer needs

Business partners
Fair and impartial trade

Local communities
Care for the environment andsafety in the communities
Contribution to local
economy and employment

Employees

Financial indicators

SOC Vision2035
Vision:Shareholders andinvestors

Business Activities• Enhance energy-saving equipment
technology• Attain growth opportunities through thedevelopment of new technologies linked
to CCUSOUTCOME

Safe and healthy workplace
Development of diverse
human resources¥400.0 billion• Operating income ¥40.0 billion or more
• ROE

10% or higher• ROIC

6.5% or higher

Business portfolio reform(based on net sales)
Cement business 50%

Non-cement business 

50%

In addition profitability improvement in
the Cement business, we aim to makethe Advanced Materials business and new
business in the decarbonization field our
new business pillars.

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Sumitomo Osaka Cement Group’s Value Creation

Materiality
The primary social issues that the Group aims to tackle through its corporate activities have been identified as five items ofmateriality, as illustrated in the diagram on the right.
The materiality initiatives help balance a growth of the Group with solution of social issues, and form a foundation forour medium-to long-term management strategies.

Materiality of the Sumitomo Osaka Cement• Contribution to building social
infrastructure and improving
national resilience(Cement business/Mineral Resourcesbusiness/Cement-Related Products business)

Process of Identifying Materiality
Contribute to the
Sustainment andOngoing Developmentof a Prosperous Society

In light of the Sumitomo Osaka Cement Group’s corporate philosophy and based on the ongoing businesses and CSR activities,
we have identified the material issues that the Group considers particularly important and should continue to work on, reflecting
interests and expectations of our internal and external stakeholders.

Step

Step

Step

1

Identify Issues

2

Assign Priority

Perform priority rating from Company and societal perspectives

3

Confirm Validity

Confirm validity at the Board of Directors’ meeting(Optoelectronics business/Advanced
Materials business)

Collect and identify materiality candidates• Respect for humanrights, diversity &inclusion• Occupational safety
and health, healthand productivity
management• Highly effective
corporate governance• Strengthen risk
management andcompliance

Develop and Utilize
Human Resources

Materiality matrix
Five items ofmateriality• Contribution to building an IoT/
ICT-driven society

Contribute to the Sustainment
and Ongoing Development of
a Prosperous Society

Care forthe Global
Environment

Contribute to theDevelopment of a
Recycling-based Society

Develop andUtilize Human
Resources

Enhance Governance

Enhance
GovernanceContribution to building social infrastructure and improving national
resilience (Cement business, Mineral Resources business, CementRelated Products business)
Very highContribution to building an IoT/ICT-driven society (Optoelectronics
business, Advanced Materials business)
Global warming prevention (Promotion of energy substitution byrecycling, promotion of installing energy-saving equipment, use ofwaste heat power generation and biomass power generation, anddevelopment of technologies leading to CCUS)

Contribute to theDevelopment of a
Recycling-based Society

Care for the Global
Environment

Resource recycling in cement plants (Receiving of waste andbyproducts)

Materiality

Biomass power generation business
Reducing environmental impact(Air/soil and water pollution prevention)High

Degree of importance for stakeholders

Preserving biodiversity (Tsushima
leopard cat protection activities,
expansion of marine products
business (artificial marine reefs andseaweed beds), reforestation of minesites after mining)

Receiving of disaster waste• Reducing environmental impact (Air/soil and water pollution prevention)• Global warming prevention
High

Very highDegree of importance for Sumitomo Osaka Cement
Develop and utilize human resources• Respect for human rights, diversity & inclusion• Occupational safety and health, health andproductivity management

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Material issues for thefoundation to support
business activities

Enhance governance• Highly effective corporate governance• Strengthen risk management and compliance(Promotion of energy substitution by recycling, promotion of installing energy-saving equipment, use of waste
heat power generation and biomass power generation, and development of technologies leading to CCUS)• Preserving biodiversity(Tsushima leopard cat protection activities,
expansion of marine products business (artificial
marine reefs and seaweed beds), reforestationof mine sites after mining)• Resource recycling in
cement plants(Receiving of waste and byproducts)• Receiving of disaster waste• Biomass power
generation
business

Integrated Report 2023

14

Sumitomo Osaka Cement Group’s Value Creation

Response to risks and opportunities
The primary social issues that the Group aims to tackle through its corporate activities have been defined as five items ofmateriality.
We identify the anticipated risks and opportunities for these five items of materiality, and through identification, clarify
the issues to be tackled by the Company.

Materiality
Contribute to the Sustainment andOngoing Development of
a Prosperous Society

Contribute to the Development of
a Recycling-based Society

Risks

Opportunities

Contribution to building social infrastructure andimproving national resilience• Contraction of domestic cement market• Increase in renewal demand due to aging of existing infrastructure• Reform the business portfolio• Secure and maintain fair cement prices• Expand the Australian Cement businessContribution to building an IoT/ICT-driven society• Increased development difficulties associated with the sudden
upgrading of technologies required by the market (Advanced
Materials)• Intensifying competition in high value-added products with
devices (Optoelectronics)• Increase in semiconductor demand due to progress in automation andunmanned technologies in each industry• Increase in demand for high capacity, high-quality transmission opticalcommunication associated with the increase in data transmission volumes(Optoelectronics)• Enhance production facilities for electrostatic chucks (ESC), which are semiconductor
manufacturing equipment components (Advanced Materials)• Strengthen development and production systems through an increase in personnel(Advanced Materials)• Advance into the 1.2T/1.6T market for optical communications equipment LN
modulators (Optoelectronics)

Resource recycling in cement plants• Intensified competition of waste collection associated with theshift from fossil energy to thermal energy-related waste• Increased acceptance of diverse waste materials due to the enhancement ofrecycling facilities• Expand the collection of waste and byproducts through aggressive capital investment
such as the increase of chlorination infrastructure at each cement plant• Establish ordinary trash treatment facilities (Ichikawa Recycle Center)

Receiving of disaster waste• Shutdown of cement plants due to large-scale disaster• Assist with fast restoration by promptly accepting the waste from the disasterand by supplying cement products and cement-related products• Build strong cooperative relationships with local government bodies by entering into
the agreement on the treatment of disaster waste

Biomass power generation business• Intensified competition of biomass fuel collection associated withthe shift from fossil energy to thermal energy-related waste• Expansion of new biomass fuel use• Enhance facilities using new biomass fuel

Reducing environmental impact

In the event that the appropriate response is not taken• air pollution and water pollution arises in the environment near
the plants• reputational damage• Preserve the environment in the vicinity of cement plants• Continued operation of plants• Prevent the emission of particulates and other air pollutants contained in gas emissions
using dust collectors and denitrification equipment, with emission levels below legally
mandated emission standards (Cement business)• Prevent water pollution (sedimentation tanks, oil-water separation tanks, oil monitors)• Identify water intake and discharge by source and respond to water risks

Care for the Global Environment
Preventing global warming

Transition risks• Introduce an impact fee system for carbon• Increase research and development spending and capital
investment to achieve carbon neutral• Change the recycling collection environment, etc.
Physical risks• Impact of accidents at cement plants, etc.

Transition opportunities• Reduce coal consumption and promote energy savings• Create new businesses and carbon businesses• Recycling market: Advancements in technologies using recycling and increasein accepted products• Optoelectronics business and Advanced Materials business: Increased demandfor optical communication components and semiconductor manufacturingcomponents, etc. due to heightened needs for high capacity, high-speed,
power-saving devices
Physical opportunities• Increase in demand for infrastructure due to measures for National Resilience,and increase in the maintenance, renewal and repair of concrete, etc.

Preserving biodiversity• Reputational damage if appropriate response is not taken• Increase in demand for marine products due to heightened social interest• Gain social trust

Respect for human rights, diversity & inclusion

In the event that the appropriate response is not taken• Violation of employee human rights through discrimination andharassment, outflow of human resources• Procurement anxiety caused by human rights risks in the supply
chain• Reputational damage, the emergence of unanticipated costs• Protect the human rights of employees and retain human resources byprohibiting all types of discrimination and preventing harassment• Create innovation based on a variety of values and perspective• Continue stable procurement by building a healthy supply chain structure• Gain social trust• Strengthen the promotion system through the establishment of the expert
subcommittee: Labor and Social Affairs Subcommittee (Sustainability Committee)• Formulate and disseminate the “human rights policy” and implement human rights
education• Consider human rights due diligence• Promote the “Plan of Action for the Promotion of Female Participation and Career
Advancement”

Occupational safety and health, Health andproductivity management

In the event that the appropriate response is not taken• Outflow of human resources, recruitment difficulty• Lower labor productivity caused by illness and injury, increase inhealth-related costs• Increase in work-related accidents• Increase labor productivity through the promotion of health and productivity
management, increase employee motivation• Increase productivity by preventing work-related accidents through continuous
health and safety education• Secure and retain human resources by enhancing the human resource
development system and systems related to the easy-to-work workplaces• Each type of training system (training for new employees, rank-based training, OJT
system)• Implement safety training held by the headquarters and by each business office, andexternal safety training• Enhance teleworking and flexible working hours, etc.
• Establishment of an online obstetrics/gynecology and pediatrics consultation service• Internal walking rally event held

Highly effective corporate governance• Decline in corporate value due to the decline in the effectivenessof the governance system, reputational damage• Improve corporate value by building a highly effective governance system, gainsocial trust• Strengthen the effectiveness of the corporate governance system

Strengthen risk management and compliance• Reputational damage due to violation of laws and/or regulations
and breach of compliance• Business continuity risks arise• Gain social trust by observing laws and regulations and being compliant• Sustained continuation of business• Operations of the Risk Management Committee• Hold in-house briefings and workshops on risk management• Hold compliance education• Establish a whistleblowing contact point

Enhance GovernanceIntegrated Report 2023

• Strengthen the promotion system with the establishment of the expert subcommittee:
Carbon Neutral and Environment Subcommittee (Sustainability Committee)• Participate in the GX League and promote the decarbonization transition plan
“SOCN2050”• Create new businesses and carbon businesses by FY 2025
• TCFD-based information disclosure• Promote blue carbon through the supply of marine products (seaweed beds)• Set ICP (internal carbon price), and become carbon neutral for energy used at
headquarters• Destroy fluorocarbons in cement kilns• Protect the marine habitat through the supply of marine products (artificial marine
reefs and seaweed beds)• Tsushima leopard cat protection activities through cooperation with local governments• Reforestation of mine sites after mining• Information sharing through participation and endorsement of initiatives

Develop and Utilize Human Resources

15

The Company’s response

Integrated Report 2023

16

Sumitomo Osaka Cement Group’s Growth Strategy

FY 2023-25 Medium-term Management Plan
This time we have presented the Group’s new 2035 medium- to long-term vision “SOC Vision2035.” To achieve this,we have formulated a Medium-term Management Plan with specific measures to be undertaken by each business fromFY2023 to FY2025.

The future we should aim for as an environmental solution company

To an environmental solution company

SOC Vision2035
Recycling-based
Society

We aim to be a business group that helps preserve the global environment and contributes toPhilosophy the sustainment and ongoing development of a prosperous society through tireless technologicalinnovation and wide-ranging business activities.

Management
visionDecarbonized/
Low-carbon Society

Care for
Ecosystems

Living Environment
Smart Society

SOC Vision2035
Presence as a challenger with thorough differentiation and unique style
An environmental solution company that meets the needs of the times

CementNew
businesses

Cement-Related
Products

MineralResources

Advanced
Materials

Optoelectronics

Originalization
pointsSecuring stable revenue,
strengthening overseas
transportation capacity, and beinga leader in “coal phase-out”

Carbon business

Construction technology using
ICT, and environmentallyfriendly products

Expanding the scale of and adding
high value to mining resources,
and securing environmentallyfriendly resources

Functional materials and devices
using nanoparticle
synthesis/dispersion technologies
and microfabrication technology

Design technology thatdraws out the functionsof LN materials

Environmentalsolution points

Commercialization of
low-carbon cement

CO2 and waste recycling

Reducing the environmental
impact through labor-saving
and manpower-saving
construction methods

Environmentally friendly mine
operations through regreening

Contributing to low power
consumption insemiconductor manufacturing

Providing products withlow power consumption

FY2035 targets
Net sales: ¥400.0 billion Operating income: ¥40.0 billion or more ROE: 10% or higher ROIC: 6.5% or higher

Managementtargets

FY2025 targets
Net sales: ¥265.0 billion Operating income: ¥21.4 billion ROE: 8.0% or higher ROIC: 5.0% or higher

Strategy outline for the FY 2023-25 Medium-term Management Plan

Management
strategies

Improving profitability of existing businesses and building foundations for growth2035 vision

Positioning the FY 2023-25 Medium-term Management Plan

Vision: to be a company with a strong presence

Target figures for 2035
Net sales¥400.0 billion① Presence as a challenger with thorough differentiation and unique style

Operating income ¥40.0 billion or more

② An environmental solution company that meets the needs of the times*

ROE③ Challenge to coal phase-out

ROIC

10% or higher
6.5% or higher

Business portfolio reform
A company that provides solutions (products and solutions) toenvironmental issues towards the realization of a recycling-basedsociety and decarbonized society*What is SOC as an environmental
solution company

Cement business 
Other than the Cement business

50%
50%

CementNew
Businesses

Environmental
solutionscompany

MineralResources

Business Portfolio Reform
Cement-Related
Products

Coalphase-out

Uniquestyle

Optoelectronics
Advanced
Materials

To be a company with

Investment policy
We will invest approximately ¥500.0 billion in carbon neutral (CN) investment and growthinvestment during the period from 2023 to 2035 with the aim of achieving the SOC Vision2035
CN investment

Key investment
themes until
FY203517

Integrated Report 2023

a strong presence

FY2029-2031

100.0 billion

Approx. ¥CN response for plants and means of transport

Growth investment /Infrastructure development

200.0 billion

Approx. ¥Advanced Materials : Diversification of theelectronics materials businessNew businesses: Carbon business
Overseas business : Australian business

Maintenance/renewal

200.0 billion

Approx. ¥Strengthen the facilities in each plant, etc.

FY2026-2028
FY2023-2025
Improving profitability ofexisting businesses andbuilding foundations for growth

Promoting businessstructural reforms

Implementation andexpansion of business modelResearch anddevelopment

Strengthen
management foundation
Human
resources

Intellectual
propertyDX

ESG Management

Integrated Report 2023

18

Sumitomo Osaka Cement Group’s Growth Strategy

FY 2023-25 Medium-term Management Plan

Company-wide strategy

Outline of numerical plan
FY2025 targets

We promote “Improving profitability of existing businesses” and “Building foundations for growth” as the company-wide strategy
in the Medium-term Management Plan.

Improving profitabilityof existing businesses• Recovery of profitability in Cement business• Improve profitability by gaining market share in next-generation opticalcommunication components

Building foundations
for growth• Expand scale and strengthen profitability by concentrating resources on theelectronics materials business for semiconductor manufacturing equipment• Overseas business expansion (Australian business)• New business development in the decarbonization field

Strengthen management foundation

Net sales¥business and Advanced Materials business field and the decarbonization field• Intellectual property strategy: Promoting development of human resources with intellectual property skills and the utilization of• DX strategy: Infrastructure development to solve issues in each business division

the management strategy for intellectual property information analysis (IP landscape)Operating income

265.0 billion¥

FY2025 targets
Operating marginROE

21.4 billion 8.1%

ROIC

8.0% or higher 5.0% or higher

Outline of investment plan
Investment themes

Investment details

CN investment

CN response for each plant and power station and remodeling facilities¥

17.0 billion

Growth investment /Infrastructure development• Enhance the production capacity of the Advanced Materials business• Expand Australian business • Company-wide DX investment• M&A and others¥

41.0 billion

Strengthen the facilities in each plant, etc.

¥

50.0 billion

Maintenance/renewal• Human resources strategy: Investment in people to support business growth and operation of a new human resources policy• Research and development strategy : Strengthen research and development for the creation of new business in the Optoelectronics

Management indicators

Investment amount3-year total
investment amount

¥

108.0

billionShareholder Return Policy
Improve profitability, provide continuous stable dividends and enhance return to shareholders (total return ratio of 3-year

average of 50% or higher).

Capital Allocation
Business Strategies
Certain promotion of the business strategy as follows, based on the company-wide strategy.
Vision for the 2035 business

CementPlease see pages 23 to
24 for the details

Advanced
Materials Business
Please see page 28 forthe details

Mineral Resources
Please see page 25 forthe details

Cement-Related
Products

A business that contributes to the CN society, demonstrating astrong presence by aiming to secure stable revenue, strengthen
overseas transportation capacity and by being an industry leader
in “decarbonization”
Vision for the 2035 businessBusiness Strategies

A technology/product development business that contributes toa sustainable society and the development of the foundation for
information infrastructure• Business expansion by concentrating resources on theelectrostatic chuck business• Expansion of products other than electrostatic chucks
including zinc oxide for cosmetics, functional paints, etc.

Vision for the 2035 businessBusiness Strategies

High-added value products from limestone resources

Please see page 27 forthe details• Business expansion through investment in increased
production• Securing resources for business sustainability

Vision for the 2035 businessBusiness Strategies

Realize a people and environmentally-friendly business model• Environmentally friendly product development, responseto new needs• Entry into urban construction and civil engineering work

Please see page 26 forthe details

Optoelectronics

Business strategies• Recovery of profitability• Foundation building• Promotion of decarbonization

Vision for the 2035 businessRealize a super smart society through original technologies

Business Strategies• Gain market share in LN modulators (1.2T*/1.6T)• Create contract manufacturing model in the
non-communication area
*1.2T (Tbps): 1.2 trillion bits of data transfer per second

New businesses

Concept
Through open innovation, shift from being a CO2 emitting
company to “Company utilizing carbon and scarce resources”

Priority theme• Low-carbon technology products• CO2recycling and waste recycling

Have a good balance
between investment andreturns to shareholders
using the cash generated
from operating cash flow
created through improved
profitability and sales ofcross-shareholdings.
(Please see page 22 for thedetails)

Billions of yen*2 Aim to increase the total return ratioof 3-year average of 50% or higher byincreasing the dividend and acquiring
treasury stock, in light of the status of
improvement in profitability with a basefor stable dividends of ¥120 per share

FY2023-2025
Shareholder returns*2 18.0

Improvingprofitability ➡
*1 Aiming forcross-shareholdings/
net assets ratio
FY2023 below 20%
FY2026 below 10%

Operating CF

111.0

Capital investment andoverseas investment

108.0

Focusing on⬅ carbon-neutral andgrowth investment
OthersSale of assets, etc.*1 20.0
in

5.0

out

New businesses
Take the emitted CO2 to be a management resource and promote research and development and demonstrations through open
innovation to turn CO2 and waste into resources, with the aim of commercialization.

Related cases
1. Launch and sales of CO2 absorption and low-carbon products• Launch and commercialization of new products based on CN thinking,leveraging the sales performance of Low-carbon Cement™ products since 2011

2. Development and demonstration of CO2 separation and capture
technology• Development and demonstration of original efficient CO2 separation andrecovery system

Target revenues (Billions of yen)■= Net sales■= Operating income

1.0

0.3
0
FY2022

FY2025 Target

3. CO2 Recycling• Starting with the social implementation of the achievements of “Establish carbonatation technology with various Ca sources”
as a NEDO Green Innovation Fund Project, launch and expand sales of new products, mainly the world‘s first waste-derived
synthetic limestone with recycled CO2.
(Examples: Various cement-related products using carbon-recycling cement, concrete, etc.)

19

Integrated Report 2023

Integrated Report 2023

20

Sumitomo Osaka Cement Group’s Growth Strategy

Message from the Director responsible for
the Corporate Planning and Administration Departments

We will maximize profits from businessexpansion, promote asset reduction, anddistribute acquired cash in a balancedmanner for sustainable growth.
Director, Managing Executive Officer

Masaki Sekimoto

Looking Back on Performance in Fiscal 2022
Energy costs, which had been rising since fiscal 2021, rose even more in fiscal 2022. Therefore, we have been working to
improve profitability through additional price increases in November 2021 and again in July 2022. However, in addition toenergy costs, the rise in prices of raw materials and other various materials as well as the impact of the depreciation of the
yen against the U.S. dollar resulted in a significant loss in the Cement business, with costs increasing faster than progressfrom price increases. Increased profits in the Advanced Materials business and other factors were unable to compensate
for this loss. As a result, the consolidated operating income in the previous fiscal year could not be maintained and aconsolidated operating loss was posted.
Cash flow from operating activities was also negative due to an increase in working capital resulting from efforts
to secure alternative procurement and inventory from sources other than Russia due to the situation in Russia andUkraine. Against this backdrop, we have steadily made investments to increase the acceptance of recyclable materials asalternatives to fossil energy, as stated in the “2050 Carbon Neutral” SOCN2050,” as this leads to cost curtailment andprofitability improvement. Therefore, any cash shortfall is covered through interest-bearing debt procurement.
Although interest-bearing debt has increased compared to the past, the debt-to-equity (D/E) ratio is around 0.5,
maintaining financial stability. Under this business environment, we have made steady progress on our reduction target forcross-shareholdings that was announced last year, while also striving to provide stable returns to shareholders.

Capital Allocation
In the FY 2023-25 Medium-term Management Plan, we will strengthen our management foundation by positioning
improving profitability of existing businesses and building foundations for growth as company-wide strategies in
anticipation of SOC Vision2035. In this context, our financial policy is to maximize profits from business expansion and topromote asset reduction. We aim to achieve ROE of at least 8.0% and ROIC of at least 5.0% through thorough capital
optimization by balancing the use of acquired cash for sustainable growth investment and shareholder returns.
Specifically, we aim to increase net sales by approximately ¥60.0 billion to ¥265.0 billion and operating income byapproximately ¥30.0 billion to ¥21.4 billion in fiscal 2025 compared to fiscal 2022. Doing so will generate operating cash
flow of ¥111.0 billion over the three-year period. In terms of asset reduction, we aim to reduce the ratio to less than 20%
of net assets in FY 2023 and less than 10% of net assets in FY 2026 through the sale of cross-shareholdings. We plan to
use the cash generated from business profits and asset reduction to fund capital investment of ¥108.0 billion over thethree-year period.
This includes ¥17.0 billion for carbon neutral investments to reduce CO2 emissions by reducing coal consumption,and increase the volume of recyclable materials received to expand alternative raw materials and thermal energy. It also
includes ¥41.0 billion in growth and infrastructure development investment to enhance the production capacity of theAdvanced Materials business, expand the Australian business (downstream development), invest in DX (development ofcommon systems for cement plants, automation of operations at production facilities for electrostatic chucks, and reformof work styles at headquarters), etc. We also expect to invest ¥50.0 billion in maintenance and renewal to strengthen
facilities at each plant, etc. In regard to shareholder returns, we aim to increase the total return ratio of three-year
average of 50% or higher by increasing the dividend and acquiring treasury stock, in light of the status of improvement in
profitability with a base for stable dividends of ¥120 per share.

FY 2023-25 Medium-term Management Plan key targets・assumptions, policies
Company-wide Targets and Assumptions

Financial policy

Net sales and operating margin (%)(Billions of yen)

Profit

300.0

8.1%

Maximize profits as business expands

ROE

Implement asset reduction
and shareholder returns

8.0% or higher÷Equity(4.1)%FY2025 targets

200.0
Balanced growth in profit and equity capital

265.0
100.0

FY2022 results
FY2022

FY2021

Change

204.7

184.2

20.5

Operating income (loss)

(8.5)

6.8

(15.4)[of which Cement business][(19.5)][(2.3)][(17.1)]

0.7

2.9

(2.2)

Net sales

Non-operating income (loss)

21(Billions of yen)

Ordinary income (loss)

(7.8)

9.8

(17.6)

Extraordinary income (loss)

4.7

2.1

2.5

Profit (loss) attributable to owners of parent

(5.7)

9.6

(15.3)

Dividends per share (yen)

120

120

-

Integrated Report 2023

Status of Cash Flow

204.7

Capital Allocation(Billions of yen)

21.4

FY2022 results FY2021 results
Profit (loss) before income taxes and non-controlling interests
Depreciation expense (including amortization of goodwill)
Changes in receivables and payables, income taxes, etc.
Operating cash flow
Purchase of property, plant and equipment
Sale of assets, etc.
OthersInvesting cash flow
Free cash flow
Change in interest-bearing debt
Purchase of treasury stock(including payments of segregated deposits)
Dividends paid and others
Financing cash flow
Net increase (decrease) in cash and cash equivalents

(3.1)
20.2
(33.2)(16.1)(27.9)
8.6(0.5)(19.8)(36.0)
43.1

12.0
19.4
(13.1)
18.3(20.9)
5.2(0.4)(16.1)
2.2
5.1

(1.5)

(8.5)

(4.3)
37.3
1.4

(4.6)
(8.0)
(5.7)

(Billions of yen)

FY2023-2025

0

Shareholder returns*2

18.0

(8.5)
FY2022

FY2025 Plan

Management
indicators

FY2022

FY2025 targets

ROE(3.0)%

8.0% or higher

ROIC(4.0)%

5.0% or higher• Demand in Japan : 38 million tons
• Petroleum
:
90$
Plan
assumptions • Coal:
CIF250$• Foreign exchange :¥130/$1

Improvingprofitability ➡

*1 Aiming forcross-shareholdings/
net assets ratio
FY2023 below 20%
FY2026 below 10%

Operating CF

111.0

Capital investment
andoverseas investment

108.0

Focusing on⬅ carbon-neutral andgrowth investment

OthersSale of assets, etc.*1

5.0

20.0

in

*2 Aim to increase the total return
ratio of 3-year average of 50%
or higher by increasing thedividend and acquiring treasury
stock, in light of the status of
improvement in profitability
with a base for stable dividendsof ¥120 per shareout
Integrated Report 2023

22

Sumitomo Osaka Cement Group’s Growth Strategy

Sumitomo Osaka Cement Group Overview by Segment
Cement Business(sales, international,
logistics)

Business Strategies

Cement BusinessBusiness Strategies

In the business environment surrounding the Cement business, domestic demand

Under “SOCN2050,” which outlines the Company’s plan to reduce CO2 emissions, we

continues to be severe, as public sector demand is decreasing due to a decline in theare focusing capital investment in areas to achieve the near term 2030 target.

budget execution rate caused by soaring material and labor costs, as well as prolonged

Toward 2030, we aim to (1) reduce fossil energy-derived CO2 emission intensity

construction periods due to labor shortages at construction sites. However, over theby 30% (compared to fiscal 2005), and (2) increase fossil energy substitution rates at

medium to long term, we believe that demand will be resilient due to redevelopment

the eight kilns in all plants to an average of 50% or higher, with a target of 80% orin urban areas, work related to the Chuo Shinkansen (Superconducting Maglev train),higher for four of those kilns.

and work related to the Expo 2025 Osaka, Kansai, as well as construction to improve
national resilience and demand for upgrading social infrastructure.

(production, facilities,
environment)

To achieve the target fossil energy substitution rate, we have been steadily
promoting initiatives to achieve the most reductions of coal consumption as possible,

And at the same time, coal and oil prices and ocean freight rates are expected tocontinue to fluctuate sharply in the future due to the uncertain global situation. Other
costs such as raw fuel, electricity, materials, and labor have also increased.
Under these circumstances, we will steadily implement sales price revisions toeven if it is as little as one ton, such as increasing waste plastics processing facilities, tocapture and use a diverse range of alternative heat sources.
In our environmental business, we will strengthen our efforts to recycle cement
resources by accepting a wide range of waste products and byproducts as raw

restore profitability as stated in the FY 2023-25 Medium-term Management Plan, andmaterials. In addition, in terms of environmental investments, we have advanced thework to maintain and secure appropriate prices. At the same time, we will carry out

conversion of dust collection equipment to enable the use of bag filters at all plants,

maintenance and renewal of logistics facilities such as for ships and service stations,which enhances dust collection performance while also making it possible to further

Representative Director

take measures to address labor shortages in personnel involved in transportation

expand our acceptance of waste products and byproducts that are difficult to process.

Representative Director

Executive Vice President(drivers, ship’s crews, and service station workers), including those to address the 2024

The ordinary incinerator ash that we receive from local governments also contributes

Senior Managing Executive Officer

Responsible for Real Estate Dept.,
Cement Sales Administration Dept.,
International Business Dept.,
Physical Distribution Dept., andCement-Related Products Div.

problem, and build an optimal transportation system, in order to continue to provide

to carbon neutrality as an alternative to limestone raw materials. In order to expand

a stable supply to users and maintain our domestic sales share. In addition, beginning

the amount of ash we receive, we have established a pretreatment and marinewith the strengthening of our logistics alliance with NIPPON STEEL CEMENT Co., Ltd.,transportation base in Ichikawa City, Chiba Prefecture, at the end of fiscal 2022.

Responsible for Production andTechnical Dept., Maintenance andEngineering Dept., Sustainability
Dept., Environment Div., andCement/Concrete ResearchLaboratory

Toshihiko Onishi

we will continue to consider expanding our logistics alliances with industry peers.

In recent years, we have concluded partnership agreements with many related local

Regarding overseas business, a cement terminal in Australia in which we invested

governments for the acceptance of disaster waste from repeated natural disasters

became operational in 2021, becoming a stable export destination for us. We will use

in order to assist in matters such as facilitating smooth administrative procedures,the terminal as a base in Australia to focus on downstream business expansion in the

procuring materials during disasters, and preserving the environment. In future, we

future. We will establish our foundation to develop overseas business where we canwill contribute to the quick recovery of disaster areas as well as the formation of atake advantage of synergies with our cement technology and exports in other overseas

local recycling-based society.

Ryoji Doiregions as well.

Positive factors

Negative factors• Marketing strength that leverages the Sumitomo brandInternalfactors

S

Strengths• Information-gathering capabilities based on direct contact with end users• Distribution of service stations providing coverage of nearly the whole of thecountry• Well-balanced locations for plants• High rate of in-house power generation (use of biomass/thermal power generation)• High intensity of waste usage and byproduct usage, high thermal energy
substitution rateW
Weaknesses• Aging of plant and service station facilities• Supply capability for specialty cement• Insufficient capacity at service stations in areas ofdemand• Docking facilities for coastal plants

160.9• Declining domestic demand for cement

O

External Opportunities
factors23• Rising demand in developing countries• Rising environmental awareness around the globe

Integrated Report 2023

Operating income (loss) (Billions of yen)
173.0

140.3

• Unified management of all overseas transportation (SOC Logistics Co., Ltd.)• Disaster prevention/mitigation, demand for major construction projects

Net sales (Billions of yen)T
Threats• Stronger regulation of companies emitting
CO2• Labor shortages and aging of personnel involved intransportation (drivers/ship’s crews/ service station
workers)• Higher repair costs caused by aging offacilities, labor shortages• Global logistics disruptions and soaring ocean freightrates• Shortages of alternative thermal energy
sources such as waste plastics and biomass
fuels• Sharp increase in energy prices• Sharp fluctuations in exchange rates

6.0
(4.6)
(19.5)FY2022

FY2023
Forecast

FY2025 Target(Final FY of Medium-termManagement Plan)

FY2022

FY2023
Forecast

FY2025 Target(Final FY of Medium-termManagement Plan)

Integrated Report 2023

24

Sumitomo Osaka Cement Group’s Growth Strategy

Sumitomo Osaka Cement Group Overview by Segment

Mineral Resources
Business

Business Strategies

Business Strategies

The Mineral Resources business supplies limestone and other materials extracted fromThe Cement-Related Products business is developing a wide range of cement products,

the eight mines that we own nationwide for use as raw materials for our own cement,with repair and reinforcing materials for concrete structures comprising the core. In

in addition to which it manufactures and sells products externally for use as raw

recent years, there has been a rising need for maintenance and renovation of aging

materials in steelmaking and chemicals, and in aggregates and powders.

social infrastructure such as roads, tunnels, railway lines, bridges, water and sewage

At the main Shuho Mine (Mine City, Yamaguchi Prefecture) we leverage thefacilities, port facilities, and buildings, and we expect further growth opportunities foradvantages conferred by the location and the quality of limestone produced there,

this business. On the other hand, given that we expect sharp increases in raw material

focusing on the manufacture of high value-added products, including exports toand secondary material prices, as well as higher unit prices for transportation, fuelnearby Asian countries. We have built a system for shipments at Senzaki Port (Nagato

and labor, we are working to cut costs by improving the efficiency of production andCity, Yamaguchi Prefecture), which is the port of dispatch for Shuho Mine, thattransportation.

enables loading 24 hours a day, and commenced shipping berth extension work

Cement-Related
Products BusinessGoing forward we will focus on highly profitable markets with potential foras infrastructure development. The joint operation with Mitsubishi UBE Cement

revenue growth, and take steps to expand sales of our mainstay products. Specifically,

Corporation at the Kokura Mine (Kitakyushu City, Fukuoka Prefecture) continues

our objective is to expand sales of our heavy metal pollution solution MAGICAL

to achieve steady progress in production through efforts to ensure operations

FIX, the demand for which is expected to rise in relation to the soil produced by

are running stably and production is efficient. At the Karasawa Mine (Sano City,

tunneling works for railroad and road construction, etc. In addition, we are working

Tochigi Prefecture), in response to rising demand for limestone aggregates in the

on developing labor-saving and energy-saving products and techniques, such as theManaging Executive Officer

Kanto region, we are striving to expand sales of high-added value aggregates while“Refre Dry Shot Method,” to address labor shortages on construction sites, as well as

Representative Director

Responsible for Mineral Resources
and Products Div., Optoelectronics
Business Div., and Advanced
Materials Div.

promoting collaborative extraction with two companies whose mining areas arefurther increasing hiring.

Executive Vice President

Akihiko Ono

adjacent to ours. The Ibuki Mine (Maibara City, Shiga Prefecture) is working to

We will provide an extended one-stop service from materials to construction that

increase production and expand sales of aggregates to provide additional supply to

combines surveying, design and construction work in order to achieve synergy effects

compensate for the progressive depletion of resources at neighboring mines.

and contracts work from the manufacturing of materials to on-site construction by

Each of the mines is moving forward with the utilization of IoT, such as drones,

enlisting collaboration with Group companies such as Estec Co., Ltd., SNC Co., Ltd.,and working to reduce extraction costs and increase revenue. In addition, in order to

KURICON,LTD., Noma Sangyo Co., Ltd., and Chuken Consultant Co., Ltd. which issecure stable resources over the long term we are drawing up plans to develop new

involved in surveying and diagnostic work for concrete structures.

