Consolidated Financial Results
for the Fiscal Year Ended March 31, 2016
[Japanese GAAP]
April 27, 2016
Company name: Daihatsu Diesel Mfg. Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange
Code number: 6023
URL: http://www.dhtd.co.jp/
Representative: Takeshi Harada, President
Contact: Osamu Gouda, Managing director
Phone: +81-6-6454-2331
Scheduled date of Annual General Meeting of Shareholders: June 29, 2016
Scheduled date of commencing dividend payments: June 30, 2016
Scheduled date of filing annual securities report: June 29, 2016
Availability of supplementary briefing material on annual financial results: Available
Schedule of annual financial results briefing session: Scheduled (for securities analysts and institutional investors)(Amounts of less than one million yen are rounded down.)
1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2016 (April 1, 2015 to March 31, 2016)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net income
Net sales
Operating income
Ordinary income
attributable toowners of parent
Fiscal year ended
Million yen%
Million yen%
Million yen%
Million yen%
March 31, 2016
57,019
(8.5)
5,493
17.1
5,438
14.8
3,596
19.7
March 31, 2015
62,304
8.2
4,689
(5.7)
4,736
(3.9)
3,004
9.5
(Note) Comprehensive income: Fiscal year ended March 31, 2016: 2,916 million yen [(15.5)%]
Fiscal year ended March 31, 2015: 3,452 million yen [17.2%]
Basic earnings
per share

Diluted earnings
per share

Rate of return on
equityOrdinary income
to total assets

Operatingincome to net
sales

Fiscal year ended
Yen
Yen
%
%
%
March 31, 2016112.9810.9
7.4
9.6
March 31, 2015
94.37
10.0
6.5
7.5
(Reference) Equity in earnings (losses) of affiliated companies: Fiscal year ended March 31, 2016: - million yen
Fiscal year ended March 31, 2015: - million yen(2) Consolidated Financial Position
Total assets

Net assets

Million yen

Equity ratio

Net assets per share

Million yen%

Yen34,224As of March 31, 2016
75,060
As of March 31, 2015
72,071
31,562(Reference) Equity: As of March 31, 2016: 34,204 million yen
As of March 31, 2015: 31,544 million yen

45.6
43.8

1,074.47
990.89(3) Consolidated Cash Flows

Fiscal year ended
March 31, 2016
March 31, 2015

Net cash provided by(used in) operating
activities

Net cash provided by(used in) investing
activities

Net cash provided by(used in) financing
activities

Cash and cash
equivalents at end of
periodMillion yen

Million yen

Million yen

Million yen

3,437
(221)

(3,256)(1,503)(1,510)(2,722)

20,60622,0402. Dividends
Annual dividends
1st
2nd
3rd
Year-endquarter-end quarter-end quarter-end

Total

Total
dividends

Payoutratio(consolidated)

Dividends
to netassets(consolidated)

Fiscal year ended
Yen
Yen
Yen
Yen
Yen Million yen%
March 31, 2015
0.00
8.00
8.00
254
8.5
March 31, 2016
0.00
15.00 15.00
477
13.3
Fiscal year ending
March 31, 2017
0.00
15.00 15.00
13.7(Forecast)(Note) Dividends for the fiscal year ended March 31, 2016 consist of an ordinary dividend of 10.00 yen and acommemorative dividend of 5.00 yen.

%

0.8
1.4

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2017 (April 1, 2016 to
March 31, 2017)(% indicates changes from the previous corresponding period.)
Net salesFirst half
Full year

Operating income

Ordinary income

Net income
attributable toowners of parent

Basic earnings
per share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

28,00063,000

5.9
10.5

1,700
5,000

(9.8)
(9.0)

1,700
5,000

(7.3)
(8.1)

1,200
3,500

(2.2)
(2.7)

37.67
109.89* Notes:(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting
in changes in scope of consolidation): No(2) Changes in accounting policies, changes in accounting estimates and retrospective restatement
1) Changes in accounting policies due to the revision of accounting standards: Yes
2) Changes in accounting policies other than 1) above: No
3) Changes in accounting estimates: No4) Retrospective restatement: No(3) Total number of issued shares (common shares)
1) Total number of issued shares at the end of the period (including treasury shares):
March 31, 2016: 31,850,000 shares
March 31, 2015: 31,850,000 shares2) Total number of treasury shares at the end of the period:
March 31, 2016: 16,170 shares
March 31, 2015: 15,845 shares
3) Average number of shares during the period:
Fiscal Year ended March 31, 2016: 31,833,944 sharesFiscal Year ended March 31, 2015: 31,835,100 shares

(Reference) Summary of Non-consolidated Financial Results
1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2016 (April 1, 2015 toMarch 31, 2016)(1) Non-consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Operating income
Ordinary income
Net income
Fiscal year ended
Million yen%
Million yen%
Million yen%
Million yen%
50,6893,374
March 31, 2016
(9.7)
14.6
4,272
17.7
3,131
18.4
March 31, 2015
56,123
8.2
2,945
(8.9)
3,630 (10.7)
2,643
4.5
Basic earnings per share
Fiscal year ended
March 31, 2016
March 31, 2015

Diluted earnings per share
Yen

Yen

98.36
83.03

-

(2) Non-consolidated Financial Position
Total assets

Net assets

Million yen

Equity ratio

Net assets per share

Million yen%

Yen

As of March 31, 2016
67,20728,58365,217
25,770
As of March 31, 2015
(Reference) Equity: As of March 31, 2016: 28,583 million yen
As of March 31, 2015: 25,770 million yen

42.5
39.5

897.88809.52

2. Non-consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2017 (April 1, 2016 to
March 31, 2017)(% indicates changes from the previous corresponding period.)
Net salesFirst half
Full year

Ordinary income

Basic earnings
per share

Net income

Million yen%

Million yen%

Million yen%

Yen

24,00056,000

2.1
10.5

2,200
4,400

16.1
3.0

1,900
3,500

20.9
11.8

59.65
109.89* Presentation regarding the implementation status of the audit procedures
These financial results are outside the scope of audit procedures under the Financial Instruments and ExchangeAct. At the time of disclosure of these financial results, audit procedures for the financial statements under the
Financial Instruments and Exchange Act have not been completed.
* Explanation of the proper use of financial results forecast and other notes(Note on forward-looking statements)
The financial results forecasts and other forward-looking statements herein are based on information andcertain assumptions deemed reasonable as of the date of publication of this document. Actual results may differ
significantly from these forecasts due to a wide range of factors. Please refer to “Analysis of Operating Results”
on page 3 of the attached material for the assumptions the financial results forecasts are based on, and notes on
their use.
(How to obtain supplementary briefing material on annual financial results and information on the briefing
session)Briefing session for institutional investors and analysts are scheduled to be held on Wednesday, May 25, 2016.
The briefing materials will be posted on the Company’s website after the session.

Table of Contents
1. Operating Results and Financial Position..................................................................................................... 2(1) Analysis of Operating Results ................................................................................................................. 2(2) Analysis of Financial Position................................................................................................................. 3(3) Dividend Policy ...................................................................................................................................... 4(4) Business and Other Risks ........................................................................................................................ 4
2. Overview of the Corporate Group ................................................................................................................ 5
3. Management Policies.................................................................................................................................... 7(1) Basic Management Policies of the Company.......................................................................................... 8(2) Target Management Indices .................................................................................................................... 8(3) Medium- and Long-Term Business Strategies and Issues to be Addressed ............................................ 8
4. Basic Stance Concerning Choice of Accounting Standards ......................................................................... 9
5. Consolidated Financial Statements............................................................................................................. 10(1) Consolidated Balance Sheets ................................................................................................................ 10(2) Consolidated Statements of Income and Comprehensive Income ........................................................ 12(3) Consolidated Statements of Changes in Equity .................................................................................... 14(4) Consolidated Statements of Cash Flows ............................................................................................... 16(5) Notes to the Consolidated Financial Statements ................................................................................... 18(Notes on going concern assumption)..................................................................................................... 18(Important matters that form the basis for preparing Consolidated Financial Statements) .................... 18(Changes in accounting policies) ............................................................................................................ 21(Notes to Consolidated Balance Sheets) ................................................................................................. 21(Notes to Consolidated Statements of Income)....................................................................................... 22(Notes to Consolidated Statements of Comprehensive Income) ............................................................ 22(Notes to Consolidated Statements of Changes in Equity) ..................................................................... 22(Notes to Consolidated Statements of Cash Flows) ................................................................................ 24(Business combinations) ......................................................................................................................... 24(Segment information, etc.) .................................................................................................................... 25(Per share information) ........................................................................................................................... 28(Significant subsequent events) .............................................................................................................. 28(Omission of disclosure) ......................................................................................................................... 28
6. Non-consolidated Financial Statements ..................................................................................................... 29(1) Non-consolidated Balance Sheets ......................................................................................................... 29(2) Non-consolidated Statements of Income .............................................................................................. 31(3) Non-consolidated Statements of Changes in Equity ............................................................................. 32(4) Notes to the Non-consolidated Financial Statements............................................................................ 36(Notes on going concern assumption)..................................................................................................... 36(Significant accounting policies) ............................................................................................................ 36(Notes to Non-consolidated Balance Sheets) .......................................................................................... 38(Notes to Consolidated Statements of Income)....................................................................................... 38(Significant subsequent events) .............................................................................................................. 38
7. Other ........................................................................................................................................................... 39(1) Status of production, orders received, and sales ................................................................................... 39(2) Changes in Directors and Statutory Auditors (Scheduled for June 29, 2016)..................................... 410

