INTEGRATED REPORT 2019
For the year ended March 31, 2019

Become a Major Global Player
through Continuous Value Creation
The Sanwa Group aims to fulfill its social responsibilities through the business activities
it undertakes in 25 countries worldwide, spanning Japan, North America, Europe, andAsia. Our Mission and Our Values are high-level concepts that all employees adhere towhile carrying out their duties and represent our most important values. Our Principles
of Business and Compliance Code of Conduct are shared by all Group companies.

Our
MissionOur Values

Our Vision

Mid-Term Management Plan

Single Year Plan

Principles of Business

PDCA

Our Mission

The Sanwa Group is committed to offering
products and services that provide safety,
security and convenience to further
contribute to the prosperity of society.
Our Values• To deliver products and services to satisfy all customers.
• To become a true global player and be highly valued in each market in the world.
• To bring together the creativity of each individual in a team environment for the enhancementof corporate value.

Principles of Business• We implement business activities with appreciation and sincerity to increase our customers’ trust.
• We produce products with good quality and reasonable cost meeting domestic and overseas needs and thereby establish the leading brand.
• We forecast our customers’ future needs and always try to improve the technical level and productivity in every division.
• We comply with the rules and make our workplace friendly, open, challenging, and rewarding.
• We are driven by inspiration, strive to achieve our high level goals, recognize our roles and r­ esponsibilities, and­contribute to the creation of corporate value.

Compliance Code of Conduct
Basic Principles and Spirit
1. The Sanwa Group must conduct company activities with top priority placed on the safety of the products and services
that we provide.
2. The Sanwa Group will not seek profit through actions that violate the Compliance Code of Conduct.
3. All management personnel and supervisors of the Sanwa Group will take the lead in observing the Compliance Codeof Conduct, and will act in such a way as to be a good example for the staff under them.

PDCA SAKURAThe employees of the Sanwa Group, not satisfied with the current situation,
maintain a critical mindset in doing their jobs in order to continue to pursue
their best work. We review results in terms of whether or not we did things as
originally planned. If not, we think about the reason why we didn’t get theintended results. Getting back to the basics such as increasing good aspects andimproving bad ones is part of the PDCA cycle. PDCA SAKURA represents thisconcept as the Sanwa Group symbol. We even planted PDCA SAKURA cherry
blossom trees on the grounds of main Group facilities.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 20191

Concept behind the Integrated Report 2019
What Direction to Take?
The Sanwa Group is implementing the Third Mid-Term Management Plan companywide with the aim of establishing a foundation for leading brands in two
years as a major global player. The Integrated Report outlines what the Sanwa
Group must do and the direction it should take. We are forging “two kinds ofreliability” with our stakeholders while aiming to become a major global player
by ensuring reliable business performance and reliable management.

The Evolution of Sanwa
Multi-product sales and globalization are the two pillars of the Sanwa Group’s
strategy. We will provide high-quality products and services worldwide by leveraging the three strengths that we have cultivated since Sanwa’s foundation:“vertically integrated business model,” “comprehensive solutions” and “global
presence.” The Integrated Report highlights what direction the evolution of the
Sanwa Group should take as it aims to create long-term value.

Creating Values through ESG
The value of companies is found in fulfilling their social responsibilities throughtheir businesses. Sustainability is the foundation of ESG, so we will create social
value together with our stakeholders by undertaking initiatives signified in theinitials of ESG: (E) proactively find solutions to environmental problems; (S)deepen our relationship with society by developing personnel who will lead thenext generation and ceaselessly work to improve safety and quality; (G)increase management transparency.

Editorial policy
To present the Sanwa Group’s management and corporate activities, we have published this Integrated Report. The report isedited in a wholistic manner to include non-financial information such as corporate social responsibility activities in addition to
information on management direction and strategy and review of operations. In editing this report, we have referred to the“International Integrated Reporting Framework” proposed by the International Integrated Reporting Council (IIRC).

Forward-looking statements
This Integrated Report includes forward-looking statements pertaining to expectations, plans, strategies, management goals,
future performance, expenses, revenues, income and other forecasts formulated on past experiences. Forward-looking statements necessarily entail some degree of uncertainty, and the content conveyed in the results as well as underlying factors identified in the report may differ materially from actual results depending on changes in those factors.

Reporting period
Fiscal years are years ended March 31 of the following calendar year. For example, fiscal 2018 is the year ended March 31, 2019.

2

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Contents
What Direction to Take?

Creating Values through ESG

4 A History of Value Creation

42 Sustainability Management Approach

6 Message from the Chairman

46 Sustainability Management System

10 Sanwa Value Creation Model

50 Corporate Governance

14 Financial & Non-Financial Highlights

56 Risk Management and Compliance

16 Third Mid-Term Management Plan

58 Interview with an Outside Director
60 Management TeamThe Evolution of Sanwa

Financial Section and C orporate Data

24 Multi-Product Sales

62 12-Year Summary

26 Special Feature
Why Was Sanwa Group Able toEstablish its Global Position?

64 Financial Review

30 Regional Operations    Japan    North America

67

Consolidated Financial Statements

72 Notes to the Consolidated Financial Statements
95

Independent Auditors’ Report

96 Corporate Data    Europe    China/Asia

Official Website

https://www.sanwa-hldgs.co.jp/english/

The corporate website has been upgraded in order to convey information in an easier-to-understand format for our stakeholders
given its importance as a platform for providing details on Sanwa Group’s corporate philosophy and business activities.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 20193

What Direction to Take?

A History of Value Creation
The Sanwa Group has grown and developed based on two pillars: athorough “Multi-Product Sales Strategy” that expanded from the door
business during its foundation in the 1960s into a wide range of productlines other than Shutters and then to the second pillar, “Globalization,”
which began in the 1990s.
Manji Takayama founded Sanwa Shutter in 1956 with a fundamental
ethos of passion, trust and diligence. The Sanwa Group formulated its
mission, values and principles of business in 2002. Since then, we havecontinuously passed along the Sanwa Group spirit of contributing tosociety by providing safety, security and convenience, all of which aresymbolized by the three rings of the corporate emblem.

Net sales
Non-shutter
sales ratio*

Overseas sales

Approx.

(1988)

1960

1970

1960s

1980

1970s

62.3%

1990

1980s

* Non-shutter ratio: The amount of net sales after excluding heavy-duty and lightweight shutter net sales from Sanwa Shutter total net sales/Sanwa Shutter total net sales x 100

Entry into the shutter industry
Sanwa Shutter Manufacturing Co., Ltd. began
manufacturing lightweight shutters in 1956
near the Sanwa Market in Amagasaki, Hyogo.
We established a leading position in the shutter
industry in 1960s. Our production capacity
grew to a world-class level with the construction of six factories.

Multi-Product Sales

Multi-Product Sales Strategy
Globalization

 he first step towardTmulti-product sales
The Sanwa Group’s multi-product sales
strategy began with its entry into the door
business in the late 1960s. Focusing onfields where we could apply the know-how
we cultivated in the shutter business, existing production facilities and sales and installation networks, we began producing
made-to-order steel doors. We rapidly roseto the top of the industry.