Responsible for Real Estate Dept.,
Cement Sales Administration Dept.,
International Business Dept.,
Physical Distribution Dept., andCement-Related Products Div.

Toshihiko Onishimining areas in existing mines.

Positive factors

Internalfactors

S

Strengths• Own limestone mines withrich mineral content and highpurity• Cost-competitiveness of
Shuho Mine• Synergies with cement plants(operating levels, processingof byproducts)

Negative factors

Net sales (Billions of yen)

13.4

W
Weaknesses

Positive factors

15.2

14.8

• Excess capacity due tocongestion at Shuho Mineshipping berthsInternalfactors
FY2022

FY2023
Forecast

FY2025 Target

S

Strengths(Final FY of Medium-termManagement Plan)

Operating income (Billions of yen)O

External Opportunities
factors• Rising demand for limestoneaggregates• Increase in marketing
opportunities caused byresource depletion at nearby
mines, etc.

T
Threats• Declining domestic demandfor cement/ concrete• Declining demand for
calcium carbonate used incoal-fired power stations
as a result of reductions ingreenhouse gas emissions

2.4

FY202225

Integrated Report 2023

2.8

FY2023
Forecast

Negative factors

3.3

FY2025 Target(Final FY of Medium-termManagement Plan)O

External Opportunities
factors• Extensive product lineup• One-stop service frommaterials to construction• Own manpower-saving andlabor-saving construction
methods• Expanding market for repair
and reinforcement of aging
infrastructure• Requests for environmentallyfriendly products resulting
from the acceleration of ESG
investment• Growing demand formeasures related to
improving national resilienceW
Weaknesses

Net sales (Billions of yen)
27.1
22.1

23.4

FY2022

FY2023
Forecast• Sales routes• Plants
FY2025 Target(Final FY of Medium-termManagement Plan)

Operating income (Billions of yen)T
Threats• Labor shortages on
construction sites• Sharp increase in prices for
raw and secondary materials

1.5

1.7

FY2022

FY2023
Forecast

2.3

FY2025 Target(Final FY of Medium-termManagement Plan)

Integrated Report 2023

26

Sumitomo Osaka Cement Group’s Growth Strategy

Sumitomo Osaka Cement Group Overview by Segment

Optoelectronics
Business

Business Strategies

Business Strategies

LN (lithium niobate) modulators, which are optical communication componentsthat are the mainstay product of the Optoelectronics business, provide superior
performance for medium- to long-distance communications, and are used primarily inbackbone networks. At a global level, the recent promotion of teleworking and so on
has resulted in further increases in internet traffic (data transmission volumes), and themarket is expected to grow further. In addition, we anticipate that high value-added
optical modulators will be required for Beyond 5G/6G, which is the foundation fornext-generation information communication.
In R&D, we will respond to customer needs for ultra miniaturization and higher
performance by developing LN integrated modulators that can handle 1T (terabit) or
higher capacity required in the future through further miniaturization of elements
and highly integrated mounting technology, while leveraging the strengths of LN
modulators, such as high-quality transmission and low power consumption. At
the same time, we will secure a competitive advantage by introducing effective
manufacturing processes consisting of new labor-saving technologies.

Director, Senior Managing
Executive Officer

In the area of compact integrated modulators, which will be our next mainstay
product, we will expand our business by developing global sales activities mainly

Responsible for Intellectual
Property Dept., Optoelectronics
Business Div., Advanced Materials
Div., New Technology ResearchLaboratory, and Funabashi Officein North America, and establishing a production and sales structure for the global

Mikio Konishi

many years, adding some modifications and advancing in non-communication areas

market.
In addition, in regard to existing products, we are also working on the developmentof new products by applying the optical device technology we have cultivated oversuch as satellite communication and the high frequency wireless field.

Positive factors

Internalfactors

S

Strengths• High-quality transmission
characteristics derived
from LN material device
technology, low power
consumption, design
technology to apply thisperformance to evolving
communications technology,
manufacturing capabilities

Negative factors

W
Weaknesses• Single-product portfolio
resulting in insufficienttechnology and productdevelopment capabilities,
including those requiredfor peripheral devices forcommunications business
operators

We expect further growth in the semiconductor manufacturing equipment market
due to the progress in digitalization of society and needs for higher performance fromsemiconductors. We are targeting for the Advanced Materials Division, with electronicmaterials for semiconductor manufacturing equipment as a pillar, to be a core businessaccounting for the 50% of net sales from non-cement businesses set forth in the mediumto long-term management vision “SOC Vision2035.”
Data handling volumes will increase exponentially in future with the spread of 5G, DX
and AI, etc. Meanwhile, the market for semiconductors and manufacturing equipment will
also increase, and we forecast the market to more than double by 2035. We will invest
concentrated resources into this growth area, and definitely develop the business.
The Company’s electrostatic chucks, which use SiC nanoparticles, have the featuresof nano-composite ceramics that excel in surface assimilation and resistance tovoltage, and improve the uniformity in surface temperatures and plasma controllability
to the outermost edge of the silicon wafer required in state-of-the-art dry etching
micro fabrication process. Amid the growing demand for various features requiredin electrostatic chucks, we will meet customer demands by accelerating the speedof technological development in addition to the attributes of materials in which theCompany has strength.
This fiscal year is the start of the FY 2023-25 Medium-term Management Plan. At
present, all semiconductor manufacturers have been forced to reduce production withongoing adjustments in semiconductor inventories, but there is no change to the rising
trend in transmission volume due to the proliferation of 5G communication and theadvancement of DX, and we forecast demand for semiconductors for memory and logic
used in data centers and mobile devices, etc. and for semiconductor manufacturing
equipment to recover in fiscal 2024 and subsequently surge ahead.
We will invest aggressively so that we can respond without delay to a surge in demandfor electrostatic chucks and our plan is to start increasing manufacturing capacity.
In addition to this, we manufacture and sell cosmetics materials and functional
paints assigned with optical functionality such as screening of UV light. In addition to
the expansion of sales pf products that use nanotechnology, a core competency of theCompany, we are developing materials for clean energy, and will not only secure stablerevenues, but contribute to a sustainable society.

Net sales (Billions of yen)

Positive factors

7.9
2.4

2.7

FY2022

FY2023
Forecast

Internalfactors
FY2025 Target

S

Strengths(Final FY of Medium-termManagement Plan)

Operating income (loss) (Billions of yen)O

External Opportunities
factors27• Continuous increase indemand for data traffic
driven by IoT, 5G, shift tocloud• Expansion of applications in
new markets, such as AI and
self-driving vehicles

Integrated Report 2023

T
Threats• Intensifying competition inhigh value-added productswith semiconductor devices
and integrated devices• Existence and emergence ofgeopolitical restrictions as an
infrastructure product

0.7
(0.1)

(0.3)

FY2022

FY2023
Forecast

FY2025 Target(Final FY of Medium-termManagement Plan)O

External Opportunities
factors• Product development basedon unique nanoparticle
technology• Product portfolio stretchingfrom semiconductor
manufacturing equipment
to UV screening material(cosmetics material)• Continuous expansion of
the semiconductor market
in areas such as 5G, AI, andself-driving vehicles• UV screening material(cosmetics material): risingdemand for inorganic
materials due to its safety
and environmentally friendly
natureNegative factors

Advanced
Materials BusinessDirector, Senior Managing
Executive Officer
Responsible for Intellectual
Property Dept., Optoelectronics
Business Div., Advanced Materials
Div., New Technology ResearchLaboratory, and Funabashi Office

Mikio Konishi

Net sales (Billions of yen)

21.7

W
Weaknesses• Securing and nurturing
human resources for design
development and production
technology, so as to be able
to meet quality needs thatrise every year, is an issue

FY202235.5

24.0

FY2023
Forecast

FY2025 Target(Final FY of Medium-termManagement Plan)

Operating income (Billions of yen)T
Threats• Synchronization with thesemiconductor market with
its rapid pace of innovation

6.9
5.3

4.8

• Need improvements inmaterials and production
platforms/executing
development in a timely
fashionFY2022

FY2023
Forecast

FY2025 Target(Final FY of Medium-termManagement Plan)

Integrated Report 2023

28

Sumitomo Osaka Cement Group’s Growth Strategy

R&D and IP
Under the basic philosophy of continually developing original technologies, the Sumitomo Osaka Cement Group engages
in a wide range of proactive R&D activities. These range from new technology and new product development in ourcore cement and concrete business to peripheral cement-related products, to R&D in the Optoelectronics business andAdvanced Materials business segments based on our core technologies.

Cement/Concrete Research Laboratory
The Cement/Concrete Research Laboratory develops new technologies and products in a broad range of fields, including highperformance concrete, concrete paving technology, as well as ultra-rapid hardening materials and methods for repairs, along withtechnologies with a lower environmental impact, among others.

Cement/Concrete Research Laboratory R&D Policy

Intellectual Properties
Intellectual Property Dept. will promote the following efforts
in order to strengthen our management foundation
to support the sustainable growth of the Group1) Strengthen the development of humanresources skilled in intellectual property2) Utilization of intellectual property
information analysis for management
strategy (IP Landscape)Executive Officer
Responsible for Intellectual Property Dept.
General Manager,
Intellectual Property Department“Strive for the implementation of technologies to actualize the higher value-added core business under one roof.”

Tomomi Yanagimachi

1) Maximize profitability of the recycling business and realize facility efficiency that contributes to a low-carbon society2) Enhance construction site productivity and develop concrete technologies with an eye on the conservation of power and labor, and automation
3) Develop carbon recycling technology using CO2 emitted from cement plants as a resource4) Develop labor-saving techniques centered on Refre Dry Shot technology

New Technology Research Laboratory
The New Technology Research Laboratory works to usher in innovations in the energy, environment, information communicationand electronics domains. It focuses on the development of optoelectronics devices and equipment with an eye on optical ICT
as well as the development of semiconductor manufacturing equipment components and various functional materials with aneye on nanoparticle material technology. The work that takes place at the New Technology Research Laboratory underpins the
Optoelectronics and Advanced Materials businesses.

1. Strengthen the development of human resources skilled in intellectual property
We will strengthen the development of personnel able to strategically create and utilize intellectual property (human resources
skilled in intellectual property) to strengthen the management foundation that supports the Group’s sustained growth.
Specifically, we will develop people able to create an image of utilizing intellectual property for the future in a continuously
changing business environment, and people who form intellectual property rights, tenaciously thinking about what types ofintellectual property to create for such images. In addition to the increase in the development of such human resources itself
strengthening the management foundation, we expect that the created intellectual property will definitely lead to management
value in future. We would like as many employees as possible to become such human resources, and will implement refineddevelopment of Human resources skilled in intellectual property in conjunction with the occupational category and class.

2. Utilization of the management strategy for intellectual property information
analysis (IP landscape)We will conduct Intellectual property information analysis for the purpose of utilization in formulation of the management strategy.
For example, we will anticipate changes to the environment surrounding the business through analysis that fuses information on“policies, market and technologies” with intellectual property, and present the risks and propose opportunities from an intellectual
property perspective. In addition, we contribute to the formulation and expansion of our own business model to provide solutions
to environmental issues by analyzing the intellectual property information in line with the trends in “environment, economy andsociety” relating to our own business and by providing this to relevant internal divisions.
We will promote the creation and utilization of intellectual property looking ahead to the SOC Vision2035, by analyzing
intellectual property information from a medium- to long-term perspective, and providing useful information for creating
technologies with competitive advantages and intellectual property in future domains.

Image of the IP landscape

New Technology Research Laboratory R&D Policy

SOC Vision2035

Provide solutions toenvironmental issues andcreate the business model

Anticipate change inexternal circumstances⇒ risks and opportunities

FY 2023-25 Medium-termManagement Plan

“Selection and concentration for product development of compact integrated modulators and electrostatic chucks, and development of
automated mass production processes”
1) Accelerate development of compact integrated modulators through a project structure2) Develop elemental technologies to maintain and improve the competitiveness of the electrostatic chuck business3) Develop automated assembly lines for modulators and electrostatic chucks4) Carry out R&D to expand business domain and scale

Macro

Society

Environment
EconomyMarketPolicies
Technologies

Micro

IP landscapeAnalysis perspective

29

Integrated Report 2023

Integrated Report 2023

30

Foundation to Support Value Creation

Sustainability for the Sumitomo Osaka Cement Group
Carbon Neutral and Environment Subcommittee

Basic Approach
Based on Sumitomo’s business spirit of “placing prime importance on integrity and sound management” and philosophy of“We aim to be a business group that helps preserve the global environment and contributes to the sustainment and ongoingdevelopment of a prosperous society through tireless technological innovation and wide-ranging business activities,” the Sumitomo
Osaka Cement Group has been working to resolve social issues through its business.
Initiatives to solve material social issues of “achieving carbon neutrality” and “preventing global warming” are imperative for thesustainable and sound development of the Group. In 2020, we announced in our carbon neutral long-term vision “SOCN2050,” ourchallenge to achieve net zero CO2 emissions by 2050.
In addition, under the belief that we need to incorporate widespread sustainability into management, we created the following
system in order to handle initiatives for the “respect for human rights” in the Company and in its supply chain, and are working as
one to promote this system.

Promotion Framework

Sustainability Committee
This Committee has been established for the purpose of trying to establish and spread sustainability awareness and to promote
activities. The structure of the activities, has the President as the chairperson in an organization that spans the entire company.
The agenda details are regularly reported to the Board of Directors with important matters discussed so that the Board of Directors
provides direction and works as one with the management on initiatives surrounding sustainability issues.

Board of Directors

Production
andTechnical
Dept.

Intellectual
Property
Dept.

MaintenanceandGeneralEngineering Affairs Dept.
Dept.

New
Technology
Research
Laboratory

Cement/Concrete
Research
Laboratory

Corporate
Planning
Dept.

Administration
Dept.

MineralSustainability Environment Resources
and Products
Dept.
Div.
Div.

Carbon Neutral and Environment Subcommittee

CementRelated
Products
Div.

PhysicalDistribution
Dept.

Purchasing
Dept.

Real Estate
Dept.

Optoelectronics
Div.

Advanced
Materials
Div.

Internal
Audit Dept.

Funabashi
OfficeHuman
Resources
Dept.

Legal Dept.

International
Business
Dept.

Labor and Social Affairs Subcommittee

Amid the continuing globalization of the economy, the focus on respect for human rights shines not only the Company itself
but also the supply chain. The Group has to date been involved in human rights issues including work life balance and diversity.
However, it is aware of the need for further promotion both inside and outside the Company. This subcommittee will gather humanrights-related information and conduct inhouse awareness raising, while actively promoting initiatives across all divisions concerning
respect for human rights in the Group’s supply chain, etc.

Integrated Report 2023

Ryoji Doi

44% of limestone is emitted as CO2. 60% of total CO2 emissions from cement plants including those from the burning

Labor and Social Affairs Subcommittee

31

Representative Director
Senior Managing Executive Officer
Responsible for Production and TechnicalDept., Maintenance and Engineering Dept.,
Sustainability Dept., Environment Div., andCement/Concrete Research Laboratory
Chair of Carbon Neutral and Environment
Subcommittee of Sustainability Committee

Possession of high-grade and abundant domestic resources and limestone is an unshakeable advantage of Japan’s
cement industry. However, as long as that raw material is used, CO2 will be generated from the calcination process.

Labor and Social Affairs Subcommittee

Cement Sales
Administration
Dept.

The immediate goal is to achieve a coal substitution rate of 50% across all
five plants by 2030, by which time the Company will have invested morethan 40 billion yen. Additionaly, we are aiming for a substitution rateof 80%, which is even a high-level target globally, for four of the eightkilns. We have upheld world class substitution rates to date, and we are
currently gearing up investment, working on unprecedented expansionof our facilities. Recently, both the kiln and temporary incinerator furnace
have successfully run completely coal-free clinker firing operations.
Currently, all divisions, including the five plants, production, environment,
facilities, and research laboratories, are fully focused on achieving a coal
substitution rate of 50% by 2030.

2050: The challenge of moving to carbon neutral

Sustainability Committee (Chairperson: President)
Carbon Neutral and Environment Subcommittee

We will tackle the challenge of achievingcarbon neutrality by using all possible
domestic and international measures.

Full focus on achieving a coal substitution rate of
50% by 2030

Apr. 2020	Established the Sustainable Measures Committee
Dec. 2020 Announced 2050 “Carbon Neutral” Vision “SOCN2050”
Apr. 2021 Established Sustainability Department
Apr. 2023 Established the “Sustainability Committee” with the development of the Sustainable Measures Committee		Established the “Carbon Neutral and Environment Subcommittee”
and under this, established the “Labor and Social Affairs Subcommittee”

Sustainability Committee
Organizational Chart

For the realization of carbon neutrality, this subcommittee undertakes promotion, information gathering, risk assessment andformulation of response, internal training and education programs, action plans and progress management of the Group’s initiatives,
etc. based on the long-term vision “SOCN2050.”

process at 1,450°C are from limestone calcination. This is why the cement sector is referred to as a difficult sector foremissions reduction, both domestically and internationally, and why cement manufacturing is said to be an industry
with high hurdles to becoming carbon neutral.
In Europe, the North Sea oil fields are nearby, and the potential for carbon capture and storage (CCS) is high. In
Japan, which is disadvantaged in that regard, we are recognizing that it is essential to pursue the possibility of CCU(carbon capture and utilization, or carbon recycling). Limestone CaCO3 is a chemically stable substance. Accordingly,
stabilizing CaO (CaCO3-CO2 = CaO) separated from CO2 in industrial processes by recombining it with CO2 after use
is rational from a carbon-neutral perspective. CaO contained in waste streams after decarbonation and human use
should be considered a valuable recycled resource for CO2 fixation or reuse. Limestone CaCO3, a domestic resource,
has been a major raw material for concrete for hundreds of years, shaping the infrastructure structures of our country.
These structures are demolished and recycled in cycles of decades. However, in this carbon-neutral era, the CaO in the
demlished materials should not be used as roadbed material or recycled aggregate but captured and used effectively asa recycled resource that fixes and reuses CO2. For this reason, we believe it is important to reform the vein system.
Our concept of carbon recycling envisions a dual loop of CO2 and calcium. Currently, under the national Green
Innovation Fund project, we are progressing the development of technology for stable and high-quality productionof synthetic limestone CaCO3 by reacting various Ca-containing wastes with cement plant emissions. We are looking
forward to a successful demonstration at the actual plant.

Integrated Report 2023

32

Foundation to Support Value Creation

E

Progress of the 2050 “Carbon Neutral” vision “SOCN2050”

Environment

2050 “Carbon Neutral” Vision “SOCN2050”

Response to Climate Change

The CO2 generated when producing cement consists of CO2 originating from energy necessary for
cement clinker burning and process-derived CO2 emitted from limestone, which is the primary ingredientGreenhouse Gas Emission Volume of the Sumitomo Osaka Cement Group■= Scope 1 ■= Scope 2 (Unit: 1,000 t-CO2eq)

10,000= Scope 1 net CO2 emissions

9,493
213

9,500

9,259
209

9,000

8,468

8,500

9,280

8,000

of cement. As a company that emits a large volume of greenhouse gases, in December 2020 weannounced the “Carbon Neutral” Vision “SOCN2050” in which we set forth our initiatives to takeon challenges for the Group to become a carbon-neutral organization by 2050 through all possible
measures. Based on this roadmap, we are advancing the following initiatives.

8,232
9,050

8,069

7,938
8,700

Initiatives toward Achieving 2030 Reduction Target

8,989
179

8,896
196

8,810

7,500

FY2030 reduction targets

8,425
195
7,521

30% reduction in energy-related CO2 emissions from FY2005 levels
on a carbon intensity basis (45% reduction in emissions)

8,230

7,000

Energy-related CO2[Breakdown] Scope1
Scope2

Non-Energy-related CO2(Derived from processes)
Non-Energy-related CO2(Derived from waste)
Other GHG

Volume of GHG emissions(CO2 equivalent)
Scope1 (net CO2 emissions)

FY2018FY2019FY2020

FY2021

FY2022FY20183,856

FY20193,742

FY20203,654

FY2021
3,706

FY2022
3,380

3,643
213

3,533
209

3,458
196

3,527
179

3,185
195

4,590

4,470

4,260

4,320

4,130

812

818

762

741

709

235

229

220

222

206

9,493

9,259

8,896

8,989

8,425

8,468

8,232

7,938

8,069

7,521

*Scope 1: Direct emissions of greenhouse gases via business operators (burning of fuel, manufacturing process)*Scope 2: Indirect emissions of greenhouse gases due to the use of electricity, heat and steam supplied by other companies*Scope 1 netCO2 emissions: CO2 derived from recyclable materials such as biomass and waste is excluded from energy-related CO2, based on the WBCSD (World BusinessCouncil for Sustainable Development) concept of net CO2 emissions.
<Scope of data collection> The Company and 48 major affiliates

CO2 from electrical energy: CO2 from electric consumption necessary for cement clinker burning

Energy-related CO2

CO2 from energy in the burning process: CO2 from fossil energy for cement clinker burning(Unit: kg-CO2/t)

Results

Energy-derived CO2 emission intensity

FY2005316

Targets
FY2022274

FY2030220❶ Maintain top-class fossil energy substitution rate by further expanding use of recyclable materials

Targets

Achieve no less than 50% average fossil energy substitution rate Company-wide(Achieve more than 80% fossil energy substitution rate at the Group’s five factories and four of its eight kilns)❷ Reduce electric energy use through heat efficiency and the minimization of electricity consumption(Upgrade to cutting-edge raw material crushing process)❸ Reduce fossil energy use from in-house power generation (greater volume of wood chips and otherbiomass fuels)

CO2 from processes: C O2 released from chemical conversion of calcium carbonate (CaCO3) in limestone, the primary
ingredient of cement, to form calcium oxide (CaO), the essential compound of cement

GX League Participation and the Disclosure of New Targets
CO2 Emissions in the Value Chain: Scope 3 (Fiscal 2022)
CO2 emissions(1,000 t-CO2)

Category
1

Purchased goods and services

2

Capital goods

47.3
66.5

3

Fuel and energy related activities not included in Scope 1 or 2

369.2

4,9 Transportation and delivery (upstream, downstream)

154.3

5 Waste generated in operations
6 Business travel
7 Employee commuting
10 Processing of sold products
12 Waste from sold products

0.3
2.2
0.9
64.1
524.2

Calculation method*
Calculated by multiplying the amount of natural materials for cement manufacturing
purchased from non-Group companies by the CO2 basic unit
Calculated by multiplying the recorded amount of new noncurrent assets by the CO2 basic unit
Calculated by multiplying the amount of thermal energy purchased for cement
manufacturing and the amount of electricity purchases by the CO2 basic unit
Periodically reported figure based on the Act on Rationalizing Energy Use(Measures pertaining to consignors and transportation operators)
Calculated by multiplying the amount of waste outsourcing fees, etc. by the CO2 basic unit
Calculated by multiplying the total travel expenses for business trips by the CO2 basic unit
Calculated by multiplying the total travel expenses for commuting by the CO2 basic unit
Calculated by multiplying the volume of cement sold by the CO2 basic unit
Calculated by multiplying the volume of cement sold converted into concrete by the CO2 basic unit

<Scope of data collection> The Company*Source of basic unit

33

“Embodied Energy and Emission Intensity Data for Japan Using Input-Output Tables (3EID)” (National Institute for Environmental Studies, Japan)“Inventory Database IDEA” (National Institute of Advanced Industrial Science and Technology)“Database of Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver. 3.2)”(Ministry of the Environment)“Explanations by Industry (Cement Production) for the Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain(Ver. 1.0)” (Japan Cement Association)

Integrated Report 2023

We endorsed the “GX League Basic Concept” announced by the Ministry of Economy, Tradeand Industry as well as steady initiatives for the Group’s “SOCN2050” initiative, and are now
participating in the “GX League*,” which will be fully operational from fiscal 2023.
* Established as a forum for companies actively engaged in green transformation (GX) to collaborate withgovernment, universities, public research institutions, and financial institutions to discuss the transformation of
the entire economic and social system and to put the creation of new markets into practice.

GHG Emission Reduction Targets Announced in Conjunction with GX League Participation
2030 GHG direct emission reduction target

2030 GHG indirect emission reduction target(Scope 1 (net CO2 emissions))(Scope 2)

16% reduction (compared to FY2013)

16% reduction (compared to FY2013)<Scope of data collection> Total of Scope 1 (net CO2 emissions) and Scope 2 (the Company + Hachinohe Cement Co., Ltd. + Wakayama Slag Cement Co., Ltd.)[Reference] Japan Cement Association FY2030 Total CO2 Emissions Reduction Target: 15% reduction (compared to FY2013)
Source: “Cement Industry Carbon Neutral Action Plan Phase II Targets” (Japan Cement Association) (published September 2022)

Integrated Report 2023

34

Foundation to Support Value Creation

Roadmap to 2050 carbon neutral

CCUS

The Group is committed not only to reducing energy-derived CO2, but also to technological innovation through investment inresearch and development in order to achieve carbon neutrality by 2050. The Group will also reduce CO2 including process-derived

Carbon-recycling

CO2 from limestone, the primary ingredient of cement, through the following measures.

Energy-related
Scope 2 CO2

20Energy-related
Scope 1 CO2

318

Requires hydrogen

2. FuelDirect use

CO2

Algae use (biofuel)methanation, etc.

dry ice, etc.

GHG emissions
Shift to carbon neutral throughthe use of biomass and waste energy

3. Mineralization

Reduction of decarboxylation through conversion of
Ca-containing wastes into raw materials
Shift to low-carbon cement throughreduction of the clinker ratio

8 million tons

Oxygenated compounds,chemicals from biomass, etc.

Use: CCU

Conceptual Image of Reducing GHG Emissions toward Achieving Carbon Neutrality
Power reduction
and shift to clean
Fossil fuel andtotal energy reduction emissions technology

1. Chemicals

Storage: CCS

Technologies that fix CO2 ascarbonate

Shift to carbon neutral through the production
and use of synthetic limestone
Manufacturing of carbon-recycling cement

TopicsNew business development throughinnovative technologies for CO2 use

4 million tons

Development of artificial photosynthesis photocatalysts
Compared to “photosynthesis,” where plants synthesizes organic matter from water and CO2 using light energy, “artificial

CO2 from
processes

CO2 collection and storage (CCS)

photosynthesis” is where hydrogen and oxygen are created by disassembling water with the power of sunlight and our proprietary413

photocatalyst technology, and useful substances such as methane are synthesized through CO2 using that hydrogen.
At the Company’s New Technology Research Laboratory, research is being carried out on photocatalyst for artificial photosynthesis in

CO2 Absorption during concrete service(international consensus)
Other GHG

21
2022

2025

2030

2040

the manufacture of hydrogen to achieve both economic rationalism and sustainability.

2050

Sunlight + Photocatalyst

CO2 free Low-cost clean energy

Recycling of CO2

Directly transform water
into hydrogen

Photocatalyst panels

An example of an innovative technology to achieve 2050 carbon neutrality

H2
Useful chemicals(Methanol, etc.)“Dual recycling” of calcium and CO2

CO2

Various technological innovations are required to achieve carbon neutrality in the cement industry, which is one industry with ahigh volume of CO2 emissions. In addition to CCS, we believe it is essential to put into practical application technology referred to
as CCU, technology for the reuse and fixing of CO2 as a resource. Among the various CU technologies, “mineral fixation” of CO2
is promising as a technology that can be implemented in society relatively quickly. As a proprietary technology, we have started
development on a technology to recycle CO2 as synthetic limestone by directly reacting calcium extracted from various calcium-

Water

Development of photocatalysts for artificial photosynthesis able to manufacture hydrogen at low cost

Hydrogen generation with thephotocatalysts being developedby the Company + watercontaining wastes with CO2, and we are working towards implementation in cement plants. (Please see page 37 for the details)

Calcium portion(cement base)• Lime has the ability
to lockup CO2

Limestone=• 44% of limestone
is made of CO2

If fine to lock up
CO2 in the form ofsynthetic limestone

CO2

mineralization

44%

35

Integrated Report 2023

Integrated Report 2023

36

Foundation to Support Value Creation

Implementation System ❶ Development of Carbonation Technologies

Initiatives for 2050 (cement manufacturing)

Sumitomo Osaka Cement Co., Ltd., Yamaguchi University, Kyoto Institute of Technology, Tokyo Instituteof Technology (IDC method), Mitsubishi UBE Cement Corporation, The University of Tokyo (DC method)❷ Development of Carbonate Utilization Technologies
Sumitomo Osaka Cement Co., Ltd., TAISEI CORPORATION

Development of CO2 recovery-type cement manufacturing processes“Establishment of carbonation technologies using various calcium sources”

Project Scale, etc.

Scale of project (❶+❷): Approx. ¥6.9 billion Scale of support (❶+❷): Approx. ¥5.1 billion[Subsidy rate: (Commissioning) 9/10 → (subsidy) 1/2]

(Adopted by NEDO Green Innovation Fund Project, research and development in progress)(Scheduled to shift to the subsidy project period after the five-year commissioning period)❶, ❷ FY2021 - FY2030 (ten years)

Project Period

Purpose and Outline of the Project
Cement (main component: CaO) is industrially produced through a decarboxylation reaction (CO2 separation) of natural
limestone (CaCO3). However, it is possible to produce Carbon-Recycling Cement (CRC)*1 with synthetic limestone (CaCO3)*1: About Carbon-Recycling Cement (CRC)by extracting CaO from various types of calcium-containing waste, such as waste concrete or ordinary incinerator ash, andrecombining it with separated CO2 in the cement production process. We are aiming for carbon-neutral in the cement*2: Indirect (IDC)/Direct (DC) method CaO extraction/CO2 fixationindustry by using this carbonation process.

*3: About Bipolar Membrane Electrodialysis (BMED)

Cement produced from CO2 recycling of carbonate = synthetic limestone, an alternative to natural limestone, which is the current raw material for cement.
Synthetic limestone can be used not only as a raw material for cement (calcined raw material), but also as a bulking material or filler for other industries.
IDC method: carbonate generation using bipolar membrane electrodialysis*3 for a highly efficient extraction of calcium, thereby recovering/generating high quality carbonate.
DC method: a less expensive method of carbonate generation that directly absorbs a large amount of CO2 through pretreatment of waste, etc.
A technology to separate ions by straining through ion-exchange membranes. It can simultaneously generate “acid = hydrochloric acid” to extract CaO fromwaste and “alkali = sodium hydroxide or potassium hydroxide” to absorb CO2 in exhaust gases.

12

Development of
Carbonation Technologies

Development of
Carbonate Utilization Technologies

We will develop and verify multiple carbonation
technologies using the two methods of direct orindirect carbonation*2 for use on various types of

We will verify whether the carbonate generated
can be used as a calcined raw material for carbonrecycling cement or as a bulking material for cement,
and develop materials that meet the performancerequirements (strength, etc.) of concrete, creating
guidelines for their use in design and construction,with the aim of societal implementation.

calcium-containing waste, and aim to establish
technologies for optimal CaO extraction and CO2
fixation.

Verification facilities for manufacture of synthetic limestone (Taisho-ku, Osaka)

Topics

s
logie
hno
c
e
T
ion
nat
o
arb
fC
o
t
en Reaction andpmfixation

CaO extraction
Cement plants
Rotary kiln
(Source of CO2 emissions)

Incinerator ash
Ready-mixed
concrete sludg
Waste concr
eete
Waste gypsum
Ca wastew
ater
disc
harg
e

Calcium sourcefrom waste

De
ve
lo

Business Image

Pca products utilizing Carbon-Recycling Cement (CRC) are a trial application in the
direct control project of the Ministry of Land, Infrastructure, Transport and Tourism

Garbageincinerator

Concrete products (U-shaped side ditch) manufactured through CO2 mineral fixation technologies havebeen installed in a trial application in the construction by Taisei Corporation of the “Naruse Dam Raw
Stone Mountain Extraction Work (Phase 1),” a direct control project of the Ministry of Land, Infrastructure,

Ready-mixed
concrete plant

Transport and Tourism in 2022.
This current technology for the mineral fixation of CO2 used the Ca contained in waste gypsum board to
fix CO2, so it is a proprietary method referred to as “conversion.“ It is as world first technology as recycling

Indirect carbonationof CO2, and since it simultaneously uses the Ca from waste gypsum board, it is technology that can be called

Direct carbonation

limestone in Taisho-ku, Osaka in May 2023 and have commenced operations.

Synthetic limestone

Generate high-grade synthetic
limestone particles

37

Integrated Report 2023

Standardize

n
tio
a
z
Calcined raw materials
tili
eU
t
a
l
on
materia Carbon-recyclingarb
BulkingCcementfoentSynthetic limestone
lopm
e
v
e
②D
Concrete structures

Filler for other industries

In future, we will advance the application to the manufacture of synthetic limestone using calcium sourcesin other waste and for trial construction of CRC.

U-shaped groove installedat the site of the directcontrol project

ch

no

lo g

Waste concrete generated
from demolition

Te

Evaluate process

ie s

①

the twin recycling of CO2 and Ca. We established the verification facilities for the manufacture of synthetic

CO2

Manufacturing
process forsynthetic
limestone andU-shaped grooves
Waste gypsum board

CO2 andsynthetic
processing

Manufacturing synthetic limestone

Manufacture of U-shaped grooves
by using concrete

Integrated Report 2023

38

Foundation to Support Value Creation

Environmental Management

Environmental Initiatives

Environmental Philosophy
Striving for harmony between the natural environment and its business activities, the Sumitomo Osaka Cement Group iscontributing to the creation of a prosperous society and environmental preservation through the pursuit of production, power
generation and logistics defined by minimal environmental impact.

Action Policy• Leverage the environmental management system and Eco Action 21 to enhance risk reduction and environmental preservationlevels, along with steps toward continuous improvement in environmental performance.
• In addition to legal and regulatory conformance, promote further voluntarily efforts to improve environmental level.
• Systematically promote energy conservation from the standpoint of helping prevent global warming.
• Strive to realize a zero-emissions society, collaborating on industrial recycling while acting to reduce the amount of such waste
produced.