11. Operating Results and Financial Position(1) Analysis of Operating Results1) Summary of operating results for the fiscal year under review
During the consolidated fiscal year under review, the Japanese economy saw improvement in corporate
earnings and the employment environment against the backdrop of the government’s economic policies andfiscal policies of the Bank of Japan, but factors such as concerns over a deceleration in emerging markets suchas China and lower crude oil prices, alongside a decline in stock prices and a rapidly weakening yen from the
beginning of 2016 led to conditions for which the outlook became increasingly uncertain.
In the shipbuilding and maritime industry, the primary industry to which the Company makes its sales,
global completed construction volume for newly-built vessels during the previous year was 67,566 thousand
gross tons, or a 4.4% increase year-on-year, but order volume for new vessels was 76,570 thousand gross tons,
or a 6.2% decrease year-on-year. As a historic decline continues in the marine cargo market, the state ofoversupply continues to remain unresolved.
Under such corporate environment, the Company defined the objectives of “Solidification and expansion ofexisting businesses,” “Growth through expansion of peripheral business domains,” and “Initiatives for futurebusiness development in preparation for 100th anniversary” within its Mid-term Management Plan (April 1,2015 to March 31, 2019) that began during the fiscal year under review, and advanced active businessexpansion.
Concerning “Solidification and expansion of existing businesses,” to solidify engine sales, the Company hascompleted development of the “DE-33” large engine that accommodates the needs for higher power
consumption in vessels. Additionally, in November 2015, the Company acquired property for the constructionof a new factory in the coastal region of Himeji City, Hyogo Prefecture, and is advancing preparations toward
larger engines to accommodate customer needs and increasing production efficiency. Furthermore, theCompany is focusing on securing and fostering global personnel, and is advancing the strengthening of“technological service ability” and “network ability” on a global scale in the maintenance business, an area ofstrength for the Company.
Concerning “Growth through expansion of peripheral business domains,” the Company will leverage its
management resources in the existing internal combustion-related business to the limit, and advance active
entry and expansion into related business domains. In April 2015, regarding scrubbers, machines that eliminate
SOx from exhaust gas, the Company concluded an exclusive sales agency agreement for the Japanese market
with US-based Belco Technologies Corporation (BELCO). Additionally, in July 2015, the Company acquired
shares of Nippon Nozzle Seiki Co., Ltd., a company with strength in development and production of fuelinjection systems, an important component for engines, and made it a subsidiary.
Concerning “Initiatives for future business development in preparation for 100th anniversary,” the Company
will aim to (1) establish a growth foundation by improving shareholder value, and (2) restructure the businessportfolio. As a part of these measures, the Company has announced a target dividend payout ratio of 20%
during the period of the Mid-term Management Plan. Moving forward, aiming for long-term growth, theCompany will work to strengthen corporate governance and enrich dialogue with stakeholders.
As a result, consolidated net sales decreased by 8.5% year-on-year to 57,019 million yen, operating income
increased by 17.1% year-on-year to 5,493 million yen, ordinary income increased by 14.8% year-on-year to
5,438 million yen, and profit attributable to owners of parent increased by 19.7% year-on-year to 3,596 million
yen.
Performance by business segment of the Company and the consolidated Group are as follows.
<Internal combustion engines>
1. Marine-use
While unit sales, centered on mainstay auxiliary power generators, decreased and decline in profitability forengines continued, centered on overseas projects, maintenance-related sales increased, resulting in a decrease in
net sales by 15.6% year-on-year to 44,129 million yen, and an increase in segment income by 10.1% year-on2

year to 7,431 million yen.
2. Land-use
Due to an increase in unit sales centered on the Japanese market and an increase in maintenance-related
sales, net sales increased by 35.3% year-on-year to 10,475 million yen and segment income increased by 91.9%
year-on-year to 564 million yen.
Consequently, including parts sales and maintenance construction, net sales for the segment decreased by
9.1% year-on-year to 54,605 million yen, and segment income increased by 13.5% year-on-year to 7,995
million yen.
<Other>
1. Industrial machinery-related
In the aluminum wheel division, an increase in unit sales for new vehicles caused both net sales andsegment income to increase.
2. Real estate leasing-related
In real estate leasing-related, both net sales and segment income increased slightly.
3. Electricity sales-related
In electricity sales-related, net sales increased and the segment loss decreased.
Consequently, net sales for the segment increased by 6.9% year-on-year to 2,414 million yen, and segment
income increased by 12.0% year-on-year to 434 million yen.
2) Outlook for the next fiscal year
Concerning the outlook of the Group for the next fiscal year, in the mainstay marine-use market, net sales
are forecast to increase year-on-year due to higher unit sale prices, owing to factors such as sales of large
engines for mega container vessels that are the result of a trend for larger vessels at marine cargo companies
aiming to improve transport efficiency, and higher sales for main engines in overseas markets. However,marine cargo market conditions are in an extremely harsh state, highlighted by a record low figure in the Baltic
Dry Index, and exchange rates are trending with a strong yen, causing newly-built vessel prices to decline andengine sale prices to remain low. Additionally, due to a deterioration in conditions of the marine cargo market, a
recovery in volume for orders for newly-built vessels for bulk carriers cannot be projected for 2016, and as theoffshore market is experiencing a significant slowdown due to low crude oil prices, curtailment andrestructuring in Chinese shipyards and declines in operations at South Korean shipyards are becoming severe;amid such extremely uncertain conditions in the sales environment, a harsh business environment is forecast tocontinue in the future.
Conversely, in the land-use market, the fiscal 2016 public works budget calls for enrichment of disasterprevention and mitigation countermeasures in light of localized heavy rain, etc., and after the Great East Japan
Earthquake, the number of companies installing off-grid power generators as a facet of business continuity
planning (BCP) are increasing, causing sales conditions forecasts to be on a solid trend.
Under such circumstances, the Group will work to provide products that fit customer needs, strengthen pricecompetitiveness via thorough raw material cost reductions and expense cuts, and while responding swiftly andappropriately to changes in the market, work to expand the scale of sales and secure profits.
From the factors outlined above, the financial results forecast of the Group for the next fiscal year is 28,000
million yen in net sales, 1,700 million yen in operating income, 1,700 million yen in ordinary income, and1,200 million yen in profit attributable to owners of parent for the first half period and 63,000 million yen in net
sales, 5,000 million yen in operating income, 5,000 million yen in ordinary income, and 3,500 million yen in
profit attributable to owners of parent for the full year.

(2) Analysis of Financial Position
In assets as of the end of the fiscal year under review, notes and accounts receivable - trade increased by 642
million yen from the end of the previous fiscal year while the turnover period of accounts receivable was 106.6
days (compared with 93.9 days at the end of the previous fiscal year), reflecting a lower export ratio.
3

Inventories increased by 2,766 million yen while the turnover period was 68.9 days (compared with 50.6 daysat the end of the previous fiscal year). Property, plant and equipment increased by 1,023 million yen from theend of the previous fiscal year to 16,146 million yen due to the acquisition of land for a new factory and otherfactors. Total assets as of March 31, 2016 amounted to 75,060 million yen, an increase of 2,988 million yen
compared with the end of the previous fiscal year.
In liabilities, notes and accounts payable - trade and electronically recorded obligations in total decreased by
106 million yen from the end of the previous fiscal year while their turnover period was 78.6 days (comparedwith 75.6 days at the end of the previous fiscal year). In addition, short-term loans payable and long-term loans
payable in total decreased by 980 million yen from the end of the previous fiscal year to 9,867 million yen,following scheduled repayments. The ratio of interest-bearing liabilities (excluding lease obligations) to net
sales at the end of the current fiscal year was 17.3%, down 0.1 point from the end of the previous fiscal year.
Net defined benefit liability increased by 582 million yen due to lower discount rates. Income taxes payable
also increased by 433 million yen. As a result, total liabilities increased by 326 million yen from the previous
fiscal year to 40,836 million yen.