Gaining a foothold overseas

4

SANWA HOLDINGS CORPORATION

Globalization

First deliveries just after the foundation

INTEGRATED REPORT 2019In 1974, we entered into a technical tie-up
with Overhead Door Corporation (U.S.A.;
ODC), and began manufacturing and selling
overhead doors. In 1986, we established
Sanwa Shutter (H.K.) Ltd. in Hong Kong,
making us the first in the industry to focus
on overseas markets.

The Expanding Multi-Product Strategy
We have promoted multi-product sales strategy
through acquisitions to further broaden our value.
The first company we acquired was Showa Front Sales
Co., Ltd. (now Showa Front Co., Ltd.) in 1984. That
was followed by the acquisitions of Showa KensanCo., Ltd., a manufacturer of automatic door operators; Venix Co., Ltd. a manufacturer of partitions; andSanwa Tajima Corporation, which manufactures andsells stainless steel building products. By acquiring
quality companies with established product brands,
we accelerated our multi-product sales strategy.

Business
Expansion by Penetrating theAmerican Market
In 1996, we acquired tie-up partner ODC. Throughthe addition of new businesses boasting leading
shares in the United States into the Group, we proceeded with collaborative product development andsales, as well as expansion into new markets.

Record-High Net Sales
FY 2018¥410

billionNon-shutter
sales ratio*
Approx.

(2018)

75.8%

Record-High
Overseas Net Sales
FY 2018
Non-shutter
sales ratio*

Non-shutter
sales ratio*
Approx.

(1998)

Approx.

(2008)

65.5%

¥190

billion2019-2020

Become a Leading Global Brand

70.3%
2016-2018

Two years to establish the foundation for becoming the top
brand as a major global player

Leaping
Three years to strengthen ourcompetitiveness as a major
global player

2013-2015

Challenge
Overhead Door
Corporation

Novoferm

M&A(2003 )

M&A
(1996)

2000

1990s

Three years to establish basis forbecoming a major global player

2000s

 DCA Advances the Multi-ProductP
Sales Strategy
To vigorously push forward with multi-productsales, in fiscal 2011 Sanwa Shutter Corporation
revamped its organization, subdivided regional
construction markets mainly by comprehensively reviewing the scope of its sales activities,
and increased its flexibility in marketing. Our
corporate culture of placing the highest priority on implementing the PDCA cycle is the
backbone of our daily business activities.

Establishmentof Three-Pronged
Platform: Japan, U.S.A., Europe
In 2003, we acquired German Novoferm Group(NF), making the European market our third cornerstone. We started to grow into a leading global brand by pursuing business and regional
diversification, in addition to expanding andgrowing our core businesses through the development of multiple product types.

Overseas
sales ratio

Operations in

46.4%(2018)
Approx.

25

countries
and regions(2019)

20102010s
Product Development in Harmony with Society
We launched environment-conscious and energy saving
products and products that use natural energy sources.
With these products, along with its extensive lineup ofdisaster prevention products that provide flood prevention, earthquake resistance and other functions, Sanwa
Shutter contributes to the sustainability of society.
We have been expanding
maintenance services to comply with inspection legislation
for fire prevention equipment
Waterproof shutter
in Japan.

Aspiring to be a Major Global Player
Formulating the Sanwa Global Vision 2020 in 2013, we set
out to offer products and services that provide safety, security and convenience to customers worldwide as a major
global player in the access systems industry. Looking
towards 2020, we are implementing this Three-Year Plan toestablish a foundation in this field.

Sanwa Global Vision 2020
Under Sanwa Global Vision 2020,
we set out to offer products andservices that provide safety, security
and convenience to customers
worldwide as a major global player
in the access systems industry. To
this end, we aim to: (1) Become
definite No. 1 brand in Japan, theU.S. and Europe; (2) Establish abusiness model for service business;(3) Expand shutter & door businessin emerging markets, spotlighting
Asia, and make them grow to be
top brands; and (4) Promote realization of Group synergy in global
markets.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 20195

What Direction to Take?

Message from the Chairman
Providing safety, security and convenience globally is
our universal mission that we continue to carry forward.
We will promote sustainable management by taking PDCA to the next level.

Toshitaka
Takayama
Representative Director,
Chairman & CEO

6

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Our Universal Mission and Business Model
The times have undergone monumental changes in the 63 years that have passed since we were established in 1956. I have a strong sense that we have always responded swiftly to the demands placed uponus through the ages, in methodical fashion, evolving to become the company we are today.
It is the mission of the Company, the overarching concept of the Group, to offer “products and services
that provide safety, security and convenience to further contribute to the prosperity of society.” This iswhat clearly defines our reason for existence. This mission does not change year by year; indeed, it isimmutable, and as the shared sense of values held by the Group it is our universal belief that is firmly rooted in Group companies around the world. In responding to competition in the market environment that is
escalating in severity, however, we must certainly take steps to transform ourselves in line with the changing demands from society. This is a management style which takes into account the vision gained by listening to the voices of our shareholders, partners, employees and other stakeholders.
The Company’s business model has steadily evolved in the 60-plus years since our establishment. Japan
in particular is characterized by a sales organization that extends to every corner of the nation in a meshlike network, and through this network we have constructed a vertically integrated business model, frominstallation to after service. On top of that is our multi-product sales strategy which takes advantage of thechannels we have created. Our products are not standardized, but in a novel way of operating they are
made-to-order customizations in accordance with customer requests for each individual property. This is abusiness model that relies heavily on human resources. Consequently, this has been well received for the
meticulous care in which we respond to customer needs, and is what lies behind our results, which are
represented by the Company’s consistently high share and profitability. This works to hinder market entry
from companies in other industries, making the shutter industry a unique market.

From a Japanese Maker of Building Materials
to a Major Global Player
The Sanwa Group completed its positioning of factories nationwide in a period of intense growth, whichearned an unshakeable position at the top of the industry. Following that, the Company became involvedin the steel door business, leveraging its shutter production equipment, as well as its sales and installation
network, demonstrating its full-fledged break away from dependence on shutters. This was a critical point
marking its first step toward today’s multi-product sales strategy. The Company continued to accelerate
this strategy to develop a range of product types, such as residential construction materials and partitions,but then Japan’s economic bubble burst. This was a period characterized by chronic oversupply, and theCompany arrived at a time in which it was extraordinarily difficult to maintain the growth it had previously
achieved. This was the time when I looked to the future and made a decision of immense importance; wewould change course and look to achieve growth through globalization. In 1996, we acquired the

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 20197

What Direction to Take?

Message from the Chairman

Overhead Door Corporation, a U.S. company with whom we had already been in a technical tie-up, then in
2003, we acquired Novoferm (NF) Group of Europe, which gave us a three polar structure in Japan, the U.S.
and Europe, respectively. This fiscal year the global structure of the Group is entering a new phase with afour polar structure as we welcome four companies from China and Asia into the scope of consolidation.
Global markets all differ in terms of a specific country’s laws and regulations, ethnic distinctions, climate,history and other aspects. This means that what had been common sense in Japan will not be applicableelsewhere. If we are unable to apply the Group’s business to the character and needs of respective regions,
we will not be able extend our roots into a region, and it will be impossible to achieve sustained growth
there. Since we started all-out efforts to establish our overseas presence, we have made progress on localization, from products to people, and have been persistent in our efforts to become a corporate group thatcan be accepted in every region of the globe.