Environmental Preservation Framework
Promotion Framework

The Group has acquired ISO14001 certification for all cement
plants, the Optoelectronics Business Division, the Advanced
Materials Division, Hachinohe Cement Co., Ltd. and Sumitec
Co., Ltd. Wakayama Slag Cement Co., Ltd., meanwhile, has
acquired Eco Action 21 certification.

Environmental Education

Environmental Audits

Beginning with plants and business sites, where environmental
risk is considered to be greatest, the Environment Division,acting as instructor, conducts environmental education that
also targets relevant departments outside of cement plants.

The Internal Audit Department conducts environmental
audits regarding the implementation status of environmental
preservation as defined in the environmental preservation
management regulations*, and reports its findings in order tosustain and improve the Company’s environmental level.

Preventing Global Warming
Electricity used at Headquarter offices to become carbon neutral with the use of inhouse
generated biomass electricity
The electricity used for the Company’s own rental space on the 20th floor of the Shiodome Sumitomo Building (Minato-ku, Tokyo)
to which the Headquarters transferred on November 28, 2022 is carbon neutral with the purchase of non-fossil valued derived fromthe Company’s own Tochigi Plant biomass power station (Sano City, Tochigi Prefecture)*1. Specifically, the electricity used in the
Headquarter offices was made carbon neutral through inhouse generated clean electricity via the Green Power Plan for tenants *2

Status of Environmental Management
System Certification

To promote environmental preservation, the Group has adopted
an environmental preservation promotion framework headedby the president, with the environmental director responsible forsupervising the Environment Division. As sub-units, the Company
has set up Environmental Preservation Committees at eachbusiness site to implement various measures targeting pollution
prevention and environmental preservation.

The Sumitomo Osaka Cement Group identifies and analyzes emissions into the atmosphere and water and waste emitted
from cement production processes as well as measures for preventing global warming, steps vital to devising more
effective measures to reduce environmental impact and conserve energy. Additionally, we are making progress in reducing
our environmental impact by developing a variety of applicable technologies and actively utilizing waste and byproducts.

provided by Sumitomo Reality & Development Co., Ltd., utilizing the FIT non-fossil fuel energy certification system with tracking
information.
*1 Non-fossil value derived from the Company’s Tochigi Plant biomass power station (Sano City, Tochigi Prefecture): The value obtained through purchase of
FIT non-fossil fuel energy certificates with tracking information in the renewable energy value trading market.
*2 Green Power Plan for tenants: A decarbonization plan for tenants offered by Sumitomo Reality & Development Co., Ltd., that features not only theconventional effectively green power scheme involving non-fossil fuel energy certificates, enabling each tenant to select its most appropriate green powerplan from among several methods for purchasing green power including effectively green power generated at power plants owned by tenant companies.

Introduction of Internal Carbon Pricing System
We have introduced the Internal Carbon Pricing System (hereinafter “ICP System”) for capital investment in the Sumitomo Osaka
Cement Group. The ICP System is a mechanism to create economic incentives for emission reductions, promote low-carbon
investment, and encourage responses to climate change by setting an internal carbon price and converting CO2 emissions into
costs. The Group will use the costs converted by applying the internal carbon price as a reference for investment decisions in capital
investment plans that involve an increase or decrease in CO2 emissions.

Sumitomo Osaka Cement Group ICP System
Promotion framework• Internal carbon price: ¥5,000/t-CO2• Target of the ICP System: capital investment involving an increase or decrease in CO2 emissions• Operation method: the internal carbon price is applied to the CO2 emissions associated with the target capital investment

President

Environmental
Directorplan, and the converted cost is used as a reference for investment decisions.

Internal Audit
Department

Environmental Preservation
Liaison Council

About the Destruction of Fluorocarbons
Fluorocarbons (CFC, HCFC, HFC) are widely used as refrigerants in air conditioners, refrigerators, and many other types of freezing
and refrigeration equipment. They are powerful greenhouse gases with a global warming potential several hundred to over 10,000
times higher than CO2. Therefore, the emission of fluorocarbons into the atmosphere must be controlled and reduced. Furthermore,(Management service supervision)
Environment Division[Supervisorydepartment]

Production
MaintenanceMineraland Technical and Engineering Resources andDepartment
Department Products Division

Environmental
preservation committees
of each plant

Business officeenvironmental
preservation committees

Funabashi Office(Optoelectronics, Advanced Materials)

Funabashi District
Environmental
Preservation Committee

Cement/Concrete Cement-Related
Research Laboratory Products Division

Ichikawa District
Environmental
Preservation Committee

Taisho District
Environmental
Preservation Committee

Advanced
Materials
Division

Corporate
Planning
Department

Kaizuka District
Environmental
Preservation Committee

PhysicalCement Sales
Distribution Administration
Department Department

Environmental
preservation committees
of each branch

CFC and HCFC, which are specified fluorocarbons, are also substances that destroy the ozone layer.
Our Kochi Plant is the only cement plant in Japan to be licensed as a fluorocarbons destruction operator under the Act on
Rational Use and Appropriate Management of Fluorocarbons. It accepts separated and collected fluorocarbons, eliminates them in akiln and contributes to the reduction of greenhouse gases and the restoration of ozone holes (GHG reduction contribution in fiscal
2022 = 214,000 tons).
We also provide technical guidance on the treatment of fluorocarbons in Asian countries, contributing to the destruction offluorocarbons overseas.

* Environmental preservation management regulations: These in-house regulations define management organizations for company-wide environmental preservation, contact
systems and other items for the purpose of preventing pollution and taking steps to put environmental measures in place. Environmental Preservation Committees based onthese regulations are established at every plant, business office and branch to promote environment preservation activities.

39

Integrated Report 2023

Integrated Report 2023

40

Foundation to Support Value Creation

Environmental Initiatives

Water Intake/Wastewater Results

Preventing Air Pollution
As part of pollution-reduction measures, the Group uses dust collectors and denitrification equipment to prevent the emission of NOx,
SOx, particulate matter and other air pollutants contained in gases emitted by cement manufacturing facilities and power generationequipment. Because dioxins and other hazardous substances in emitted gases are decomposed through burning with a high temperatureof roughly 1,450 degrees Celsius, cement manufacturing equipment is known for being able to basically carry out detoxification. While
the operational scope of this equipment varies year to year, emission levels remain well below legally mandated emissions standards.

Water intake

FY2021

FY2022

Surface water

38

38

Groundwater

3,785

4,265

Water for industrial use/Tap water

4,325

4,228

Total freshwater intake volume

8,148

8,531

Total seawater intake volume

5,932

5,820

Total water intake volume

14,08014,351

Wastewater Total freshwater discharge volume

Trend of NOx, SOx, Particulate Matter, and Dioxin Emissions(Unit: t)NOx* emissions
1(Cement and power generation business)
14,34013,873
13,272

16,174

14,327

Particulate matter emissions(Cement and power generation business)
191
136(Unit: t)

218

FY2019FY2020

FY2021

FY2022FY2018FY2019

3,157

3,722

Total other wastewater discharge volume

4,154

3,998

Total wastewater discharge volume

7,311

7,721

We conducted water risk assessments for all of Group facilities using
the Aqueduct tool released by the World Resources Institute (WRI).
We defined areas ranked “High” or higher in the Water Stress Index
as water-stressed areas. Based on our assessment, we confirmedthat there will be no water-stressed areas in the cement division(plants, power plants, and mines), which accounts for approximately
97% of the Group’s total water intake, in 2040. Although there
were no pressing issues, we will continue to strive for efficient water
use by promoting measures such as water recycling and rainwater
utilization.

Freshwater usage volume
6,769
6,631
Scope of data collection: the Company and 48 major affiliates

143
99

FY2018

Response to Water Risks(Unit: 1,000 t)

FY2020

FY2021

FY2022

Material Balance and Energy Balance
Scope of data collection: The Group’s 6 cement plants (Tochigi, Gifu, Ako, Kochi, Hachinohe Cement Co., Ltd., Wakayama Slag Cement Co., Ltd.), 8 mines(Karasawa, Gifu, Tochikubo, Ibuki, Taga, Katsumori, Shuho, Kokura), 3 power plants (Tochigi, Ako, Kochi)

Inputs(Unit: t)SOx*2 emissions(Cement and power generation business)
1,120
1,111
1,095

1,175

1,219

(Unit: g-TEQ)

Dioxin*3 emissions(Cement business)
0.27

0.41
0.31
0.18

FY2018FY2019FY2020

FY2021

FY2022FY2018FY2019FY2020

FY2021

0.22

FY2022*1: NOx: This refers to nitrogen oxides, which are gaseous compounds emitted from sources such as automobile exhaust and factory equipment that
contribute to air pollution and photochemical smog. In Japan, emissions standards for NOx are defined under the Air Pollution Control Act based on thescale and type of the equipment.
*2: SOx: This refers to sulfur oxides, gaseous compounds that come from burning petroleum and other sulfur-rich substances. SOx is emitted from automobile
exhaust and factory equipment and is a contributor to acid rain and other air pollution. As with NOx, emissions standards are set by law.

• Energy• Raw materials

Coal
1,144,000 tons
Petroleum coke
111,000 tons
Waste and byproducts 999,000 tons

Natural resources
Excavated limestone
SilicaNatural gypsum

18,788,000 tons
589,000 tons
25,000 tons

Total	19,402,000 tons

Total	2,254,000 tons

Heavy oilLight oil
KeroseneGasoline

4,000 kl
34,000 kl
100 kl2,000 kl

Total	40,000 kl

Purchased electricity

312,000 MWh*3: Dioxins: A type of chlorinated organic compound, dioxins are legally defined as the collective class of substances that include PCDD, PCDF and coplanar PCB.

Waste water from our cement plants primarily takes the form of rainwater or of indirect cooling water discharged from cement
production facilities or power plants. Furthermore, we have dikes installed around oil tanks and similar structures to prevent oil
leaks. When wastewater is released from the plant into the local water zone, sedimentation tanks, oil-water separation tanks and oil
monitors are put in place to prevent any contamination.
In terms of water for industrial use, we collect groundwater, seawater and river water, taking only the amount necessary as partof our environmental responsibility to the local community. The power plant at the Kochi Plant uses water it takes from the sea as
cooling water, and strives to conserve freshwater resources.

[Basic Policy]
The Sumitomo Osaka Cement Group uses water for cooling and cleaning in the production process. Water is a limited resource, andsince good quality water resources are essential for business continuity, we contribute to solving water resource issues by promoting
efficient water use and reducing the environmental impact of water intake and wastewater discharge.

41

Integrated Report 2023

3,924,000 tons

• Water intake

Grinding aid
5,183 tons
Gunpowder
2,419 tons
9,034 tons
Refractory
Grinding media and steel casings 628 tons
Lubricants and chemicals
83 tons
17,347 tons

Total	Sumitomo Osaka Cement Group

Basic Policy for Protection of Water Resources
In fiscal 2021, to further promote initiatives to conserve limited water resources, we established a new basic policy on water
resource protection under the slogan of “Sumitomo Osaka Cement conserves water, utilizes water, and creates a livelihood.”

Total	Incl. seawater and river water13,964,000 tons

• Materials

Preventing Water Pollution

Waste and byproducts
Byproduct gypsum
287,000 tons
1,321,000 tons
Coal ash
Soil from construction
216,000 tons
352,000 tons
SludgeBlast furnace/converter slag 874,000 tons
Nonferrous slag
339,000 tons
535,000 tons
Others

Mines

Cement plants

Power plants

Outputs• Mineral Resources business• Cement business• Volume of waste, etc. discharged

Aggregates, etc.
Limestone products

Cement production volume 9,546,000 tons

Waste, etc. outsourced for treatment

1,793 tons
Final disposal volume
636 tons

5,250,000 tons
3,259,000 tons

*Actual results from the Karasawa, Gifu,
Tochikubo, Ibuki, Taga, Katsumori, Shuho andKokura mines*Incl. clinker and cement exports

Retail electricity

718,000 MWh• Wastewater
Wastewater discharge volume7,516,000 tons

Integrated Report 2023

42

Foundation to Support Value Creation

Information Disclosure Based on TCFD Recommendations
In July 2021, the Company endorsed the recommendations of
the Task Force on Climate-related Financial Disclosures (TCFD)
established by the Financial Stability Board (FSB), and conducted ascenario analysis of the impact of climate change on each of ourbusinesses, including the Cement business that accounts for the
majority of the CO2 emitted by the Group.

Classification

Government policies/
regulations

Carbontax hike,
regulations on
greenhouse gas
emissions andfossil energy

Risks

Opportunities• As an industry consuming enormous energy, the cement
industry is expected to see higher energy costs due to arise in the price of fossil fuel energy.

• The Company’s commitment to promote of the use ofcoal alternatives (waste plastic, biomass fuel) is expected
to help boost revenue in the waste collection business.

• Retail Electricity business can be downsized or
discontinued if the electrical power plant owned by theGroup falls under a non-efficient coal-fired power plant.
Purchase of electricity used in plants from retail electricity
suppliers as a result of decommissioning of the electric
power plant is expected to increase electricity costs.

• With a possibility to use idle owned lands, such as sites
where a factory previously stood, for building newelectricity generation plants, including those to generate
renewable energy power, new business is expected to becreated with a conception of addressing climate change
issues through green electricity and green carbon.

GovernanceTechnologies

New
technology
development• R&D expenses for new technology and capital
investment to realize carbon neutrality is expected toincrease.

• It is expected that the usage amount of mixed cement
will increase and production volume of clinker will
decrease
Change in user
activity

We analyzed the impact of climate change on all businesses of the Group on the premise that it was 2030 with reference toscenarios written by bodies such as IPCC (Intergovernmental Panel on Climate Change) and IEA (International Energy Agency).
Risks posed by climate change can be distinguished between the risks associated with a transition to a low carbon society(transition risks) and physical impact (physical risks). We analyzed adopting scenarios that assumed an average global temperaturerise of 2 degrees Celsius and 4 degrees Celsius compared to 2021, but then revised the setting in our scenarios to rise of 1.5 degree
Celsius*1 and 4 degrees Celsius*2, and we identified items deemed to have a substantial impact in terms of the respective risks and• An influx of low-priced cement from countries with low
carbon emission costs and prevalence of low carbon
cement in the nation advanced in terms of climatechange measures can strain cement share.
• Demand for low-carbon logistics can contribute toincreasing logistical costs.

MarketStrategies (Risks and Opportunities)

Recycling
market• Reduced waste/byproducts (waste oils, waste plastics,
coal ash, flue gas desulfurization gypsum, etc.) canbring about intensified competition of waste collection,
deterioration of quality, a decline in processing costs,
and soaring prices.
• Fierce competition to procure biomass fuels will send theprice soaring.

[1.5°C scenario ]*1
A scenario for temperatures to rise relative to the levels at the time of the industrial revolution by no more than about 1.5°C in theyear 2100, by taking strict measure to address climate change.

Physical Risks

Integrated Report 2023

• Difficulty in procuring funds is expected due to lower
assessment of greenhouse gas emitter companies.

Frequent andintensified
naturaldisasters• Supply chain being cut off by frequent large typhoons
and torrential rain and ensuing damage to production
sites are expected to increase costs incurred in disruption
to operations and those required to restoration.

Chronic risks*1: The scenario used in the analysis is from the IEA “World Energy Outlook 2022” “NZE2050 (Net Zero Emissions by 2050)”*2: The scenario used in the analysis is from the IPCC “Fifth Assessment Report RCP8. 5 scenario,” etc.

Change instakeholders’assessment

Acute risks

A scenario for temperatures to rise relative to the levels at the time of the industrial revolution by about 4°C in 2100, with no strictmeasures taken to address climate change.

Assessment[4°C scenario]*2• Further development, spread, and promotion of low
carbon cement and low carbon concrete that the Grouphas been working on for a long time will accelerate
product differentiation, and application to low carbon
building structure that is expected to spread and growwill become more common and expands a business.
• Concrete pavement with excellent LCC in terms ofheat island effect reduction, fuel efficiency effect, anddurability can become ubiquitous, and demand for
cement may increase.
• Revenue from waste collection and recycling can be
expected from an increase in receivable items that isunderpinned by technological advancement in waste andbyproducts treatment.
• The new business area to extract, refine, and sellresources from wastes is expected to expand thanks toownership of massive manufacturing infrastructure tocollect various wastes and process raw fuels.
• An increase in data traffic due to transformation oflife style and work style induced by rising averagetemperature and electricity supply shortage caused
by non-fossil energy conversion will likely boost
needs for high capacity, high-speed, and high powersaving devices, resulting in more demand for opticalcommunication parts and semiconductor manufacturing
equipment.

Optoelectronics
Business andAdvanced
Materials
Business

opportunities.

43• With the advancement in technology that allows
effective use of CO2 along with an application of sucha technology, a large amount of CO2 can be stably
immobilized, and expansion of new businesses is
expected. (Methane, methanol, plastic material)• Owned unused patents can be used in new markets.

Transition Risks

As a body to promote initiatives to address sustainability issues such as the Group’s climate change issues, the “Sustainability
Committee” convenes regularly, chaired by the President. The “Sustainability Committee” has established the expert subcommittee“Carbon Neutral and Environment Subcommittee” as a subordinate body. The “Carbon Neutral and Environment Subcommittee”
is chaired by the Director with overall responsibility for both the Production and Technical Department and the Sustainability
Department and meets four times a year (every quarter) to formulate annual action plans, including information gathering on climatechange issues, risks assessment, formulation of measures, and promotion of in-company training and education programs andmanage the progress. Following deliberation at the Subcommittee, important matters deliberated at the Sustainability Committee
are reported to the Board of Directors, and initiatives for the Group’s 2050 carbon neutrality are managed and supervised throughdeliberation.
In addition, we have established the Sustainability Department designated to handle matters concerning sustainability issues
centered on initiatives for carbon neutrality and biodiversity as a standing organization to administer the Sustainability Committee.
(Please see the Sustainability Committee Organizational Chart on page 31)• CO2 emission reduction technology is expected to help
bring in revenues. (Carbonate mineralization technology,
artificial photosynthesis hydrogen production
technology, ammonia /hydrogen utilization technology)

Rising averagetemperature,reoccurring
extremeweather• Rising temperature is expected to affect the health andsecurity of employees at production sites adversely.
• Higher sea levels can inflict damage caused byinundation, including high tide along the seaside.

• Fund procurement and employee hiring can become
easily leveraged as a result of a higher evaluation ofproactive climate change measures, new technologicaladvancement in CO2 recycling, promotion of new
business, and waste/byproducts processing.
• Demand for cement-related products is expected toincrease due to infrastructure development contributing
to national resilience, maintenance/reinforcement/repairof structures, and the likes.
• With request for disaster waste treatment, more
important social role can be fulfilled.
• Increasing demand for labor-saving methods, including
those to shorten the construction period and makeefficient construction, is expected.
• Expansion in demand for marine products and businesscreation can potentially tap a new source of revenue.

Integrated Report 2023

44

Foundation to Support Value Creation

Information Disclosure Based on TCFD Recommendations

Risk Management
The Group drafts the plan for reducing CO2 emissions at the “Sustainability Committee Carbon Neutral and Environment
Subcommittee,” which has the Sustainability Department as their secretariat, with the progress managed across the Group. To
identify and assess the impact of climate change on the Group’s business, we extract and analyze the climate change risks andopportunities, and take appropriate action through the “Sustainability Committee” and Board of Directors, as necessary.

Financial Impact with respect to Risks and Opportunities
Identified through Scenario Analysis
Risks• Capital investment for the 2030 reduction target in the“SOCN2050” carbon neutral vision for 2050

40.0 billion through 2030

Approx. ¥2020-2022
2023-2025
2026-2028
2029-2030

Impact evaluation of risks and opportunities
We evaluated the size of the financial impact of anticipated risks and opportunities as of 2030 based on the scenario analysis of the
impact of climate change for all the Group’s businesses on page 44, and evaluated the level of impact.

¥9.9 billion¥17.0 billion¥8.0 billion¥6.0 billion• Decrease in costs due to lower coal consumption
Classification

Government policies/
regulations

Carbon tax hike,stricter regulations
on greenhouse gas
emissions and fossil
energyTransition Risks

Technologies

New technology
development

Risks /opportunities[Risks]• Introduction of a levy system[Opportunities]• Promotion of reduced coalconsumption and energy savings[Risks]• Increase in R&D expenses andcapital investment to realize
carbon neutrality[Opportunities]• Creation of new businesses andcarbon businesses[Risks]• Change in recycling collection
environment

Recycling market

MarketOptoelectronics
Business andAdvanced Materials
Business[Opportunities]• Progress in technologies using
recycling and increase in accepted
products[Opportunities]• Increased demand for opticalcommunication components andsemiconductor manufacturingcomponents due to heightenedneeds for high capacity, highspeed, power-saving devices.
[Risks]• Impact of cement plant accidents

Acute risks

Physical Risks

45

Frequent andintensified natural
disasters

Integrated Report 2023

[Opportunities]• Increase in demand forinfrastructure due to measures for
National Resilience, and increasein the maintenance, renewal andrepair of concrete, etc.

Impact of 1.5°C scenario
Negative ←→ Positive

6.0

7.5

Effects will be realized in accordance with progress in capital investment¥
billion to ¥billion/year
due to increased acceptance of waste plastics, etc., resulting in a decrease
from FY2026 onwardin consumption of 200,000 tons/year from 2026 onward.
Impact amount assuming coal price of $200/t(Cumulative effect of ¥39.0 billion from 2020 to 2030)• Increase in recycling revenue due to increase in alternative raw materials and thermal energy resulting
from lower coal consumption, etc.

1.0

Impact amount calculated at a unit price that takes into account thedifficulty of procurement in the future

Approx. ¥billion/year
from FY2026 onward(Cumulative effect of ¥8.0 billion from 2020 to 2030)

Capital Investment Amount and Effect for 2030 Reduction Target
in the “SOCN2050” Carbon Neutral Vision for 2050

(Billions of yen)

FY2020-2022

FY2023-2025

FY2026-2028

FY2029-2030

Total

Environmental
investment

9.9

17.0

8.0

6.0

Approx. 40.0

Depreciation(1.9)(10.0)(13.0)(7.0)(32.0)

Coal reduction

+0.4

+4.5

+19.0

+15.0

+39.0

Recycling increase

+0.1

+2.5

+3.0

+2.0

Approx. +8.0

Investment effect

(1.3)

(3.0)

+9.0

+10.0

Approx. +15.0

Indicators and targets
The Group declared “Care for the global environment” to be one of the items of materiality, the primary social issues the Group aims
to tackle through its corporate activities, and it has taken initiatives to prevent global warming, including the promotion of energy
alternatives through recycling and the use of biomass power generation. In addition, in December 2020, we formulated specificmedium-term targets towards “2050 carbon neutrality” and the 2050 “Carbon Neutral” vision “SOCN2050,” which is our long-term
action policy. Through various measures up until 2050, we will take on the challenge for the Group’s corporate activities to be carbon
neutral, while advancing initiatives that contribute to the decarbonization of society as a whole through the supply chain.
In future, we will further promote our challenge to achieve 2050 carbon neutrality through participation in the GX League.

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46

Foundation to Support Value Creation

Message from Plant Managers
Small group improvement intiatives at each plant
We are carrying out “FSO activities”*1 at each of the Group’s cement plants and Group company Hachinohe Cement
Co., Ltd. is carrying out small group improvement activities called “DH activities.”*2 Every year, we form small teams foreach partner company resident within each division andlocation, determine activity themes from items such asenergy saving, reducing CO2 emissions, improvements indaily operations, improving work efficiency, health andsafety and cooperate to carry out improvement activities.
In addition, the best performing teams from each plantcompete for the top peformance award announced at
an annual company-wide presentation. Through suchactivities, we aim to improve autonomy and problemsolving ability and to further foster teamwork.
*1 FSO activities: the abbreviation of Fresh Sumitomo Osaka activities*2 DH activities: the abbreviation of Development Hachinohe activities

Initiatives of “FSO activities”

General Manager,
Tochigi Plant

Hiroshi Ohashi

Tochigi plant is encouraging FSO activities for 10 groups of employee worksites and three groups of partnercompanies. In fiscal 2022, the initiatives were on themes including reducing workload and improving the facilities
and the environment. This time, we introduce the initiative of the electricity-related group “Energy savings throughrevision of No.3K lighting facilities.” No.3K was constructed 30 years ago, and with the aging of the lighting
facilities, and the installation of new facilities, there are many places where the light does not illuminate that aredark at night and dangerous. So, the activities have the purposeof improving the work environment, improving safety and savingenergy. As a preliminary investigation, the power consumption oflighting facilities was measured, and the best places to locate lighting
were investigated with mobile lighting facilities, and lighting facilities
were newly relocated based on the results. Mercury lamps with highpower consumption were replaced with LED lights and the rules
for turning on and off lights were revised. The plan was to improve
the work environment and improve safety through these activities,
but success was also achieved by reducing the power consumption
No.3K facilities, which changed to LED lightingof lighting facilities by 29%. Hidden waste will continue to bediscovered and improvements made through these FSO activities.

Initiatives of “FSO activities”

General Manager,
Gifu Plant

Tetsuo Yokobori

47

Integrated Report 2023

Tochigi Plant

Gifu Plant

In the FSO of the Gifu Plant, the handmade feeling of participants is valued. They think by themselves and takeaction, and implement improvement activities through their own efforts. Looking at the plants, there are places
and equipment that have been improved by many FSO. In addition, the basis for plant operations is the 5S
framework (Seiri (Sort), Seiton (Set in order), Seisou (Shine/clean), Seiketsu (Standardize) and Shitsuke (Sustain)),and we have made it possible to promote the 5S even in FSO activities.
This time we are introducing the theme of “Establishment of amethod to utilize simple vacuum” that involved Gifukousan, Inc.
This is the simple vacuum introduced last year, and although it hadeasy aspects, it also had aspects that made it difficult to use andinefficient. By devising various attachments and tools for cleaning,
the efficiency was greatly improved and the features were improved
so that it would fit in a vacuum truck. Now, the vacuum truck andthe simple vacuum are used together and contribute greatly to thecleanliness and beautification of plants.
We plan to continue promoting cost reduction at plants, 5S andTesting the simple vacuum
safety measures, enlivening FSO with wisdom and devices.

Initiatives of “FSO activities”

General Manager,
Ako Plant

Akio Hamada

Ako Plant

A total of 19 groups of employees and partner companies are active at the Ako Plant. Among Ako Plant’s activities
are improvement activities at waste plastic transportation facilities, a source of coal alternatives. Waste plastic
come in various types, big and small, and have different weights and properties. Waste plastic is measured, loaded
onto a belt conveyor and used in a temporary incinerator furnace, but the volume transported is not equal due tothe types and properties of the waste plastic, so the volume becomes large when the plastics are particularly light,
resulting in spillage. Spilled waste plastic is scattered by the wind and has a negative impact on the environment.
Therefore, operations were conducted by suppressing the volume of waste plastic used.
In this activity, the following improvements were implemented.
① Acceleration of the belt conveyor② The waste plastic heaped on the conveyor is smoothed to an equal level of thickness
with a scraper③ A board is installed at the bottom of the belt conveyor to prevent wind
As a result, spillage was eliminated and waste plastic could be used to the maximum
stability possible. Reducing coal consumption and greatly contributing to the beautification
Belt conveyorof the environment near facilities, and this impact continues today. In future, we will also
adjustment work
incorporate themes that link to decarbonization in FSO activities.

Initiatives of “FSO activities”

Kochi Plant

At the Kochi Plant, a total of 19 groups of the Company’s employees and partner companies every year select aleader for each group, determine a theme and undertake activities. This time, we introduce an award-winning
activity from fiscal 2022. The theme is to “Prevent trouble in slag mill supply transport equipment.” This supply
transport equipment comprises a flex belt conveyor that transports slag andplaster and a scraper that transports anything that is spilled. The flex belt
conveyor is inside a steel case and lumps of the transported material thatstick to the case during transport drop and repeatedly damaged the scraper.
The leader was a new employee, but had success. Without deciding that thetransported materials were sticking, the trouble was solved by investigating
literature about why things stick and testing was done on how to advance
items that were stuck, with the implementation of a number of appropriate
measures that solved the problem. At present, the slag mill can operate
without night shift patrols, and the impact of this activity was very large.
General Manager,
Kochi Plant

Masato Hiroshima

Lower section of the flex BC

Initiatives of “DH activities”

President,
Hachinohe Cement Co., Ltd.

Tomoya Akeshiro

Hachinohe Cement Co., Ltd.

At Hachinohe Cement, QC circle activities commenced from 1979, with the name changed to DH (Development
Hachinohe) activities from 1983, and are now in their 45th year. Activities span various measures including
stable operations, energy savings, improvements to the workplace environment, and measures to address safety,
quality and the environment. Here we introduce activities that were initiated last fiscal year. The theme of theactivity is “slag mills – improving the method for adjusting material guides.” The company manufactures theslag powder used in blast furnace cement inhouse. There needs tobe facilities which can be adjusted in a short period of time, andthat maintain optimal settings to product stable operations and highenergy efficiency. This time, the company implemented improvements
to the method for adjusting material guides and revised the abrasion
prevention measures. As a result of achieving the target, this led
to stable supply as well as improvement in the energy basic unit.
Furthermore, the company also obtained improvements in the work
environment as well as improvements in safety aspects. In future, thecompany will build a company that it trusted by the region through DH
State of onsite work
activities.

Integrated Report 2023

48

Foundation to Support Value Creation

Resource Recycling
At Sumitomo Osaka Cement Group, when manufacturing cement, we use waste and byproducts that arise from various
industries and local governments, which has put us in charge of one part of the “recycling-based society.”

Social Role of Cement Recycling
Cement is a chemical substance characterized by the chemical reaction called hydration that occurs when water is mixed withcement. Cement is mainly composed of calcium, silicon, alumina and iron, which are produced by compounding and burning themat a high temperature of approximately 1,450 degrees Celsius.
The main components are abundant in natural resources such as limestone, clay and silica, but waste and byproducts also containsimilar components so they can be used as a substitute for cement raw materials. Now we no longer use natural clay as a result of
the recycling of waste and byproducts.
Waste and byproducts from other industries and local governments, including wood scraps, waste oil/recycled oil and waste
plastic are used in combination with coal as thermal energy in the burning process at approximately 1,450 degrees Celsius. Since
these are directly burnt inside the kiln, the ash and residues that remain after burning are also reused as part of the cement raw
material, and everything is transformed into cement products, generating no unwanted substances.
Such a recycling effort controls use of natural resources such as clay and coal, and also leads to CO2 emission reduction as a
substitute for fossil energy, and contributes to prolonging the life of the landfill, which is the final waste disposal yard.
The Group also accepts disaster waste generated by earthquakes and flood damage, which are reusable as alternative raw
materials and thermal energy.

• Cement recycling in daily life

POINT

▶ The inside of a cement kiln (bakingkiln) reaches approximately 1,450
degrees Celsius, which can reduce
dioxins to dispose them safely.

Receiving of recycling
Waste and byproducts to bereused as raw materials• Construction site soil

• Coal ash• Incinerator ash from ordinary trash• Blast furnace slag
• Sewage sludge① Raw material process
Save natural resources byusing waste and byproducts asalternative materials for cement
Main natural resources used for
raw materials▶ Limestone, silica and clay

Waste and byproducts to berecycled as thermal energy• Wood scraps• Waste plastic

Zero secondary waste• Waste oil② Burning process

Detoxifying hazardous substances

Effect for extending landfill life ▶ Waste are transformed
into cement, as burned and ashed compositions are also
absorbed as part of clinker (intermediate product of cement).

③ Finishing process

Reduction of fossil energy-derived
CO2 as alternative thermal energy(reduction by replacing coal with
waste and byproducts)

Cement plants④ Shipment
Transported byship or truck

Ichikawa Recycle Center/Completion of ordinary trash treatment facilities
Coal ash derived from coal-fired power stations as an alumina source, which is one main
component of cement, is often used, but with the transition to an international decarbonizedsociety, we anticipate that coal ash will be reduced over time. Meanwhile, the Company is
involved in increasing the volume of incinerator ash emitted from incinerator facilities such as
for household trash collected by local governments as individual alumina sources as alternatives
to coal ash. Incinerator ash is stably available alumina source, while also including CaO (Calciumoxide), so we also forecast it will have the effect of reducing process-derived CO2. On theother hand, incinerator ash requires pre-treatment such as foreign matter removal for it to be
Ichikawa Recycle Center
effectively used as a cement raw material.
Ordinary trash treatment facilities
At the treatment facilities installed at the Ichikawa Recycle Center in February 2023,
incinerator is sorted and crushed with processing capacity of 640t per day. In addition, thewarehouse attached to the treatment facilities have a maximum storage capacity of 2,600t, so incinerator ash can be stably received.
The total volume of treated incinerator ash is transported to the Group’s cement plants and recycled as cement raw material.

Building a Cooperative System with Local Governments
The Group has been promoting to support quick recovery and fast revitalization by
accepting disaster waste when distastes occur and concluding various agreements
as part of efforts to build a system to cooperate with municipalities to solve
various issues.
In 2022, the Company and the group company Hachinohe Cement Co.,
Ltd. respectively concluded “Comprehensive Cooperation Agreements” with
Hachinohe City, Aomori Prefecture in March and Aomori Prefecture in December,while the Company concluded a “Comprehensive Cooperation Agreement” with
Sano City, Tochigi Prefecture in June.
Under these agreements, in the event of a large-scale disaster and a large
volume of disaster waste is generated in the prefecture or the city with which theagreement is concluded, the cement plants of the Company and Group companies
will reuse as much of the disaster waste as possible as raw materials for cement
production and thermal energy. In addition,
we have also agreed to closely cooperate on
various issues such as reducing environmental
impact through upcycling of waste into cement
resources, promoting environmental education,
revitalizing local community daily living, andimproving services for prefectural residents
Aomori Prefecture
toward realizing a sustainable society.