(3) Dividend Policy
The Company views the return of profits to shareholders as an important management objective, and while
maintaining internal reserves to improve profitability and strengthen its financial standing, the Company has abasic policy of implementing distribution of profits in accordance with business results, and has placed a“dividend payout ratio of 20%” as a target under the Mid-term Management Plan period (April 1, 2015 toMarch 31, 2019).
(4) Business and Other Risks
Forward-looking statements, such as forecasts, anticipation, expectations, and prospects, indicated in thissection reflect the judgment of the Group as of March 31, 2016 and actual results in the future may differ
significantly from them.
1) Foreign exchange risk
For certain products and related parts and services, the Group conducts sales and procurement in regions
other than Japan, and may conduct these transactions in the US dollar, euro, or other local currency, aside fromthe yen. Some overseas consolidated subsidiaries also conduct sales in yen, and concerning these accounts
receivable at the fiscal year-end, foreign exchange losses or gains may occur due to foreign exchange
fluctuation of the standard accounting currency, and it is possible that there may be an effect on business results
or financial conditions.
2) Cash flows
Consolidated net sales of the Group amounted to 57,019 million yen while interest-bearing debt (excluding
lease obligations) was 9,867 million yen. In addition, cash and cash equivalents at the end of the fiscal year
under review decreased by 1,434 million yen. This is mainly because of increased working capital reflecting
expansion of sales and repayment of loans. Moving forward, the Group will strengthen cash flow improvement
activities, and work toward measures to strengthen the financial standing through inventory reduction andimprovement in transaction conditions, etc., but as fund procurement is dependent on indirect financing,variations in financial trends may have an effect on cash flows.
3) Dependence on technologies of certain suppliers
The Group sources many of the parts that comprise an engine from outside sourcing, and certain key parts
are dependent upon suppliers that possess specific advanced technologies. Concerning these, it is possible thatprocurement may become unstable due to conditions at the suppliers. Additionally, the Group is working
toward continued reduction of procurement costs via measures such as domestic procurement at lower costs
and seeking new suppliers in countries such as China, but if factors such as a rise in prices for specificmaterials arise, it is possible that cost reductions will not proceed steadily.

44) Legal restraints
Regulations regarding environmental burden reduction are becoming increasingly strict toward diesel
engines, a mainstay product of the Company. In addition to the Air Pollution Control Act for land-use,
restrictions for exhaust gases based on the International Convention for the Prevention of Pollution from Ships
are forecast to add another level of strictness for marine-use. While the Group is working toward productdevelopment to satisfy these restrictions, if delays arise during development, there may be an effect on policies
to secure and expand market share for the Company’s products.
5) Credit risk associated with accounts receivable
The Group possesses accounts receivable toward transaction partners. As a result, amid changes in financial
trends and uncertainty in the economy, the Sales and Transaction Partner Management Committee wasestablished, and countermeasures are in place to prevent occurrence of bad debts and doubtful account losses
by continuously paying close attention to business conditions of credit counterparties. However, there may be
manifestations of collection risk if unforeseen or unavoidable conditions arise due to sudden changes in themarket environment, etc.
6) Risk of natural disasters
The production of the Group’s mainstay diesel engines is concentrated at the Moriyama Factory in
Moriyama City, Shiga Prefecture, and if a large-scale earthquake occurs, production activities may be impacted.
7) Risk of oversea expansion
The economic environment surrounding the marine cargo and vessel markets, which most greatly affect theGroup, is heavily impacted by expansion of emerging markets, particularly the Chinese economy, and if
unforeseen circumstances cause the vessel market in China to shrink and engine production volume at licensees
in China to sharply decrease, there may be discord in the medium-term plan to aim for share expansion for
Daihatsu-branded engines in tandem with Chinese licensee engines.

2. Overview of the Corporate GroupThe Group is comprised of the Company and its 22 subsidiaries and other companies, and engages in thebusinesses such as production and distribution of internal combustion engines and industrial equipment as well as
real estate leasing.
Concerning the industrial equipment business, all deliveries are made to one other associated company.
Businesses and the position of the Company and each subsidiary and associated companies within the relevantbusiness are as follows.

5Category

Main Products (Business)

Major Companies
Daihatsu Diesel Mfg. Co., Ltd., DAIHATSU DIESEL EAST JAPANCO., LTD., DAIHATSU DIESEL NAKANIHON CO., LTD.,

Diesel engines for marine-use

DAIHATSU DIESEL SHIKOKU CO., LTD., DAIHATSU DIESEL

Diesel engines for land-use

NISHINIHON CO., LTD.

Gas turbine

DAIHATSU DIESEL (ASIA PACIFIC) PTE. LTD.

Sales of parts for the above

DAIHATSU DIESEL (EUROPE) LTD.
DAIHATSU DIESEL (AMERICA), INC.

Internal Marine-use/
combustion land-use
engines
engines

DAIHATSU DIESEL (SHANGHAI) CO., LTD.
Information handling service

Other

Industrial
equipment
Real estateleasing
Precision
parts

DAITEK COMPANY INCORPORATEDTransportation

DS CORPORATIONInternal warehouse management

DAIHATSU DIESEL PARTS SERVICE CO., LTD.,

DesignDD TECHNICAL CO., LTD.*1

Production and distribution

DAIHATSU DIESEL ANQING IRONWORKS.CO., LTD.*2

After-sales service

MD ENGINEERING CO., LTD.*1

Sale of aluminum wheels

Daihatsu Diesel Mfg. Co., Ltd.

Rental office

Daihatsu Diesel Mfg. Co., Ltd., DAIHATSU DIESEL UMEDA
CITY CO., LTD.

Precision parts

Nippon Nozzle Seiki Co., Ltd.*1(Notes)1. Marked with *1: Non-consolidated subsidiaries
2. Marked with *2: Associated companies
3. Aside from the above, there is a consolidated subsidiary “DAIHATSU DIESEL HIMEJI CO., LTD.” It is not included as thecompany is in business preparation phase.

6

The chart shows the relationship stated above.
Information handlingservice
DAITEK COMPANY
INCORPORATEDSale of internal combustion
engines and parts
9 companies

Transportation
DS CORPORATIONInternal warehousemanagement
DAIHATSU DIESELPARTS SERVICE CO., LTD.
Internal combustion
engines(Marine-use/land-use engines)

After-sales service(Non-consolidated
subsidiary)
MD ENGINEERING CO.,LTD.

Daihatsu Diesel
Mfg. Co., Ltd.

Design(Non-consolidated
subsidiary)
DD TECHNICAL CO., LTD.

Production and distribution(Affiliate)
DAIHATSU DIESELANQINGIRONWORKS.CO., LTD.

Generalcustomers
Rental office
DAIHATSU DIESELUMEDA CITY CO., LTD.
Other
(Real estateleasing-related)
Delivery of aluminum
wheels(Other associatedcompany)
Daihatsu Motor Co., Ltd.

Other
(Industrial
machinery-related)
Other(Power sellingrelated)

DAIHATSUDIESEL UMEDA
CITY CO., LTD.

Other
(Real estateleasing-related)(Non-consolidated
Other
subsidiary)(Precision partsNippon Nozzle
related)
Seiki Co., Ltd.

(Notes)1. DAIHATSU DIESEL UMEDA CITY CO., LTD. partially owns the “Umeda Sky Building,” and is in the rental office business.
2. Aside from the above, there is a consolidated subsidiary “DAIHATSU DIESEL HIMEJI CO., LTD.” It is not included as the company is inbusiness preparation phase.