Positioning of the Third Mid-Term Management Plan toward 2030
In fiscal 2018, we achieved record-setting net sales of ¥400.0 billion. Our goal is to grow that to ¥450.0
billion by fiscal 2020, the Mid-Term Management Plan’s final year, and we can envisage reaching the¥500.0 billion mark after that. This will not be a mountain that is easily climbed, but we are resolved totake this difficult path and go to the top. Consequently, the current Mid-Term Management Plan has beenformulated as a two-year plan, and we have positioned it as a period in which we aim to secure a foundation as a major global player. We are treating this as a period in which we will sow the seeds to realize ournext long-term vision, and as a critical two years during which we will calmly and with a critical eye look to
the market following 2020, and will consider the path and methods we should take going forward.

A Sanwa Global Vision 2020

To offer products and services that provide
safety, security and convenience as a major global player
in the access systems industry

Three years to establish basis forbecoming a major global player

Three years to strengthen
our competitivenessas a major global player

Two years to establish
the foundation for becoming
the top brandas a major global player

2013

2016

2019

2013-2015 First Three Year plan

8

SANWA HOLDINGS CORPORATION

2016-2018 Second Three Year Plan

INTEGRATED REPORT 20192020

2019-2020 Third Mid-Term Management Plan

Reliable Management Built by Enhanced PDCA Cycle Implementation
One of the strengths of the Sanwa Group is that we are an organization that is intensely diligent and serious. Keeping in mind the spirit of our establishment, namely an organization with comradery, you might
say we have a backbone that is flexible enough to respond to the changes of a new age. Furthermore, I
will not waver in the implementation of the Plan, Do, Check, Action cycle, which is the linchpin of management. This management cycle has become ubiquitous to our employees worldwide, and I am convinced that it is this hands-on realization of PDCA’s speed that secures our ability to execute the strategiesof the plans we make, and it is the secret to realizing the Sanwa Group’s vision and seizing upon success.

“Two Kinds of Reliability, One Sanwa”
to Achieve the Next Long-Term Vision
Achieving our challenging long-term goals will require management’s strong belief and resolve. I use theexpression “two kinds of reliability” to capture the essence of this thought. First, there is raising the reliability of business performance that is driven by the growth of each business, and next, there is boosting
the reliability of the management foundation, which consists of safety, quality, corporate governance andother aspects. It is through these, I believe, that we can grow relationships of trust with our customers andpartners, and fulfill the future dreams of our over 10 thousand employees around the world.
Among the approximately 10 thousand employees in the Sanwa Group, over half account for humanresources with diverse nationalities. Among those as well, more than any other, the greatest topics wehave are the sharing of vision and goals, and the building of relationships of trust. One thing I am constantly considering is our human resources, specifically, nurturing them and making use of their efforts infulfilling ways so that we can link each and every employee’s growth to the prosperity of the Company. At
the same time, we need to be a Group that allows employees to dream. My belief is that to achieve sustainable management nothing is possible without supporting the human talent that will comprise the next
generation. Please look forward to the evolution of management that forges ahead to increase corporate
value for the Group’s continued growth as “one Sanwa.”

Toshitaka Takayama
Representative Director,
Chairman & CEO

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 20199

What Direction to Take?

Sanwa Value Creation Model
The Sanwa Group creates value to fulfill its mission of offering products and services that provide safety,
security and convenience to further contribute to the prosperity of society and resolve global social issues.

Social Issues

Input

Sanwa Business Activities

L Technology/
Manufactured
Capital• Uniform supply chain fromdevelopment to maintenance and service• Proprietary technical development process• Most facilities in the industry
Capitalexpenditures

No. ofProduction
bases¥12.4 billion

60

L Intellectual Capital• Know-how in access systems
field that realizes multi-product types• R&D systems in each region• Firmly rooted PDCA cyclefrom management to rankand-file employees
R&D
expenditures

No. ofproducts¥4.6 billion

No.1

Installation

Strategy
les
化
S種a

Strategies
戦略
o化n

Protecting
against frequentcrimes against
people andproperty

Maintenanceand service

lti-Prod多u品
Muct

Protecting
against natural
disasters fromglobal climatechangeDevelopment

ti
aル
z
バ
i
l
G
グl oロbーaManufacturing10,000ct

No. ofinstallers
Over

ion

P
n
la

No. ofemployees
Over

3,800

• ROE and SVA focused financial strategieskec

L Financial Capital

Ch

Being mindfulof diversity suchas nationality,
age, genderand disabilities• 24/7/365 full-time service• Utilizing global personnelA

L Human CapitalDo

L Social and
Relationship Capital• Trust of stakeholders• The power of brands that havetaken hold in each region

Reliable Business Performance
A corporate group that earns the trust of stakeholders byreliably achieving its performance targets

10

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Procurement

Output & Outcomes

Value Provided to Society

L Financial Targets
Fiscal 2020 Targets

Sanwa Global
Vision 2020

Sales

• Net sales

¥450 billion

37.5 billion•O perating income ratio 8.3%
• S VA
¥15.9 billion• ROE
14.1%•O perating income ¥Safe living with protection
from disaster• Heavy duty shutters/
Lightweight shutters
Japan
North
AmericaDesignOffer products andservices that provide
safety, security andconvenience to further
contribute to theprosperity of society

No.1
No.1

• Industrial sectional doors

Secure living with protection from
crimes against people and property
Comfortable living througheasy-to-use access systems

No.1
No.1
Europe No.2
Japan
North
America• Steel doors

Customers
Local Com­munities

Shareholders andInvestors

Business
Partners

Employees

No.1
Europe No.2
Japan

• Aluminum & stainlesssteel facades

Installers

Japan

No.1

Reliable Management
A sincere corporate culture that earns the trust of society through safety,
corporate governance and thorough compliance

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201911

What Direction to Take?

Sanwa Value Creation Model
Realizing our social responsibility through our business activities and gaining the understanding of our
stakeholders by providing safety, security and convenience to further contribute to the prosperity of society
is very meaningful for the Sanwa Group, which is a company that continues to earn the trust of society. To
this end, we share with our stakeholders a complete picture of our value creation process and reveal thedetails of Sanwa Group value creation activities on pages 10-11.

1 External Environment and Social Issues
External Environment
Sanwa Group products have a wide range of uses at businesses
and facilities vital for people’s daily lives, such as detached houses, housing complexes, commercial facilities/offices, medical/
welfare facilities, and factories/warehouses in 25 countries andregions worldwide. Accordingly, we need to respond appropriately to changes in economic conditions and market trends inregions where Sanwa Group operates, including Japan, North
America, Europe, and Asia. Meanwhile, we undertake businessactivities by identifying business growth opportunities that help
to solve global social problems.

Social Issues
The Sanwa Group contributes to society by providing safety,
security, and convenience. Protecting customers from disasters
and accidents, and bringing convenience and comfort to customers in their daily lives is the Sanwa Group’s mission. To continue to deliver that value, our access systems must meet the
expectations of customers at all times. To meet this responsibility, introducing a diverse array of management resources into
our business activities while realizing safety, security and convenience worldwide is our approach to becoming a major global
player in the access systems industry.