• Signing parties of the agreement on
the treatment of disaster waste• September 2019 Ako City, Hyogo Prefecture“Agreement on Cooperation in the Establishment of
Temporary Sites for Disaster Waste Storage”• October 2019
Kochi Prefecture and Susaki City, Kochi Prefecture“Agreement on Cooperation in the Disposal ofDisaster Waste”• March 2020
Funabashi City, Chiba Prefecture“Basic Agreement on Disposal of Disaster Waste”
Miyagi Prefecture• October 2020
“Comprehensive Cooperation Agreement”• December 2020 Tochigi Prefecture“Comprehensive Cooperation Agreement”• July 2021 Ako City, Hyogo Prefecture“Comprehensive Cooperation Agreement”• August 2021
Kashiwa City, Chiba Prefecture“Agreement on Disposal of Disaster Waste”• November 2021 Hyogo Prefecture“Comprehensive Cooperation Agreement”• March 2022
Hachinohe City, Aomori Prefecture“Comprehensive Cooperation Agreement”• June 2022
Sano City, Tochigi Prefecture“Comprehensive Cooperation Agreement”• December 2022 Aomori Prefecture“Comprehensive Cooperation Agreement”

Status of Waste and Byproduct Use
In fiscal 2022, we used 4,922,000 t of waste and byproducts. This was about a 6% reduction from the volume used in FY2021,
which was mainly due to the decrease in the volume of cement production, however it is among the best consumption rates in theindustry on a basic unit basis.
Our daily life

Various industries
Garbage generated(such as thermal powerfrom daily life
plants and steel mills)

The Company supports people’s lives
through providing cement-related products
and aims for realization of a recycling-basedsociety through its businesses.

Ready-mixed concrete plants
Concrete product plants

Raw material-related waste*1 (Unit: 1,000 t)
Thermal energy-related waste*2 (Unit: 1,000 t)(Unit: 1,000 t)
Byproducts*3(Unit: 1,000 t)
Subtotal(Unit: 1,000 t)
Cement production volume
Raw material-related
Thermal energy-related
Basic unit (kg/ton-cement)
Byproducts
Total (kg/ton-cement)

Topics49

Integrated Report 2023

FY2018
2,883
367
2,289
5,538
10,758
268
34
213
515

FY2019
2,911
378
2,190
5,479
10,550
276
36
208
519

FY2020
2,739
394
2,077
5,210
10,041
273
39
207
519

FY2021
2,717
399
2,117
5,233
10,085
269
40
210
519

In March 2023, the Company commenced verification testing at the Tochigi
Plant of recycling unwanted carpets and futons (mattresses) collected by
Nitori Co., Ltd. following interim treatment (crushing) by Takeei Corporation
as raw materials and thermal energy when firing cement.

FY2022
2,605
402
1,915
4,922
9,546
273
42
201
516

*1 Raw material waste: coal ash,waste soil from construction
work, waste sludge, burnt husks
and dust, sludge, rubble, waste
acid, waste alkali, slag, others*2 Thermal energy waste: waste
plastic, waste clay, waste oil,waste tires, wood scraps, others*3 Byproducts: incinerator slag,
byproduct gypsum, wood chips(including those for retail power
generation), others

Collected unwanted
carpets and futon(mattresses)

Integrated Report 2023

50

Foundation to Support Value Creation

Preserving Biodiversity
Given their use of limestone, coal and other natural resources in operations, the Sumitomo Osaka Cement Group’s
Cement-related businesses by their very nature could potentially impact directly or indirectly the surrounding ecosystem.
We believe that paying close attention to the environment and preserving biodiversity are essential and indispensable tosustaining our ability to operate as an enterprise.
The environmental philosophy of the Group is summarized as follows: “The Sumitomo Osaka Cement Group aims tocontribute to the preservation of the global environment and create abundance in society by pursuing environmentallyfriendly manufacturing, power generating and distribution operations in order to maintain harmony between theenvironment and corporate activities.” Based on this philosophy, we conduct reforestation programs around mines andproduction plants and develop marine products to assist ocean environment recovery among our actions for proactively
contributing to the preservation of biodiversity.

Preserving Biodiversity

Tsushima Leopard Cat Protection Activities
Tsushima City,
NagasakiPrefecture

Tsushima

Expansion of Marine Products Business
The Company commenced the marine products business to manufacture and install marine reefs and seaweed beds, applying
concrete precast technologies, more than 40 years ago.
Sea desertification, where seaweed disappears due to the effects of global warming and other causes, has become evident along
Japan’s coasts since about 2000. Since the catch is ultimately declining as a result of the decrease in fish spawning grounds andfry hiding place, the Company commenced the business of manufacturing and installing seaweed beds due to the need to revive
seaweed beds. K-hat Reef Beta is a multifunctional seaweed cultivation artificial marine reef that utilizes the Group’s proprietarynursery type seaweed cultivation technology. The reef functions as a “core seaweed bed,” where seaweed grown inside the reef
supplies the seeds for more plants to revive seaweed beds. This is a revolutionary initiative for marine public works projects, and todate, more than 3,800 seaweed beds have been sunk, mainly in Nagasaki Prefecture. Sumitomo Osaka Cement is currently working
with its subsidiary SNC Co., Ltd. to establish these marine products businesses in an effort to preserve the ocean’s environment.
In recent years, the value of seaweed beds has risen with the awareness of the absorption and fixation of CO2= blue carbon, andwe anticipate an increase in local governments and private-sector companies taking initiatives in the creation of seaweed beds. We
are committed to assisting in the creation of seaweed beds by making full use of our experience and know-how accumulated in ourseaweed cultivation business over the past 20 years, since before
the term “blue carbon” even existed.
In addition, the Company purchased “blue carbon credits”
issued by Goto City, Nagasaki Prefecture for the purpose of
seaweed beds reviving activities in July 2023. Together with further
promoting the development of the marine products business, wewill further contribute to preserving the biodiversity and reducing
Seaweed bed sinking work
Seaweed bed placed on the seafloor
CO2 emissions through cooperation with local governments.

Participation in the “30by30 Alliance for Biodiversity”
The Company participates in the “30by30 Alliance for Biodiversity.” 30by30 is an international target
to support biodiversity with countries aiming to conserve and protect at least 30% of their land andsea areas, with a goal of halting and reversing losses to biodiversity in Japan as a whole by 2030.

Endorsement of the “Declaration of Biodiversity Initiative by
Keidanren (Japan Business Federation)”
We expressed our endorsement of the Declaration of Biodiversity Initiative by Keidanren (Japan
Business Federation)*. The Group’s corporate philosophy is consistent with the philosophy of
the Declaration of Biodiversity by Keidanren. For preserving biodiversity, we have been engaged
in regreening of former mines, developing marine products business (artificial marine reefs andseaweed beds) and conserving Tsushima leopard cats.
* The Declaration of Biodiversity Initiative by Keidanren involves companies and organizations that take initiatives for multiple of theseven items that constitute the “Keidanren Declaration on Biodiversity and Action Guidelines (revised edition)” or that have endorsed
the overall objectives.

51

Integrated Report 2023

Shushi District

National Endangered Species ofWild Fauna and Flora:
Tsushima leopard cat
Only distributed in Tsushima City, Nagasaki Prefecture.
The number of Tsushima leopard cats estimated to beless than 100 (90 or 100) (according to the Ministry of
the Environment website).
Photo credit: Noted wildlife photographer Makoto Kawaguchi

We have been restoring the natural environment to protect
the Tsushima leopard cat at the site of a clay mine.
In the Shushi District of Tsushima City (Nagasaki Prefecture), Sumitomo Osaka Cement owns a forest (approximately 16 hectares)
designated for the extraction of clay, a cement raw material. With the cement industry aggressively promoting the recycling ofindustrial waste, alternatives have emerged to replace natural clay in cement manufacturing. Consequently, the Company neverextracted any clay from the forest, which was left idle.
This idle land, as it turns out, is the habitat of one of Japan’s most endangered species, the Tsushima leopard cat. In 2007,
Sumitomo Osaka Cement Group began protecting the natural environment of this forest in the idle land and started taking part incollaborative protection programs. In cooperation with local Tsushima residents, we have grown the forest substantially, clearing
away brush and planting deciduous trees, which drop acorns eaten by field mice, the small creatures that are prey for the Tsushima
leopard cat. In these ways, we have been restoring the natural environment by preparing an environment from the ecosystem upthat the Tsushima leopard cat will find welcoming.

Participation in Nature Conservation and Observation Tour in the Shushi Forest
On May 28, 2023, following on from last year, a nature watching event was held by the Committee promoting the creation of
the Shushi Forest, with participation by Group employees. On the day of the event, a total of 29 participants, including 15 generalparticipants, the Tsushima City Hall, the Shushi District Special Committee, and the Wildlife Conservation Center, participated.
On the day, a large age range of participants attended from children to the elderly, who observed while enjoying fineweather. The Committee promoting the creation of the Shushi Forest introduced the Tsushima leopard cat protection activities
being carried out at the Shushi Forest andprovided explanation about the types andfeatures of the wild grasses that are being
grown, while participants took a gentle
stroll through the Shushi Forest.
We will continue to promote ourconservation activities by participating in
Tsushima leopard cat-related events suchas nature observation tours.
Participants at the Shushi Forest Nature
Explanation to participants
Conservation and Observation Tour

Integrated Report 2023

52

Foundation to Support Value Creation

S

SocialDiversity

Together with Employees

Promoting the Advancement of Women

The Sumitomo Osaka Cement Group strives to create comfortable work environments that are safe, healthy andwhere it is easy to work to enable employees to perform their jobs with peace of mind. Furthermore, we aim to createorganizations and worksites that remain great places to work for every employee for years to come, training humanresources capable of utilizing their talents and aptitude to contribute to society as we look to build a more dynamic world.

Human Resource Development
Boosting Employee Skill Levels through
Education and Training Programs

System Supporting Self-Learning
Employees

Sumitomo Osaka Cement positions human resource training
as one of the most important initiatives for its sustainable
development. Through training by occupational class andother means, we emphasize boosting the skills to execute
duties with a broad view from a medium- to long-term
perspective as we take steps to develop our employees.

Sumitomo Osaka Cement encourages those with a highdegree of ambition to teach themselves. By using our system
of scholarships for acquiring qualifications, correspondence
courses and other means, many employees are devoting
themselves to raising their own knowledge and awareness.

▶ Short-term Overseas Training System▶ Induction Training for New Employees▶ Business English Training▶ Three-Year Training PlanAt Sumitomo Osaka Cement, in advance of our global businessdevelopment efforts, we are implementing in-house language
training in English to improve business English skills and support
employee self-knowledge and awareness.

To foster employees capable of deliberating a course of action
by their own, executing it and pursuing desired outcomes,
Sumitomo Osaka Cement prepares an individualized “ThreeYear Training Plan” for each new hire, enabling employee
education to unfold in a more systematic fashion.

▶ Domestic Business School Enrollment System
Sumitomo Osaka Cement is sending employees to “Management
Academy,” a graduate school of business administration sponsoredby the Japan Productivity Center. This academy is a business schoolfor extensive management research through industry-academia
collaboration and for training the human resources who will
spearhead corporate transformation. The main thrust is to cultivate
expert skills responsive to today’s era of global competition.

▶ Annual Training for Young Employees
We are conducting training for employees in their second to
fourth year of employment, aimed at arming young employeeswith the tools they need as early as possible, to help themacquire the necessary skills for each year and take a systematic
approach to their training.

Incentive Systems for Outstanding
Development and Improvement
Sumitomo Osaka Cement has set up various
commendation systems with the purpose of encouraging
employees to tackle tough business goals, encourage
consideration and improvement in duty performance,and establish a corporate culture that boosts morale andpromotes facing challenges.

Number of days and amount of investment in
Human Resources Dept. led training■= Number of days of training

41

Integrated Report 2023

54

41

26

FY201853

55

FY2019FY2020

FY2021

Employee/Ratio of women (Sumitomo Osaka Cement Co., Ltd.)■= Employees (Consolidated) (people)■= Employees (Sumitomo Osaka Cement Co., Ltd.) (people)= Ratio of women (Sumitomo Osaka Cement Co., Ltd.) (%)

2,974

3,005

3,068

3,065

10.5

10.9

11.3

1,186

1,196

1,203

FY2018FY2019FY2020

2,896
13.0

12.1

1,243

1,232

FY2021

FY2022

The Diversity Group is working on the following four goals for the three years from fiscal 2021 to fiscal 2023.
① Aim to make women 20% or higher in proportion to all new general-career-track hires.
② Aim to make the proportion of female managers 2% or higher.
(For more information, go to https://www.soc.co.jp/saiyou/recruit/benefits/) (in Japanese only)

As one avenue for developing human resources with a global
perspective and able to adapt to globalization, Sumitomo Osaka
Cement implements one-month overseas training programs,
sending those who are interested to sites in Southeast Asia,
China and India.

After joining, the Company conducts roughly two weeks
of training for new hires, where they learn the mindset andknowledge necessary to work as a Sumitomo Osaka Cement
employee. When touring production plants, new hires also takepart in cleanup activities around the sites as community service.

As the Japanese government publicly promotes the advancement of
women as part of its long-term strategy, Sumitomo Osaka Cement isbacking its own sustainable development for the future by promoting
initiatives that broaden spaces where women can thrive. In April 2016,
we established a Diversity Group within the Human Resources Dept.,with the aim of being a company women and other diverse humanresources find an exciting place to work.
We have been taking various actions, including active employmentof women, the introduction of leave of absence and re-employment
schemes for female employees (Managers, employees nationwide) who
have reasons such as sharing livelihood with a partner after marriage
and relocation due to the partner’s work transfer, broader placementof various frameworks such as for teleworking and flexible working
hours allowing employee’s peace of mind at work, multiple systems
to support balancing work with childrearing, nursing care, etc., andprovision of training aimed at raising awareness within the company.

③ Aim for a 25% rate of male employees taking childcare leave.
④ Keep annual paid leave at 70% or higher and aim for 80% or higher.

Together with steps to expand opportunities for women to flourish, we are enacting training programs designed to raise awarenessamong employees of the rationale for diversity promotion and the status of related initiatives taken by the Company in hope toprepare the ground and reshape attitude and the mindset. Sumitomo Osaka Cement is committed to backing efforts to help
employees thrive even more, as we leverage the talents and aptitude of every employee and strive to create organizations andworkplaces where it is exciting to work for years to come.

Senior Citizen Employment System
Where employing senior citizens is concerned, Sumitomo Osaka Cement views mandatory retirees as invaluable human resources
possessing knowledge, technical skills and experience. Accordingly, the Company has adopted a reemployment system for passing
on technological capabilities to young generations of employees. Reemployment is available to all retirees who apply and isrenewable through age 65. In addition, we are conducting career training to enable employees to reflect on their careers to dateand create new roles that leverage their own strengths.
We are conducting training to support post-retirement life including the aspects of (1) life planning, (2) money planning, and (3)career planning. In addition, starting from 2022, we are offering a career training program with a career design series for 57 years
old and a mindset series for rehired workers.

Employment of Persons with Disabilities
Sumitomo Osaka Cement is a proactive
employer of people with disabilities. Asa measure to normalize this trend within
the Group, we ask detailed questions
about needed accommodations during
the hiring interview, then prepare theworkplace environment accordingly. In thisway, we give ample attention to creating
work environments where employees withdisabilities can shine to the greatest extent
possible. We will pour energy into awarenessraising activities more than ever before tocontinue to encourage understanding ofour policies inhouse, as we promote greater
employment of people with disabilities.

Change in Percentage of Company Employees who are People with Disabilities(As of June 1) (Unit: %)

2.62

1.97

2.07

2.04
1.83

2018

2019

2020

2021

2022

FY2022Integrated Report 2023

54

Foundation to Support Value Creation

Diverse Work Styles

Safety Initiatives
The Sumitomo Osaka Cement Group strives to create comfortable work environments that are safe, healthy and where itis easy to work to enable employees to perform their jobs with peace of mind.

Work Life Balance
Supporting Employees with Childcare and Nursing Care Needs
With fewer births and societal aging gaining momentum in Japan, Sumitomo Osaka Cement has established childcare leaveand nursing care leave systems and institutionalized reduced working hours significantly greater than legal requirements, sothat employees can balance work with childcare and nursing care with a sense of security. In 2008, the Company acquired the“Kurumin” mark certifying support for raising the next generation of people, in recognition of its initiatives supporting employee
balancing of work and childcare needs.
In 2017, we assembled “The Balance Support Guidebook,” bringing together the Company’s relevant regulations and systems
regarding support for balancing work with childcare and nursing care needs. The guidebook is part of our drive to encourage
understanding of the Company’s systems supporting work-life balance for employees, as we move forward in creating work
environments with highly accessible supportand systems for employees striving for
Ratio of male employees taking childcare leavebalance. We also revise the guidebook asneeded to comply with revisions to the Child
FY2022
33.3%
Care and Family Care Leave Act.
In April 2021, we formulated a General
Business Owner Action Plan (the Company’s
The fifth action plan
FY2021
16.7%
targetfifth such action plan) pursuant to Japan’s
25.0%
Act on Advancement of Measures to
Support Raising Next-Generation Children.
FY20202.9%
With this step, we will press ahead with
implementing initiatives to actualize a
flexible working style and support to strike abalance between work and family life.
FY2019
14.8%
The Company further promotes to build aworking environment where both male andfemale employees can vigorously work while
FY20185.0%
creating a work-life balance.
0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Well-being
Initiatives for Health and Productivity Management
Health and productivity management has become widely known among corporations to address low productivity stemming fromhealth problems. In recent years, the focus has shifted to “well-being,” the state of being satisfied both mentally and socially in
addition to being healthy physically, wherein these three elements of health are kept in good condition in a well-balanced manner.
In order to maintain and promote the health of our employees, we set forth the Health Declaration, “The Sumitomo Osaka
Cement Group aims to be a vibrant company where all employees can work vigorously and energetically, in good physical andmental health.” We were recognized again as a 2023 Certified Health & Productivity Management Outstanding Organization (Large
Enterprise Category), following our initial recognition in fiscal 2022.
As a specific activity for fiscal 2023, we held a walking event on an original course using smartphones at our domestic sites forabout a month from late April to the end of May. Over 580 employees, including
many from our subsidiaries and affiliates, participated in the event. It received
positive comments such as “It helped me create an exercise habit” and “It revitalized
communication,” and we plan to hold it again on a regular basis going forward.
In addition, a ready-made company cafeteria supervised by a nutritionist will be
set up on the office floor of the new headquarters to provide well-balanced meals
at any time, and various health-conscious dietary initiatives have been implemented,
such as educating employees on the need to prevent missing meals and maintainnutritional balance.
We will continue our efforts to improve the health of our employees by repeating
the plan-do-check-act (PDCA) cycle while setting clear goals and implementing
specific initiatives.

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Integrated Report 2023

Occupational Health, Safety and Security Measures Basic Policy
The Sumitomo Osaka Cement Group considers that occupational healthand safety underpins corporate existence, and securing them is an essential
corporate responsibility. As a group with an uncompromising commitment
to safety, Sumitomo Osaka Cement is targeting a goal of zero accidents. To“create an uncompromising climate for safety,” we will work to improve
the occupational health and safety standard further and forge into thebuilding up of a comfortable work environment by a thorough eliminationof unsafe behaviors and insecure condition.

Occupational Health and Safety
Quantitative Targets

Enactment Priorities for fiscal 2023

• Fatal accidents: 0 (2022 result: 0)• Reduce the number of sites with lost time
incidents to 20% or less of all sites(2022 result: 21%)
• Reduce the number of sites where accidents,
including incidents without lost time, occur,
to 30% or less of all sites (2022 result: 42%)

1. Eliminate accidents

Number of Accidents (Incidents)

1) Eradication of repeated disasters2) Enhancement of the safety standard in the workplace3) Improvement on the sense of safety (sensitivity to feel danger)4) Enforcement of heatstroke prevention measures

2. Infectious disease countermeasures
3. Develop healthy, people-friendly worksites
4. Eliminate traffic accidents (accidents during commutes)
5. Organize labor accident data■= Accidents that require time off from work■= Accidents not accompanied by lost worktime

15
7

13

18
12

15

20
8

24

18
12

11

14

17

7
12
7
6
5
4
4
4
FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022
8

9

Occupational Health, Safety and Security Measures Division Management System
The Sumitomo Osaka Cement Group has established an Occupational Health, Safety and Security Measures Division covering theentire company. Through regular contact meetings centered on the division’s secretariat and other actions, we are moving to further
strengthen initiatives with respect to safety.
Management System

Occupational Health, Safety and Security Division
Secretariat

Production Division

Mining Division

Head Office andBranch Office Division

Plants

Mines

Departments and branches

Optoelectronics
Division

Advanced Materials
Division

Physical Distribution
Division

Cement-Related
Products Division

Cement-Related
Products Division

Funabashi District
Division

New Technology
Research Laboratory

Cement/Concrete
Research Division

Cement/Concrete
Research Laboratory

Funabashi Occupational Health and Safety Council Secretariat: Funabashi Office

Safety Education
Sumitomo Osaka Cement is channeling energy into safety education at every level to embed a culture of safety within a greater
corporate culture prioritizing worker health and safety.
Safety Education at Headquarters

Principal Safety Education at Business Sites

Outside Education• Safety education for new hires• Safety education for younger employees• Safety education by occupational class
New chief / New leader / New manager• Foreman and team leader education
Team leaders from all factories gathered to exchange opinions and have discussion• Hands-on safety education• Work safety supervisor education• Foreman education

Health Management
To ensure employees are healthy as they work, Sumitomo Osaka Cement supports them in creating good health by, among other measures,assisting employees in getting the full range of regular health checkups, including health exams designated in collaboration with the healthinsurance association.
The Company has also introduced a stress-check system as we seek to prevent mental health concerns before they occur. Through lectureson occupational health by industrial health physicians and mental health seminars, we hope to deepen proper understanding of stress among
our entire workforce, strengthening our support system for helping them build minds and bodies defined by health and vigor.

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Foundation to Support Value Creation

Human Rights Policy
Respect for International Norms

Message from the Officer responsible for Human Resources

We promote initiatives for the respectof human rights at the Group and theentire supply chain.

We adhere to the ideas of the UN “Guiding Principles on Business and Human Rights” and support and respect the followinginternational norms.
• International Bill of Human Rights (International Declaration of Human Rights and International Covenants on Human Rights)• International Labour Organization (ILO) ”Declaration on Fundamental Principles and Rights at Work”
We also understand and comply with laws and regulations applicable not only in Japan but also in the countries and regionsin which we operate. Even when such laws and regulations conflict with international norms, we pursue methods to respect
internationally recognized human rights the greatest extent possible.

Scope of Application
Executive Officers
General Manager, Personal Department
Chair, Labor and Social Affairs Subcommittee,
Sustainability Committee

Yasutarou Hashimoto

We recognize that all officers and employees of each Group company are in positions to have their human rights respected andare in positions that should respect human rights, and promote initiatives for the respect of human rights based on this policy. In
addition, we also expect that business partners and other parties will also understand and support this policy and promote initiatives
for the respect of human rights similar to ourselves.

Human Rights Due Diligence
We work to identify, assess, prevent and mitigate the possible direct and indirect negative impact of the Group on human rights
through a framework of human rights due diligence. In addition, we continuously monitor and improve the effectiveness of
initiatives.

PolicyWe, the Sumitomo Osaka Cement Group, have an underlying stance to conduct our business activities with a high awarenessof social norms and a philosophy based on the Sumitomo business spirit and the Group’s philosophy. Meanwhile, we recognizethat respect for human rights is the root of management and one of the most important issues, and have recently formulated the“Sumitomo Osaka Cement Group Human Rights Policy.” This policy clarifies the ideas for fair and just behavior so that we do not
violate human rights in our business activities.
We recognize that there is possible direct and indirect negative impact of the Group’s business activities on human rights and wework for the Group as a whole to promote ongoing initiatives so that all officers and employees of all Group companies as well as
our stakeholders will respect human rights.

Process for Initiatives
Understanding that respect for human rights is an important issue for one’s own company

Correction/Remedy
We promote Initiatives to correct/remedy through appropriate and effective procedures in the event that we have caused a negative
impact on human rights through such business activities or that it has clearly promoted such impact.

Dialogue
To respond appropriate to the impacts on human rights, it is important to recognize that human rights are affected by businessactivities or there are stakeholders that could be affected. We share human rights issues related to business activities withstakeholders at the appropriate timing, and engage in activity such as ongoing two-way dialogue and discussion, and work towards
solving in cooperation.

Disclosure
We disclose the status of initiatives for the respect of human rights based on this policy through the Company website, Integrated
Report, etc.

Understand what types of human rights risks are present inside and outside one’s own company

Promotion of understanding and education
We incorporate this policy in all business activities and conduct wide-ranging education and awareness-raising for all officers andemployees for effective implementation. We also share this policy with business partners and other parties, and work for it to beunderstood and promoted.

Committed to respecting human rights(Formulation of the Human Rights Policy)

Start human rights due diligence

To observe the commitment towards respect for human rights based on this policy, the Labor and Social Affairs Subcommittee(please see page 31), which has been established within the Sustainability Committee and chaired by the President, under thesupervision of the Board of Directors, works with each Division on drafting the plan and managing the progress.

Source: Karna Ltd.

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Foundation to Support Value Creation

Quality
Approach to Quality
The Sumitomo Osaka Cement Group places importance on quality in the Cement business, the Optoelectronics business, and theAdvanced Materials business, and has established a quality control framework that responds promptly to customer needs.
In the Cement business, the use of cement is diversified from large structures, such as dams, to an array of concrete products.
Thus the cement performance must be optimized depending on the purpose of the usage. The Sumitomo Osaka Cement Group,
under a product assurance system built upon by long-held cement manufacturing technology, considers a stable supply of safeand quality cement as the priority in fulfilling customer demand. To that end, the Group strives to implement thorough day-to-day
product management to stabilize and enhance the product quality.

Quality Control Framework
The Sumitomo Osaka Cement Group’s cement production plants have acquired quality management system (QMS) certification inaccordance with ISO 9001 (international guidelines on quality assurance), have built and maintain quality control frameworks andcontinue working on quality improvement. The five production plants of Tochigi, Gifu, Ako, Kochi and Hachinohe Cement Co., Ltd.,and the Optoelectronics Business Division, Advanced Materials Business Division and affiliates including Shuho Kogyo Co., Ltd. haveobtained ISO 9001 certification.

Quality Control Information Communication and Response Flow Chart

Relationship with Customers(Cement Business)
We strive to deepen our relationships withcustomers in such ways as holding regular meetings
among divisions to exchange information on
quality control communication and response flow
charts and forming a system for assured internal
communication of customer information. We alsoutilize this system for product development andresponse to customer complaints.

Customers
Inquiries andRequests

Branches
Technology Centers

Cement/Concrete
Research Laboratory

Cement Sales
Administration Department

Production andTechnical Department

We have built a framework capable of responding

Plantspromptly and properly to inquiries and requests.

Technological Interaction with Customers (Cement Business)
Aiming at sharing technical information on concrete with customers, the Group regularly holds the nationwide Sumitomo Osaka
Cement Technical Report Meeting. The report meeting features not only lectures and speakers on the latest topics or technicaltrends in the concrete field but also provides an opportunity of information sharing between the Company and customers as awhole, where some customers from all over the country present valuable research results. The Group also holds technical meetingsand lectures in each district for improvement of technologies by working together with customers.

Quality Initiatives (Cement Business)
The QMS of the plant is operated under defined responsibilities and authorities of each division according to the plant organization
chart. As shown in the production flow chart, the quality control of the plant is consistently applied from receiving inspection of raw
materials, thermal energy, and waste and byproducts to shipment inspection of cement products, and highly accurate inspections
are conducted in cooperation with the analysis center at the Ako Plant. Safety data sheets listing information about particular toxic
hazards in products are also provided to enable them to be used safely.
Plant Organization
QMS Management Supervisors, as
on-site plant general managers,
work to establish and maintainthe system by raising all
employees’ awareness of requests
from customers while having theplant’s quality policy known to all
employees in the plant.

Plant General
Manager

The Sumitomo Osaka Cement Group has stipulated the following basic policy to be a partner in creating attractive
products under a concept of quality and reliability.

Basic Policy on Purchasing
QMS Management
Supervisor

GeneralAffairs Section

Fair Trade

Production
Section

MaintenanceandMechanical
SectionEnvironmental
Control
SectionQuality
Assurance
SectionPower plants

Mines

Production Flow and Quality Control at Plants
Receipt

Raw materials
process

Burning
process

Finishingprocess

Shipment

Confirmation ofcontract details

Receivinginspection

In-processinspection

In-processinspection

In-processinspection

Shipment
inspection

Chemical composition,etc., of raw materials
and thermal energy andwaste and byproducts

Chemicalcomposition,
calorific value,
moisturecontent, etc.

Chemicalcomposition,
particle size
analysis

Chemicalcomposition,
burning
temperature

Chemicalcomposition,
particle size
analysis

Chemicalcomposition,
particle size
analysis

Product/Shipment inspection• Chemical composition• Physical properties(mortar compressive strength, etc.)

Openness

We not only maintain trade relationships with business partners that have outstanding records,
but also always strive to purchase from new business partners.
As a result, we always disclose information related to material procurement.

Fairness

We always select business partners based on a fair and just assessment that takes acomprehensive view into account including quality, price, delivery time, stable supply, aftersales service, technological compatibility with existing facilities and business results.

Compliance with Laws and Regulations

We always obey all rules and regulations when engaging in purchase transactions and carry out
duties while respecting that spirit.

Mutual Trust

We aim to build sound relationships based on trust with the people from our business partners
by engaging in fair purchase transactions.

Contribution to Society

We believe it is important to contribute to society with people from our business partners byengaging in fair purchase transactions.

Based on the above basic policy on purchasing, we require that suppliers and other business partners respect human rights, prevent forcedlabor and child labor, as well as prevent discrimination based on nationality, gender, etc., and we also fulfill our social responsibilities in thevalue chain through purchasing activities that take into consideration safety, health, and environmental preservation.

Endorsement of the Partnership Building Declaration
The Company has endorsed the “Partnership Building Declaration” promoted by the Cabinet
Office and the Small and Medium Enterprise Agency. The entire company will strive to increase
the added value of the entire supply chain by working with our business partners. At the sametime, we will seek to build mutual prosperity with our business partners through collaboration
beyond existing business relationships and enterprise sizes. In addition, we declare that we will
strive to build a forward-looking partnership by ensuring transactions are appropriately conducted in terms of determining prices andpayment terms and addressing work style reforms, thereby minimizing the economic impact of various factors as much as possible.

Sumitomo Osaka Cement Partnership Building Declaration
Calorific value measuring device

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Integrated Report 2023

Automatic analysis system

https://www.biz-partnership.jp/declaration/8152-05-13-tokyo.pdf (in Japanese only)

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60

Foundation to Support Value Creation

G

GovernanceEfforts to Strengthen Corporate GovernanceCorporate GovernanceWe believe that corporate governance is a structure for proper decision-making by corporate management, and that theobjective of corporate governance is to constantly enhance our corporate value by increasing management efficiency, andby securing soundness and transparency in business activities. The Sumitomo Osaka Cement Group, therefore, recognizes
the fulfillment of this aim as our most important management issue. Moreover, we have formulated the Sumitomo
Osaka Cement Corporate Governance Basic Policy to promote sustainable growth and enhanced medium- to long-term
corporate value for our Group.

Status of Meeting Bodies and Internal Control System
Board of Directors and Executive Officers

The Board of Company Auditors consists of fiveCompany Auditors, three of whom are Outside
Company Auditors. Company Auditors takepart in Board of Company Auditors meetings
convened at least once monthly, as well as
attend other important company meetings,
including meetings of the Board of Directors.

Directors in order to secure the objectivity andtransparency of performance evaluations and thevalidity of remuneration standards of directors
and executive officers and in order to secure
the objectivity and transparency with regard to
appointments of directors and executive officers,
similarly to the remuneration.
The Committee shall comprise a majorityof Outside Directors and independent outside
experts as necessary, and the chairperson iselected by mutual election of the members. The
Committee shall deliberate on proposals forcandidates for directors and executive officers,
the succession plan for and election/dismissalof the chairman, president, etc., and policies
on determination of remuneration, as well
as a proposal on remuneration for them. The
Committee then reports on its decisions to theBoard of Directors.
From June 2021, the Committee comprises a
total of five members consisting of the president,
three Outside Directors and one outside expert.

Nominating and Remuneration Committee

Internal Audit Department

On January 1, 2016, Sumitomo Osaka Cement
established a Remuneration Committee as anadvisory body to the Board of Directors, and then,on January 1, 2018, Sumitomo Osaka Cement
established a Nominating and Remuneration
Committee as an advisory body to the Board of

We have established the Internal Audit
Department under the direct control of the
President for the purposes of conducting internal
audits regarding the Sumitomo Osaka Cement
Group’s business activities and various systems.
The Internal Audit Department conducts

The Board of Directors consists of nine Directors,
including three Outside Directors and convenes
meetings at least once monthly to make decisions
regarding material matters affecting management
and to receive reports on the status of business
operations. Further, from June 2006, we havealso introduced the executive officer system inorder to separate management decision making
and supervision from actual execution and toraise management efficiencies by reinforcing
each function, speeding up decision making andclarifying authority and accountability.

Board of Company Auditors

audits together with Company Auditors asnecessary based on the annual internal audit
plan and cooperatively shares information andopinions. It also investigates and reports on
specific matters at the request of the Company
Auditors. Matters such as audit results and thestatus of improvements made in response toaudit findings are reported to the Representative
Director, Directors and Company Auditors as
appropriate, based on the establishment of adual reporting system.

Risk Management Committee
We have established the Risk Management
Committee, chaired by the President, in order to
identify, evaluate and respond to risks facing theentire Group. Additionally, we have formulated
the Regulations of the Risk Management
Committee in order to clarify the roles andresponsibilities of the committee.
The Risk Management Committee preparesan action plan for risk management every fiscal
year and monitors its progress. Audits on thestatus of risk management are carried out by
the Internal Audit Department, with the results
reported to the Risk Management Committee.
The Risk Management Committee takes
appropriate action, when necessary, based on
the results, and reports the results of audits to
the Board of Directors and Company Auditors.