73. Management Policies(1) Basic Management Policies of the Company
The Company holds as its corporate philosophy, “to strive unstintingly for the betterment of society andsymbiosis with our neighbours, drawing on the bold spirit of creativity and yearning for technologicalachievement we nurture within ourselves.”
Under this corporate philosophy, the Company holds the management policy of “(1) providing new
products and services to satisfy customers, (2) business expansion that is in harmony with the trend ofprotecting the earth environment, and (3) building an energetic and positive-minded corporate environment,
on a strong but flexible management structure which enable the Company to swiftly respond to changes in thebusiness world and secure necessary profits.” By implementing these management policies, each Group
company will expand its business activities in a unified way, and the Group aims for further growth andprosperity as a corporate group that is recognized as a significant presence for all persons that come into
contact with the Company, including customers, shareholders, transaction partners, and employees.
(2) Target Management Indices
To enhance its corporate value, the Group considers that the improvement of the net sales to ordinary
income ratio and the equity ratio are important.
(3) Medium- and Long-Term Business Strategies and Issues to be Addressed
In the shipbuilding and maritime industry, which is the mainstay sales target for the Group, demand forships undergoes peaks and valleys, and currently, the current supply-demand gap is at an unprecedented level
as resolution for overinvestment from prior to the 2008 global financial crisis fails to progress, and it isforecast that an extremely harsh business environment will persist. Amid a market where such fluctuations in
the market are fierce, the Group recognizes that establishing a structure that can continuously grow andexpand moving forward through securing continuous sales and profits at a certain level is its largest
management issue. The Company prioritizes the following three strategies in the medium- to long-term
management strategies to resolve such issue.
1. Solidification and expansion of existing businesses
To solidify sales of the Group’s mainstay engines, it will advance product development that meets themarket needs and pursue high-quality, low-cost production with short lead-time. It will clarify priority
markets and strategic goals and promote initiatives for continuous expansion of engine sales while advancing
structural reform including restructuring of the global sales network and after-sales service structure andhuman resource development.
2. Growth through expansion of peripheral business domains
By leveraging the management resources in existing businesses, with respect to businesses such as theenvironment-friendly products business and the accessories business, the Group will advance measures
toward expanding business into new business domains while considering the use of outside resources.
3. Initiatives for future business development in preparation for 100th anniversary
The Company will celebrate its 50th anniversary since its founding in May 2016. Toward continuous
growth in view of the 100th anniversary, the Company will restructure businesses across the entire group inorder to improve its market value, and advance measures toward transforming into a highly profitablecorporation.

84. Basic Policy Concerning Selection of Accounting Standards
Taking into consideration the comparability of consolidated financial statements among companies, theGroup prepares its consolidated financial statements using Japanese GAAP.
With regard to International Financial Reporting Standards, the Group’s policy is to respond appropriately
based on consideration of the situation in Japan and overseas.

9

5. Consolidated Financial Statements(1) Consolidated Balance Sheets(Million yen)
As of March 31, 2015
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

10

As of March 31, 2016

23,29916,325
9,382
1,747
2,091
(14)
52,83021,412
16,967
12,148
1,873
1,548
(9)
53,940

6,755
4,178
3,085
458
644
15,122
605

6,690
3,648
4,403
674
729
16,146
728

1,109
3
1,894
520
(15)
3,513
19,241
72,071

1,715
2
2,048
510
(33)
4,244
21,11975,060(Million yen)
As of March 31, 2015
Liabilities
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans payable
Lease obligations
Income taxes payable
Provision for bonuses
Provision for directors' bonuses
Accrued expenses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Provision for directors' retirement benefits
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

11

As of March 31, 2016

10,384
1,948
4,355
234
815
647
60
3,403
2,473
24,323

7,941
4,284
6,563
287
1,249
713
85
2,867
3,118
27,110

6,492
538
399
6,136
135
2,483
16,18640,509

3,304
621
463
6,718
137
2,480
13,72540,8362,434
2,170
26,933(10)
31,5282,434
2,170
30,275(10)
34,870

275
(4)
69
(324)
15
17
31,562
72,071

205
39
(910)
(665)
19
34,22475,060(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income(Million yen)
For the fiscal year
ended March 31, 2015
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Fiduciary obligation fee
Reversal of allowance for doubtful accounts
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Miscellaneous loss
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Insurance income
Compensation income
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Loss on abandonment of non-current assets
Loss on sales of non-current assets
Loss on valuation of golf club membership
Impairment loss
Other
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

12

For the fiscal year
ended March 31, 2016

62,30446,895
15,40957,01940,584
16,435

7,975
2,745
10,720
4,689

8,005
2,937
10,942
5,493

29
24
23
88
81
248

27
30
82
2
77
220

140
20
39
200
4,736

121
113
40
275
5,438

27
104
67
1
200

5
7
12

49
0
1
87
0
138
4,798
1,460
331
1,792
3,005
1
3,004

18
0
0
5
1
25
5,425
1,828
(1)
1,827
3,598
1
3,596

Consolidated Statements of Comprehensive Income(Million yen)
For the fiscal year
ended March 31, 2015
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests

13

For the fiscal year
ended March 31, 2016

3,005

3,598

98
(4)
103
249

(69)
4
(30)
(586)

447

(681)

3,452

2,916

3,451

2,915

1

1

(3) Consolidated Statements of Changes in Equity
For the fiscal year ended March 31, 2015
(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus Retained earnings Treasury shares

2,434

2,170

24,662(8)

29,258

(478)
2,434

2,170

(478)

24,183

Changes of items during
periodDividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during period
Balance at end of current
periodTotal
shareholders’equity(8)28,780

(254)

(254)

3,004

3,004
(1)

(1)

-

-

2,749

(1)

2,748

2,434

2,170

26,933(10)

31,528

Accumulated other comprehensive income

Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

Valuationdifference on
availablefor-salesecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

Remeasurementsof defined
benefit plans

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests

Total net
assets

176

-

(34)

(574)

(431)

16

28,843
(478)

176

-

(34)

(574)

(431)

16

28,365

Changes of items during
periodDividends of surplus(254)

Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items
other thanshareholders' equity
Total changes of items
during period
Balance at end ofcurrent period

3,004
(1)
98

(4)

103

249

447

1

448

98

(4)

103

249

447

1

3,196

275

(4)

69

(324)

15

17

31,56214

For the fiscal year ended March 31, 2016
(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Effect of changes inaccounting standards
applied to foreignsubsidiaries
Restated balance

Capital surplus Retained earnings Treasury shares

2,434

2,170

26,933(10)

31,528

2,434

2,170

26,933(10)

31,528Changes of items during
periodDividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during period
Balance at end of current
periodTotal
shareholders’equity

(254)

(254)

3,596

3,596
(0)

(0)

-

-

3,342

(0)

3,341

2,434

2,170

30,275(10)

34,870

Accumulated other comprehensive income

Balance at beginning ofcurrent period
Effect of changes inaccounting standards
applied to foreignsubsidiaries
Restated balance

Valuationdifference on
availablefor-salesecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

Remeasurementsof defined
benefit plans

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests

Total net
assets

275

(4)

69

(324)

15

17

31,562

(9)

275

(4)

(9)

60

(324)

6

(9)

17

31,552

Changes of items
during period
Dividends of surplus(254)

Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items
other thanshareholders' equity
Total changes of items
during period
Balance at end ofcurrent period

3,596
(0)
(69)

4

(20)

(586)

(672)

1

(670)

(69)

4

(20)

(586)

(672)

1

2,671

205

-

39

(910)

(665)

19

34,22415

(4) Consolidated Statements of Cash Flows(Million yen)
For the fiscal year
ended March 31, 2015
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors' bonuses
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for directors' retirement
benefits
Interest and dividend income
Interest expenses
Loss (gain) on sales of property, plant and equipment
Loss on abandonment of non-current assets
Impairment loss
Insurance income
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Decrease/increase in consumption taxes
receivable/payable
Increase (decrease) in guarantee deposits received
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Proceeds from compensation
Proceeds from insurance income
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from redemption of investment securities
Purchase of shares of subsidiaries
Payments of loans receivableCollection of loans receivable
Proceeds from withdrawal of time deposits
Payments into time deposits
Net cash provided by (used in) investing activities

16

For the fiscal year
ended March 31, 2016

4,798
2,106
(97)
(0)
5
(564)

5,425
2,152
12
66
25
(328)

57

63

(54)
140
(26)
49
87
(104)

(58)
121
(5)
18
5
-

(321)

(776)

(1,457)(1,520)(2,767)65(1,001)

576

(2)
(148)
1,943
53
(141)
104
(2,181)
(221)

(1)
263
4,858
58
(122)
73
(1,430)3,437(1,505)
3
(9)
(0)
1
(20)
(52)
29
492
(441)
(1,503)(2,819)
49
(19)
23
1
(726)
(351)
216
1,183
(812)
(3,256)

(Million yen)
For the fiscal year
ended March 31, 2015
Cash flows from financing activities
Increase (decrease) in short-term loans payable
Repayments of finance lease obligations
Proceeds from long-term loans payable
Repayments of long-term loans payable
Purchase of treasury shares
Cash dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