2 Input
Technology/Manufactured Capital
The Sanwa Group focuses on product categories that are
expected to see growth over the long term, and also invests insystems to reduce manpower, streamline operations and

12

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019improve product reliability. In Japan, we newly established the
Osaka plant as our western Japan production base for partitionsin April 2018. In North America, we expanded the Matamoros
plant (Mexico), which manufactures automatic doors and door
openers, in May 2019. In Europe, we enhanced production
capacity in 2018 by upgrading Alpha plant (Netherlands), which
manufactures industrial sectional doors, and Wykroty plant(Poland), which makes dock levelers.

Intellectual Capital
The Sanwa Group maintains proprietary technological development processes for its businesses and products that boast highmarket shares. Leveraging our know-how in the access systemdomain in R&D activities, we are realizing multi-product sales
that extend beyond shutters and doors. In addition, we areengaging in development that promotes increases in quality,
security, and installation while reducing costs, have built a R&D
system for Group companies since venturing overseas, and aresharing and effectively using core technologies.

Human Capital
The Sanwa Group continues to grow and develop together with
its employees by engaging in personnel training from the perspective of increasing product quality and underpinned by our
growth strategies. Our staff of around 10,000 employees andover 3,800 installers is a management resource that plays a vitalrole in supporting the Sanwa Group’s growth. We focus onrespecting the diversity among our employees, enhancing systems and working environments that enable staff members tomaximize their abilities, and personnel training that is the driving force behind individual creativity.

Financial Capital
The Sanwa group maintains healthy earnings and a stablefinancial position while engaging in disciplined fiscal manage-

What Direction to Take?

Sanwa Value Creation Model
The Sanwa Group creates value to fulfill its mission of offering products and services that provide safety,
security and convenience to further contribute to the prosperity of society and resolve global social issues.

Social Issues

Input

Sanwa Business Activities

Output & Outcomes

L Technological andmanufacturing
capitalFiscal 2020 Targets• Uniform supply chain fromdevelopment to maintenance and service• Proprietary technical development process• Most facilities in the industry

Protecting
against frequentcrimes against
people andproperty¥12.4 billion

62

L Intellectual Capital2• Know-how in access systems
field that realizes multi-product types• R&D systems in each region• Firmly rooted PDCA cyclefrom management to rankand-file employees
R&D
expenditures

No. ofproducts¥4.6 billion

No.1

Installation

Strategy
les
化
Sa
種

Sales

• Net sales

37.5 billion• Operating income ratio
8.3%
• SVA
¥15.9 billion
• ROE
14.1%
• Heavy duty shutters/
Lightweight shutters

3

Strategies
戦略
ti
z aル
G
グl oロbー
a liバ

Japan
North
America
DesignNo. ofemployees
Over

10,000A

No. ofinstallers
Over

ion

P
n
la

Being mindfulof nationality,
age, genderand disabilities

ct

Safe living with protection
from disaster
Secure living with protection from
crimes against people and property
Comfortable living througheasy-touse access systems

No.1
No.1
Europe No.2
Japan
North
America

Procurement

Customers
Shareholders andInvestors

Local Communities• Steel doors

No.1
Europe No.2
Ch

k

ec

• ROE- and SVA-focusedfinancial strategies

4

Japan

3,800

L Financial Capital

No.1
No.1

• Industrial sectional doors

Manufacturing

L Human Capital• 24/7/365 full-time service• Utilizing global personnel

Offer products andservices that provide
safety, security andconvenience to further
contribute to theprosperity of society¥450 billion• Operating income ¥o化n1

Maintenanceand service

Capitalexpenditures

No. ofProduction
bases

Sanwa Global
Vision 2020

Development

lti-Prod多u品
Muct

Protecting
against natural
disasters fromglobal climatechangeValue Provided to Society

L Financial Targets

Do

Business
Partners• Aluminum & stainlesssteel facades

Employees

Installers

L Social Capital• Trust of stakeholders• The power of brands that havetaken hold in each region

10

Japan

No.1

Reliable Business Performance

Reliable Management

A corporate group that earns the trust of stakeholders byreliably achieving its performance targets

A sincere corporate culture that earns the trust of society through safety,
corporate governance and thorough compliance

SANWA HOLDINGS CORPORATION INTEGRATED REPORT 2019

ment. We take capital efficiency into consideration, particularly
focusing on ROE and SVA. We will return profits to stakeholders
by prioritizing the strategic investment of cash flows generated
through sound financial management toward sustainablegrowth from 2020 and further promoting management aimed
at increasing corporate value.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201911

development, production and sale of products, but also extend
to installation and maintenance and service. Meeting those
responsibilities and realizing safety, security and convenience
worldwide through strict adherence to PDCA as part of theGroup’s proprietary management is our approach to becoming
a major global player in the access systems industry.

Social and Relationship Capital
The trust of our stakeholders forms the basis of our businessactivities. The Sanwa Group has a broad array of stakeholders
that include affiliates, dealers and other trading partners, investors, employees, and local communities. The Sanwa Group has
continued to exist by expanding its businesses globally, realizing
a high level of social responsibility, and meeting the great
expectations of its stakeholders over the long term.

Natural Capital
The Sanwa Group engages in business activities in harmony
with the global environment and local communities in order tohelp achieve a sustainable society as a good corporate citizen.
The Group engages in environmentally oriented business activities as well as providing eco-friendly products and services as a
global comprehensive construction materials company. In addition, we work to reduce greenhouse gases such as CO2 toappropriately address climate change risks while helping achievea sustainable society.

3 Sanwa Business Activities

4 Output & Outcomes
We intend to achieve our Medium-Term Plan targets by strategically keeping abreast of trends in value creation. We will aggressively allocate resources in order to maximize the impact of each
initiative. Management is committed to establishing leading
brands as a major global player for our stakeholders by implementing the Medium-Term Plan.

Value Provided to Society
The Sanwa Group aims to provide value to our stakeholders byleveraging the Group’s uniqueness in keeping with its mission
and management philosophy. There are two kinds of reliability:“reliable business performance,” which gains the trust of stakeholders by achieving performance targets, and “reliable management,” which is built through a sincere corporate character
that gains the trust of society through strict adherence to safety,
quality, and corporate governance and compliance. Based on
this, we will contribute to society through the provision of security, safety, and convenience by promoting ESG-oriented businesses in cooperation with each division.

Protecting customers from disasters and accidents, and bringing
convenience and comfort to customers in their daily lives is the
Sanwa Group’s mission. To continue to deliver that value, ouraccess systems must meet the expectations of customers at all
times. In other words, our responsibilities include not only

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201913

What Direction to Take?

Financial & Non-Financial Highlights
Financial Indicators
Operating Income &Operating Income Ratio(Millions of yen)
7.8

40,000

7.3

7.5

Profit Attributable to Owners of the
Parent Company & ROE

7.3

7.7

(%)
8

(Millions of yen)
25,00012.7

31,59330,00026,334 26,870 26,440

628,32220,00011.4
17,07015,0004

20,00010.7

12.7
18,280

13.5

(%)
15

Capital Expenditures &Depreciation and Amortization*(Millions of yen)
15,00012,367

20,910 12

11,383
10,00014,627912,857

7,622

7,188

6

10,0008,049

8,127 8,096
8,022
7,290

7,727

5,000
2

10,000(FY)

02014 2015 2016 2017 2018

0

3

5,000

(FY)

Operating income (left scale)Operating income ratio (right scale)02014 2015 2016 2017 20180P rofit attributable to owners of the parent
company (left scale)ROE (right scale)

(FY)

0

2014 2015 2016 2017 2018
Capital expenditures
Depreciation and amortization* Excluding amortization of goodwill

Operating income in fiscal 2018 rose 11.5%
year on year and 0.3% compared with theinitial target to reach the Company’s projection. As a result, operating income ratio—
which had remained flat from fiscal 2015 tofiscal 2017—rose 0.4 points year on year to
7.7% in fiscal 2018. The Company targets
operating income ratio reaching 10% overthe medium to long term.