2006

Introduced Executive Officer System

2008

Invited one Outside Director for the first time

2015

Increased the number of Outside Directors to two

2015

Established “The Sumitomo Osaka Cement Corporate
Governance Basic Policy”

2016

Established the Remuneration Committee

2018

Established the Nominating and Remuneration Committee

2019

The Nominating and Remuneration Committee comprises
the President, two Outside Directors, and one outside
expert, in a total of four members

2021

Increased the number of Outside Directors to three
The Nominating and Remuneration Committee comprises
the President, three Outside Directors, and one outside
expert, in a total of five members

Evaluation of the Effectiveness of the Board of Directors

1

Analysis and Evaluation Methods
In fiscal 2022, the Company conducted a questionnaire for all Directors and Company Auditors centered around thefollowing items. The results were compiled and reported at the Board of Directors meeting in May 2023, along withdeliberations on initiatives for fiscal 2023.
• Operation of Board of Directors meetings, etc. (Frequency of meetings, deliberation time, content of materials,
discussion environment, etc.)• Support systems for Directors, etc. (Provision of appropriate information, officer communication, etc.)• Governance, etc. (Compliance, internal controls, risk management, dialogue with shareholders and investors, etc.)2

Summary of Evaluation Results
The results of the evaluation showed that the operation of the Board of Directors, etc., the support system for the Boardof Directors, etc., and governance, etc., were generally appropriate and that no problems were found.

Corporate Governance System
General Meeting of Shareholders

Nominating andRemuneration Committee

Consultation
AdviceElection andDismissal

Directors

Election andDismissal
Audit

Board of Directors (Chairman)
Election andDismissal, Supervision

President
Sustainability Committee
Risk Management Committee

Executive Officers

Head Office, Branch Offices, Plants,
Research Laboratories, Etc.

Election andDismissal(Collaboration)

Company Auditors
Board of Company Auditors

Financial
Auditors
Financial
Audit

Audit
ReportReport(Collaboration)(Collaboration)

3

Future Initiatives
The following initiatives will be considered and implemented to contribute to further improvement of the effectiveness of
the Board of Directors based on the evaluation of its effectiveness conducted in fiscal 2022.
• Change in questionnaire methodology to improve efficiency of responses and analysis• Identification of issues by conducting interviews with officers based on questionnaire results

Internal Audit Department

Internal Audit

Compliance Committee
Group Companies

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62

Foundation to Support Value Creation

ComplianceCorporate GovernanceWe consider that sustainable advancement of corporations requires the foundations of substantive corporate governanceas well as exhaustive compliance.

Remuneration for Officers
The Board of Directors is the body holding decision-making authority in adopting policies concerning the determination of
remuneration of the Directors of the Group and the calculation thereof. The Group has established the Nominating andRemuneration Committee, which is comprised of one Inside Director, three Outside Directors, and one outside expert, as an advisory
body of the Board of Directors with a view of ensuring the appropriateness of remuneration level and objectivity and transparencyof the earning performance evaluation. The Nominating and Remuneration Committee considers earnings performance andcontribution to future sustainable growth and other factors, deliberates about proposals concerning remuneration for the Directors
and management executives, and reports to the Board of Directors. The Board of Directors discusses to decide the remuneration of
the Directors within the remuneration range approved and adopted by the General Meeting of Shareholders based on a report fromthe Nominating and Remuneration Committee.

Introduction of Stock-Based Remuneration PlanAt the 157th Ordinary General Meeting of Shareholders held in June 2020, the Group passed a resolution to introduce a stockbased remuneration plan (the “Plan”) that covers the Directors of the Group excluding the Outside Directors, on top of the existingbasic remuneration. The purpose of the introduction of the Plan is to clarify the correlation between Directors’ remuneration and
the Company’s stock value, and encourage Directors to share the benefits and risks arising from stock price fluctuations withshareholders and, as a result, enhance their awareness of contributing to the improvement of medium- to long-term businessperformance as well as the increase in corporate value.
Under the Plan, a trust established with cash contributions made by the Group acquires the Group’s stocks to be granted throughthe trust to the eligible Directors for the number of stock equivalent to points the Group grants to the Directors. The total numberof points the Group grants to the eligible Directors shall be capped at 10,000 points (one point equals one stock of the Group.
Excluding salaries paid to the Director concurrently serving as an employee) per fiscal year, and the time when the eligible Directors
receive the Group’s stocks is at their resignation from the Director’s position in principle.
The percentage of remuneration for the Group’s directors (excluding Outside Directors) is based on the base amount determinedfor each executive rank, with basic remuneration and stock-based remuneration accounting for 90% and 10%, respectively, as thestandard, and the remuneration for outside directors is limited to basic remuneration only.
In light of business performance in FY2022, each director declined to receive points under the stock-based remuneration plan
through the trust scheme (Employee Stock Ownerhsip Plan).

Compliance Promotion System

Compliance Committee

We have established the Compliance Committee chaired by the

The Compliance Committee creates a compliance action plan every

President to establish, spread and elevate the compliance awarenessfiscal year and monitors its progress. Compliance audits are carriedof all officers and employees of the Sumitomo Osaka Cementout by the Internal Audit Department, with the results reported

Group, including executive officers, fixed-term employees andto the Compliance Committee. The Compliance Committee takes

dispatched employees. Also, we have formulated the Regulations

appropriate action, when necessary, based on the results, andof the Compliance Committee in order to clarify the roles andreports the results of audits to the Board of Directors and Company

responsibilities of the committee.

Auditors.

Compliance Promotion Framework• Compliance Officer
Each department head shall be the compliance officer responsible formanagement and supervision of compliance within the department.

Basic remuneration

Directors(of which Outside Directors)

270
(32)

270
(32)

Company Auditors(of which Outside Company Auditors)

60
(25)

60
(25)

Classification

Performance-linked
remuneration——

Non-monetary
remuneration

—

9
(3)

—

5
(3)

The Group shall resolutely stand up to respond to anti-social forces that threat the order and safety of civil society, and shall have no
relationship with them. Based on this Basic Policy, General Affairs Dept. is designated as a corresponding administrative departmentthat gathers information and works together with police and lawyers collaboratively if necessary.

Sumitomo Osaka
Cement Departments
Compliance
OfficerCompliance
Supervisor

Compliance Committee
Chair: President
Secretariat: Legal Dept.

Sumitomo Osaka Cement Group Companies
Representative
Director

Compliance
Committee

Compliance
Officer

Chair

Compliance
Supervisor

Secretariat

Furthermore, Group companies shall also establish a promotionalframework similar to that of Sumitomo Osaka Cement.

on any corrective measures to be taken. Information on the system
is disseminated through the Company via the intranet and efforts
are being made to make it easier to use. It is being expanded toinclude consultations on all suspicions as well as acts that violate
laws, ordinances, or internal regulations, or run the risk of doing so.

Compliance Hotline System Flowchart
Communicate resultsof investigation
Report(written letter,phone, fax, email)
Reporter
Sumitomo Osaka
Cement Group
employee

Internal consultation
General Manager,
Internal Audit Dept.

Compliance
Committee

Report on resultsof investigation

Chair
President

Investigation

Report on
results ofinvestigation

OffenderOffending department

Investigation
Report(written letter,
Communication
phone, fax, email) External consultationof report details
LawyerCommunicate resultsof investigation* The amount of non-monetary remuneration above is stated at the amount of provision for the stock-based remuneration plan through the trust scheme (Employee Stock
Ownership Plan) recorded for the fiscal year under review.

Basic Approach toward the Elimination of Anti-Social Forces
and its Implementation Status

Representative
Director

The compliance officer appoints the compliance supervisor, who shallconvey information to the Compliance Committee Secretariat anddisseminate information related to compliance in each department.

from any officer or employee, investigates the report and decides
Number ofapplicable officers(persons)

Receipt of reports
Internal: General
Manager, Internal
Audit Dept.
External: Lawyer• Compliance Supervisor

Compliance Hotline, a whistleblower system that receives reports

Total amount by type of remuneration (millions of yen)

Total amount of
remuneration(millions of yen)

Board of Directors

compliance officer and compliance supervisor.

The Sumitomo Osaka Cement Group has also established the

Total Amount of Remuneration for Directors and Company Auditors

Overview of Compliance Promotion Framework

Each department in Sumitomo Osaka Cement appoints its own

Secretary General
General Manager,
Legal Dept.

Communicate resultsof investigation

Details of Activities
Compliance Manual
We produced the Compliance Manual as a specific guideline for rigorous compliance, disclosing it via the intranet, adding and changing whenneeded and striving to making it known.

Raising Officers’ and Employees’ Awareness

Basic Approach to Anti-Bribery and Corruption and Status of Initiatives
The Group clearly states in its in-house compliance manual that the prohibition of bribery and gifts to civil servants, including foreign civil
servants, as well as entertainment and gifts to business partners, must be thoroughly examined. We disclose manuals on the in-house
intranet and conduct compliance education through e-learning on a regular basis to ensure thorough communication and awareness.

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• The Compliance Committee Secretariat conducts training and legal consultations about compliance for each department or Group company.
• A Compliance Supervisor Meeting for compliance supervisors of each division of the Company and each Group company are held to invite external experts togive a lecture on newsworthy subjects on compliance.
• We provide an e-learning program to learn compliance through videos to our officers and employees and are expanding it to the Group companies.
• Rank-based training also includes education on compliance, and we are advancing the dissemination and establishment of compliance awareness.

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64

Foundation to Support Value Creation

Risk Management
Risk Management Structure
We have established the Risk Management Committee, chaired by the President, in order to identify, evaluate and respond to risksfacing the entire Group. Additionally, we have formulated the Regulations of the Risk Management Committee in order to clarify theroles and responsibilities of the committee.
The Risk Management Committee prepares an action plan for risk management every fiscal year and monitors its progress.
Audits on the status of risk management are carried out by the Internal Audit Department, with the results reported to the Risk
Management Committee.
The Risk Management Committee takes appropriate action, when necessary, based on the results, and reports the results ofaudits to the Board of Directors and Company Auditors.

Skills Matrix of Directors
Skills Matrix of Directors
Knowledge, Experience, Skills, etc.
Name

Position

Fukuichi Sekine

Corporate
Management

Financial
Strategy/
Accounting

Chairman○○

Hirotsune Morohashi

President,
Representative Director○○

Toshihiko Onishi

Representative Director
Executive Vice President○○

Ryoji Doi

Representative Director
Senior Managing
Executive Officer○○

Mikio Konishi

Director,
Senior Managing
Executive Officer○○

Masaki Sekimoto

Director,
Managing Executive
Officer○

Mitsuko Makino

Outside Director

Tatsuya Inagawa

Outside Director

Yoshimi Morito

Outside Director

International
Business

Human
Resources/Labor
Management/
Occupational
Safety and Health

Sales/
Marketing

Legal/
Compliance/
Risk
Management

○

○

○

○

○

○

Production/
Engineering

Research andDevelopment

Environment/
Sustainability

Fiscal 2022 Initiatives
We conducted a risk assessment of the new Headquarters buildings when relocating the headquarters at the end of November
2022, and updated various manuals including the Basic Guidelines for Emergency Response and the Guidelines for Initial Response
to Major Earthquakes, etc. For major drills, we simulated an initial response for the Headquarters disaster response task force atthe new Headquarters based on a disaster at the Headquarters and business offices in the Tokyo Metropolitan Area caused byan earthquake under the Tokyo Metropolitan Area, for purposes such as ensuring members of the disaster response task force
secretariat and subordinate organizations (employee support teams, information and public relations team, system team, and thetask force support team) reconfirm their own roles, and also utilized Zoom on the premise that there would also be people working
from home when an earthquake strikes.

Holding In-House Briefings and Workshops on Risk Management2022
October

Information security incident response training

January

Joint meeting and lecture for risk management supervisors from each department, location and affiliated company (online)

March

Safety driving education (online)
Headquarters disaster response task force training (initial response) (in person + online)

2023

Under the “Basic Rules on Information Management,” which defines the basic matters required for information management, theGroup has established “Basic Rules on Information Security” for the purposes of protecting tangible and intangible information
assets and information infrastructure related to business activities from external threats and of promoting business activities safely
and smoothly. The Group is working on information security activities under a management system based on these rules.
Since a timely response to cyber attacks, which have become a social problem in recent years, has become necessary, we haveinstalled new security services, etc. and implemented core infrastructure development to use them, with plans for continuation.

Establish Procedures for Responding to Information Security Incidents

○

○

○

○

○

○

○

Information Security

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

In case of leakage of confidential information or customer information out of the company due to loss, theft, eavesdropping, wrong
transmission, or other errors or in case of an information security incident due to falsification or destruction of the system caused by
an attack from the outside causing the business to stop, the Company has established procedures for setting up a response teamlinked with the relevant departments or groups and for taking necessary actions in order to minimize the damage.
The main purpose of the above is to function properly during an emergency and we conduct regular training.

Basic Policy on the Protection of Personal Information
Following the basic principles of Japan’s Act on the Protection of Personal Information, we consider the appropriate handlingof personal information to be an important management task, and as such, we have established our own personal information
protection policy. In accordance with this basic policy, the appropriate handling of personal information is set in the “Regulations for
the Protection of Personal Information” and the in-house organizational structure is established for protection.

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66

Foundation to Support Value Creation

Our Management Team (As of June 28, 2023)
Directors
1

Fukuichi Sekine

2

Hirotsune Morohashi

3

Toshihiko Onishi

4

Ryoji Doi

5

Mikio Konishi

6

Masaki Sekimoto

8

Tatsuya Inagawa

9

Yoshimi Morito

Chairman

Representative Director
Senior Managing Executive Officer
Responsible for Production and TechnicalDept., Maintenance and Engineering Dept.,
Sustainability Dept., Environment Div., andCement/Concrete Research Laboratory

President, Representative Director

Director, Senior Managing Executive Officer
Responsible for Intellectual Property Dept.,
Optoelectronics Business Div., Advanced
Materials Div., New Technology ResearchLaboratory, and Funabashi Office

Representative Director
Executive Vice President
Responsible for Real Estate Dept., Cement
Sales Administration Dept., International
Business Dept., Physical Distribution Dept.,
and Cement-Related Products Div.

Director, Managing Executive Officer
Responsible for Legal Dept., Corporate
Planning Dept., Administration Dept., andPurchasing Dept.

Directors (Outside)
7

Mitsuko Makino
Outside Director

Apr. 1993	Contract caster of Shizuoka
Station, Japan Broadcasting
Corporation
Oct. 2000	Contract reporter of Shizuoka
Broadcasting System Co., Ltd.
Apr. 2009	Freelance announcer (to thepresent)
Jun. 2018	Director of the Company (to thepresent)

Outside Director

Apr. 1983 Appointed as Public Prosecutor
Sep. 2016	Director-General of the Public
Security Department of Supreme
Public Prosecutors Office
Mar. 2017	Superintending Public Prosecutorof the Takamatsu High Public
Prosecutors OfficeJan. 2018	Superintending Public Prosecutorof the Hiroshima High Public
Prosecutors OfficeNov. 2019	Registered as Attorney at Law
and joined Takahashi Sogo Law
Office (to the present)
Jun. 2020	Outside Company Auditor of
FUJIFILM Holdings Corporation(to the present)
Jun. 2021	Director of the Company (to thepresent)

Outside Director

Apr. 1974	Joined Kandenko Co., Ltd.
Jul. 2013	Executive Managing Officer andBranch Manager of Kanagawa
Branch of Kandenko Co., Ltd.
Jun. 2014	Managing Director and Executive
Officer of Kandenko Co., Ltd.
Jun. 2015	Representative Director ofKandenko Co., Ltd.
Jun. 2015	Executive Vice President ofKandenko Co., Ltd.
Jun. 2016	President and Executive Officerof Kandenko Co., Ltd.
Jun. 2020	Vice Chairman and Director ofKandenko Co., Ltd.
Jun. 2021	Director of the Company (to thepresent)

Company Auditors
10 Kaname Ito

Company Auditor (Full-time)

10

14

11
7

12

13

8

9

Outside Company Auditor

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Integrated Report 2023

3

1

2

4

Company Auditor (Full-time)

Company Auditors (Outside)
12 Shoji Hosaka

5

11 Takeya Okizuka

6

Apr. 1969	Joined MITSUI & CO., LTD.
Jun. 1994	President of MITSUI CHILE LTDA.
(currently MITSUI & CO. (CHILE)
LTDA.)
Aug. 1998	President of K.K. Ichirei (currently
PRI Foods Co., Ltd.)
Oct. 2002	Inspector of MITSUI & CO., LTD.
Jun. 2005	Company Auditor of Mitsui Oil
Exploration Co., Ltd.
Jun. 2009	Resigned as Company Auditor of
Mitsui Oil Exploration Co., Ltd.
Jun. 2010	Company Auditor of theCompany (to the present)

13 Kazuo Suzuki

Outside Company Auditor
Jan. 1973	Joined Tetsuzo Ota & Co.
(currently Ernst & Young
ShinNihon LLC)
Mar. 1977	Registered as Certified Public
Accountant (to the present)
May 1995	Representative Partner
May 2004 Executive Director
May 2008 Managing Director
Sep. 2008	Senior Advisor
Jul. 2009	Established Suzuki CPA
accounting office (to the present)
Jun. 2010	Company Auditor of theCompany (to the present)

14 Taku Mitsui

Outside Company Auditor
Dec. 2012	Registered as Attorney at Law (tothe present)
Dec. 2012	Joined Inoue Harutaka Law
Office (currently Inoue & Sakurai
Law Office)Dec. 2015	Established Mitsui Taku Law
Office (to the present)
Jun. 2020	Company Auditor of theCompany (to the present)

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68

Foundation to Support Value Creation

Round-Table Discussion with Outside Directors
About the Medium- to Long-Term Vision
and Medium-term Management Plan
What are your expectations for the new medium- tolong-term vision and Medium-term Management
Plan, and what is your role as an Outside Director inachieving those plans?

Outside Director

Outside Director

Outside Director

Tatsuya Inagawa

Mitsuko Makino

Yoshimi Morito

Outside Directors Makino, Inagawa, and Morito spoke about matters suchas the Sumitomo Osaka Cement Group’s medium- to long-term vision,
Medium-term Management Plan, and efforts to strengthen governance.

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Makino: I would like to start off by discussing expectations
and evaluations of the medium- to long-term vision. I
would like to hear from Director Morito on this point. Whatdo you think?
Morito: Last year I had the opportunity to participate in thecreation of the medium- to long-term vision and Mediumterm Management Plan for the first time since assuming
the position of Outside Director, which was a valuable
experience for me. Moreover, the business environment
surrounding the Company was also created under difficult
circumstances that we have never experienced before.
“SOC Vision2035” states that we aim to be anenvironmental solutions company that meets the needsof the times, with a presence as a challenger withthorough differentiation and unique style. One thing I pay
particular attention to is the fact that business portfoliotransformation is stated in the 2035 vision. The key toachieving this vision will be to make progress in advanced
materials business fields and new business fields other thanthe Cement business, with the Cement business accountingfor 50% of net sales and other than the Cement businessaccounting for the other 50%. As a future discussion, wemust clarify the gaps between the targets we should aim
for and the current situation, and then further strengthen
our research and analysis of strategies, human resources,
technological development, and external partnerships to fillthese gaps, as well as further enhance our verification ofbusiness feasibility.
Makino: I participated in many discussions as an Outside
Director, so I was deeply moved when the vision was finallycompleted. I was also surprised by the rather bold visionof aiming to become an environmental solutions company
by demonstrating our presence as a challenger withunique style in order to become “a company with a strong
presence,” and the portfolio transformation of doublingsales by 2035 and splitting the net sales ratio of the
Cement business and the other than the Cement businessin half. However, I feel that having the conviction that “it’snot just a dream” by setting high targets and clarifying
processes will help the company grow.
I also believe that particular consideration should
be given to ensuring that the difference in enthusiasm
between management and people on the front lines does
not become too great. As we have communicated at Boardof Directors meetings and meetings to discuss the mediumto long-term vision, I feel it is necessary for management toconstantly pay attention to employees with regard to thehigh targets they have set, and to show each other that thecompany is working together as one toward these targets,
little by little.
What are your expectations and evaluations, Director
Inagawa?
Inagawa: With regard to the content of the medium- tolong-term vision, as you both have already touched on,
I also commend the establishment of a “management
vision” that aims to have a strong presence as a challenger
and become an environmental solutions company, as wellas the “portfolio reform” to have 50% of our business asother than the Cement business. I believe that these areappropriate directions that take into account the position of
the Company and the trends of the time.
I personally evaluate not only the content, but also
the methodology and discussion process for creating the
medium- to long-term vision as being appropriate andmeaningful. Specifically, the President himself took the
initiative in setting a major direction, the project teamadded substance to the direction set by the President
in consultation with outside experts, all business andadministrative divisions participated in these discussions
and actively shared their opinions, making revisions andadditions to the content, and then we, external officers,
participated in multiple rounds of discussions and expressedvarious opinions, including on wording. In other words, it is
the medium- to long-term vision that was created throughthorough discussions throughout the entire company. As aresult, I felt that all the employees were able to successfullysummarize what they really want to do and what theyshould do, and that dreams for the future are not simply
dreams but concrete targets for future corporate activities
at a level that can be fully realized with effort. In thissense, I strongly expect that the management vision andtargets will be integrated among all employees and Group
companies, and that all employees will work together toimplement the Medium-term Management Plan createdbased on this vision and these targets.
Makino: Certainly, it is important to first integrate anddisseminate the medium- to long-term vision among all
employees, including those at Group companies, in order toachieve it.
I would now like to move on to a discussion of theMedium-term Management Plan and our roles as Outside
Directors in achieving it. This Medium-term Management
Plan was put together through backcasting based on themedium- to long-term vision that was previously studied
and created. In light of this, what are your thoughts on thecontent and the role that we, as Outside Directors, will playin accomplishing this plan?
Inagawa: In terms of the content of the Medium-termManagement Plan, we are still focusing on whether the
profitability of the Cement business will recover andwhether the expansion of the electrostatic chuck businesswill proceed as planned. In addition, we have put forth
a human resources strategy as a measure to strengthen

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Foundation to Support Value Creation

Round-Table Discussion with Outside Directors

the management foundation, and we recognize that thisis an extremely important strategy as it will serve as thefoundation for future business expansion.
In terms of our role in achieving the plan, first of all, as
Ms. Makino mentioned, the Medium-term Management
Plan was created through backcasting based on the mediumto long-term vision toward 2035. So, while it is certainly
important to achieve the revenue targets and other figures
stated in the plan, I don’t think that alone will be enough.
While keeping an eye on the medium- to long-term vision,
we also need to plant the seeds for the next Medium-termManagement Plan. This is especially necessary for new
businesses that are being launched, and thus we mustfully consider the new risks involved. So in that sense, it isessential for each business division to strive to achieve its
targets in order to achieve the plan. However, at the sametime, I feel that it is also essential for each business division
to make a thorough identification of various risks in lightof the Medium-term Management Plan, and to conduct
proper risk management that includes all Group companies.
I believe that our role as Outside Directors is to check andsupervise, from our respective standpoints and perspectives,
whether the executive side is appropriately managing andimplementing this risk management, while also keeping in
mind the medium- to long-term vision. In my case, I would
like to play my part by overseeing primarily compliance risks
and ESG-related risks from a stakeholder’s perspective frommy position as a legal professional.
Morito: I believe that the announcement of our mediumto long-term vision and Medium-term Management Plan
amidst an unprecedentedly severe business environmentis, in a sense, an opportunity. We must seize thisopportunity to raise the awareness of all members of theGroup by holding workplace roundtable discussions andother meetings with management executives at an earlystage. The Medium-term Management Plan must also
be further developed into a detailed action plan using

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Integrated Report 2023

various KPIs. Going forward, I would like to be involvedin supervision and oversight, including the continuous
monitoring of management, as the business operation
PDCA cycle is developed in line with the Medium-termManagement Plan. In addition, since there is certainly anasymmetry of information between internal and external
officers in various discussion situations, I would like to take
opportunities such as business site visits and meetings with
Company Auditors to share management information. It isalso worth considering the use of “free discussion training
camps” and other methods focused on themes of company
direction and business strategy. which have already been
adopted by some companies.
Makino: As you both mentioned, one of our roles is to
manage and oversee the achievement of the targets set in
the Medium-term Management Plan by examining risks interms of execution and monitoring progress on an ongoingbasis.
I am primarily focused on ESG. What I expect from a
carbon neutrality perspective is for the Company to conduct
research and development at a rapid pace so that CO2
can be converted into energy efficiently. Achieving “CO2recycling,” which is a key theme for new businesses in theMedium-term Management Plan, will lead to tremendous
opportunities. New businesses are also at the core of
our medium- to long-term vision, so my role is to help
establish them over the three years of the Medium-termManagement Plan.
In addition, our Medium-term Management Plan calls forthe promotion of diversity by increasing the ratio of womenin new graduate general-career-track positions and the ratioof women in managerial positions toward 2025. I believethat many women at our company should also assume
responsible positions and gain a variety of experience. As
the saying goes, “Experience is the best teacher.” Rather
than shying away from roles due to a lack of confidence,
I look forward to the possibility for growing into the right
person for the role. To achieve this, it is necessary for thepeople around these women to provide support and follow
up on their concerns. I also believe we must incorporate
programs for female officers and career development. I
have the opportunity to speak individually with female
executive officers and managers, and I believe it is my role toencourage women to shine without undue pressure.

Towards Strengthening Governance
What are the governance challenges facing theSumitomo Osaka Cement Group and what efforts
are being made to strengthen it?
Makino: Keeping in mind the medium- to long-term vision
and Medium-term Management Plan that we have been
discussing, I would now like to move on to the issue ofgovernance challenges and how to strengthen governancein order to realize this vision and plan.
On this point, I would like to hear from Director
Morito, who has a long history of implementing corporate
governance at another company.
Morito: We are working on various management
reforms, such as improving the method of evaluating
the effectiveness of the Board of Directors, in order toachieve “sustainable growth of the company and enhance
corporate value over the medium to long term.” However,since we are still in the process of development, I believe
we need to continue to enhance our discussions.
In particular, with regard to the operation of theBoard of Directors, I would like to deepen discussions
on management issues such as management strategies,
succession plans, and capital policies when selecting
agenda items. We must also improve the asymmetryof information between internal and external officers
by further accelerating the distribution of materials in
advance, even in draft form, and by sharing more accurate,
objective, and vivid discussions at management meetings.
Furthermore, I expect internal officers to be active ascompany-wide management supervisors without being
restricted to their own responsibilities.
In terms of training for Outside Directors, I believe that
we can further deepen our knowledge of the industry andof the Sumitomo Osaka Cement Group by visiting sites(development, production, sales, logistics, and service) andreceiving the latest information from executive officers incharge, attending research presentations, and participating
in product exhibitions.
With respect to the Nominating and Remuneration
Committee, I believe it is necessary for the Committee toregularly deliberate on matters related to the succession
plan for the President, including the appropriateness of theplan and a review of the candidates.

Inagawa: In this era of VUCA, when the future isunpredictable, I believe that strong leadership fromthe top, flexible management decision-making in
response to changing circumstances, and strengthened
governance are essential to achieve the new Medium-termManagement Plan and to link it to the medium- to longterm vision. In general terms, systems and methods forstrengthening corporate governance include establishingand implementing a philosophy, code of conduct, andinternal rules; improving internal control systems, including
risk management; enhancing internal audits; thoroughly
educating employees; and strengthening the effectivenessof the Board of Directors and Board of Company Auditors.
In this context, if we are to transform our business portfolio
to become a company with a strong presence, as indicatedin our medium- to long-term vision, I believe that thoroughrisk management and strengthening the effectiveness of
the Board of Directors and Board of Company Auditors,
which supervise and audit risk management, are the mostimportant points for strengthening governance.
As an Outside Director, I am directly responsible forstrengthening the effectiveness of the Board of Directors,
so I have been making proposals to achieve this such asactive contributions by external officers. I recognize thatthe effectiveness of the Board of Directors is gradually
being strengthened, but I would like to work on further
strengthening it going forward. In addition, the Nominating
and Remuneration Committee was established as an advisory
body to the Board of Directors. I believe that personnel
policies, such as succession plans for top management andthe appointment of executives, will become even more
important in the future, so as a member of this committee, I
will work to strengthen its role and functions.
Makino: I believe that the Board of Directors has very
productive discussions based on the various insightsof each officer. Director Inagawa has experience as alegal professional and Director Morito has experience
as a manager. I believe that you possess both deep
insight accumulated over the years and ideas from new
perspectives.
In addition, the Nominating and Remuneration Committee
may need to consider enhancing education for successors to
the President and incorporating development programs not
only for the President but also for other officers in the future.
The Nominating and Remuneration Committee will continue
to discuss these issues in light of this.

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72

Consolidated Financial Data

Foundation to Support Value Creation

Disclosure

Consolidated Financial Highlights

Engagement with shareholders and investors requires that they have an understanding of Sumitomo Osaka Cement
Group’s current situation and management plans through accurate and timely disclosures of information.
It is also important for them to broadly understand our businesses. We carry out investor relations activities using awide range of tools, including briefing sessions and facility tours.

Net sales (Billions of yen)244.8 251.1 245.2 239.3

230.0

Operating income (loss) and operating margin

Profit (loss) attributable to owners of parent■= Operating income (Billions of yen)
= Operating margin (%)(Billions of yen)

18.9

204.7
184.2

7.8

14.1
5.6

16.1

16.6

6.6

7.0

Financial Results Briefings

Sumitomo Osaka Cement Co., Ltd. (“the Company,” “we” or“our”) conducts fair and equitable information disclosure in atimely and appropriate manner. In order to provide accurate
information to stakeholders, including our shareholders, theCompany ensures that information disclosed is not boilerplate or lacking in detail.

We hold financial results briefings for our annual and interim
results in order to foster understanding in the Group’s
management status among institutional investors andanalysts. During financial results briefings, top management
explains our financial results and answers questions. In
addition, we also respond to individual inquiries fromsecurities analysts and institutional investors inside and outsideof Japan. By these efforts, we seek to engage a broad range
of investors on an ongoing basis.
In May 2023, we announced the Fiscal 2022 Financial
Results (fiscal year ended March 31, 2023) and the Fiscal
2023-25 Medium-term Management Plan, and in addition toholding an explanatory meeting at the BelleSalle Shiodome
Conference Center, we broadcast it simultaneously online
using an online conference system, with participation by
many.

9.6

9.5

2.7
(4.2)
(5.7)
(8.5)

FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
Forecast

FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
Forecast

FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
Forecast

ROE/ROA* (%) *ROA = Ordinary income / Total assets

Free cash flow (Billions of yen)

Equity ratio* and D/E ratio (%)

= ROE
= ROA

13.5

6.0

13.9

13.5

= Equity ratio= D/E ratio

9.2

7.4
4.8

5.6
5.2

59.5

5.9
4.8
5.4

3.3

59.2

*Equity = Total net assets– Share subscription rights– Non-controlling interests

61.3

61.8

60.7
54

53.1

2.2

1.7

51.2

4.0
3.0

30

31

1.9

26

25

48

28

(2.3)
(3.0)
FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
Forecast(36.0)FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
Forecast

FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
Forecast(Millions of yen)

Quiet Period
The Company sets a quiet period from approximately two
weeks before the final settlement date for each fiscal quarter,in order to prevent the leakage of financial results informationand to ensure fairness, during which period the Company
refrains from commenting on or answering questions
related to the financial results. Even during these quiet
periods, however, the Company will disclose information onamendments to forecasts of financial results or dividends in atimely manner in accordance with the listing regulations set
forth by the Tokyo Stock Exchange and other rules.

11.7

7.8

6.1

3.7

Basic Policy

The Company discloses information required for timely
disclosure via TDnet and press releases as well as on the
Company homepage in a timely manner in compliance with
relevant regulations such as the Financial Instruments andExchange Act and based on the “Timely Disclosure Rules”
defined by the Tokyo Stock Exchange.
For information that is not covered by the “Timely
Disclosure Rules,” the Company makes every effort to disclose
information in a prompt and fair manner via the homepage
and the media if the Company deems that the information isuseful for shareholders, investors and other stakeholders.

10.9
6.8

Disclosure Policy

Disclosure Methods

14.6

Explanatory Meeting for the FY2022 Financial Results and the Medium-termManagement Plan

FY2017FY2018FY2019FY2020

FY2021

FY2022

Net sales

244,826

251,061

245,159

239,274

184,209

204,705

Cost of sales

190,170

200,756

193,491

188,229

142,113

175,841

Selling, general and administrative expenses

35,664

36,12635,53934,41335,21737,419Operating income (loss)

18,99014,17816,128

16,631

6,878(8,555)

Ordinary income (loss)

20,153

15,79916,947

17,641

9,834(7,849)Profit (loss) attributable to owners of parent

14,6597,799

10,922

11,7199,674(5,719)Net cash provided by operating activities

26,47029,25232,30532,797

18,255(16,146)

Net cash used in investing activities(24,753)(20,032)(18,815)(18,884)(16,062)(19,818)

1,717

9,220

13,49013,9132,193(35,964)

Net cash used in financing activities(6,626)(15,755)(12,959)(10,869)(7,995)37,292

Cash and cash equivalents at end of period

22,072

15,27015,79918,60013,085

14,500204,157

194,138

198,699

205,827

203,173

184,591

339,958

324,755

321,108

329,650

331,107356,558

Profit36.12

199.15283.21304.56262.77(166.79)

Cash dividends

11.0

110.0

120.0

120.0

120.0

120.0

498.81

4,985.49

5,101.00

5,397.31

5,778.40

5,326.24

Free cash flow

At year-end:

Feedback to Management
The Company actively engages in mutual communication withcapital market participants such as shareholders, investors andsecurities analysts. The division in charge of IR conveys theopinions gleaned from such communication to management
executives and the Board of Directors as feedback that is
considered when formulating the management plans.

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Integrated Report 2023

Net assets
Total assets*

Per share data (yen):

Net assets*The Company executed a 10 for 1 reverse stock split of its common stock on October 1, 2018.
Profit per share and net assets per share for fiscal 2018 are calculated assuming this reverse stock split was executed at the beginning of the fiscal year. The dividend for fiscal
2018 is after the reverse stock.