17

For the fiscal year
ended March 31, 2016

(3,705)(218)
4,200(2,742)(1)(254)(2,722)
239

(274)
(980)
(0)
(254)
(1,510)(105)(4,207)
26,24722,040(1,434)22,04020,606

(5) Notes to the Consolidated Financial Statements(Notes on going concern assumption)
There is no relevant information.
(Important matters that form the basis for preparing Consolidated Financial Statements)
1. Scope of consolidation(1) Numbers of consolidated subsidiaries: 13
Principal companies:
DAIHATSU DIESEL EAST JAPAN CO., LTD., DAIHATSU DIESEL NISHINIHON CO., LTD.
DAIHATSU DIESEL SHIKOKU CO., LTD., DAIHATSU DIESEL NAKANIHON CO., LTD.,DAIHATSU DIESEL (ASIA PACIFIC) PTE. LTD., DAIHATSU DIESEL (EUROPE) LTD.,DAIHATSU DIESEL (AMERICA), INC., DAIHATSU DIESEL (SHANGHAI) CO., LTD.
(2) Major non-consolidated subsidiaries:
DD TECHNICAL CO., LTD.
MD ENGINEERING CO., LTD.
Nippon Nozzle Seiki Co., Ltd.
Reasons for exclusion from scope of consolidation
These companies are excluded from the scope of consolidation as they are small in size and do not havematerial impact on the Consolidated Financial Statements with respect to total assets, net sales, profit or loss
and retained earnings (corresponding to the percentage of shares).
2. Application of the equity method
Major non-consolidated subsidiaries and affiliates not accounted for by the equity method:
DD TECHNICAL CO., LTD.
MD ENGINEERING CO., LTD.
Nippon Nozzle Seiki Co., Ltd.
DAIHATSU DIESEL ANQING IRONWORKS.CO., LTD.
Reason for not applying equity method:
As those companies have only minor impact on the consolidated profit (loss) and retained earnings, andtheir overall impact is not material, the investments in these companies are accounted for at cost rather than by
the equity method.
3. Accounting Standards(1) Valuation standards and methods for important assets
A. Securities(a)Held-to-maturity securities
Stated at amortized cost(b)Available-for-sale securities
Fair market values available ………… Stated at fair market value based on the market value,etc. of the closing date
(All valuation gains or losses are treated as acomponent of net assets, and cost of sales is computedby the moving-average method.)
Fair market values not available …… Stated at cost using the moving-average method18

B. Inventories
Finished goods/work in process/raw materials
Stated at cost using the periodic average method (The book value will be written down for decreased
profitability)(2) Depreciation methods for significant depreciable assets
A. Property, plant and equipment (excluding lease assets)
However, certain consolidated subsidiaries use the declining-balance method.
Those acquired on or before March 31, 2007 will be depreciated in equal amounts over the five-year
period beginning with the year following the completion of depreciation to the permissible limit.
B. Intangible assets (excluding lease assets)
They are depreciated using the straight-line method.
Software for internal use is depreciated using the straight-line method based on their estimated useful
lives (5 years).
C. Lease assets
Lease assets under finance leases wherein ownership of the leased asset does not transfer to thelesseeThese assets are depreciated using the straight-line method over respective lease periods without
residual value.
(3) Accounting standards for significant reserves
A. Allowance for doubtful accounts
In order to prepare for probable losses on collection, estimated amount uncollectible is provided for inaccordance with the historical write-off ratio in the case of ordinary receivables and provided against
estimated future losses on collection based on the detailed credit analysis in the case of doubtful accounts
and other specific receivables.
B. Provision for bonuses
To provide for payment of bonuses to employees, provision for bonuses is provided for based on theestimated amount of payments attributable to the current fiscal year.
C. Provision for directors’ bonuses
To provide for payment of bonuses to directors, provision for directors’ bonuses is provided for basedon the estimated amount of payments attributable to the current fiscal year.
D. Provision for directors’ retirement benefits
To prepare for the payment of retirement benefits to directors, the Company and certain consolidated
subsidiaries provide for the amount of year-end payments pursuant to internal rules of retirement benefits
for directors.
(4) Accounting method for retirement benefits
A. Periodic allocation of projected retirement benefits
In calculating projected benefits obligations, periodic allocation of projected retirement benefits up to
the end of current period is based on the benefit formula basis.
B. Method of amortizing actuarial differences and prior service costs
Prior service costs are recorded as expense over a certain number of years within the averageremaining years of service of the corresponding employees at the time of occurrence (10 years) using thestraight-line method.
Actuarial differences are accounted for as expenses over a certain number of years within the average

19remaining years of service of the corresponding employees (10 years) using the straight-line method,commencing with the consolidated fiscal year following the one in which they were incurred.
(5) Significant hedge accounting
A. Hedge accounting
Deferred hedging is applied. The appropriation procedure is applied to foreign currency receivables andpayables for which forward exchange contracts have been entered.
The special accounting procedure is applied to interest rate swap contracts that qualify for hedge
accounting.
B. Hedging instruments and hedged items
Hedging instruments and hedged items for which hedge accounting was applied for the current fiscal
year are as follows:(a)
Hedging instruments: Forward foreign exchange contracts
Hedged items: Foreign currency trade receivables resulting from product export and future anticipatedtransactions denominated in foreign currency(b)
Hedging instruments: Interest rate swap contracts
Hedged items: Loans payable
C. Hedging policy
The Group conducts derivative transactions to hedge against foreign exchange and interest-rate risks inaccordance with the “Derivative Transaction Handling and Risk Management Regulations.”
D. Evaluation of hedge effectivenessFor forward exchange contract and interest rate swap, the evaluation of hedge effectiveness is omitted
because important conditions for hedge instruments and hedged items are identical, and it can be assumed
that market fluctuations will be completely eliminated at the time hedging begins and at any time
thereafter.
(6) Capital covered by Consolidated Statements of Cash Flows
Capital comprises cash on hand, deposits available for withdrawal as needed, and short-term
investments due for redemption within three months from the date of acquisition, which are easily
cashable and are subject to minimal risk of fluctuation in value.
(7) Other significant matters on presenting Consolidated Financial Statements
Accounting for consumption taxes
Consumption taxes are accounted for by the tax exclusion method.

20

(Changes in accounting policies)
The “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013,
hereinafter the “Business Combinations Standard”), the “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, September 13, 2013, hereinafter the “Consolidated Financial Statements
Standard”), the “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013,
hereinafter the “Business Divestitures Standard”) have been applied from the current fiscal year. Differences
arising from changes in holdings of subsidiaries in cases where the Company continues to have control are now
recorded in capital surplus, and acquisition expenses for business combinations are now treated as expenses in
the consolidated financial statements for the year in which they in which they arise. For business combinations
which occur after the beginning of the current fiscal year, any changes to the allocation of the acquisition costarising from adjustment of the provisional accounting treatment shall be reflected in the consolidated financial
statements for the fiscal year in which the business combination occurred. Additionally, a change inpresentation has been made to the previous “net income” category, and the previous “minority interests” haschanged to “non-controlling interests.” To reflect these changes in presentation, certain items in the
consolidated financial statements for the previous fiscal year have been reclassified.
The Group has adopted these accounting standards prospectively from the beginning of the current fiscal
year, in accordance with transitional treatment based on Article 58-2 (4) of the Business Combinations
Standards, Article 44-5 (4) of the Consolidated Financial Statements Standards, and Article 57-4 (4) of theBusiness Divestitures Standards.
In the consolidated statements of cash flows for the current fiscal year, the cash flows related to purchase orsale of investments in subsidiaries not resulting in change in the scope of consolidation is included in cash
flows from financing activities, and the cash flows related to the expenses for purchase of investments in
subsidiaries resulting in change in the scope of consolidation or expenses for purchase or sale of investments in
subsidiaries not resulting in change in the scope of consolidation is included in cash flows from operating
activities.
None of these changes affect the Consolidated Financial Statements and per share information for thecurrent fiscal year.
(Notes to Consolidated Balance Sheets)
1. Accumulated depreciation of property, plant and equipment(Million yen)
As of March 31, 2015

As of March 31, 2016

35,02736,323

Accumulated depreciation ofproperty, plant and equipment

2. Investments in non-consolidated subsidiaries(Million yen)
As of March 31, 2015
Investment securities (shares)

158

As of March 31, 2016
777

3. Pledged assets and secured payables
Assets pledged for foundation mortgage and secured liabilities are as follows.
(Million yen)
As of March 31, 2015

As of March 31, 2016

Pledged assets

2,749

2,605

Secured liabilities- (Note)- (Note)(Note) Revolving mortgage with regards to bank transactions is set for the assets of the above factory foundation. There
are no secured liabilities.