Profit in fiscal 2018 reached a record high of¥20,910 million, and ROE was 13.5%. With
the Company estimating shareholders’ equity
costs at around 8%, corporate value has
increased steadily since fiscal 2014, when
ROE reached the 10% range. The Company
targets ROE of 14.1% in fiscal 2020.

The Sanwa Group focuses on product fields
anticipated to grow over the long term andengages in investment to increase productreliability. Capital expenditures (including tangible and intangible) amounted to ¥12,367
million in fiscal 2018. The amount of investment in fiscal 2017 and fiscal 2018 increasedon large-scale strategic investment but
remained on par with depreciation and amortization as usual.

Debt/Equity Ratio

Sanwa Value Added (SVA) &Return on Invested Capital (ROIC)Free Cash Flow

(Times)(Billions of yen)

1.00

(%)
30

15

(Millions of yen)
20,000

12.7
0.75

10
0.54
0.50

15,66415,000

0.70
0.53

7.8
0.44

12.6

0.38

9.0

8.2

8.1

12.2

12.2

10,000

15.0

5,000
10

0.25

(FY)

10,593
8,737

12.8

5

0

13,36020

02014 2015 2016 2017 2018

(FY)

0

2014 2015 2016 2017 2018

0

(5,000)(FY)(4,776)2014 2015 2016 2017 2018

SVA (left scale)
ROIC (right scale)

The Company views financial health asimportant, and one criterion for evaluating
this, debt/equity ratio, has been steadily
declining after peaking in fiscal 2014. In fiscal
2018, debt/equity ratio was 0.38, falling
below the initial estimate of 0.40. In light ofcurrent interest rate conditions, debt/equity
ratio is expected to remain in sufficiently safe
territory for the time being.

The Company’s unique indicator, Sanwa Value
Added (SVA) is important for indicating profitability in relation to shareholders’ equity andgeneral business invested capital (including
liabilities). In fiscal 2018, SVA exceeded theinitial forecast of ¥10.3 billion. Consequently,
ROIC reached 15.0%. The Company targets
SVA of ¥15.9 billion and ROIC of 16.4% in
fiscal 2020.

Our policy is to allocate free cash flow,
excluding dividends paid, for growth investments such as M&A and strategic capital
investments. However, if there are fewer­strategic investments and our cash position
becomes larger than expected, we will specifically ­consider using it for shareholder returns,
such as stock buybacks.

Notes: S VA: O
 ur unique indicator of added value.
Net operating profit after tax (NOPAT) – Invested capital × Weighted average cost of capital (WACC) (6%)
ROIC: R eturn on Invested Capital. NOPAT ÷ Invested capital* × 100* Invested capital based on Sanwa Group ROIC is calculated by subtracting cash/deposits and securities.
* The effective tax rate has changed from 40% to 33% from fiscal 2018.

14

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Non-Financial Indicators
Number of Employees (Consolidated)

Service Business Net Sales(Consolidated)

R&D Expenditures &R&D Expenditures to Net Sales Ratio(Billions of yen)

10,000
8,000

8,546

8,790 9,051

1,979

2,039 2,177

9,643
2,545

55.0

10,151

6,000
3,562

3,634 3,617

(FY)

0

3,117 3,257

1.13
1.03

1.15

1.06
4,422

40

37.8

3,666 3,819

10.7

11.3

12.1

12.9

12

4,000

1.12 1.2
4,611

3,868 3,999

0.8

3,505

8.9
6

20

3,005

(%)

6,000

43.7

2,808

4,000

(Millions of yen)

49.0

32.5

2,000

(%)
18

60

12,0000.4

2,000

3,432 3,524

2014 2015 2016 2017 2018

(FY)

0

0

2015 2016 2017 2018 2020 (Target)(FY)Service business net sales (left scale) atio of service business sales to net sales
R(right scale)Japan
Overhead Door Corporation
Novoferm02014 2015 2016 2017 2018

0

Japan
North America
Europe (left scale)R&D expenditures to net sales ratio (right scale)

The number of Sanwa Group employees on aconsolidated basis exceeded 10,000 in fiscal
2018. This breaks down to approximately
35% in Japan and 65% overseas. The addition of employees at Asian Group companies
from fiscal 2019 will further increase theoverseas ratio.

Service business net sales in fiscal 2018 rose
12.1% year on year, a 1.46-fold growth compared with fiscal 2015. The Company aims toreach net sales of ¥55 billion in fiscal 2020 bydeveloping the service business in line withcustomer needs worldwide, gaining new customers, and expanding its business model.

R&D activities involve promoting product lineups in each application market; pursuing platform development, consolidating products,
materials, and components; increasing quality,
safety, and installation; lowering costs; developing new products; and improving existing
ones. R&D expenditures in fiscal 2018 totaled¥4,611 million, up 4.3% year on year.

Number of Installers &Number of Installation Training Center
Trainees (Sanwa Shutter)

Rate of lost-worktime due to injuries(Japan)CO2 Emissions (Japan)(Tons)

(%)
4,000

1.9

2.00

35,0001.8

30,000

1.6
3,000

1.5

1.06
2,000

1.06

30,501
27,94628,32525,0001.20

1.15

29,757 29,081

20,000

1.02

1.00
0.8

1,000

15,0000.9

10,000

0.50

5,000

(FY)

0

2014 2015 2016 2017 2018
Number of installers
Number of installation training center trainees

Installers are the source of the Sanwa Group’s
competitiveness. We are adding more installers every year to handle construction of large
buildings and inspection of fire prevention
equipment. We will continue to focus efforts
on securing employees and training to
upgrade their skills to prepare for an expected
additional increase in the maintenance andservice business as regular fire prevention
equipment inspection systems go into fullswing in Japan.

(FY)

0

2014 2015 2016 2017 2018

(FY)

Japan (domestic factories)
Manufacturing industry average*02014 2015 2016 2017 2018

Note: CO2 emissions are calculated from the consumption amounts of electricity, gas, gasoline, diesel fueland kerosene.

Frequency rate is an indicator of the frequency of casualties from labor accidents andshows the number of casualties per million
actual working hours. The frequency rate at
the Group’s domestic factories in fiscal 2017
was 0.8, below the manufacturing industry
average, and while rising slightly to 0.9 in fiscal 2018, remains low.

In fiscal 2018, we reduced CO2 emissions byapproximately 7% despite increased sales by
installing energy-saving equipment, promoting energy conservation companywide, and adecrease in the utility CO2 emission factor.

*Source: M inistry of Health, and Welfare“Survey on Industrial Accidents”

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201915

What Direction to Take?