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74

Consolidated Financial Data

Non-financial Information Highlights
Economic
Production
Volume(Cement business)

Unit

FY2018FY2019FY2020

FY2021SocialFY2022

Cement production volumeT10,757,727 10,549,830 10,040,723 10,085,469

9,545,518

Clinker production volume

T9,138,702

8,902,629

8,480,155

8,605,630

8,239,963

Mixed cementT2,151,598

2,336,717

2,260,466

1,942,106

1,640,270

Unit

Environmental
impact data
(Group’s total)

Unit

GHG emissions (CO2 equivalent)

FY2019FY2020

FY2021

9,493

9,259

8,896

8,989

8,425

1,000 t-CO2eq

9,280

9,050

8,700

8,810

8,230

Scope 2

1,000 t-CO2eq

213

209

196

179

195

1,000 t-CO2eq

8,468

8,232

7,938

8,069

7,521

T

13,873

13,272

14,34016,174

14,327

T

1,120

1,111

1,095

1,175

1,219

Particulate matter emissions

T

191

136

143

218

99

g-TEQ

0.27

0.31

0.41

0.18

0.22

PJ

32.61831.52430.71131.00929.385

%

29

28

29

27

27

In-house power generation ratio*1

%

79

78

78

79

77

Waste heat power generation ratio

%

7

7

7

7

9

Dioxin emissions
Total energy consumption related to cement manufacturing(Based on periodic reports in accordance with the Act on Rationalizing Energy Use)

Thermal energy substitution rate
*Coal (fossil fuel) substitution rate

%

16

15

14

17

15

Volume of waste and byproducts received*2

1,000 t

5,538

5,479

5,210

5,233

4,922

Consumption ratekg/tcem

515

519

519

519

516

Biomass power generation ratio

Volume of waste plastics received (recycled + purchased)

1,000 t

48

56

62

64

66

Volume of wood chips received (recycled + purchased)

1,000 t

451

417

401

429

399

Volume of ordinary incinerator ash received

1,000 t

62

63

61

62

61

Volume of disaster waste received

1,000 t

3

44

21

5

0

24,943

16,652

51,91521,9383,517

Preserving biodiversity Re-greened area of mine

m²

Thermal energy substitution rate (%)*Coal (fossil fuel) substitution rate

9,493

9,259

8,896

8,989

Volume of waste and byproducts received(1,000 t)

5,538
8,425
29

5,479

5,210

5,233

29

1,232

1,243

95

105

118

114

110

persons

2,974

3,005

3,065

3,068

2,896

%

10.5

10.9

11.3

12.1

13.0

Number of managers

persons

432

435

441

439

433

Number of women in managerial positions

persons

8

9

9

8

9

Ratio of women in managerial positions

%

1.9

2.1

2.0

1.8

2.1

Average years of service Male

Years

18.8

19.0

18.5

19.4

19.1

Female

Years

17.5

16.8

15.8

15.8

16.0

Under 30

persons

222

231

257

214

222

Age 30-39

persons

270

265

262

288

283

Age 40-49

persons

373

343

342

294

273

Age 50-59

persons

316

350

333

411

429

Over 60

persons

5

7

9

25

36

Turnover within three years after joining the Company

%

11.9

22.2

9.1

6.9

0.0

Voluntary retirement ratio

%

2.0

1.5

1.2

2.3

1.8

Working hours (prescribed working hours 1,860)

Hours per year

1,868

1,861

1,860

1,864

1,862

Number of paid vacation days taken*5

Employees

Employment(Non-consolidated)

Age demographic

Work style(Non-consolidated)

Days per year

15.2

15.7

15.0

15.4

16.2

Ratio of annual paid vacation days taken*5

%

77.1

80.0

76.3

78.6

81.2

Ratio of new graduate hires (general career-track
positions) that are female

%

17.4

18.2

26.1

19.4

13.8

Number of employees taking nursing care leavepersons

0

0

0

0

0

Ratio of persons with disabilities employed*6

%

1.97

2.04

1.83

2.07

2.62

persons

2

4

1

5

11

persons

9

12

5

6

4

%

100

100

100

100

100

Number of days

41

41

26

55

54

0

0

0

0

0

0

0

0

0

0

0

2

2

3

4

4

10

3

1

3

5

2

3

3

9

6

6

4

11

8

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

2.34

Number of employees taking childcare leave Male

4,922

Female28
27

FY2022

1,203

Temporary employees*1 In-house power generation ratio includes waste heat power generation and biomass power generation*2 Volume of waste and byproducts received includes the volume of waste plastics, wood chips, ordinary incinerator ash and disaster waste received

CO2 emissions (1,000 t-CO2)

FY2021

1,196

Ratio of female employees

1,000 t-CO2eq

FY2020persons

FY2022[Breakdown] Scope 1[Reference] Scope 1 (Net CO2 emissions)(Cement business is NOx (nitrogen oxides) emissions
as follows)
SOx (sulfur oxides) emissions

Resource recycling(Cement business)

FY2018FY20191,186

Employees (Non-consolidated)*3 *4 Employees(Consolidated)

Environmental

FY2018

27

Reinstatement rate after childcare leave
Education/training (hosted by the headquarters)
Number of fatal accidents

Direct employment
incidents
Indirect employment*7

FY2018 FY2019 FY2020 FY2021 FY2022

FY2018 FY2019 FY2020 FY2021 FY2022

Number of accidents that
require time off from work

FY2018 FY2019 FY2020 FY2021 FY2022
Occupationalsafety and health

Ratio of women in managerial positions(%)

Ratio of new graduate hires that are female(%)

Ratio of annual paid vacation days taken
(%)

77.1
1.9

2.1

2.0

1.8

2.1

FY2018 FY2019 FY2020 FY2021 FY2022

75

Integrated Report 2023

17.4

18.2

81.2

80.0

26.1
19.4

78.6
76.3
Intellectual
property data

13.8

FY2018 FY2019 FY2020 FY2021 FY2022

FY2018 FY2019 FY2020 FY2021 FY2022

Direct employment
Incidents
Indirect employment

Number of accidents not
Direct employment
accompanied by lost worktime
Indirect
employment

Incidents

Accident frequency rate of
Fatal accidents
directly employed employees*8
Accidents that requiretime off from work%

Number of patent applications*9

Number

268

206

251

153

178

Number of patents held*9

Incidents

1,824

1,971

2,060

2,120

1,873

*3 Number of employees is based on the annual securities report as of the end of the fiscal year (excluding loaned out employees and contract employees, but includingtransferred in employees and fixed-term employees)*4 Number of temporary employees is contract employees only
*5 Number of days of paid vacation taken and acquisition rate are averages for union members*6 As of June 1 survey*7 Indirect employment: workers who are not employees but whose work or workplace is under the control of the organization (partner companies)*8 Accident frequency rate = number of fatalities and injuries due to work-related accidents/total man-hours worked x 1,000,000 hours (scope of data collection: theCompany’s 4 cement plants)*9 The figures are the aggregate for Japan and overseas

Integrated Report 2023

76

Consolidated Financial Data

Consolidated Balance Sheets
SUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2022 and 2023
Thousands of U.S. dollars(Note 1)Millions of yen
End of FY2022(as of March 31, 2022)

End of FY2023
End of FY2023(as of March 31, 2023) (as of March 31, 2023)

AssetsEnd of FY2022(as of March 31, 2022)

End of FY2023
End of FY2023(as of March 31, 2023) (as of March 31, 2023)

Liabilities

Current assets

Current liabilities

Cash and deposits*3 ¥13,148*3 ¥14,542$108,909

Notes and accounts payable - trade

Notes and accounts receivable - trade, and contract assets*1 39,396*1 41,922

313,954

Electronically recorded obligations - operating

Electronically recorded monetary claims - operating

6,156

7,989

59,835

Short-term loans payable

Merchandise and finished goods

8,024

10,04375,212

Commercial papers

230

103

773

Raw materials and supplies

17,00537,961

284,295

Short-term loans receivable

800

377

2,825

Income taxes payable

3,016

4,047

30,311

Provision for bonuses

(22)

(9)

(72)

87,756116,978876,043

Work in process

Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets*3, *5 177,697

1,330,765

Accumulated depreciation(128,368)(128,217)(960,212)

Buildings and structures, net

49,09449,479370,552*3, *5 462,747*3, *5 477,585

3,576,616(405,895)(414,993)(3,107,869)

56,85262,591

468,747*3, *5 37,157*3, *5 37,128

278,050

7,834

8,845

66,240*3, *5 38,748*3, *5 39,235

293,833

Accumulated depreciation(20,476)(20,727)(155,229)

Other, net

18,271

18,507

138,603169,211

176,552

1,322,194

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other

Total property, plant and equipment

Other
Total intangible assets*3 ¥29,676$222,244

1,707

2,290

17,149*3 19,972*3 31,316

234,524

5,000

10,00074,889*3 5,843*3 7,237

54,200–5,000

37,444

1,171

1,364

10,219

2,523

2,511

18,806*2 10,916*2 12,648

94,72375,479102,044764,203

10,00020,000149,779

Long-term loans payable*3 15,825*3 26,166

195,956

Deferred tax liabilities

12,183

9,981

74,751

Provision for directors’ retirement benefits

139

116

870

Provision for PCB waste disposal costs

26

12

92

Net defined benefit liability

892

893

6,690

Provision for share awards

40

38

286

Asset retirement obligations

1,003

253

1,895

Other

12,343

12,461

93,324

Total noncurrent liabilities

52,45469,922

523,646

127,934

171,966

1,287,850

Capital stock

41,65441,654

311,945

Capital surplus

10,45910,551

79,022Retained earnings

127,896

107,791

807,242(8,566)(272)(2,043)

171,443

159,724

1,196,167

28,89222,093

165,456

Other
Total current liabilities

Total liabilities

Net assets
Shareholders’ equity

Intangible assets
Goodwill

Current portion of bonds

Bonds payable*3, *5 177,463

Buildings and structures

Current portion of long-term loans payable*3 ¥28,344

Noncurrent liabilities

Property, plant and equipment

127

95

714

*5 3,317*5 3,556

26,633

3,444

3,651

27,347

Treasury stock

Investments and other assets

Total shareholders’ equity*4 59,401*4 47,784

357,854

Long-term loans receivable

3,074

4,022

30,123

Deferred tax assets

1,094

1,168

8,752

Valuation difference on available-for-sale securities

Net defined benefit asset

1,748

1,851

13,869Foreign currency translation adjustments

197

239

1,791

Other

5,496

4,661

34,911Remeasurements of defined benefit plans

431

382

2,861

Allowance for doubtful accounts

(119)

(113)

(850)

29,52022,714

170,109

Total investments and other assets

70,69559,375444,660

2,209

2,152

16,119243,351

239,579

1,794,202

203,173

184,591

1,382,396¥331,107¥356,558$2,670,246¥331,107¥356,558$2,670,246

Investment securities

Total noncurrent assets
Total assets

77

Thousands of U.S. dollars(Note 1)Millions of yen

Integrated Report 2023

Accumulated other comprehensive income

Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

Integrated Report 2023

78

Consolidated Financial Data

Consolidated Statements of Income and Comprehensive Income

Consolidated Statements of Changes in Net Assets

SUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2022 and 2023

SUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2022 and 2023

Fiscal 2022
(Apr. 1, 2021 toMar. 31, 2022)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Equity in earnings of affiliates
Rent income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Equity in loss of affiliates
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Loss on sales of noncurrent assets
Impairment loss
Total extraordinary losses
Profit (loss) before income taxes and non-controlling interests
Income taxes - current
Income taxes - deferred
Total income taxes
Profit (loss) before non-controlling interests
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent

79

Integrated Report 2023

Thousands of U.S. dollars(Note 1)

Fiscal 2023
(Apr. 1, 2022 toMar. 31, 2023)

Fiscal 2023
(Apr. 1, 2022 toMar. 31, 2023)*1 ¥184,209
142,113
42,096*2, *3 35,217
6,878*1 ¥204,705
175,841
28,864*2, *3 37,419(8,555)$1,533,031
1,316,867
216,164
280,235(64,070)

104
2,522
412
242
126
853
4,260

77
2,007
–
–
123
997
3,206

582
15,031
–
–
924
7,473
24,011

577
–
–
727
1,305
9,834

785
526
127
1,060
2,500
(7,849)

5,880
3,945
955
7,942
18,724(58,783)*4 6292,471
3,101*4 1,738
4,703
6,441

13,01835,224
48,243*5 895
*6 13
*7 12
922
12,013
3,039
(817)
2,222
9,791
116
¥9,674*5 1,079*6 15*7 608
1,703(3,111)
1,706
801
2,508
(5,619)100¥(5,719)

8,083
119
4,557
12,761(23,301)
12,777
6,005
18,783(42,084)751$(42,836)

Fiscal 2022
(Apr. 1, 2021 toMar. 31, 2022)

Profit (loss) before non-controlling interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates accounted forusing equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

Millions of yen

Millions of yen

Thousands of U.S. dollars(Note 1)

Fiscal 2023
(Apr. 1, 2022 toMar. 31, 2023)

Fiscal 2023
(Apr. 1, 2022 toMar. 31, 2023)¥9,791¥(5,619)$(42,084)

2,422
(227)
220

(6,800)(40)(48)(50,925)
(302)
(366)

0

82

621

* 2,416
12,207* (6,806)(12,425)(50,973)(93,057)

12,090¥116(12,526)¥100(93,807)$749

Millions of yen
Shareholders’ equity
Capital stock Capital surplus

Balance at April 1, 2021
Change of items during period
Dividends from surplus
Profit attributable to owners of parent for the period
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in scope of equity method
Change in treasury shares of parent arising from transactions with
non-controlling shareholders
Transfer from retained earnings to capital surplus
Other, net
Total change of items during period
Balance at March 31, 2022
Change of items during period
Dividends from surplus
Loss attributable to owners of parent for the period
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in scope of equity method
Change in treasury shares of parent arising from transactions with
non-controlling shareholders
Transfer from retained earnings to capital surplus
Other, net
Total change of items during period
Balance at March 31, 2023

¥41,654¥14,102

Retainedearnings

Treasury stock¥124,190¥(3,319)(4,498)
9,674(10,366)
8
5,111

(0)
(5,111)

Total¥176,626(4,498)
9,674(10,366)8––––¥41,654

1,468(1,468)(3,643)¥10,459

3,706¥127,896–(5,246)¥(8,566)(4,145)(5,719)(1,718)3
10,0080(10,008)
(231)
92

–
¥41,654(5,182)¥171,443(4,145)(5,719)(1,718)
3
–
(231)
92

10,008(10,008)92¥10,551(20,105)¥107,791–
8,293¥(272)(11,719)¥159,724
Millions of yen

Accumulated other comprehensive income

Balance at April 1, 2021
Change of items during period
Dividends from surplus
Profit attributable to owners of parent for the period
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in scope of equity method
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
Transfer from retained earnings to capital surplus
Other, net
Total change of items during period
Balance at March 31, 2022
Change of items during period
Dividends from surplus
Loss attributable to owners of parent for the period
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in scope of equity method
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
Transfer from retained earnings to capital surplus
Other, net
Total change of items during period
Balance at March 31, 2023

Valuationdifference on
available-forsale securities

Foreigncurrencytranslation
adjustments

Remeasurementsof defined
benefit plans¥26,469

¥424

¥210

Total

¥27,104

Non-controlling
Total net assetsinterests¥2,096¥205,827(4,498)
9,674(10,366)
8
–
–
–

2,422
2,422
¥28,892

(227)
(227)
¥197

220
220
¥431

2,416
2,416
¥29,520

112
112¥2,209–2,528(2,653)¥203,173(4,145)(5,719)(1,718)
3
–
(231)
92

(6,798)(6,798)¥22,093

41
41
¥239

(48)
(48)
¥382

(6,806)(6,806)¥22,714(56)(56)¥2,152–(6,862)(18,582)¥184,591

Integrated Report 2023

80

Consolidated Financial Data

Consolidated Statements of Cash Flows
SUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2022 and 2023
Thousands of U.S. dollars (Note 1)
Shareholders’ equity
Capital stock Capital surplus$311,945

Balance at April 1, 2022

$78,327

Retainedearnings

Treasury stock$957,814$(64,154)$1,283,932

Change of items during period
Dividends from surplus(31,044)

Loss attributable to owners of parent for the period(42,836)

Disposal of treasury stock
Retirement of treasury stock(31,044)(42,836)(12,871)(12,871)

0

25

25

(74,956)

74,956

Purchase of treasury stock(1,734)

Change in scope of equity method
Change in treasury shares of parent arising from transactions with
non-controlling shareholders

74,956

Transfer from retained earnings to capital surplus–(1,734)695

695(74,956)

Other, net
Total change of items during period
Balance at March 31, 2023–

695

(150,571)

62,110(87,765)$311,945$79,022$807,242$(2,043)$1,196,167

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income

Balance at April 1, 2022

Valuationdifference on
available-forsale securities

Foreigncurrencytranslation
adjustments

Remeasurementsof defined
benefit plans$216,372$1,480$3,228

Total$221,080

Non-controlling
Total net assetsinterests$16,544$1,521,558

Change of items during period
Dividends from surplus(31,044)

Loss attributable to owners of parent for the period(42,836)

Purchase of treasury stock(12,871)

Disposal of treasury stock25

Retirement of treasury stock–(1,734)

Change in scope of equity method
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders

695–

Transfer from retained earnings to capital surplus
Other, net
Total change of items during period
Balance at March 31, 2023

81

Integrated Report 2023

Fiscal 2022
(Apr. 1, 2021 toMar. 31, 2022)

Total(50,915)

310

(366)

(50,970)(425)(51,396)(50,915)

310

(366)

(50,970)(425)(139,162)$165,456$1,791$2,861$170,109$16,119$1,382,396

Cash flows from operating activities
Profit (loss) before income taxes and non-controlling interests
Depreciation expense
Impairment loss
Amortization of goodwill
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for directors’ retirement benefits
Increase (decrease) in allowance for doubtful accounts
Interest and dividends income
Interest expenses
Foreign exchange losses (gains)
Equity in loss (earnings) of affiliates
Gain on sales of noncurrent assets
Loss on sales of noncurrent assets
Loss on retirement of noncurrent assets
Loss (gain) on sales of investment securities
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Increase in notes and accounts payable - trade
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of noncurrent assets
Proceeds from sales of noncurrent assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments of loans receivableCollection of loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Proceeds from issuance of commercial papers
Redemption of commercial papers
Proceeds from sales of treasury stock
Purchase of treasury stock
Decrease (increase) in segregated deposits for purchase of treasury
sharesCash dividends paid
Cash dividends paid to non-controlling shareholders
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from inclusion ofsubsidiaries in consolidation
Cash and cash equivalents at end of period

Millions of yen

Thousands of U.S. dollars(Note 1)

Fiscal 2023
(Apr. 1, 2022 toMar. 31, 2023)

Fiscal 2023
(Apr. 1, 2022 toMar. 31, 2023)¥12,013
19,336
12
31
(402)
(14)
14
(2,626)
577
(697)
(242)
(629)
13
205
(2,471)
1,147(4,195)
1,621(2,106)
21,5892,640(573)(5,400)¥18,255¥(3,111)
20,214
608
31
(173)
(23)
(3)
(2,084)
785
(203)
127
(1,738)15
232(4,703)(3,800)(23,484)
1,952
(598)
(15,957)
2,125
(769)
(1,544)¥(16,146)$(23,301)
151,384
4,557
238(1,297)(175)(29)(15,614)5,880(1,526)955(13,018)
119
1,743(35,224)(28,464)(175,874)
14,623(4,482)(119,505)
15,914(5,760)(11,567)$(120,918)¥(20,921)
1,347
(375)
3,869
(738)
767
(11)
¥(16,062)¥(27,913)
1,867
(451)
6,692
(789)
386
389
¥(19,818)$(209,042)
13,987(3,382)50,120(5,913)2,897
2,915$(148,416)

¥537
6,300
(6,757)–5,000–
8(10,366)¥11,382
18,860(7,141)
15,00032,000(27,000)
3(1,718)$85,245
141,241(53,479)
112,334
239,646(202,201)25(12,871)

1,867

187

1,407

(4,498)(4)(82)¥(7,995)
146(5,656)
18,600(4,145)(4)(132)¥37,292
76
1,403
13,085(31,044)(30)(994)$279,280
569
10,514
97,996

141

10

78

* ¥13,085* ¥14,500$108,589

Integrated Report 2023

82

Consolidated Financial Data

Notes to Consolidated Financial Statements
1. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
Sumitomo Osaka Cement Co., Ltd. (the “Company”) maintains its accounting records and prepares its financial statements in accordancewith accounting principles and practices generally accepted and applied in Japan.
The accompanying consolidated financial statements of the Company and its consolidated subsidiaries are prepared on the basis ofaccounting principles generally accepted in Japan, and are compiled from the consolidated financial statements prepared by the Company
as required by the Financial Instruments and Exchange Law of Japan.
In addition, the notes to the consolidated financial statements include certain information which is not required under accounting
principles generally accepted in Japan but is presented herein as additional information.
The U.S. dollar amounts are included solely for the convenience of the reader and are stated, as a matter of arithmetic computation
only, at US$1.00=¥133.53, the exchange rate prevailing on March 31, 2023.
These translations should not be construed as representations that the Japanese yen amounts actually represent, or have been or could
be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation. Any material differences between the cost of investments
in consolidated subsidiaries and the underlying equity in their net assets at the dates of acquisition are amortized over five years.
Significant investments in unconsolidated subsidiaries and affiliates are accounted for by the equity method. Investments inunconsolidated subsidiaries and affiliates which are not accounted for by the equity method are carried at cost.

3. SCOPE OF CONSOLIDATION(1) Number of consolidated subsidiaries: 38(2) Names of main non-consolidated subsidiaries
SOC AMERICA INC.
(Reason for exclusion from the scope of consolidation)
The total assets, net sales, profit or loss, and retained earnings (amounts corresponding to equity) of the company excluded from thescope of consolidation are all small in scale and do not have a material effect on the consolidated financial statements. This company istherefore excluded from the scope of consolidation.
(3) Changes in scope of consolidation
SOC Vietnam Co., Ltd. has been excluded from the scope of consolidation because it was transferred to another company during thecurrent fiscal year.
SOC OCEANIA PTY LTD. and one other company have been included in the scope of consolidation due to their increased importancefrom the current fiscal year.

4. APPLICATION OF THE EQUITY METHOD(1) Number of non-consolidated equity-method subsidiaries: 0(2) Number of equity-method affiliates: 4(3) Names of significant non-consolidated subsidiaries and affiliates not accounted for under the equity method
SOC AMERICA INC.
Right Grand Investments Limited
Forcecharm Investments Limited(Reasons for not applying the equity method)
The profit or loss and retained earnings (amounts corresponding to equity) of the companies to which the equity method is not applied
are all small in size and do not have a material effect on the consolidated financial statements. These companies are therefore notaccounted for under the equity method.
(4) Significant changes in the scope of application of the equity method
FALCON CP (NSW) PTY LTD. has been included in the scope of application of the equity method due to its increased importance fromthe current fiscal year.

5. MATTERS CONCERNING THE FISCAL YEARS OF CONSOLIDATED SUBSIDIARIESThe consolidated subsidiaries Dongguan Sumi Sou Optoelectronics Technology Co., LTD., and Sumilong Nanotechnology Materials(SHENZHEN) Co., LTD. have a December 31 fiscal year-end date. Because the difference with the consolidated fiscal year-end date is within
three months, the financial statements as of the fiscal year-end date of the consolidated subsidiaries are used in the preparation of theconsolidated financial statements. SOC OCEANIA PTY LTD. and one other company have a June 30 fiscal year-end date, and their financial
statements are based on the provisional settlement of accounts conducted as of December 31. Regarding these consolidated subsidiaries,
the required adjustments for consolidation have been made for material transactions that have occurred from the fiscal year-end date or
the provisional fiscal year-end date up until the consolidated fiscal year-end date.

6. MATTERS CONCERNING ACCOUNTING POLICIES(1) Valuation standards and methods for significant assets
Securities
Stocks of subsidiaries and affiliates
Stated at cost using the moving-average method.
Available-for-sale securities
Securities other than shares that do not have a market value
Stated at fair value (valuation differences are directly reflected in net assets, and cost of sales is calculated using the movingaverage method).
Shares that do not have a market value
Stated at cost using the moving-average method.
Derivatives
Stated at fair value.

83

Integrated Report 2023

Inventories
Inventories are stated principally at cost using the moving-average method (the carrying amount on the balance sheet is calculated
by book value method based on decreases in profitability).
Note that inventories are stated at individual cost for certain consolidated subsidiaries (the carrying amount on the balance sheet is
calculated by book value method based on decreases in profitability).
(2) Depreciation method of significant depreciable assets
Property, plant and equipment (excluding leased assets)
Depreciation is calculated based on the declining-balance method. (Note that the depreciation of in-house power generation
facility at the Ako Plant, the Kochi Plant and Tochigi Plant, and property, plant and equipment of certain consolidated subsidiaries iscalculated by the straight-line method, and quarry sites are depreciated by the unit-of-production method.)
In addition, depreciation of buildings (excluding facilities attached to buildings) acquired on or after April 1, 1998, and facilities
attached to buildings and structures acquired on or after April 1, 2016 is calculated by the straight-line method. The main useful
lives are as follows.
Buildings and structures: 2 to 75 years
Machinery, equipment and vehicles: 2 to 22 years
Intangible fixed assets (excluding leased assets)
Mining rights
Calculated by the unit-of-production method.
OthersAmortized by the straight-line method.
Note that the straight-line method is used for software (in-house use) based on the in-house use period (five years).
Leased assets
Leased assets under finance leases transactions that do not transfer ownership
The straight-line method is applied for useful lives for the lease period, with a residual value of zero (residual value guarantee
amount if there is a residual value guarantee agreement).
(3) Criteria for posting significant reserves
Allowance for doubtful receivables
To prepare for losses on doubtful receivables, the expected uncollectible amount is posted based on the loss ratio for general
receivables and an individual examination of the collectability of specific doubtful receivables.
Provision for bonuses
A provision for bonuses for employees is recorded based on the estimated payment amount.
Provision for directors’ retirement benefits
To prepare for payments of retirement bonuses for directors, consolidated subsidiaries provide reserves in amounts equal to the fullamounts to be paid at the end of the fiscal year based on internal rules.
Provision for share awards
To prepare for the delivery of the Company’s shares to Directors and Executive Officers (excluding Outside Directors) under the Share
Delivery Rules, an estimated amount of the share awards payable as of the end of the current fiscal year is provided.
Provision for PCB waste disposal costs
To prepare for payment of disposal costs for PCB (polychlorinated biphenyl) wastes that are held, the estimated disposal, collection,and transport expenses are posted.
(4) Accounting method for retirement benefits(1) Period allocation method for the projected retirement benefit obligation
The retirement benefit obligation is calculated by allocating the estimated retirement benefit amount until the end of the current
fiscal year using the benefit calculation method.
(2) Amortization of actuarial gain or loss
Actuarial gain or loss is amortized pro rata in the fiscal years following the year in which the difference occurs by the straight-line
method over the specified number of years (15 years) within the average remaining years of service of the employees.
(3) Application of the simplified method for small businesses
For certain consolidated subsidiaries, a simplified method is applied for the calculation of retirement benefit obligations andretirement benefit expenses in which the necessary retirement benefit provisions for voluntary resignations at the end of the fiscal
year are recorded as retirement benefit obligations.
(5) Criteria for posting significant revenues and expenses
The Group recognizes revenue based on the following five-step approach:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the entity satisfies a performance obligation
In its Cement-related business, the Group manufactures and sells repair materials for cement, ready-mix concrete, limestone, andconcrete structures, and also engages in construction work associated with the aforementioned. In its High-Performance Productbusiness, the Group manufactures and sells waveguide-based optical modulators and other optical-related components, various
ceramic components, and nanoparticle materials. In its other businesses, the Group engages in real estate leasing, information
processing services, and electrical equipment work.
Among these businesses, revenue from sales of products is recognized as the amount expected to be received in exchange for suchproducts at the time of delivery of the product to the customer. For sales of products in Japan, revenue is recognized at the time of
shipment when the period from the time of shipment to the transfer of such products to the customer is a normal period.
As for the Company and its subsidiaries, revenue from transactions that fall under the category of agent transactions is recognized
as the net amount of total consideration received from the customer less the payment to the supplier.
Revenue related to construction contracts with construction companies and other such entities is recognized over a certain periodof time as the performance obligations for the transfer goods or services to customers are satisfied in cases where control of a goodor service is transferred to a customer over a period of time. Regarding the measurement of progress related to the fulfillment of
performance obligations, revenue is recognized based on the ratio of construction costs incurred by the end of each reporting period tothe total expected construction costs. In addition, if it is not possible to reasonably estimate the progress of fulfillment of performanceobligations, but the costs incurred are expected to be recovered, revenue is recognized based on the cost recovery method.
Integrated Report 2023

84

Consolidated Financial Data
(6) Accounting method for significant hedges(1) Hedge accounting method
Special treatment is applied for interest rate swaps that meet certain conditions.
(2) Hedging instruments and hedged items
Hedging instruments and hedged items for which hedge accounting was applied for during the current fiscal year are as follows.
Hedging instruments: interest rate swaps
Hedged items: loans payable(3) Hedging policy
Hedged items are identified by transaction for assets or liabilities, and the hedged items and hedging instruments that are identified
are associated and separately managed based on hedge designation at the time of the hedged transaction.
(4) Assessment of hedge effectivenessThe effectiveness of hedges is assessed by comparing the cumulative change of cash flows or fair value of both hedging instruments
and corresponding hedged items. However, the assessment of effectiveness is not conducted for interest rate swaps for which
special treatment is applied.
(7) Amortization method and amortization period for goodwill
Goodwill is amortized over five years from the fiscal year of occurrence by the straight-line method.

(Notes to consolidated balance sheets)*1. Amounts of receivables and contract assets arising from contracts with customers included in notes and accounts receivable- trade, and contract assets are as follows, respectively.

Notes receivable - trade
Accounts receivable - trade
Contract assets

Millions of yen
Current fiscal year

Thousands of U.S. dollars
Current fiscal year

¥169,211¥176,552$1,322,194

82,96583,480625,181–––(2) Information on the details of significant accounting estimates for identified items
Applying impairment accounting involving noncurrent assets entails determining whether to recognize impairment loss with respect
to asset groups recognized as showing signs of impairment. Accordingly, if future undiscounted cash flows of any such asset groupfalls below the carrying amount, the carrying amount of the asset group is reduced to the recoverable amount and the amount of
the decrease is recorded as an impairment loss in the consolidated statements of income.
In the Cement business, amid higher cement manufacturing costs due to soaring coal prices and crude oil prices, the Company
worked to pass on the higher costs to sales prices with price revisions. However, with the delay in price pass-throughs, the further
rise in coal prices due to the situation in Russia and Ukraine, and the continued yen depreciation, the business continued to incur
losses from operating activities in the fiscal year ended March 31, 2023, following the previous fiscal year, and thus there wereindications of impairment of property, plant and equipment in the business.
The Company has continued to revise cement sales prices with the aim of securing revenue going forward and ensuring business
continuity. The assessment of the impairment of property, plant and equipment in the Cement business revealed that the total
future undiscounted cash flows exceed the carrying amount of the noncurrent assets. Therefore, the Company has determined thatno impairment loss shall be recognized.
The forecasts for Fiscal 2024 and beyond include key assumptions that include the status of sales volumes and sales pricerevisions based on cement demand assumptions, as well as effects of coal and crude oil prices reflecting prevailing international
developments involving Russia and Ukraine, and foreign exchange rates. Accordingly, any significant deviations from theseassumptions caused by changes in factors such as the market environment could have a material impact on the consolidated
financial statements.

(Accounting standards not yet applied)• “Accounting Standard for Current Income Taxes” (ASBJ Statement No. 27, October 28, 2022)• “Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25, October 28, 2022)• “Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, October 28, 2022)(1) Overview
These stipulate the classification of income taxes when applied to other comprehensive income and the treatment of tax effects related
to the sale of shares in subsidiaries, etc. when the group tax sharing system is applied.
(2) Scheduled application date
Application is scheduled from the beginning of the year ending March 31, 2025.
(3) Impact of the application of the accounting standard, etc.
The impact of the application of the Accounting Standard for Current Income Taxes and other accounting standards andimplementation guidance on the consolidated financial statements is currently being evaluated.

(Changes in presentation)(Notes to consolidated balance sheets)“Electronically recorded obligations - operating,” which was included in “Notes and accounts payable - trade” under “Current liabilities”
in the previous fiscal year, is separately presented from the current fiscal year because its monetary significance increased. To reflect thischange in presentation, the consolidated financial statements for the previous fiscal year have been reclassified.
As a result, ¥30,051 million that was presented as “Notes and accounts payable - trade” under “Current liabilities” in the consolidatedbalance sheet for the previous fiscal year has been reclassified as “Notes and accounts payable - trade” of ¥28,344 million and“Electronically recorded obligations - operating” of ¥1,707 million.
Integrated Report 2023

$40,608
262,309
11,035Previous fiscal year
(March 31, 2022)

Millions of yen
Current fiscal year
(March 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)

¥110

¥113

Previous fiscal year
(March 31, 2022)

Millions of yen
Current fiscal year
(March 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)

¥50
412

¥100
409

$754
3,062

4,729
10,1683,806
236¥19,403

4,531
11,1983,779
234¥20,253

33,93883,86228,307
1,754$151,680

Millions of yen
Current fiscal year
(March 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)

¥311
380
282
2,253
¥3,228$2,3332,845
2,117
16,878$24,174

Millions of yen
Current fiscal year
(March 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)¥5,880$44,040*2. Contract liabilities included in “other” are as follows.

(1) Impairment of noncurrent assets(1) Amount recorded in the consolidated financial statements for the current fiscal year85

¥5,42235,026
1,473¥5,86632,675854$851*3. Pledged assets and secured liabilities
Pledged assets and secured liabilities are as follows.

(Significant accounting estimates)

Previous fiscal year

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)

Contract liabilities(8) Scope of cash and cash equivalents in consolidated statement of cash flows
Cash on hand, deposits that can be withdrawn at any time, and short term investments that easily be converted to cash and havematurities within three months of acquisition that are exposed to only a minimal price fluctuation risk are posted.