21

(Notes to Consolidated Statements of Income)
1. Major breakdown of selling, general and administrative expenses
For the fiscal year
ended March 31, 2015

(Million yen)
For the fiscal year
ended March 31, 2016

Salaries/wages/bonuses

3,433

3,564

Provision for bonuses

285

329

Retirement benefit expenses
Provision for directors’ retirement
benefits

371

234

79

186

(Notes to Consolidated Statements of Comprehensive Income)
1. Reclassification adjustment and tax effect relating to other comprehensive income(Million yen)
For the fiscal year
ended March 31, 2016

For the fiscal year
ended March 31, 2015
Valuation difference on available-for-salesecurities
Amount incurred during the period
Reclassification adjustment
Before tax effect adjustment
Tax effect
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Amount incurred during the period
Tax effect
Deferred gains or losses on hedges
Foreign currency translation adjustment
Amount incurred during the period
Tax effectForeign currency translation adjustment
Remeasurements of defined benefit plans
Amount incurred during the period
Reclassification adjustment
Before tax effect adjustment
Tax effectRemeasurements of defined benefit plans,
net of tax
Total other comprehensive income

129
(1)
128
(30)

(95)
(7)
(102)
33

98

(69)

(6)
2
(4)

6
(2)
4

103
103

(30)
(30)

(90)
503
412
(162)

(896)
63
(833)
247

249

(586)

447

(681)

(Notes to Consolidated Statements of Changes in Equity)
For the fiscal year ended March 31, 2015
1. Number of issued shares(Shares)Class of shares

Number of shares at
beginning of period

Common shares

31,850,000

Increase-

22

Number of shares at endof period

Decrease-

31,850,000

2. Number of treasury shares(Shares)Class of shares

Number of shares at
beginning of period

Common shares

14,275

Increase

Number of shares at endof period

Decrease
1,570

Increase by purchase of shares in less than a share-trading unit.

-

15,845

1,570 shares

3. Dividends(1) Cash dividends paid
Resolution

Class ofsharesTotal cash
dividends

Dividend
per share

Record date

Effective dateJune 27, 2014
Annual General
Meeting of
Shareholders

Commonshares254
million yen

Ordinary
dividend
8 yen

March 31, 2014

June 30, 2014

(2) Dividends for which the record date falls in the current period, but the effective date falls in the following period
Resolution

Class ofsharesFunds fordividends

Total cash
dividends

Dividend
per share

Record date

Effective dateJune 26, 2015
Annual General
Meeting of
Shareholders

CommonsharesRetainedearnings

254
million yen

Ordinary
dividend
8 yen

March 31,2015

June 29, 2015

For the fiscal year ended March 31, 2016
1. Number of issued shares(Shares)Class of shares

Number of shares at
beginning of period

Common shares

31,850,000

Increase

Number of shares at endof period

Decrease--

31,850,000

2. Number of treasury shares(Shares)Class of shares

Number of shares at
beginning of period

Common shares

15,845

Increase

Number of shares at endof period

Decrease
325

Increase by purchase of shares in less than a share-trading unit-

16,170325 shares

3. Dividends(1) Cash dividends paid
Resolution

Class ofsharesTotal cash
dividends

Dividend
per share

Record date

Effective dateJune 26, 2015
Annual General
Meeting of
Shareholders

Commonshares254 million
yen

Ordinary
dividend
8 yen

March 31, 2015

June 29, 201523

(2) Dividends for which the record date falls in the current period, but the effective date falls in the following period
Resolution
June 29, 2016
Annual General
Meeting of
Shareholders

Class ofsharesCommonsharesFunds fordividends

Retainedearnings

Total cash
dividends

Dividend
per share

Record date

Effective date477
million yen

Ordinary
dividend
10 yenCommemorative
dividend
5 yen

March 31,2016

June 30, 2016

(Notes to Consolidated Statements of Cash Flows)
1. Relationship between cash and cash equivalents at the fiscal year end and account items listed in theConsolidated Balance Sheets(Million yen)
For the fiscal year
ended March 31, 2015

For the fiscal year
ended March 31, 2016

23,29921,412(1,259)(806)

22,04020,606

Cash and deposits
Time deposits with deposit terms of
more than three months
Cash and cash equivalents(Business combinations)
There is no relevant information.

24

(Segment information, etc.)(Segment information)
1. Description of reportable segments
The reportable segments of the Company categorize the business composition of the Company with respect
to financial information and are based on the financial reporting for performance evaluation with regard toannual business plan for each business at periodical meetings of the Board of Directors.
The Company’s main business is the manufacture and sale of internal combustion engines; it also provides
products that are not related to internal combustion engines to certain affiliates, and conducts business toutilize the real estate held by the Company.
The operative conditions of internal combustion engines, which comprise the majority of the Company’sbusiness, are significantly different between marine-use and land-use, and the Company conducts
management and evaluation by categorizing production, sales, and after-sales service business activities forengines into marine-use and land-use.
As a result, the Company’s reportable segments are Marine-use engines and Land-use engines.
2. Information on net sales, profit (loss), assets, liabilities, and other by reportable segment

For the fiscal year ended March 31, 2015
(Million yen)Amountrecorded in
Adjustment Consolidated(Notes) *2
Financial
Statements(Notes)*3

Reportable segment
Marine-use
engines

Land-useengines

Other(Notes)*1

Total

Total

Net sales(1)

Net sales tooutside customers

52,303

7,742

60,046

2,257

62,304-62,304(2) Inter-segment net
sales or transfers

-

-

-

-

-

-

-

52,303

7,742

60,046

2,257

62,304-62,304

Segment income

6,752

294

7,046

388

7,434

(2,745)

4,689

Other
Depreciation

1,578

228

1,806

207

2,013

92

2,106

Total

(Notes)*1 The “Other” category is a business segment that is not included in reportable segments, and includes the industrial
machinery-related business, the real estate leasing-related business, and the electricity sales-related business.
*2 The adjustment for segment income represents corporate expenses, largely consisting of selling, general andadministrative expenses not attributable to the reportable segments.
*3 Segment income is adjusted with operating income on the Consolidated Statements of Income.
*4 Assets are not allocated to the business segments.

25

For the fiscal year ended March 31, 2016
(Million yen)Amountrecorded in
Adjustment Consolidated(Note) *2
Financial
Statements(Notes)*3

Reportable segment
Marine-use
engines

Land-useengines

Other(Notes)*1

Total

Total

Net sales(1) Net sales
outsidecustomers

to44,12910,47554,6052,414

57,019-57,019

-

-

-

-

-

-

-

44,12910,47554,6052,414

57,019-57,019Segment income

7,431

564

7,995

434

8,430

(2,937)

5,493

Other
Depreciation

1,471

338

1,810

203

2,013

139

2,152

(2) Inter-segment net
sales or transfers
Total(Notes)*1 The “Other” category is a business segment that is not included in reportable segments, and includes the industrial
machinery-related business, the real estate leasing-related business, and the electricity sales-related business.
*2 The adjustment for segment income represents corporate expenses, largely consisting of selling, general andadministrative expenses not attributable to the reportable segments.
*3 Segment income is adjusted with operating income on the Consolidated Statements of Income.
*4 Assets are not allocated to the business segments.

26

(Related information)
For the fiscal year ended March 31, 2015
1. Information by product and service
This is omitted as similar information is disclosed in Segment information.
2. Information by geographical area
1) Net sales
Japan

Asia

Latin America
26,84928,7542,107(Note) Country and region categories are based on geographic proximity.

Other
4,593

(Million yen)Total
62,3042) Property, plant and equipment

This is omitted as the amount of property, plant and equipment located in Japan exceeds 90% of that stated in
the consolidated balance sheet.
3. Information by major customer
This is omitted as there were no external customers whose net sales account for more than 10% of net sales in
the consolidated statements of income.
For the fiscal year ended March 31, 2016
1. Information by product and service
This is omitted, as similar information is disclosed in Segment information.
2. Information by geographical area
1) Net sales
Japan

Asia

Latin America
30,588
19,1342,160(Note) Country and region categories are based on geographic proximity.

Other
5,136

(Million yen)
Total
57,0192) Property, plant and equipment

This is omitted as the amount of property, plant and equipment located in Japan exceeds 90% of that stated in the
consolidated balance sheet.
3 Information by major customer
This is omitted because there were no external customers whose net sales account for more than 10% of net sales
in the consolidated statements of income.