Third Mid-Term Management Plan

Yasushi Takayama
Representative Director,
President & COO

Third Mid-Term Management Plan Numerical Targets
First Three-Year
Plan Results

Second Three-Year
Plan Targets(FY2013-FY2015)(FY2016-FY2018)

Net Sales¥365.6 billion

Operating Income
Operating Income
Ratio
SVA

FY2018 (Actual)

Third Mid-Term
Management Plan
FY2020 Targets¥410.0 billion¥410.0 billion¥450.0 billion+9.8%¥26.87 billion¥37.00 billion¥31.59 billion¥37.50 billion+18.7%

7.3%

9.0%

7.7%

8.3%

+0.6%

¥  8.3 billion¥ 12.8 billion*1¥12.7 billion+¥3.2 billion

ROE*2

11.4%

15.0%

13.5%

14.1%

+0.6%

Shareholders’Equity Ratio

41.7%

42.0%

47.4%

—

—

0.54 times

0.40 times

0.38 times——

D/E Ratio*1 Calculated at the weighted average cost of capital (WACC) of 6%, tax rate of 40% (FY2018 is 33%)
*2 The cost of capital target is 8%*3 Calculated at the weighted average cost of capital (WACC) of 6%, tax rate of 33%*Forex rate (Second Three-Year Plan 1$: ¥110.00, 1 : ¥125.00) (FY2018 Actual 1$: ¥110.36, 1 : ¥130.01)(Third Mid-Term Management Plan FY2020 forecast 1$: ¥105.00, 1 : ¥120.00)

16¥ 15.9 billion*3

Variance vs. FY2018

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Sanwa Global Vision 2020: Third Mid-Term Management Plan Strategies
Under the Sanwa Group Third Mid-Term Management Plan, which covers the two-year period from FY2019
to FY2020, we are working towards the goal of establishing the foundation for becoming the top brand asa major global player. In particular, I would like to focus on explaining the positioning of the region-specificstrategies that form the core of the Management Plan.
Based on the results of the First Three-Year Plan (FY2013FY2015), we defined the three-year period covered by theSecond Three-Year Plan (FY2016 to FY2018) as one in which
the Sanwa Group will strengthen its competitiveness as a major
global player. During FY2018, the final fiscal year of the Second
Three-Year Plan, net sales tracked the figures announced at thestart as planned, but profits fell short of the initial targets primarily due to a higher than expected rise in steel prices and various costs. However, the Group recorded record high numbers
for net sales and operating income.
Despite continued expansion, our businesses in Japan experienced a backwards slide in performance due to market factors.
Overseas, however, residential doors and door openers served
as drivers for continued growth in both volume and quality forour businesses in North America. In Europe, the success ofstructural reforms led to greater sales in the industrial door business, primarily, and helped businesses here achieve wide-spread
improvements in profitability. Our businesses in China and Asia
maintained profitability for two consecutive years, but the
speed of growth remained lower than expected.

“Two years to establish the foundation for becoming the top
brand as a major global player” is the Sanwa Group’s goal for
the Third Mid-Term Management Plan. As part of this goal, theGroup is aiming to become a central global presence as a major
global player in the access systems industry and is aiming to
expand our position as a top brand from G7 markets, as westand today, to G20 markets. Over the long term, we will promote system standardization in cooperation between production, sales, and installation, and focus heavily on improving
business efficiency for the purpose of working towards overall
optimization.
Among net sales by product for our businesses in Japan
during fiscal 2018, maintenance and service experienced thestrongest growth at approximately 15%. This business is alreadyone of the Group's strengths, but we foresee greater growthwhen the new periodic inspection reporting system for fire prevention equipment goes into full effect in fiscal 2019.

Basic Strategies

Two years to establish the foundation for becoming
the top brand as a major global playerCore Business

1 Expand and strengthen business areas in core businesses in Japan,

the U.S. and Europe

Growing Business

2 Strengthen service segments and expand business model
3 Enhance operation bases of China Business and Asia Business

Reinforcing Business

4 Reform work styles and improve productivity
5 Promote ESG to develop a corporate structure that is more trusted

by society

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201917

What Direction to Take?

Third Mid-Term Management Plan

L Japan

L North America

The status of orders in fiscal 2019 remains robust following similar levels during the previous fiscal year. Meanwhile, the tightsupply-demand balance has deepened labor shortages at every
level, including manufacturing, logistics, and installation.
Although a combination of concentrated deliveries and natural
disaster recovery response was one factor, in fiscal 2018 theoccurrence of delivery management problems made it clear that
the Group’s supply systems do not stand on a firm footing.
Currently, we are focusing our energies on efforts to solve thisproblem.
As a fundamental strength of the Group, the supply chain
was the highlight setting us apart from our competition.
Currently, however, product supply capability and labor shortage problems have emerged as urgent challenges, so will betaken up as important themes in the new Mid-Term
Management Plan.
Meanwhile, against a backdrop of rising raw material, logistics, and installation costs, we are no longer able to avoid passing these increases on to customers. In this respect, as well, we
will proceed with an awareness of our status as price leader andas the top brand in the industry.
Although it may seem obvious, in fiscal 2019 we will keep inmind our goal of delivering high-quality products and properly
installing these as scheduled. And we will tighten cooperation
between manufacturing, sales, and installation, in particular, toachieve a high level of added value. Moreover, we will work tofurther promote multi-product sales by expanding strategic
growth products such as partitions, stainless steel doors, automatic doors.

North America has experienced strong market conditions overthe past few years, allowing the door and door opener divisions
to achieve steady growth in sales. Through fiscal 2020, we willcontinue working to expand our core businesses to achieve ourtargets for net sales and profit. Still, there are many challenges
in strategic sectors, and problems remain for introducing andoperating ERP*1, restructuring downstream strategies, andundertaking other measures.
In fiscal 2018, we began operating an ERP system at our
main shutter plant, but problems occurred when modifying theworkflow in response to the system’s introduction. As such, thismeasure has not progressed as expected. In terms of downstream strategies, we are investigating frameworks for how wewill implement these strategies for sales, installation, and service operations, and we will exchange information with our distributors as we move forward with a sharper focus. In terms of
the organization, we are considering returning sales and installation professionals to the door division as part of restructuringfrom a long-term perspective.
In consideration of introducing new products to and expanding the product lineup for existing businesses, we will investigate adding product groups that we do not currently supply.
Another important initiative will be working to generate synergy, for example by expanding the product lineup through M&As
and deploying expertise related to products sold in Europe to
the North American market.

Basic Strategies 1

Japan

Expand and strengthen business areas in core businesses in Japan, the U.S. and Europe
North America

Measures

Measures

Grow as an access system company by establishing ourposition in each business field

ODC: Strengthening core business segments while entering
adjacent business fields

Core Business• Promotion of customer strategy, unrivalled product appeal

Existing Businesses

Growing
Business• Strategy to defeat rival manufacturers in competition formarket share

DomesticGroup• Strengthening of synergies through cooperation, business
optimization of Group companies in Japan

Maintenance& ServiceBusiness• Taking advantage of periodic inspection reporting system
for fire prevention equipment to expand repair andmaintenance businesses• Gain share in the residential and commercial door
markets by improving quality and maximizing
customer satisfaction• Reinforce sales channels including addition of
resources in major metropolitan areas• Implement the West Coast strategy in manufacturing
and sales• Restructuring of the forward integration strategy

New Businesses• Expand access controls business into offering security
related equipment• Enter peripheral business fields

Strengthen the structure for business expansion

18*1 E RP (Enterprise Resources Planning): A Central Information System designed to properly
allocate and effectively utilize the resources and elements (people, things, money, information) that form the foundation of corporate management.