Property, plant and equipment
Of which, property, plant and equipment associated with theCompany’s Cement businessImpairment loss (Cement business)

Millions of yen
Current fiscal year
(March 31, 2023)

Previous fiscal year
(March 31, 2022)

Ordinary deposits
Current deposit
Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Land
Other
Total pledged assets

Previous fiscal year
(March 31, 2022)

Accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Long-term loans payable
Total secured liabilities

¥225
380
282
2,536
¥3,425*4. Items related to non-consolidated subsidiaries and affiliates are as follows.
Previous fiscal year
(March 31, 2022)

Investment securities (stocks)¥5,653*5. Reduction entry
Previous fiscal year (March 31, 2022)
The reduction entry amounts corresponding to national subsidies were ¥510 million for buildings and structures, ¥4,704 million formachinery, equipment and vehicles, ¥280 million for land, ¥4 million for other tangible fixed assets, and ¥1 million for other intangible
fixed assets. These reduction entry amounts have been deducted from the carrying amounts of the assets presented on the consolidatedbalance sheets.
Current fiscal year (March 31, 2023)
The reduction entry amounts corresponding to national subsidies were ¥510 million (US$3,824 thousand) for buildings and structures,¥4,868 million (US$36,459 thousand) for machinery, equipment and vehicles, ¥280 million (US$2,099 thousand) for land, ¥4 million(US$32 thousand) for other tangible fixed assets, and ¥1 million (US$9 thousand) for other intangible fixed assets. These reduction entry
amounts have been deducted from the carrying amounts of the assets presented on the consolidated balance sheets.
*6. Contingent liabilities
Guarantee obligations on bank loans, etc. are as follows.
(1) Guarantee obligations on bank loans (including re-guarantees)
Millions of yen
Current fiscal year
(March 31, 2023)

Previous fiscal year
(March 31, 2022)

Hachinohe Biomass Power
Generation Co., Ltd.
Others (2 companies)
Total¥1,248591¥1,840Hachinohe Biomass Power
Generation Co., Ltd.
Others (2 companies)
Total

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)¥1,164$8,719278¥1,442

2,086$10,806
Integrated Report 2023

86Consolidated Financial Data
(2) Guarantee obligations on product purchase obligations from a ready-made concrete co-operative
Millions of yen
Current fiscal year
(March 31, 2023)

Previous fiscal year
(March 31, 2022)

BLAST Co., Ltd.
Others (3 companies)

¥83
32

Total

¥116

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)

¥20
14
21
¥56

Yoshida Kenzai Inc.
Nohara Holdings, Inc.
Others (2 companies)
Total

$151
110
158
$421

(Notes to consolidated statements of income)*1. Revenue from contracts with customers
Revenue from contracts with customers and revenue from other sources are not separately presented with respect to net sales. Revenue
from contracts with customers is presented in the consolidated financial statements under, “Notes to Consolidated Financial Statements(Revenue recognition), 1. Information on disaggregation of revenue from contracts with customers.”*2. Main components of selling, general and administrative expenses

Current fiscal year (April 1, 2022 to March 31, 2023)
With respect to some office buildings scheduled to be demolished and disposed of among the assets held by the Group, the recoverable
amount significantly decreased, and their carrying amount has been reduced to the memorandum value, and this reduction has beenrecorded under extraordinary loss as an impairment loss (¥594 million [US$4,451 thousand]).
For idle assets with a recoverable amount lower than the carrying amount, the carrying amount has been reduced to the recoverable
amount, and this reduction has been recorded under extraordinary loss as an impairment loss (¥14 million [US$105 thousand]).
A breakdown of impairment losses is as follows.
Application

Office buildings
Idle assets

Location¥11,183
8,389
25
1,110
329
34
3,052

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)¥12,102
8,383
0
1,069
332
47
3,092

$90,637
62,784
0
8,009
2,487
353
23,158Millions of yen
Current fiscal year
(April 1, 2022 to March 31, 2023)¥3,052¥3,092$23,158*4. Main gains on sales of noncurrent assets
Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Land
Quarry sites
Buildings and structures–
Machinery, equipment and vehicles

¥3
9
–
616

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)¥1,07842
13603$8,080
317
97
4,523

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

¥76
125
846

$571
940
6,336

*5. Main losses on retirement of noncurrent assets
Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Buildings and structures
Machinery, equipment and vehicles
Machinery, equipment and vehicles removal costs

¥24
186
682

Breakdown (millions of yen)

Office buildings
Idle assets

Breakdown (thousands of U.S. dollars)

Buildings ¥590, structures ¥2, tools, furniture andfixtures ¥1
Total ¥594
Land ¥11, quarry sites ¥2
Total ¥14

Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Land
Machinery, equipment and vehicles
Buildings and structures
Tools, furniture and fixtures

¥3
1
8
–

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

¥–
0
3
12

$–
0
25
94

*7. Impairment loss
Based on the categories of business assets and idle assets, the Group groups its business assets based on the smallest segments used inmanagement accounting and groups idle assets individually.
Business assets that are rental properties for the real estate business are grouped based on the corresponding property unit.

87

Integrated Report 2023

Buildings $4,418, structures $20, tools, furniture andfixtures $12
Total $4,451
Land $89, quarry sites $16
Total $105

Recoverable amounts for idle assets are measured using respective net selling prices. However, net selling prices for land are assessed
based on real estate appraisal valuations.

(Notes to consolidated statements of comprehensive income)*Reclassification adjustments and tax effects related to other comprehensive income

Valuation difference on available-for-sale securities:
Amount incurred during the current fiscal year
Reclassification adjustments
Before adjustment for tax effects
Tax effects
Valuation difference on available-for-sale securities
Foreign currency translation adjustments:
Amount incurred during the current fiscal year
Remeasurements of defined benefit plans:
Amount incurred during the current fiscal year
Reclassification adjustments
Before adjustment for tax effects
Tax effects
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates accounted forusing equity method:Amount incurred during the current fiscal year
Total other comprehensive income

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)¥5,981(2,471)
3,510(1,087)2,422¥(5,154)(4,701)(9,856)
3,056(6,800)$(38,602)(35,210)(73,813)22,888(50,925)

(227)

(40)

(302)

227
92
320
(99)
220

(155)
84
(70)
21
(48)

(1,163)
632
(531)
164
(366)

0
¥2,41682¥(6,806)

621$(50,973)(Notes to consolidated statements of changes in net assets)
Previous fiscal year (April 1, 2021 to March 31, 2022)
1. Type and total number of outstanding shares and treasury stock
Number of shares at
beginning of the fiscal year
(thousands of shares)*6. Main losses on sales of noncurrent assets$4,451$105*Breakdown of impairment losses for each typePrevious fiscal year
(April 1, 2021 toMarch 31, 2022)

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 to March 31, 2023)

Impairment loss
(thousands of U.S. dollars)

¥594
¥14

Buildings and structures, etc.
Land and quarry sites*3. R&D expenses included in general and administrative expenses
Previous fiscal year
(April 1, 2021 to March 31, 2022)

Impairment loss
(millions of yen)

Type

Osaka City, Osaka Prefecture
Maibara City, Shiga Prefecture

Application

Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Sales costs
Allowances and bonuses
Provision for share awards
Transfer to provision for bonuses
Retirement benefit expenses
Transfer to provision for retirement benefits for officers
R&D expenses

Previous fiscal year (April 1, 2021 to March 31, 2022)
This information is omitted as it is immaterial.

Outstanding shares
Common stock (Note 2)
Total
Treasury stock
Common stock (Notes 1, 3, 4)
Total

Increase during
the fiscal year
(thousands of shares)

Decrease during
the fiscal year
(thousands of shares)

Number of shares atthe end of the fiscal year
(thousands of shares)

38,64338,643

–
–

1,400
1,400

37,24337,243

896
896

2,970
2,970

1,402
1,402

2,464
2,464

(Notes) 1.	The number of common stock held as treasury stock includes the Company’s stocks (30,000 shares at the beginning of the current fiscal year,
28,000 shares at the end of the current fiscal year) held by the trust relating to the stock-based remuneration plan for officers.
2. A breakdown of decreases in the outstanding shares of common stock is as follows.
		 Decrease due to the retirement of treasury stock based on the resolution by the Board of Directors: 1,400 thousand shares
3. A breakdown of increases in common stock held as treasury stock is as follows.
		 Increase due to the purchase of treasury stock based on the resolution by the Board of Directors: 2,966 thousand shares
		 Increase due to the acquisition of shares in amounts of less than one trading unit: 3 thousand shares
4. A breakdown of decreases in common stock held as treasury stock is as follows.
		 Decrease due to the retirement of treasury stock based on the resolution by the Board of Directors: 1,400 thousand shares
		 Decrease due to Employee Stock Ownership Plan: 2 thousand shares
		 Decrease due to sales of shares in amounts of less than one trading unit: 0 thousand shares
Integrated Report 2023

88Consolidated Financial Data
(Notes to consolidated statements of cash flows)

2. Information on dividends(1) Amount of dividends paid

*Relationship between cash and cash equivalents at end of the fiscal year and the carrying amount on the consolidated balance sheets(Resolution)

Type ofsharesOrdinary General Meeting of
Shareholders held on June 29, 2021
Board of Directors Meeting held on
November 11, 2021

Commonstock
Commonstock

Total dividend amount(millions of yen)

Dividends per share(yen)¥2,266¥60.00¥2,232¥60.00Cut-off date

Effective date

March 31,2021
September 30,
2021

June 30,
2021
December 1,
2021

Previous fiscal year
(April 1, 2021 toMarch 31, 2022)(Notes) 1.	Per resolution of the Ordinary General Meeting of Shareholders held on June 29, 2021, the total dividend amount includes ¥1 million in dividends
associated with the Company’s shares held by the trust relating to the stock-based remuneration plan for officers.
2.	Per resolution of the Board of Directors meeting held on November 11, 2021, the total dividend amount includes ¥1 million in dividends associatedwith the Company’s shares held by the trust relating to the stock-based remuneration plan for officers.

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)¥14,542(42)¥14,500¥13,148(62)¥13,085$108,909(319)$108,589(Lease transactions)(Note)	Per resolution of the Ordinary General Meeting of Shareholders held on June 28, 2022, the total dividend amount includes ¥1 million in dividends
associated with the Company’s shares held by the trust relating to the stock-based remuneration plan for officers.

1. Finance lease transactions (lessee)
Finance lease transactions that do not transfer ownership(1) Leased assets
Property, plant and equipment
Mainly consist of production facilities (structures and machinery, equipment and vehicles) in the Cement business(2) Leased asset depreciation method
The depreciation methods of leased assets used for the preparation of the consolidated financial statements are as described under “6.
Matters concerning accounting policies (2) Depreciation method of significant depreciable assets.”

Current fiscal year (April 1, 2022 to March 31, 2023)
1. Type and total number of outstanding shares and treasury stock

2. Operating lease transactions
Future lease payments for non-cancelable operating leases(2) Dividends with the cut-off date in the year ended March 31, 2022 and the effective date in the year ended March 31, 2023
(Resolution)

Type ofsharesOrdinary General Meeting of
Shareholders held on June 28, 2022

Commonstock

Total dividend amount(millions of yen)

Source ofdividends¥2,088Retainedearnings

Number of shares at
beginning of the fiscal year
(thousands of shares)

Outstanding shares
Common stock (Note 2)
Total
Treasury stock
Common stock (Notes 1, 3, 4)
Total

Increase during
the fiscal year
(thousands of shares)

Dividends per share(yen)¥60.00Cut-off date

Effective date

March 31,2022

June 29,
2022

Decrease during
the fiscal year
(thousands of shares)

Number of shares atthe end of the fiscal year
(thousands of shares)

37,24337,243

–
–

2,913
2,913

34,32934,329

2,464
2,464

526
526

2,914
2,914

76
76

(Notes) 1.	The number of common stock held as treasury stock includes the Company’s stocks (28,000 shares at the beginning of the current fiscal year,
27,000 shares at the end of the current fiscal year) held by the trust relating to the stock-based remuneration plan for officers.
2. A breakdown of decreases in the outstanding shares of common stock is as follows.
		 Decrease due to the retirement of treasury stock based on the resolution by the Board of Directors: 2,913 thousand shares
3. A breakdown of increases in common stock held as treasury stock is as follows.
		 Increase due to the purchase of treasury stock based on the resolution by the Board of Directors: 521 thousand shares
		 Increase due to the acquisition of shares in amounts of less than one trading unit: 4 thousand shares
4. A breakdown of decreases in common stock held as treasury stock is as follows.
		 Decrease due to the retirement of treasury stock based on the resolution by the Board of Directors: 2,913 thousand shares
		 Decrease due to Employee Stock Ownership Plan: 0 thousand shares
		 Decrease due to sales of shares in amounts of less than one trading unit: 0 thousand shares

2. Information on dividends(1) Amount of dividends paid
(Resolution)

Type ofsharesOrdinary General Meeting of
Shareholders held on June 28, 2022
Board of Directors Meeting held on
November 9, 2022

Commonstock
Commonstock(Resolution)

Type ofsharesOrdinary General Meeting of
Shareholders held on June 28, 2022
Board of Directors Meeting held on
November 9, 2022

Commonstock
Commonstock

Total dividend amount(millions of yen)

Dividends per share(yen)¥2,088¥60.00¥2,056¥60.00Total dividend amount(thousands of U.S. dollars)

Dividends per share(U.S. dollars)$15,639$0.449$15,404$0.449Cut-off date

Effective date

March 31,2022
September 30,
2022

June 29,
2022
December 1,
2022

Cut-off date

Effective date

March 31,2022
September 30,
2022

June 29,
2022
December 1,
2022(Notes) 1.	Per resolution of the Ordinary General Meeting of Shareholders held on June 28, 2022, the total dividend amount includes ¥1 million in dividends
associated with the Company’s shares held by the trust relating to the stock-based remuneration plan for officers.
2.	Per resolution of the Board of Directors meeting held on November 9, 2022, the total dividend amount includes ¥1 million in dividends associatedwith the Company’s shares held by the trust relating to the stock-based remuneration plan for officers.

(2) Dividends with the cut-off date in the year ended March 31, 2023 and the effective date in the year ending March 31, 2024
(Resolution)

Type ofsharesTotal dividend amount(millions of yen)

Source ofdividends

Dividends per share(yen)

Ordinary General Meeting of
Shareholders held on June 28, 2023

Commonstock¥2,056

Retainedearnings¥60.00(Resolution)

Type ofsharesTotal dividend amount(thousands of U.S. dollars)

Source ofdividends

Dividends per share(U.S. dollars)

Ordinary General Meeting of
Shareholders held on June 28, 2023

Commonstock$15,403

Retainedearnings$0.449Cut-off date

Effective date

March 31,2023

June 29,2023

Cut-off date

Effective date

March 31,2023

June 29,2023(Note)	Per resolution of the Ordinary General Meeting of Shareholders held on June 28, 2023, the total dividend amount includes ¥1 million in dividends
associated with the Company’s shares held by the trust relating to the stock-based remuneration plan for officers.

89

Ending balance of cash and deposits
Time deposits with a maturity of over three months
Ending balance of cash and cash equivalents

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

Integrated Report 2023

Previous fiscal year
(March 31, 2022)

Within one year
Over one year

Millions of yen
Current fiscal year
(March 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)

¥438
1,412
¥1,850$3,280
10,578$13,858

¥48
86
¥134

Total

(Financial instruments)
1. Matters concerning the status of financial instruments(1) Policies for financial instruments
The Group procures necessary funds primarily through bank loans and the issuance of bonds in accordance with capital expenditureplans and financial plans mainly to engage in the business of producing and selling cement. Temporary surpluses are invested in lowrisk financial instruments and bank loans provide short-term working capital. It is the Group’s policy to use derivatives as a way to avoid
the below-stated risks and to not engage in trading or speculative transactions.
(2) Types and risks of financial instruments and risk management
Trade receivables, such as notes and accounts receivable - trade and electronically recorded monetary claims - operating are subject
to credit risk in relation to customers. In accordance with its internal policies for managing such risk, the Company has established asystem that manages the due dates and outstanding balances by each customer. Investment securities are composed of mainly stocks
associated with business and capital alliances, and are subject to market risk.
Trade payables, such as notes and accounts payable - trade and Electronically recorded obligations - operating usually have apayment due dates within one year. Furthermore, a certain portion of such payables are denominated in a foreign currency, associatedwith the import of raw materials, thus subject to exchange rate fluctuation risk. However, such risks are minor. Loans, bonds andlease obligations related to finance lease transactions are taken out principally for the purpose of making capital investments. Suchobligations’ redemption dates are a maximum of 32 years from the balance sheet date. A certain portion of said liabilities have variableinterest rates and are subject to interest rate fluctuation risk. However, to hedge such risks, the interest rates are fixed through the useof derivative transactions (interest rate swap transactions). Evaluation of the effectiveness of hedges is omitted since all of the interest
rate swap transactions meet the specific matching criteria.
Derivative transactions are entered into and managed in accordance with internal policies, which determine the authority toundertake such transactions. To minimize credit risk, derivative transactions are entered into only with highly rated financial institutions.
Furthermore, while trade payables and loans are subject to liquidity risk, the Group manages such risks by preparing monthly cash
flow plans for each company.
(3) Supplemental explanation of the estimated fair value of financial instruments
The values of contracts related to derivative transactions as stated in “2. Estimated fair value of financial instruments” do not bythemselves indicate the market risk associated with the respective derivative transactions.
2. Estimated fair value of financial instruments
Previous fiscal year (April 1, 2021 to March 31, 2022)
Consolidated balance sheet amounts, estimated fair values and their differences are as follows. In addition, since cash and deposits, notes
and accounts receivable - trade, electronically recorded monetary claims - operating, short-term loans receivable, notes and accounts
payable - trade, short-term loans payable, and commercial papers are settled in the short-term and the fair value is nearly equal to thecarrying amount, their presentation has been omitted.
Millions of yen
Consolidated balance sheet amounts(1) Investment securities
Available-for-sale securities(2) Long-term loans receivable(3) Bonds payable(4) Long-term loans payable(5) Derivative transactions

Fair value

Difference¥51,863¥51,863¥–3,074
10,00021,668
–

3,372
9,992
21,630
–

298
(7)
(38)
–
Integrated Report 2023

90

Consolidated Financial Data
(Note)	Shares that do not have a market value are not included in “Available-for-sale securities in (1) Investment securities.” Consolidated balance sheet
amounts of such financial instruments are as follows.
Classification

Millions of yen
Consolidated balance sheet amounts

Unlisted securities¥7,537

Current fiscal year (April 1, 2022 to March 31, 2023)
Consolidated balance sheet amounts, estimated fair values and their differences are as follows. In addition, since cash and deposits, notes
and accounts receivable - trade, electronically recorded monetary claims - operating, short-term loans receivable, notes and accounts
payable - trade, Electronically recorded obligations - operating, short-term loans payable, and commercial papers are settled in the shortterm and the fair value is nearly equal to the carrying amount, their presentation has been omitted.
Consolidated balance sheet amounts(1) Investment securities
Available-for-sale securities(2) Long-term loans receivable(3) Bonds payable(4) Long-term loans payable(5) Derivative transactions¥39,984¥39,984¥–

4,022
25,00033,403–

4,185
24,82333,216
–

162
(176)
(186)
–

Consolidated balance sheet amounts(1) Investment securities
Available-for-sale securities(2) Long-term loans receivable(3) Bonds payable(4) Long-term loans payable(5) Derivative transactions

Millions of yen
Difference

Fair value

Thousands of U.S. dollars
Difference

Fair value$299,444$299,444$–

30,123
187,223
250,157–

31,341
185,902248,760–

1,218(1,321)(1,397)–(Note)	Shares that do not have a market value are not included in “Available-for-sale securities in (1) Investment securities.” Consolidated balance sheet
amounts of such financial instruments are as follows.
Millions of yen
Classification

Cash and deposits
Notes and accounts receivable - trade, and contract assets
Electronically recorded monetary claims - operating
Investment securities
Held-to-maturity securities
Redeemable available-for-sale securities
Short-term loans receivable
Long-term loans receivable
Total

Short-term loans payable
Commercial papers
Bonds payable
Long-term loans payable
Total

3. Redemption schedule for receivables and redeemable securities with future redemption dates
Previous fiscal year (March 31, 2022)

Within one year

Over two years
and under
three years

Over three years
and under
four years

Over four years
and under
five years

Over five years¥19,972
5,000
–
5,843
¥30,816

¥–
–
5,000
4,169
¥9,169

¥–
–
–
3,561
¥3,561

¥–
–
–
2,477
¥2,477

¥–
–
5,000
1,622
¥6,622

¥–
–
–
3,994
¥3,994

Within one year

Over one year
and under
two years¥31,316
10,0005,000
7,237¥53,553

¥–
–
–
6,628
¥6,628Within one year

Over one year
and under
two years$234,524
74,88937,44454,200$401,059$–––
49,643$49,643

Millions of yen

Total

Cash and deposits
Notes and accounts receivable - trade, and contract assets
Electronically recorded monetary claims - operating
Investment securities
Held-to-maturity securities
Redeemable available-for-sale securities
Short-term loans receivable
Long-term loans receivable
Total

Over one year
and under
five years

Over five years
and under
ten years

Over ten years¥13,126
39,396
6,156
–
–
–
800
0
¥59,480

¥–
–
–
–
–
–
–
23
¥23

¥–
–
–
–
–
–
–
1,637
¥1,637

¥–
–
–
–
–
–
–
1,413
¥1,413

Within one year

Over one year
and under
five years

Over five years
and under
ten years

Over ten years¥14,517
41,922
7,989
–
–
–
377
1
¥64,808

¥–
–
–
–
–
–
–
2,198
¥2,198

¥–
–
–
–
–
–
–
700
¥700

¥–
–
–
–
–
–
–
1,121
¥1,121

Current fiscal year (March 31, 2023)
Millions of yen

Cash and deposits
Notes and accounts receivable - trade, and contract assets
Electronically recorded monetary claims - operating
Investment securities
Held-to-maturity securities
Redeemable available-for-sale securities
Short-term loans receivable
Long-term loans receivable
Total

91

Integrated Report 2023

$–
–
–
–
–
–
–
8,399
$8,399Over one year
and under
two years

Millions of yen
Within one year

$–
–
–
–
–
–
–
5,248
$5,248Current fiscal year (March 31, 2023)

Short-term loans payable
Commercial papers
Bonds payable
Long-term loans payable$58,409

$–
–
–
–
–
–
–
16,463$16,463

Millions of yen

Thousands of U.S. dollars¥7,799$108,721
313,954
59,835
–
–
–
2,825
12
$485,349

Thousands of U.S. dollars
Over five years
and under
Over ten years
ten years

4. Redemption schedule for bonds payable, long-term loans payable and other interest-bearing liabilities with future
redemption dates
Previous fiscal year (March 31, 2022)

Consolidated balance sheet amounts Consolidated balance sheet amounts

Unlisted securities

Within one year

Over one year
and under
five years

Short-term loans payable
Commercial papers
Bonds payable
Long-term loans payable
Total

Over two years Over three years Over four years
and underand underand under
three years
four years
five years

¥–
–
–
5,553
¥5,553

¥–
–
5,000
4,704
¥9,704¥––10,000
3,863¥13,863Over five years

¥–
–
5,000
5,415
¥10,415

Thousands of U.S. dollars
Over two years Over three years Over four years
and underand underand under
Over five years
three years
four years
five years$–––
41,588$41,588$––
37,44435,229$72,674$––
74,88928,935$103,825$––
37,44440,559$78,004

5. Breakdown of financial instruments by level of fair value
The fair values of financial instruments are categorized into the following three levels, in accordance with the observability and significanceof the inputs used in the fair value calculation.
Level 1 fair value: Fair value calculated using the unadjusted quoted price in an active market for an identical asset or liability
Level 2 fair value: Fair value calculated using inputs that are directly or indirectly observable, other than the Level 1 inputs
Level 3 fair value: Fair value calculated using significant unobservable inputs
In cases where multiple inputs which have a material effect on the calculation of the fair value are used, among the levels to which therespective inputs belong, the fair value is categorized at the level with the lowest priority in the fair value calculation.
(1) Financial assets and financial liabilities with the carrying amount recorded on consolidated balance sheet at fair value
Previous fiscal year (March 31, 2022)
Millions of yen
Fair value
Classification

Investment securities
Available-for-sale securities

Level 1

¥51,863

Level 2

Level 3

¥–

Total

¥–

¥51,863

Integrated Report 2023

92Consolidated Financial Data
Current fiscal year (March 31, 2023)

Current fiscal year (March 31, 2023)
Millions of yen

Millions of yen

Fair value
Level 1

Classification

Investment securities
Available-for-sale securities

Level 2¥39,984

Level 3

¥–

Type

Total

¥–

¥39,984

Carrying amount on consolidated balance sheet
exceeds acquisition costThousands of U.S. dollars
Fair value
Level 1

Classification

Investment securities
Available-for-sale securities

Level 2$299,444

Level 3

$–

Total

$–

$299,444

Carrying amount on consolidated balance sheet
does not exceed acquisition cost(1) Stocks(2) Bonds(3) Others
Subtotal(1) Stocks(2) Bonds(3) Others
Subtotal

Total(2) Financial assets and financial liabilities not at fair value for their carrying amount recorded on consolidated balance sheet
Previous fiscal year (March 31, 2022)
Millions of yen
Level 1Long-term loans receivable
Bonds payable
Long-term loans payable

Level 2¥–––

Level 3

¥3,372
9,992
21,630

Total

¥–
–
–

¥3,372
9,992
21,630Type

Carrying amount on consolidated balance sheet
exceeds acquisition cost

Carrying amount on consolidated balance sheet
does not exceed acquisition cost

Current fiscal year (March 31, 2023)
Millions of yen
Level 1

Level 2¥–––Long-term loans receivable
Bonds payable
Long-term loans payable

Level 3

¥4,18524,82333,216¥–––¥4,18524,82333,216

Fair value
Level 1

Level 2$–––Long-term loans receivable
Bonds payable
Long-term loans payable

Level 3$31,341
185,902248,760

Total

$–
–
–

$31,341
185,902248,760

Millions of yen

Carrying amount on consolidated balance sheet
exceeds acquisition cost

Carrying amount on consolidated balance sheet
does not exceed acquisition cost
Total

93

Integrated Report 2023

Acquisition cost

¥31,877––
31,877(1)––(1)¥31,876

Difference$60,651––
60,65175––
75$60,726

Total¥3,869––¥3,869¥2,471––¥2,471

Type

Proceeds from sales

Total gains on sales

Total¥6,692––¥6,692¥4,722––¥4,722Type

Proceeds from sales

Total gains on sales

Total$50,120––$50,120$35,366––$35,366(1) Stocks(2) Bonds(3) Others

1. Derivative transactions not subject to hedge accounting
Not applicable.

1. Available-for-sale securities
Previous fiscal year (March 31, 2022)¥51,655––
51,655207––
207¥51,863$299,380––
299,38063––
63$299,444

Proceeds from sales(Securities)

Type

Consolidated balance
sheet amounts

Type

Current fiscal year (April 1, 2022 to March 31, 2023)(1) Stocks(2) Bonds(3) Others
Subtotal(1) Stocks(2) Bonds(3) Others
Subtotal¥8,098
–
–
8,098
10
–
–
10
¥8,108$238,729––
238,729
(11)
–
–
(11)
$238,717

2. Sales of available-for-sale securities
Previous fiscal year (April 1, 2021 to March 31, 2022)(Note) Explanation of the valuation methods and inputs used in calculating fair values
Investment securities		The fair value of investment securities is based on quoted market prices. The fair value of listed shares is categorized as Level 1 fair value because
they are traded on active markets.
Long-term loans receivable		The fair value of long-term loans receivable is categorized as Level 2 fair value. Long-term loans receivable are classified into set periods, with theirfair value calculated based on the present value of their future cash flows discounted by the contracted interest rates adjusted to reflect fluctuationsin interest rate levels (Japanese government bond yields).
Bonds payable		 The fair value of bonds payable issued by the Company is calculated based on market price and categorized as Level 2 fair value.
Long-term loans payable		The fair value of long-term loans payable is categorized as Level 2 fair value. Long-term loans payable are classified into set periods, with their fairvalue calculated based on the present value of their future cash flows discounted by the contracted interest rates adjusted to reflect fluctuations ininterest rate levels (Japanese government bond yields). Long-term loans payable with floating-rate interest are subject to special treatment of interest
rate swaps, and the total of principal and interest is accounted for together with the interest rate swap on the hedged long-term loan discounted
using an interest rate reasonably expected to be applied for a similar type of loan.
Derivative transactions
		Under the special treatment, interest rate swaps are accounted for together with the hedged long-term loans payable, and the fair value is includedin the fair value of the relevant long-term loans payable (refer to “Long-term loans payable” above).

Consolidated balance
sheet amounts¥39,976––
39,9768––
8¥39,984

Difference

Total

Thousands of U.S. dollars
Classification(1) Stocks(2) Bonds(3) Others
Subtotal(1) Stocks(2) Bonds(3) Others
Subtotal

Total

Fair value
Classification

Acquisition costThousands of U.S. dollars

Fair value
Classification

Consolidated balance
sheet amounts

Acquisition cost

¥9,857
–
–
9,857
236
–
–
236
¥10,093

Difference¥41,798––
41,798
(28)
–
–
(28)
¥41,769(1) Stocks(2) Bonds(3) Others(1) Stocks(2) Bonds(3) Others

Total gains on sales

Millions of yen
Total losses on sales

¥–
–
–
¥–

Millions of yen
Total losses on sales

¥18
–
–
¥18
Thousands of U.S. dollars
Total losses on sales

$141
–
–
$141

(Derivative transactions)

2. Derivative transactions subject to hedge accounting
Interest rate related
Previous fiscal year (March 31, 2022)
Millions of yen
Hedge accounting method

Types of transactions

Major hedged items

Special accounting treatment
for interest rate swaps

Interest rate swap transactions
Pay fixed; receive floating

Long-term loans payable

Contract amountContract amountover one year

Fair value¥1,450¥300(Note)(Note)	Because the special treatment of interest rate swaps is applied, the interest rate swap is accounted for together with the hedged long-term loans
payable, and the fair value is included in the fair value of the relevant long-term loans payable.

Integrated Report 2023

94

Consolidated Financial Data
Current fiscal year (March 31, 2023)
Millions of yen
Hedge accounting method

Types of transactions

Major hedged items

Special accounting treatment
for interest rate swaps

Interest rate swap transactions
Pay fixed; receive floating

Long-term loans payable

Hedge accounting method

Types of transactions

Major hedged items

Special accounting treatment
for interest rate swaps

Interest rate swap transactions
Pay fixed; receive floating

Long-term loans payable

Contract amountContract amount
Fair value
over one year

¥300

Contract amount¥–(Note)

Thousands of U.S. dollars
Contract amount
Fair value
over one year

$2,246$–(Note)(Note)	Because the special treatment of interest rate swaps is applied, the interest rate swap is accounted for together with the hedged long-term loans
payable, and the fair value is included in the fair value of the relevant long-term loans payable.

(Retirement benefits)
1. Outline of retirement benefits system
In order to pay employee retirement benefits, the Company and its domestic consolidated subsidiaries have funded and unfunded defined
benefit and retirement lump-sum payment plans.
For the defined benefit and retirement lump-sum payment plans of certain domestic consolidated subsidiaries, the net retirement
benefit liability and benefit cost are calculated using the simplified method.
2. Defined benefit plans(1) Reconciliation of beginning and ending balances of projected benefit obligation (excluding plans using the simplified method)
Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Beginning balance of projected benefit obligation
Service cost
Interest cost
Actuarial gains and losses
Payment of retirements benefits
Ending balance of projected benefit obligation¥14,375
661
42
(138)
(536)
¥14,404

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)¥14,404
623
57
(205)
(1,040)¥13,839

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)$107,876
4,670
427(1,536)(7,794)$103,643

Beginning balance of pension assets
Expected return on pension assets
Actuarial gains and losses
Employer contribution
Payment of retirements benefits
Ending balance of pension assets¥14,981
299
89
867
(529)
¥15,708

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)¥15,708
314
(360)
608
(1,028)¥15,242

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)$117,639
2,352(2,699)4,559(7,699)$114,152

Beginning balance of net defined benefit liability
Retirement benefit expenses
Payment of retirements benefits
Contributions to the plan
Other
Ending balance of net defined benefit liability

¥473
247
(78)
(194)
–
¥447

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

¥447
290
(104)
(188)
–
¥444

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)$3,351
2,175(781)(1,414)–$3,330Millions of yen
Current fiscal year
(March 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)

Projected benefit obligation of unfunded plan
Net amount of liabilities and assets on the consolidated balance sheet¥15,730(17,603)(1,873)
1,017
(856)

¥15,177(17,173)(1,996)
1,037
(958)

$113,662(128,612)(14,949)
7,771(7,178)Net defined benefit liability
Net defined benefit asset
Net amount of liabilities and assets on the consolidated balance sheet

892(1,748)¥(856)

893(1,851)¥(958)

6,690(13,869)$(7,178)

Projected benefit obligation of funded plan
Pension assets(5) Breakdown of retirement benefit cost
Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Service cost
Interest cost
Expected return on pension assets
Amortization of actuarial loss
Retirement benefit cost calculated using simplified method
Retirement benefit cost of defined benefit pension

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

¥623
57
(314)
84
290
¥741

¥661
42
(299)
92
247
¥743

$4,670427(2,352)632
2,175$5,552(6) Remeasurements of defined benefit plans
Components of remeasurements of defined benefit plans (before tax effects) are as follows.
Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Total(3) Reconciliation of beginning and ending balances of net defined benefit liability using the simplified method
Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Previous fiscal year
(March 31, 2022)

Actuarial gains and losses(2) Reconciliation of beginning and ending balances of pension assets (excluding plans using the simplified method)
Previous fiscal year
(April 1, 2021 toMarch 31, 2022)(4) Reconciliation of projected benefit obligations and pension assets at end of year with net defined benefit liability and net defined
benefit asset recorded in the consolidated balance sheet

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

¥(70)
¥(70)

¥320
¥320

$(531)$(531)(7) Cumulative remeasurements of defined benefit plans
Components of cumulative remeasurements of defined benefit plans (before tax effects) are as follows.
Previous fiscal year
(March 31, 2022)

Unrecognized actuarial loss/gain
Total

Millions of yen
Current fiscal year
(March 31, 2023)¥(553)¥(553)¥(624)¥(624)

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)$(4,147)$(4,147)(8) Matters concerning pension assets(1) Breakdown of main pension assets
The ratio of the main types of pension assets to total pension assets is as follows.
Current fiscal year
(March 31, 2023)

Previous fiscal year
(March 31, 2022)

Bonds
StocksGeneral accounts
Other
Total

49%
30%
15%
7%
100%

53%
26%
15%
7%
100%

(2) Method for determining the expected long-term investment return
In determining the expected long-term investment return for pension assets, estimates are made in consideration of the current andexpected distributions of pension assets, and the current and expected long-term return rate from the various assets that compose
the pension assets.
(9) Matters concerning actuarial assumptions
Principal actuarial assumptions

Discount rate
Expected long-term investment return
Expected rates of salary increases

95

Integrated Report 2023

Previous fiscal year
(April 1, 2021 to March 31, 2022)

Current fiscal year
(April 1, 2022 to March 31, 2023)

0.3%
2.0%
2.7% to 5.2%

0.4%
2.0%
2.7% to 5.2%

Integrated Report 2023

96Consolidated Financial Data
2. Significant components of material differences between the statutory effective tax rate and the effective tax rate after theapplication of tax effect accounting(Stock options)Not applicable.