27

(Per share information)
For the fiscal year
ended March 31, 2015

Category

For the fiscal year
ended March 31, 2016

Net assets per share

990.89 yen

1,074.47 yen

Basic earnings per share

94.37 yen

112.98 yen(Note) The basis for the calculation of basic earnings per share is as follows.
For the fiscal year
ended March 31, 2015

Category

For the fiscal year
ended March 31, 2016

Basic earnings per share
Profit attributable to owners of parent (Million yen)

3,004

Amount not attributable to shareholders of common shares(Million yen)
Profit attributable to owners of parent relating to common
3,004
shares (Million yen)
Average number of shares of common shares outstanding
31,835,100 shares
during each fiscal year
(Note) Diluted earnings per share are not presented as there is no share outstanding with dilutive effect.

3,596
3,596
31,833,944 shares(Significant subsequent events)
Not applicable.
(Omission of disclosure)
Disclosure is omitted regarding notes on lease transactions, financial instruments, securities, derivativetransactions, retirement benefit, tax effect accounting, asset retirement obligations, investment and rental properties,
and transactions with related parties since the Company considers there to be no material necessity for disclosing
such information in the Financial Results.

28

6. Non-consolidated Financial Statements(1) Non-consolidated Balance Sheets(Million yen)
As of March 31, 2015
AssetsCurrent assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Raw materials
Work in process
Prepaid expenses
Deferred tax assets
Short-term loans receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Construction in progress
Total property, plant and equipment
Intangible assets
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

29

As of March 31, 2016

19,3791,240
15,468
66
9,232
125
1,602
1,050
1,654
(5)
49,815

16,963
1,027
15,89480
12,019
133
1,761
1,073
994
(4)
49,945

2,057
475
4,131
22
618
2,818
457
10,581

2,086
474
3,597
27
709
4,140
674
11,710

578
6
584

706
7
714

932
1,361
3
1,708
238
(8)
4,236
15,402
65,217

813
2,173
2
1,614
261
(28)
4,838
17,262
67,207

(Million yen)
As of March 31, 2015
Liabilities
Current liabilities
Notes payable - trade
Accounts payable - trade
Electronically recorded obligations - operating
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Accounts payable - otherAccrued expenses
Income taxes payable
Advances received
Deposits received
Provision for bonuses
Provision for directors’ bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Long-term guarantee deposited
Provision for retirement benefits
Provision for directors’ retirement benefits
Asset retirement obligations
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Total capital surpluses
Retained earnings
Legal retained earnings
Other retained earnings
Reserve for advanced depreciation of non-current
assetsReserve for special depreciation
General reserve
Retained earnings brought forward
Total other retained earnings
Total retained earnings
Treasury shares
Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

30

As of March 31, 2016

3,552
6,567
1,948
3,375
980
230
331
3,200
422
401
4,580
542
60
255
26,450

1,217
6,564
4,284
3,375
3,188
283
423
2,735
849
829
4,267
596
85
218
28,917

6,492
531
10
5,510
351
100
12,99639,446

3,304
614
10
5,264
412
101
9,707
38,624

2,434

2,434

2,150
2,150

2,150
2,150

221

221

120

114

62
17,0003,523
20,707
20,929(10)
25,50448
19,6003,820
23,58323,805(10)
28,380270(4)266
25,77065,217

202
202
28,583
67,207

(2) Non-consolidated Statements of Income
Non-consolidated Statements of Income(Million yen)
For the fiscal year
ended March 31, 2015
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest and dividend income
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Miscellaneous loss
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Insurance income
Compensation income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on abandonment of non-current assets
Other
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit31

For the fiscal year
ended March 31, 2016

56,12345,61010,5127,567
2,945

50,68939,432
11,257
7,882
3,374

758
151
910

1,006
134
1,141

142
83
225
3,630

123
119
242
4,272

25
104
67
197

0
7
7

44
0
45
3,782
845
293
1,138
2,643

18
1
20
4,260
1,163
(34)
1,129
3,131

(3) Non-consolidated Statements of Changes in Equity
For the fiscal year ended March 31, 2015
(Million yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Balance at beginning ofcurrent period

Capital
stock

Legal
capitalsurplus

Total capitalsurplusLegalretainedearnings

2,434

2,150

2,150

221

Reserve foradvanced
Reserve fordepreciation
specialof nondepreciation
current
assets
114

74

Generalreserve

Retainedearnings
brought
forwardTotal
retainedearnings

14,5004,108

19,018

(478)

(478)

3,629

18,540

(254)

(254)

(2,500)-14-

Cumulative effects ofchanges in accounting
policies
Restated balance

2,434

2,150

2,150

221

114

74

14,500Changes of items during
periodDividends of surplus
Provision of generalreserve

2,500

Reversal of reserve for
special depreciation(14)

Provision of reserve foradvanced depreciationof non-current assets

13

(13)

-

Reversal of reserve foradvanced depreciationof non-current assets

(12)

12

-

Adjustment to reserve due
to change in tax rate

5

(8)

-

2,643

2,643

2

ProfitPurchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during period

-

-

-

-

6

(11)

2,500

(105)

2,388

Balance at end of current
period

2,434

2,150

2,150

221

120

62

17,0003,523

20,92932

Shareholders’ equity

TreasurysharesBalance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance(8)

Valuation
Total
difference onshareholders’ available-forequity
sale
securities
23,594

Deferred
gains orlosses onhedgesTotalvaluation andtranslation
adjustments

Total net
assets-174

23,769

174

(478)
(8)

Changes of items during
periodDividends of surplus
Provision of generalreserve
Reversal of reserve for
special depreciation
Provision of reserve foradvanced depreciationof non-current assets
Reversal of reserve foradvanced depreciationof non-current assets
Adjustment to reserve
due to change in tax rate
ProfitPurchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during period
Balance at end of current
periodValuation and translation adjustments(1)

23,116

(478)

-

174

174

23,290

(254)

(254)

-

-

-

-

-

-

-

-

-

-

2,643

2,643

(1)

(1)
96

(4)

92

92

(1)

2,387

96

(4)

92

2,479

(10)

25,504

270

(4)

266

25,77033

For the fiscal year ended March 31, 2016
(Million yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

Capital
stock

Legal
capitalsurplus

Total capitalsurplusLegalretainedearnings

2,434

2,150

2,150

221

2,434

2,150

2,150

221

Reserve foradvanced
Reserve fordepreciation
specialof nondepreciation
current
assetsGeneralreserve

Retainedearnings
brought
forwardTotal
retainedearnings

17,0003,523

20,929

-

-

3,523

20,929

(254)

(254)

(2,600)

-

15

-

-

-

-

(8)

8

-

(3)

-

3,131

3,131

120

120

62

62

17,000Changes of items during
periodDividends of surplus
Provision of generalreserve
Reversal of reserve for
special depreciation
Provision of reserve foradvanced depreciationof non-current assets
Reversal of reserve foradvanced depreciationof non-current assets
Adjustment to reserve
due to change in tax rate
ProfitPurchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during period
Balance at end of current
period

2,600
(15)

2

1

-

-

-

-

(6)

(14)

2,600

296

2,876

2,434

2,150

2,150

221

114

48

19,6003,820

23,80534

Shareholders’ equity

TreasurysharesBalance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance(10)

Valuation
Total
difference onshareholders’ available-forequity
sale
securities
25,504

270

Deferred
gains orlosses onhedgesTotalvaluation andtranslation
adjustments

Total net
assets(4)266

25,770(10)Changes of items during
periodDividends of surplus
Provision of generalreserve
Reversal of reserve for
special depreciation
Provision of reserve foradvanced depreciationof non-current assets
Reversal of reserve foradvanced depreciationof non-current assets
Adjustment to reserve
due to change in tax rate
ProfitPurchase of treasury
sharesNet changes of items
other than shareholders'equityTotal changes of items
during period
Balance at end of current
periodValuation and translation adjustments(0)25,504

270

(4)

266

25,770

(254)

(254)

-

-

-

-

-

-

-

-

-

-

3,131

3,131

(0)

(0)
(68)

4

(63)

(63)

(0)

2,876

(68)

4

(63)

2,812

(10)

28,380

202

-

202

28,58335

(4) Notes to the Non-consolidated Financial Statements(Notes on going concern assumption)
Not applicable.