Enhancement of
product development
capabilities

Human resource
strategy and work-stylereforms

Reinforcement of
manufacturing, logistics
and installation systems

Improvement of safety
awareness andmanagement system

Preparing for the next
10 years (AI, IoT, ZEB..)

Further improvement of
product quality andenhancement of the quality
management system

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

L Europe

L China/Asia

During fiscal 2018, our businesses in Europe saw a steep rise in
the industrial door business. This gain led to an overall net sales
growth of 10.7% on a euro basis and helped maintain robust
growth of 30.0% in operating income. One feature of theEuropean market is that it is not shifting towards an oligopoly.
The shutter market in Japan is dominated by the top three companies, which hold approximately 90% of market share, while
the North American market is also dominated by the top threeor four companies, which hold 70-80% of market share. In
Europe, however, the top three companies, including our own,
account for only 50% of the market. The European market isalso composed of many countries and different markets. Our
sales over the past three years have been robust, and despite
moderate market growth, we feel there is still plenty of room to
expand our share of the market. During fiscal 2020, the final
fiscal year of the Third Mid-Term Management Plan, we haveset a target of expanding net sales by just over 8% comparedwith fiscal 2018. The priority policies include further strengthening the industrial and hinged door businesses, expanding sales
throughout the European region, and expanding our share of
the garage door business. Along with expanding and strengthening existing businesses through these policies, we will work
to reform operational processes (estimate and ordering process
digitalization, efficient systemization of production, logistics,
and sales) through digitalization.
There are also still untapped, attractive regions within theEuropean market, so we will proceed with M&As in a way thatfills in these parts of the mosaic.

Starting in fiscal 2019, Shanghai Baosteel-Sanwa Door, Sanwa
Shutter (H.K.), and An-Ho Metal Industrial (Taiwan), among ourbusinesses in China, and Vina-Sanwa (Vietnam), among ourbusinesses in Asia, were brought into the scope of consolidation. The scale of sales in Asia as a whole is still small at justover ¥10 billion (including unconsolidated businesses), so
including these businesses in our consolidated accounts has
only now just brought us to the starting line. In China, we willconsider the three companies: Shanghai Baosteel-Sanwa Doorfor shutters, Novoferm Shanghai for doors, and Sanwa Shutter(Hong Kong) and their integration into a single operation to
expand business.
In other regions of Asia, we will work to expand the facilities
at Sanwamas Metal Industry in Indonesia as our second location
after Vietnam. Both of these countries have large populations
and a growing middle-income group. We will also investigate
expanding into other ASEAN countries, including Malaysia, thePhilippines, and Myanmar.

L Strengthening service segments: Expanding
added value in this division with remarkable growth
Consolidated net sales for our service businesses in fiscal 2018
reached ¥49 billion, making for significant growth of 1.5 times
the net sales recorded in fiscal 2015, the first year of theSecond Three-Year Plan. We aim to increase consolidated net
sales in fiscal 2020 to ¥55 billion, 12.2% growth compared

Basic Strategies 3

EuropeMeasures

NF: Further strengthen industrial segment and promote
digitalization through NF4.0
Industrial Business• E xpand sales as a total solution provider

Hinge Door Business• E xpand sales throughout Europe by enhancing
product lineup

Garage DoorBusiness• Increase market share throughout Europe bystrengthening brand power and expanding sales
channels

Reform Operational
Processes• P romote digitalization in processes, including sales,
service, production and logistics

Enhance bases of China/Asia BusinessMeasures
China BusinessCompanies Covered: Baosteel-Sanwa, NF Shanghai,
An-Ho Metal, Sanwa Shutter (H.K.)• Integrate operations in the Eastern China, where BaoSteel-Sanwa and NF
Shanghai are located• Strengthen the door business and businesses for logistics facilities• Expand businesses in the Southern China• Strengthen collaboration with Sanwa Shutter (H.K.) and BaoSteel-Sanwa• E xpand the Taiwan business• Boost production capacity

Asia BusinessCompanies Covered: Vina-Sanwa, Sanwamas,
Dongbang NF, Sun Metal• Enhance operation basis of production and installation• Increase production capacity and implement measures to strengthen
installation capacity at Vina-Sanwa• Reinforce production facilities at Sanwamas• Optimize production at ASEAN areas

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201919

What Direction to Take?

Third Mid-Term Management Plan

L Reforming work styles and improving productivity: Improving efficiency by utilizing
systemswith fiscal 2018. Our strategy here consists of two essential
parts, namely (i) providing service businesses that meet theneeds of customers in regions throughout the world, including
Japan, the U.S., Europe, and Asia, and (ii) working to cultivate
new customers and expand the business model. In Japan, a
new periodic inspection reporting system for fire prevention
equipment will go into full effect starting in fiscal 2019, which
we expect to drive further growth. The service segment includes
businesses that utilize the strengths of the Sanwa Group. Alongwith investigating M&As, we hope to grow by demonstrating
the brand power of a leading manufacturer.

Basic Strategies 2

Work-style reforms are a requirement of the times and a theme
that we cannot avoid. For this reason, we are employing AI, IoT,
and other systems in all sales, design, manufacturing, installation, maintenance, and management processes in order toimprove the efficiency of business. Including the systemizationand digitalization of ODC and NF, as discussed as part of theregion-specific strategies on the previous page, we believe that
we can advance work-style reforms in a more beneficial direction by strengthening global initiatives. As a result, we feelthese initiatives will help raise productivity and contribute toexpanded profits.

Strengthen service segments and expand business model

Providing service businesses that meet the needs of customers in various regions/Cultivating new customers andexpanding the business model
Measures

Initiatives
FY2015

Consolidated Service
Business Net Sales

FY2018FY2020 (Target)billion¥32.5 billion ¥49.0 billion (vs.¥55.0
FY2018 +12.2%)



Japan

• Increase market share of legal inspection• E xpand general repair and service businesses

ODC• E xpand direct sales businesses of direct sales divisions, such as CDS• Introduce the field service system

NF• Expand businesses centered on the industrial door business• Introduce the field service system*Not including Asia

Basic Strategies 4

Reform work styles and improve productivity

Improve productivity through work-style reforms and enhanced operational efficiency using latest information systems,
such as AI and IoT, in all processes from sales, to design, manufacturing, installation, maintenance and management.
Measures
Japan

ODC

• Optimize businesses of Group companies in Japan/Collaborate on sales
systems/Improve operational efficiency through use of IT, etc.
• Improve installation productivity by enhancing ease of installation/Develop
labor-saving products and products that can be installed quickly• Improve productivity by strengthening the manufacturing system/Strengthen
plant supply capabilities and improve quality/Enhance prompt delivery bybuilding the logistics system• Reduce long work hours through work-style reforms, improve efficiency
through IoT and RPA• Achieve operational innovation by introducing ERP• Improve productivity by introducing the field service system• ASD (door division): Improve production capacity and quality by promoting
automated production• Automatic doors: Improve productivity and quality