Current fiscal year
(March 31, 2023)

Previous fiscal year
(March 31, 2022)(Income tax accounting)
1. Significant components of deferred tax assets and liabilities
Previous fiscal year
(March 31, 2022)

Deferred tax assets
Impairment loss
Tax loss carryforwards (Note 2)
Provision for bonuses
Unrealized holding gain
Net defined benefit liability
Accrued business tax
Tax effect of investment and loans to subsidiaries
Other
Subtotal for deferred tax assets
Valuation allowance related to tax loss carryforwards (Note 2)
Valuation allowance related to the total of deductible temporary
differences
Subtotal for valuation allowance (Note 1)
Total deferred tax assets
Deferred tax liabilities
Valuation difference for available-for-sale securities
Liability reserves under the Act on Special Measures Concerning
Taxation
Other
Total deferred tax liabilities
Deferred tax liabilities, net

Millions of yen
Current fiscal year
(March 31, 2023)

Thousands of U.S. dollars
Current fiscal year
(March 31, 2023)¥2,155
606
804
425
93
134
1,139
1,446
6,806
(606)

¥2,323
3,935
800
474
115
139
–
1,581
9,370
(3,595)$17,399
29,475
5,995
3,555
861
1,047
–
11,842
70,178(26,929)(2,393)(2,673)(20,024)(3,000)¥3,805(6,269)¥3,101(46,953)$23,224(12,971)(9,915)(74,255)(1,063)(1,084)(8,121)(860)(14,895)¥(11,089)(914)(11,913)¥(8,812)(6,846)(89,222)$(65,998)(Notes) 1.	Significant changes in the amount deducted from deferred tax assets (valuation allowance) were mainly due to an increase in valuation allowance
related to tax loss carryforwards.
2. The amounts of the tax loss carryforwards and the respective amounts of deferred tax assets by maturity datePrevious fiscal year (March 31, 2022)

Statutory effective tax rate
(Adjustment)
Adjustments that are not temporary differences
Valuation allowance related to tax loss carryforwards
Valuation allowance related to the total of deductible temporary
differences
Tax credit
Tax effect of investment and loans to subsidiaries
Other
Effective tax rate after the application of tax effect accounting

31.0%

31.0%

(2.7)
(0.5)

(1.0)
(99.9)

0.1

(8.6)

(1.4)
(9.5)
1.5
18.5

–
–
(2.1)
(80.6)(Business combinations, etc.)
Business divestiture(1) Overview the business divestiture(1) Name of the succeeding company
Sumitomo Metal Mining Co., Ltd. (Sumitomo Metal Mining)(2) Description of business divested
The lithium iron phosphate (LFP) battery materials business (including the Battery Materials Research Group of the New Technology
Research Laboratory, and a subsidiary SOC Vietnam Co., Ltd.)(3) Main reason for the business divestiture
The Company has developed LFP battery materials using the original nanoparticle synthesis technology it has cultivated since the1980s. It completed a mass-production plant in Vietnam in December 2012 and has since been supplying the market with highperformance LFP battery materials featuring highly stable quality.
LFP battery materials are poised to encounter mounting demand going forward, particularly for their applications in electricvehicles and batteries for stationary energy storage. Amid this scenario, the Company has opted to entrust this business to
Sumitomo Metal Mining, which already has a lineup of nickel cathode material products and has been making progress with astructure capable of increased production, given the notion that having it operate this business will give rise to more opportunity forbusiness growth.
(4) Date of the business divestiture
May 1, 2022
(5) Overview of the divestiture including legal form
Business transfer in which the consideration received is cash or other property only

Millions of yen
Within one year

Over one year
and under
two years

Over two years
and under
three years

Over three years
and under
four years

Over four years
and under
five years

Over five years

¥51
(51)
–

¥96
(96)
–

¥60
(60)
–

¥110
(110)
–

¥48
(48)
–

¥237
(237)
–

Tax loss carryforwards (a)Valuation allowance
Deferred tax assets

Total

¥606
(606)
–

(a) The amounts of the tax loss carryforwards are multiplied by the effective statutory tax rate.

Current fiscal year (March 31, 2023)
Millions of yen

Tax loss carryforwards (a)Valuation allowance
Deferred tax assets

Within one year

Over one year
and under
two years

¥54
(54)
–

¥60
(60)
–

Over two years Over three years Over four years
and underand underand under
three years
four years
five years

¥66
(66)
–

¥48
(48)
–

¥51
(51)
–

Over five years¥3,652(3,312)340

Total¥3,935(3,595)(b) 340

Tax loss carryforwards (a)Valuation allowance
Deferred tax assets

Over one year
and under
two years

$410
(410)
–

$455
(455)
–

Over two years Over three years Over four years
and underand underand under
three years
four years
five years

$501
(501)
–

$365
(365)
–

$387
(387)
–

Over five years$27,354(24,808)2

Millions of yen

Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities

Thousands of U.S. dollars

¥947
822
¥1,770
162
781
¥944

$7,092
6,156$13,255
1,213
5,849$7,070(3) Accounting treatment
The difference between the consolidated carrying amount of the Company’s LFP battery materials business and the sale price, lesscosts related to the sale, was accounted for as non-operating income or loss.

Total(3) Reporting segment in which the divested business was included
Other segment
The classification of reporting segments was changed in the current fiscal year. Please refer to “(Segment information)” for details.

$29,475(26,929)2(4) Approximate amounts of profits and losses related to the divested business recorded in the consolidated statements ofincome for the fiscal year ended March 31, 2023
This information is omitted as it is immaterial.

Thousands of U.S. dollars
Within one year(2) Overview the accounting treatment implemented(1) Amount of gain or loss on transfer
The impact of the business transfer on the consolidated financial statements is immaterial.
(2) Appropriate carrying amounts of assets and liabilities in relation to the business transferred and their major components(a) The amounts of the tax loss carryforwards are multiplied by the effective statutory tax rate.
(b) Deferred tax assets of ¥340 million were recognized for tax loss carryforwards of ¥3,935 million (amount multiplied by the effective statutory tax rate). The
deferred tax assets were recognized for a portion of the total tax loss carryforwards of ¥3,491 million (amount multiplied by the effective statutory tax rate).
No valuation allowance is recognized for the portion of such tax loss carryforwards that are deemed recoverable based on expected future taxable income.

97

Integrated Report 2023

Integrated Report 2023

98Consolidated Financial Data
(Rental real estate)
The Company and certain subsidiaries own rental distribution warehouses, rental office buildings (including the surrounding land), idle
land, and other properties in Osaka Prefecture and other areas.
During the previous fiscal year ended March 31, 2022, rental income from rental property assets was ¥1,169 million (rental revenue isrecorded under sales and rental costs are recorded under cost of sales), and impairment losses amounted to ¥12 million (recorded under
extraordinary loss). During the current fiscal year ended March 31, 2023, rental income from rental property assets was ¥1,183 million(US$8,866 thousand) (rental revenue is recorded under sales and rental costs are recorded under cost of sales), gain on sales of noncurrent
assets amounted to ¥59 million (US$445 thousand) (recorded under extraordinary income), and impairment losses amounted to ¥14
million (US$105 thousand) (recorded under extraordinary loss).
The carrying amount of rental property, and changes in carrying amount and fair value are as follows.
Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)

Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Consolidated balance sheet amounts
Opening balance
Change during the fiscal year
Closing balance
Fair value at the end of the fiscal year

¥21,136(673)
20,463¥32,114

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)¥20,463(254)
20,209¥31,774$153,252(1,903)
151,348$237,958(Notes) 1.	Consolidated balance sheet amounts exclude accumulated depreciation and amortization as well as accumulated impairment loss from acquisition
costs.
2.	The fair value (which includes adjustments using relevant indices) is calculated using the standard for real estate appraisal for significant assets, andestimated based on the value calculated for property tax for other assets.

(Revenue recognition)
1. Information on disaggregation of revenue from contracts with customers
Previous fiscal year (April 1, 2021 to March 31, 2022)
Millions of yen

CementGoods or services transferred
at a point in time
Goods or services transferredover time
Revenue from contracts withcustomers
Other revenue
Net sales to outside customers

Reporting segments
CementRelated
Optoelectronics
Products

MineralResources

Advanced
Materials

Other

Total

¥125,973¥12,310¥7,848¥3,767¥14,595¥4,917¥169,414

646–

12,875

–

–

1,274

14,795

126,620

12,31020,723

3,767

14,595

6,191

184,209–¥126,620–¥12,310–¥20,723–¥3,767–¥14,595–¥6,191–¥184,209

Current fiscal year (April 1, 2022 to March 31, 2023)
Millions of yen

CementGoods or services transferred
at a point in time
Goods or services transferredover time
Revenue from contracts withcustomers
Other revenue
Net sales to outside customers¥139,833

Reporting segments
CementRelated
Optoelectronics
Products

MineralResources¥13,370¥8,187¥2,385

Advanced
Materials¥21,678

Other¥3,621

Total¥189,078

99

Integrated Report 2023

3. Basic information for understanding revenue from contracts with customers
Basic information for understanding revenue is as described under “Basis of preparation of consolidated financial statements 6. Mattersconcerning accounting policies (5) Criteria for posting significant revenues and expenses.”
4. Information regarding the relationship between satisfaction of performance obligations based on contracts with customers
and cash flows arising from such contracts, as well as amounts and timing of revenue likely to be recognized in thefollowing and subsequent fiscal years derived from existing contracts with customers as of the end of the current fiscal year
(1) Balances of contract assets and contract liabilities
Previous fiscal year

Receivables from contracts with customers (as of April 1, 2022)
Receivables from contracts with customers (as of March 31, 2023)
Contract assets (as of April 1, 2022)
Contract assets (as of March 31, 2023)
Contract liabilities (as of April 1, 2022)
Contract liabilities (as of March 31, 2023)

Millions of yen
Current fiscal year

Thousands of U.S. dollars
Current fiscal year

¥44,698
48,438
854
1,473
110
¥113

$334,745
362,754
6,396
11,035827$851¥46,135
44,698
823
854
597
¥110

Contract assets are mainly unbilled receivables for revenue recognized based on the measurement of progress in construction contracts.
Contract assets are reclassified to receivables arising from contracts with customers when the Group’s rights to the consideration become
unconditional upon billing or delivery.
Contract liabilities are mainly advance payments received from customers prior to the satisfaction of performance obligations underconstruction contracts, and are reversed when revenue is recognized due to the satisfaction of performance obligations.
Contracts have no normal payment due date, as payment terms vary by individual contract.
(2) Transaction price allocated to the remaining performance obligations
Unsatisfied and partially unsatisfied performance obligations amount to ¥2,182 million as of March 31, 2022.
Unsatisfied and partially unsatisfied performance obligations amount to ¥4,674 million (US$35,006 thousand) as of March 31, 2023.
Such performance obligations pertain to construction contracts with respect to which revenue is likely to be recognized within about one
year.

(Segment information)[Segment information]
1. Overview of reporting 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 to make decisions about resource allocation and to assess performance.
The Company’s reportable segments are composed of products and services based on the Cement segment and departments. The
Company’s six reportable segments are: Cement, Mineral Resources, Cement-Related Products, Optoelectronics, Advanced Materials andOthers.
Main products for each reportable segment are as follows:
Reporting segments

Main products
Assorted cement, cement-related solidification materials, ready-mix concrete, supply of electrical power,
and recycling of raw materials and fuel511–

13,920

–

–

1,196

15,627

Cement140,344

13,37022,107

2,385

21,678

4,818

204,705

Mineral Resources

Limestone, dolomite, calcium carbonate, aggregate, and silica powder

Cement-Related Products

Repair and reinforcement of concrete structures (materials and construction), various admixture, heavy
metal pollution control material, fish beds and seaweed beds, electrolytic protection methods, various
ground improvement work, PC (products, settings), and various hume concrete pipes

Optoelectronics

Optical communications devices and components, and optical measurement equipment

Advanced Materials

Various ceramic products, various nanoparticle materials, antibacterial agents, cosmetics, and various
functional paints

Other

Leasing of real estate, engineering, and development of software–¥140,344–¥13,370–¥22,107–¥2,385–¥21,678–¥4,818–¥204,705

Thousands of U.S. dollars

Goods or services transferred
at a point in time
Goods or services transferredover time
Revenue from contracts withcustomers
Other revenue
Net sales to outside customers

2. Matters related to changes in reportable segments, etc.
As stated in “(Segment information)” above, “Battery Materials,” which had been separately presented until the previous fiscal year, hasbeen included in “Other” from the current fiscal year because its significance has decreased.
Information on disaggregation of revenue from contracts with customers for the previous fiscal year is presented based on thesegmentation after the change.

Reporting segments
CementRelated
Optoelectronics
Products

Total

Advanced
Materials

Other$17,864$162,349$27,122$1,415,996

104,246

–

–

8,960

117,034

100,134

165,564

17,864

162,349

36,082

1,533,031–$100,134–$165,564–$17,864–$162,349–$36,082–$1,533,031

CementMineralResources$1,047,208$100,134$61,3173827–

1,051,036–$1,051,036(Matters related to changes in reportable segments, etc.)“Battery Materials,” which had been separately presented until the previous fiscal year, has been included in “Other” from the current
fiscal year, because its significance has decreased due to the business transfer to Sumitomo Metal Mining Co., Ltd. on May 1, 2022.
The segment information for the previous fiscal year is based on the segmentation after the change.
2. Calculation method for net sales, profit or loss, assets, liabilities, and other amounts for each reportable segment
The accounting methods for the reportable segments are, in general, the same as those described in the “Basis of preparation of
consolidated financial statements.”
Segment profit (loss) is based on operating income. Intersegment profits and transfers are based on prevailing market prices.

Integrated Report 2023

100

Consolidated Financial Data
3. Information on net sales, profit or loss, assets, liabilities, and other items by reporting segment
Previous fiscal year (April 1, 2021 to March 31, 2022)

CementNet sales and operating income
Net sales(1) Net sales to outside customers(2) Intersegment sales or transfers
Total
Segment profit (or loss)
Segment assets
Other items
Depreciation expense
Amortization of goodwill
Increase in property, plant andequipment and intangible assets

MineralResources

Reporting segments
CementAdvanced
Related Optoelectronics
Materials
Products

Note 1
Other

Total

Millions of yen
Note 2Adjustment
amountConsolidated¥126,620
2,834¥129,454(2,382)
222,132¥12,310
3,993¥16,304
2,264
33,996¥20,723
2,280¥23,004
1,818
18,915¥3,767–¥3,76799
2,872¥14,595–¥14,595
3,304
12,437¥6,191
6,484¥12,676
1,700
26,392¥184,209
15,593¥199,803
6,804
316,747¥–(15,593)¥(15,593)
74
14,360¥184,209–¥184,209
6,878
331,107

15,026
–

2,279
–

539
31

67
–

815
–

588
–

19,31731

18–

19,33631¥16,200¥1,897¥405¥162¥1,883¥134¥20,684¥–¥20,684[Related information]
Previous fiscal year (April 1, 2021 to March 31, 2022)
1. Information by product and service
Because similar information is disclosed in segment information, this information is omitted.
2. Geographical information
Net sales
Because net sales in the Japan area constitute more than 90% of net sales stated in the consolidated statements of income,information regarding geographical areas is omitted.
Property, plant and equipment
Because property, plant and equipment located in Japan accounts for over 90% of the property, plant and equipment stated in the
consolidated balance sheets, information regarding geographical areas is omitted.
Current fiscal year (April 1, 2022 to March 31, 2023)
1. Information by product and service
Because similar information is disclosed in segment information, this information is omitted.
2. Geographical information
Net sales
Because net sales in the Japan area constitute more than 90% of net sales stated in the consolidated statements of income,information regarding geographical areas is omitted.

(Notes) 1. Eliminations and adjustments are described below.
		 (1) Adjustments for segment profit (or loss) of ¥74 million include elimination of inter-segment profit and loss.
		 (2) Adjustments for segment assets of ¥14,360 million include ¥39,223 million of corporate assets, which are not allocable to a reportable segment,and ¥(24,862) million of elimination of inter-segment profit and loss. Corporate assets mainly consist of long-term investment funds (investment
securities) and assets attributable to administrative divisions.
		 (3) Adjustments for depreciation and amortization of ¥18 million include ¥41 million of depreciation and amortization for corporate assets and ¥(23)
million of elimination of inter-segment profit and loss.
2. Segment profit (or loss) has been adjusted to the operating income reported in the consolidated statements of income.

[Impairment loss on noncurrent assets by reporting segment]

Current fiscal year (April 1, 2022 to March 31, 2023)

Previous fiscal year (April 1, 2021 to March 31, 2022)

CementNet sales and operating income
Net sales(1) Net sales to outside customers(2) Intersegment sales or transfers
Total
Segment profit (or loss)
Segment assets
Other items
Depreciation expense
Amortization of goodwill
Increase in property, plant andequipment and intangible assets

Millions of yen
Note 1
Note 2
Other

Total

Adjustment
amountConsolidated

CementImpairment loss

Millions of yen

MineralResources¥6¥4

Reporting segments
CementAdvanced
Related Optoelectronics
Materials
Products

¥–

¥–

Other

¥–

Total

¥–

¥10

Adjustment
amountConsolidated

¥2

¥12

(Note) The adjustment amount of ¥2 million is related to the idle assets, etc. included in corporate assets.

¥140,344
3,326¥143,671(19,542)
248,784¥13,370
4,324¥17,695
2,448
39,827¥22,107
2,726¥24,834
1,511
20,465¥2,385
5¥2,391(129)
2,022¥21,678–¥21,678
5,384
16,530¥4,818
10,831¥15,649
1,867
23,357¥204,705
21,215¥225,921(8,460)350,987–(21,215)¥(21,215)
(94)
5,570

¥204,705–
204,705(8,555)356,558

15,751
–

2,078
–

510
31

66
–

1,299
–

490
–

20,19531

18–

20,214
31¥22,570¥3,005¥466¥220¥3,184¥219¥29,666¥–¥29,666

CementNet sales and operating income
Net sales(1) Net sales to outside customers(2) Intersegment sales or transfers
Total
Segment profit (or loss)
Segment assets
Other items
Depreciation expense
Amortization of goodwill
Increase in property, plant andequipment and intangible assets

MineralResources

Reporting segments
CementAdvanced
RelatedOptoelectronics
Materials
Products

Property, plant and equipment
Because property, plant and equipment located in Japan accounts for over 90% of the property, plant and equipment stated in the
consolidated balance sheets, information regarding geographical areas is omitted.

MineralResources

Reporting segments
CementAdvanced
RelatedOptoelectronics
Materials
Products

Current fiscal year (April 1, 2022 to March 31, 2023)

CementImpairment loss

Total

Adjustment
amountConsolidated

MineralResources

¥5

¥1

¥–

¥–

¥–

Other

Total

¥594

¥601

Current fiscal year (April 1, 2022 to March 31, 2023)

Thousands of U.S. dollars
Note 1
Note 2
Other

Millions of yen
Reporting segments
CementAdvanced
RelatedOptoelectronics
Materials
Products

CementImpairment loss

Consolidated

¥7

¥608

Thousands of U.S. dollars

MineralResources$41

Adjustment
amount$9

Reporting segments
CementAdvanced
RelatedOptoelectronics
Materials
Products

$–

$–

$–

Other

Total

$4,452$4,503Adjustment
amountConsolidated$54$4,557(Note) The adjustment amount of ¥7 million (US$54 thousand) is related to the idle assets, etc. included in corporate assets.

$1,051,036
24,913$1,075,950(146,353)
1,863,134$100,134
32,387$132,521
18,335298,263$165,564
20,421$185,985
11,320153,267$17,86442$17,907(972)
15,143$162,349–$162,349
40,325
123,792$36,082 $1,533,031
81,117
158,882$117,200 $1,691,914
13,982(63,363)
174,924 2,628,527$– $1,533,031(158,882)–$(158,882) $1,533,031(707)(64,070)
41,719 2,670,246

117,960–

15,562
–

3,820
238

495
–

9,734
–

3,672
–

151,245238

138–

151,384
238$169,032$22,506$3,491$1,648$23,848$1,644$222,171$–$222,171[Information relating to goodwill amortization and unamortized balance by reporting segment]
Previous fiscal year (April 1, 2021 to March 31, 2022)

CementAmortization in the fiscal year
Unamortized balance at end of the
fiscal year

Millions of yen

MineralResources

Reporting segments
CementAdvanced
Related Optoelectronics
Materials
Products

Other

Total

Adjustment
amountConsolidated

¥–

¥–

¥31

¥–

¥–

¥–

¥31

¥–

¥31

¥–

¥–

¥127

¥–

¥–

¥–

¥127

¥–

¥127

(Notes) 1. Eliminations and adjustments are described below.
		 (1) Adjustments for segment profit (or loss) of ¥(94) million (US$(707) thousand) include elimination of inter-segment profit and loss.
		 (2) Adjustments for segment assets of ¥5,570 million (US$41,719 thousand) include ¥32,735 million (US$245,154 thousand) of corporate assets,
which are not allocable to a reportable segment, and ¥(27,164) million (US$(203,435) thousand) of elimination of inter-segment profit and loss.
Corporate assets mainly consist of long-term investment funds (investment securities) and assets attributable to administrative divisions.
		 (3) Adjustments for depreciation and amortization of ¥18 million (US$138 thousand) include ¥40 million (US$306 thousand) of depreciation andamortization for corporate assets and ¥(22) million (US$(167) thousand) of elimination of inter-segment profit and loss.
2. Segment profit (or loss) has been adjusted to the operating loss reported in the consolidated statements of income.

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102

Consolidated Financial Data

Company Information

Current fiscal year (April 1, 2022 to March 31, 2023)

MineralResources

CementAmortization in the fiscal year
Unamortized balance at end of the
fiscal year

Millions of yen
Reporting segments
CementAdvanced
RelatedOptoelectronics
Materials
Products

Other

Total

Consolidated

¥–

¥–

¥31

¥–

¥–

¥–

¥31

¥–

¥31

¥–

¥–

¥95

¥–

¥–

¥–

¥95

¥–

¥95

Current fiscal year (April 1, 2022 to March 31, 2023)

Company Overview / Stock Information (as of March 31, 2023)
Company
Established
Head Office

Thousands of U.S. dollars
MineralResources

CementAmortization in the fiscal year
Unamortized balance at end of the
fiscal year

Adjustment
amountReporting segments
CementAdvanced
RelatedOptoelectronics
Materials
Products

Other

Total

Adjustment
amountConsolidated

$–

$–

$238

$–

$–

$–

$238

$–

$238

$–

$–

$714

$–

$–

$–

$714

$–

$714

Sumitomo Osaka Cement Co., Ltd.
November 29, 1907
Shiodome Sumitomo Bldg. 1-9-2 Higashi-Shimbashi,
Minato-ku, Tokyo 105-8641, Japan
Telephone number +81-3-6370-2700

Employees

Non-consolidated: 1,243
Consolidated: 
2,896¥41.6 billion

CapitalPrimary Group Companies
Name

SectorHachinohe Cement Co., Ltd.

Cement manufacturing

Wakayama Slag Cement Co., Ltd.

Blast furnace cement manufacturing

SOC Logistics Co., Ltd.

Coastal shipping services

SOC Marine Co., Ltd.

Ship leasing and cargo handling services

Taiyo Holdings Co., Ltd.

Holding company

Taiyo Kisen Co., Ltd

Ship leasing

Izumi Unyu Co., Ltd.

Truck transport of specified cargoes

Sumice Kenzai Co., Ltd.

Cement and ready-mixed concrete wholesaling

Tokai Sumice Co., Ltd.

Cement and ready-mixed concrete wholesaling

Kitaura SOC Co., Ltd.

Cement and ready-mixed concrete wholesaling[Related party transaction information]
Previous fiscal year (April 1, 2021 to March 31, 2022)
Not applicable.

Izumi Industry Ltd.

Crushed rock wholesaling and contract manufacturing of cement

Tokyo SOC Co., Ltd.

Ready-mixed concrete manufacturing

SO Engineering Co., Ltd.

Equipment and facility installation

Current fiscal year (April 1, 2022 to March 31, 2023)
Not applicable.

Chuken Consultant Co., Ltd.

Construction consulting

Shuho Kogyo Co., Ltd.

Limestone excavation and sales

Shiga Kosan Co., Ltd.

Limestone excavation and sales(Per share information)

Estec Co., Ltd.

Civil engineering

SNC Co., Ltd.

Concrete product manufacturing and civil engineering[Information relating to gains incurred from negative goodwill by reporting segment]
Previous fiscal year (April 1, 2021 to March 31, 2022)
Not applicable.
Current fiscal year (April 1, 2022 to March 31, 2023)
Not applicable.

Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Item

Net assets per share
Profit (loss) per share¥5,778.40
262.77Yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)¥5,326.24(166.79)

U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)$39.888(1.249)(Notes) 1. Diluted profit per share is not presented since there is no dilutive stock.
2. The basis for the calculation of profit (loss) per share is as follows.

Previous fiscal year
(April 1, 2021 toMarch 31, 2022)

Profit (loss) attributable to owners of parent
Amount not attributed to common shareholders
Profit (loss) attributable to owners of parent related to common stock
Average outstanding shares during the fiscal year (shares)¥9,674–
9,674
36,816,557

Millions of yen
Current fiscal year
(April 1, 2022 toMarch 31, 2023)¥(5,719)–(5,719)34,295,232

Thousands of U.S. dollars
Current fiscal year
(April 1, 2022 toMarch 31, 2023)$(42,836)–(42,836)

KURICON,LTD.

Manufacture and sales of hume pipes and other concrete products

Sumitec Co., Ltd.

Optical communications equipment and digital equipment manufacturing

Sumitomo Cement Computer Systems Co., Ltd.

Information services

Chiyoda Engineering Co., Ltd.

Construction of electrical facilities

Securities code
Stock exchange listing
Total number of authorized shares
Total number of shares outstanding
Shareholders

5232
Tokyo Stock Exchange
130,000,000
34,329,517 (49,373 shares of treasury stock)
21,354

Status of Major Shareholders
Number of shares owned(thousands of shares)

Ownership ratio(%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

5,804

16.9

NORTHERN TRUST CO. (AVFC) RE SILCHESTER INTERNATIONALINVESTORS INTERNATIONAL VALUE EQUITY TRUST

3,632

10.6

Custody Bank of Japan, Ltd. (Trust Account)

2,279

6.6

Date of gain on sales of investment securities: Scheduled for the end of June 2023 (or possibly July 2023 depending on circumstances)

NORTHERN TRUST CO. (AVFC) RE U. S. TAX EXEMPTED PENSION FUNDS

1,547

4.5

Gain on sales:
Approx. ¥4.2 billion (US$31,453 thousand) (estimate)	The gain on sales of investment securities is an estimated amount calculated based on
the current price of the security, and is subject to change.

THE KILTEARN GLOBAL EQUITY FUND

1,255

3.7

NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NON LENDING 15 PCT TREATY ACCOUNT

1,239

3.6

Purpose of sale:	To review cross-shareholdings and improve capital efficiency based on the Corporate
Governance Basic Policy.

NORTHERN TRUST CO. (AVFC) RE NON TREATY CLIENTS ACCOUNT

Name(Significant subsequent events)(Sales of investment securities)
At the Board of Directors meeting held on June 28, 2023, the Company resolved to sell investment securities held by the Company.
Details of sale of investment securities
Securities to be sold:A listed security(Note) The contents of this financial section are an English translation of the Securities Report, prepared in Japanese, for the 160th term (from April 1, 2022
to March 31, 2023) that was audited by Ernst & Young ShinNihon LLC, the Company’s independent auditor. However, the English translation was not
audited separately by the independent auditor.

1,193

3.5

STATE STREET BANK AND TRUST COMPANY 505103

873

2.5

Sumitomo Life Insurance Company

852

2.5

DFA INTL SMALL CAP VALUE PORTFOLIO

673

2.0

(Note) Ownership ratio is calculated using the number excluding 49,373 shares of treasury stock from the total number of shares outstanding.
In addition, the number of treasury stock excludes 27,300 shares of the Company’s stocks held by the trust relating to the stock-based remuneration plan for officers.

103

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104

Company Information

Network (as of March 31, 2023)

Third-Party Verification Report

Network in Japan

Based on the assessment by an independent external third-party assessment organization on factual information on thefiscal 2022 greenhouse gas emission volume of the Group, including its domestic subsidiaries stated under this report, theGroup obtained a guarantee for the appropriateness of the calculated value.

■ Head Office● Branch●

Sapporo Branch

Hokuriku Branch■ Cement Plant■ Limestone Plant● Research Laboratory

Osaka Branch
Ako Plant■

Shikoku Branch

Hachinohe Cement Co., Ltd.

●

Hiroshima Branch
Yamaguchi Mining Station
Kokura Mining Station

■

■ ●
●

■

●

■●
●

■
●

■

●

Karasawa Mining OfficeTochigi Plant■■●

Fukuoka Branch

Head Office, Tokyo Branch
Funabashi Office
New Technology Research Laboratory
Cement/Concrete Research Laboratory

Nagoya Branch■

Greenhouse Gas Emissions Verification Report

Tohoku Branch

Gifu Plant
Wakayama Slag Cement Co., Ltd.
Kochi Plant

Cement Plant (FY2022)*Excluding plants operating mixing operation

Name

To: Sumitomo Osaka Cement Co., Ltd.

Japan Audit and Certification Organization

Production (tons)

Tochigi Plant

793,000

Gifu Plant

1,077,000

Ako Plant

2,819,000

Kochi Plant

3,261,000

Hachinohe Cement Co., Ltd.

1,272,000

Overseas network

August 21, 2023
for Environment and Quality (JACO)
2-2-19 Akasaka Minato-ku, Tokyo, Japan

President ____________________
Japan Audit and Certification Organization for Environment and Quality (JACO) has been
engaged by Sumitomo Osaka Cement Co., Ltd. including its domestic consolidated company(hereinafter referred to as “the Organization”) to conduct independent verification of its GHG
emissions data in the Integrated Report prepared under the responsibility of the Organization.
1. Purpose and scope of verification
With regard to GHG emissions information for the fiscal year 2022 (from April 1, 2022 to March
31, 2023) reported to the report, the verification was conducted. The aim of this verification is toconsider the reliability and accuracy of the GHG emissions data and to provide a verification opinion.

“Dongguan Sumi Sou Optoelectronics Technology., Co., Ltd.
(Guangdong,China)”

1) Scope 1 and Scope 2 Greenhouse gas emissions
 CO2 emissions from energy consumption by business activities at the Organization’s 84 sites
 Greenhouse gas emissions from production processes at 34 domestic factories and mines.
The Organization revised a part of the data in the 專CO2 Emissions fiscal year 2022專 that wasused for the verification based on the verification results. The responsibility for preparing acalculation report and reporting GHG emissions is in the Organization and our responsibility is toexpress an opinion on GHG emissions stated in the calculation report by independent standpoint.

●●●“Shanghai Representative Office(Jing’an District, Shanghai)”“Sumilong Nanotechnology Materials (Shenzhen) Co., Ltd.
(Guangdong, China)”“SOC America Inc.
(New Jersey, US)”

2. Verification procedure
JACO conducted verification in accordance with ISO 14064-3:2019, Greenhouse gases - Part 3:
Specification with guidance for the verification and validation of greenhouse gas statements. We
conducted the following activities as part of limited assurance:●“SOC OCEANIA PTY LTD(New South Wales, Australia)”



Hearing or document inquiries to the Organization’s officials who are responsible for identifying
and accounting greenhouse gas emissions;
Evaluation of the application of the accounting criteria, the method of data measurement, theassumptions adopted by the Organization as well as its basis, and the description of the GHG
statement related to the information (data) used to determine the GHG emissions; andVerification by sampling in order to confirm accuracy of GHG emissions.

3. Conclusion
Based on the procedures we have performed and evidence we have obtained, nothing has cometo our attention that causes us to believe that the Organization’s GHG statements:
Website information
For the details of IR information, please visit our website.
Corporate website

https://www.soc.co.jp/

are not materially accurate and are not a fair representation of the GHG emissions as per thescope of work; andare not prepared in accordance with the methodology implemented by the Organization.

Verified greenhouse gas emissions
Scope 1: 8,230 ktCO2e, Scope 2: 195 ktCO2e
The Organization and JACO verification team did not have any specific conflicts of interest and carried out theverification on an independent basis.

IR Information

https://www.soc.co.jp/ir/

105

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106

Shiodome Sumitomo Bldg. 1-9-2 Higashi-Shimbashi,
Minato-ku, Tokyo 105-8641, Japan
Tel: +81-3-6370-2700
https://www.soc.co.jp/

This report was produced using easy-to-read universal design font. We use FSC®-certificated paper and vegetable oil ink.

Published September 2023