(Significant accounting policies)
1. Valuation standards and methods for securities(1) Investments in subsidiaries and affiliates………Stated at cost using the moving-average method(2) Held-to-maturity securities………Stated at amortized cost(3) Available-for-sale securities
Fair market values available ………… Stated at fair market value based on the market value,etc. of the closing date
(All valuation gains or losses are treated as acomponent of net assets, and cost of sales is computedby the moving-average method.)
Fair market values not available …… Stated at cost using the moving-average method
2. Valuation standards and methods for inventories
Work in process/raw materials………Stated at cost using the periodic average method (The book value will be written down for decreased
profitability)
3. Depreciation methods for non-current assets(1) Property, plant and equipment (excluding leased assets)
They are depreciated using the straight-line method.
Those acquired on or before March 31, 2007 will be depreciated in equal amounts over the five-year period
beginning with the year following the completion of depreciation to the permissible limit.
(2) Intangible assets (excluding leased assets)
They are amortized using the straight-line method.
Software for internal use is depreciated under the straight-line method based on their estimated useful lives(5 years).
(3) Leased assets
Lease assets under finance leases wherein ownership of the leased asset does not transfer to the lessee
These assets are depreciated using the straight-line method over respective lease periods without residual
value.
4. Accounting standards for reserves(1) Allowance for doubtful accounts
In order to prepare for probable losses on collection, estimated amount uncollectible is provided for inaccordance with the historical write-off ratio in the case of ordinary receivables and provided against
estimated future losses on collection based on the detailed credit analysis in the case of doubtful accounts andother specific receivables.
36

(2) Provision for bonuses
To provide for payment of bonuses to employees, provision for bonuses is provided for based on theestimated amount of payments attributable to the current fiscal year.
(3) Provision for directors’ bonuses
To provide for payment of bonuses to directors, provision for directors’ bonuses is provided for based on theestimated amount of payments attributable to the current fiscal year.
(4) Provision for retirement benefits
In order to prepare for payments of employees' retirement benefits, the amount deemed accrued at the end of
the current fiscal year is provided for, based on the projected retirement benefit obligation at that time.
A. Periodic allocation of projected retirement benefits
In calculating projected benefits obligations, periodic allocation of projected retirement benefits up to theend of the current fiscal year is based on the benefit formula basis.
B. Method of amortizing actuarial differences and prior service costs
Prior service costs are recorded as expense over a certain number of years within the average remaining
years of service of the corresponding employees at the time of occurrence (10 years) using the straight-line
method.
Actuarial differences are accounted for as expenses over a certain number of years within the averageremaining years of service of the corresponding employees (10 years) using the straight-line method,commencing with the consolidated fiscal year following the one in which they were incurred.
(5) Provision for directors’ retirement benefits
To prepare for the payment of retirement benefits to directors, the amount of year-end payments pursuant tointernal rules of retirement benefits for directors is provided for.
5. Hedge accounting(1) Hedge accounting
Deferred hedging is applied.
The appropriation procedure is applied to foreign currency receivables and payables for which forward
exchange contracts have been entered.
Special accounting procedures are applied to interest rate swap contracts that qualify for hedge accounting.
(2) Hedging instruments and hedged items
Hedging instruments and hedged items for which hedge accounting was applied for the year under review
are as follows:(a)
Hedging instruments: Forward foreign exchange contracts
Hedged items: Foreign currency trade receivables resulting from product export and future anticipatedtransactions denominated in foreign currency(b)
Hedging instruments: Interest rate swap contracts
Hedged items: Loans payable(3) Hedging policy
The Company conducts derivative transactions to hedge against foreign exchange and interest-rate risks inaccordance with the “Derivative Transaction Handling and Risk Management Regulations.”37

(4) Evaluation of hedge effectivenessFor forward exchange contract and interest rate swap, the evaluation of hedge effectiveness is omitted
because important conditions for hedge instruments and hedged items are identical, and it can be assumed thatmarket fluctuations will be completely eliminated at the time hedging begins and at any time thereafter.
6. Other significant matters on presenting Non-consolidated Financial Statements(1) Accounting method for retirement benefits
The accounting treatment for the balance of unrecognized actuarial differences and unrecognized past
service costs for retirement benefits is different from the treatment for these items in the consolidated financial
statements.
(2) Accounting for consumption taxes
Consumption taxes are accounted for by the tax exclusion method.

(Notes to Non-consolidated Balance Sheets)
1 Pledged assets and secured payables(Million yen)
As of March 31, 2015
Pledged assets
Payables to said assets

As of March 31, 2016

2,749

2,605

- (Note)- (Note)(Note) Revolving mortgage with regards to bank transactions is set for the assets of the above factory

foundation. There are no secured liabilities.

2 Balance with subsidiaries and associates
The amounts included in each item other than those listed separately are as follows:
As of March 31, 2015

As of March 31, 2016

Short-term monetary assets

12,807

13,507

Short-term monetary liabilities

6,062

6,080

(Notes to Consolidated Statements of Income)1 Transactions with subsidiaries and associates

Sales to subsidiaries and associates
Purchases from subsidiaries andassociates
Non-operational transactions withsubsidiaries and associates

For the fiscal year
ended March 31, 2015
41,473(Significant subsequent events)
Not applicable.

38(Million yen)
For the fiscal year
ended March 31, 2016
39,392

5,310

5,376

105

59

7．Other(1) Status of production, orders received, and sales (April 1, 2015 to March 31, 2016)
1) Production
Production by segment for the current fiscal year are as follows:(Million yen)Segment

VolumeAmountYear-on-year change

Horsepower%

Internal combustion engines
Marine-use engines

940,138

44,129(15.6)

Land-use engines

145,240

10,475

35.3

-

1,776

9.2

56,381

(8.6)

Other
Total
(Notes)*1 Amounts are based on sales prices.
*2 The figures above do not include consumption taxes.

2) Orders received
Orders by segment for the current fiscal year are as follows:(Million yen)Order received
Segment

VolumeAmountHorsepower

Order backlogs
Year-on-year
quarterlychange%Horsepower

5.1

1,999,331

14.5

90,443

6.1-

VolumeAmountYear-on-yearchange%Internal combustion engine
Marine-use engines

1,632,609

Land-use engines

116,505

Other

Total

51,474[32,164]
10,273
[558]
1,747
[-]
63,495[32,722]

6.6

37,723[23,201]
3,739
[13]
103
[-]
41,566[23,215]

24.2
(5.1)
(22.1)
20.6(Notes)*1 Amounts are based on sales prices.
*2 Figures in brackets [ ] indicate export orders received and the balance of export orders outstanding, and areincluded in totals.
*3 The figures above do not include consumption taxes.

393) Sales results
Sales by segment for the current fiscal year are as follows:
Segment

VolumeHorsepower

AmountExport ratio%(Million yen)
Year-on-year change%Internal combustion engine
Marine-use engines

940,138

Land-use engines

145,240

Other

44,129[25,858]
10,475
[571]
2,414
[-]
57,019[26,430]

Total

58.6

(15.6)

5.5

35.3

-

6.9

46.4

(8.5)

(Notes)*1 Figures in brackets [ ] indicate export volume, and are included in totals.
*2 Major export destinations and compositions are as follows:
Asia (72.4%), Europe (15.8%), Latin America (8.2%), North America (3.1%), Others (0.5%)*3 The “Other” segment includes industrial machinery-related (1,776 million yen) and real estate leasing-related(638 million yen).
*4 The figures above do not include consumption taxes.

40

(2) Changes in Directors and Corporate Auditors (Scheduled for June 29, 2016)
1. Candidates for new Directors
Isamu Teraoka(Current position: Deputy General Manager, Customer Satisfaction Promotion
Division)Takashi Iida
(Current position: Advisor)
Kazuo Komatsu(Current position: Attorney, Joint Foreign Legal Business, Kitahama Partners)
2. Candidates for new Statutory Auditors
Shinichiro Ogura(Current position: Senior General Manager, Corporate Planning Department)
Noriyoshi Matsushita (Current position: Senior Managing Executive Officer, Daihatsu Motor Co., Ltd.)
3. Directors scheduled to retire
Ryotaro Nakajima(Current position: Managing Director)
Masafumi Yamashita (Current position: Managing Director)
Takashi Okauchi(Current position: Director)
4. Statutory Auditors scheduled to retire
Hideki Yamada(Current position: Standing Statutory auditor)
Ryuichi Narano(Current position: Chief Auditor, Outside Statutory Auditor, Daihatsu Motor Co., Ltd.)5. Appointment scheduled at the Board of Directors meeting to be held after the conclusion of the Annual General
Meeting of Shareholders)
Chairman & Representative Director Takeshi Harada(Current position: President & Representative
Director)
President & Representative Director
Shigeki Kinoshita (Current position: Representative Senior
Managing Director)
Senior managing director
Osamu Gouda(Current position: Managing Director)
Managing director
Yuichi Uemura(Current position: Director)
Managing director
Toshiyuki Fujita(Current position: Director)
Managing director
Takashi Saito(Current position: Director)

41