China/Asia• Support for cooperation between two companies in Shanghai (BaoSteelSanwa and NF Shanghai) through Sanwa Shanghai (regional control
company)• Rebuild production and supply systems in each area

20

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Novoferm• Continue to improve operational efficiency through NF3.0• Reform operational processes through NF4.0 (digitalization)• Consolidate U.K. businesses (BGS, NFUK)• Optimize dock leveler production and supply chains, etc.
• Strengthen production capacity of industrial door plants

Capital Policy: ¥30 billion in strategic investments over two years
From cash flows, we will allocate ¥30 billion to strategic investments for growth and steadily expand SVA
and ROIC in order to build up corporate value.
In fiscal 2001 we adopted SVA as a performance indicator, andwork with a particular awareness of capital cost and capital efficiency, not simply profit and loss, in North America and Europe.
After reaching ¥12.7 billion in fiscal 2018, SVA is expected toreach ¥15.9 billion in fiscal 2020. Moreover, ROIC reached15.0% in fiscal 2018 and is forecast to reach 16.4% in fiscal
2020. With both indicators steadily rising under the current
Mid-Term Management Plan, we feel this signifies we are accumulating corporate value.
Among performance results, for some time our approach has
been to emphasize the operating income ratio. Although theactual operating income ratio for fiscal 2015 during the First
Three-Year Plan was 7.3% and the actual ratio for fiscal 2018
during the Second Three-Year Plan was 7.7%, our target is toachieve 10%. By increasing the operating income ratio, we
expect to further improve ROE and other indicators.
In terms of strategic investments, we plan to allocate approximately ¥30 billion to capital investments and M&As over thetwo fiscal years of 2019 and 2020 with a focus on promoting
multi-product sales, strengthening service businesses, andgrowth sectors where synergy effects are anticipated.
Specifically, we expect to provide approximately ¥20 billion in
strategic investments for M&As and ¥10 billion for equipment.
Shareholder returns were set at an annual dividend of ¥32, as
initially forecast. In fiscal 2019, we plan to raise the annual dividend by ¥2 to ¥34 (eight consecutive years of dividend increases: planned). The payout ratio for fiscal 2018 was 34.4%, witha target of 35% for fiscal 2020.

Cash flow allocation policy
Second Three-Year Plan
Dividends: ¥19.2 billion
Share buybacks:¥5 billion
Strategic investments:¥17.6 billion
Capital investments:¥20 billion

Financial Strategy

Third Mid-Term
Management Plan
Dividends: ¥15.5 billion
Share buybacks, etc.

Strategic investments:¥30 billion

Interest-bearing debt
buybacks, etc.:¥12.7 billion

Capital investments:¥9 billion
Interest-bearing debt
repayments, etc.:¥1.7 billion

Operating cash flow:¥74.5 billion(Three-year total)

Operating cash flows:¥61.2 billion (forecast)(Two-year total)

Key Figures

SVA (Effective corporate tax
rate: 33%)
ROIC (WACC: 6%)


FY2018 Actual

FY2020 Forecast¥12.7 billion¥15.9 billion

15.0%

16.4%

* The amount of improvement in corporate value is confirmed by SVA,
and the ratio of improvement by ROIC.

ROE (Cost of capital: 8% )

13.5%

14.1%

Payout Ratio

34.4%

Around 35%¥18.2 billion¥28.0 billion

0.38

0.35

47.4%

47.8%

FCF (Before strategic
investment allocation)
D/E Ratio
Shareholders’ Equity Ratio

Financial Policy in the Third Mid-Term Management Plan

Prioritize strategic investments tobecome a major global player
Dividends

J Payout ratio target of 35%

SharebuybacksJ Prioritize growth investments including
M&A. Consider share buybacks if there areno substantial cash outflows related to suchinvestments.

Capitalinvestments

J In principle, we make capital investments
necessary for maintaining and continuing
existing businesses within the range ofdepreciation and amortization.
J Allocate FCF to strategic investments.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201921

What Direction to Take?

Third Mid-Term Management Plan

ESG Message: Key Issues of human resource development and safety
Under the concept of ESG, we place particular importance on human resource development and work to
expand systems that enable employees to reach their full potential. Ensuring safety will also influence
the future of the company. We will earn the trust of society through uncompromising safety, quality,
and compliance.
The perspectives of Environment (E), Social Responsibility (S),and Governance (G), in short ESG, are essential to sustainablecorporate growth. Since our founding, we have valued reliability
and trust, and have undertaken related initiatives as a matter ofcourse long before ESG became a focus of the market.
Although we naturally emphasize all of these themes, we consider those involving Social Responsibility (S) to be of particularimportance. In fact, of the 20 key issues that we have identified
and undertake, 10 of these fall within the scope of Social
Responsibility. Although some of the aspects related to humanrights, labor practices, and consumer issues are somewhat
abstract and vague, we feel that clearly defining the direction ofthese measures is a key point because this is also an area inwhich the understanding of people changes continuously.

Basic Strategies 5

Promote ESG to develop a corporate structure that is more trusted by society

Increase Sanwa’s “two kinds of reliability” through cooperation among all divisions to promote important ESG issues,and link this to sustainable growth into the future

E Environment

S Social

G Governance• Reduction of greenhouse gas
emissions• Respect for Human Rights/
Work-Life Balance• Corporate Governance• Appropriate waste management• Diversity/Human·Resource Development/
Health and Safety• Risk Management• Promotion of green purchasing• Providing of Eco-Friendly Products• Compliance• Offering products and services that
contibute safety, security andconvenience• Stakeholder Dialogue• Fair competition• Anti-Corruption• Strengthening of Quality Control• Improvement of Customer Satisfaction/
Regional Contribution/
Social Contribution

Reliable Business Performance
A corporate group that earns the trust of
stakeholders by reliably achieving its
performance targets

22

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Reliable Management
Two Kindsof Reliability

A sincere corporate culture that earns the trustof society through safety, quality, corporate
governance and thorough complianceAmong issues of Social Responsibility (S), human resource
development is of particular importance. Historically, ouremployees have held a high sense of professional awarenessand morals, so our turnover rate has also tended to be low.
These types of human resources are our most important management resource, and we make every effort to establish systems that allow our employees to reach their full potential. In
addition to our employees, the installation technicians that ultimately ensure quality are similarly important. This field is also
being affected by aging, which has made it difficult to secure
personnel. Likewise, we see our challenge as firmly approaching
this issue by enhancing the training system and putting othersystems into place. Our business is unique in that we rely heavily
on outsourcing to affiliated companies for not just installation,
but also for the design and production divisions. Without thesepartners, our business would not stand. Under our spirit of valuing all of those who help create the Sanwa Brand and our senseof working together towards a common goal, going forward
we will continue to act by combining our capabilities within thisstrong relationship of trust.
The second area is safety. We constantly strive to reduce accidents at manufacturing and installation sites to as close to zero
as possible. Work sites that are rife with accidents do not attract
good people, so we also tackle this challenge with an awareness of its relationship to our future.

Our growth foundation stands on Two Kinds of Reliability. In
short, these are Reliable Business Performance and Reliable
Management. The latter refers to earning the trust of society
through uncompromising safety, quality, governance, and compliance. Instead of approaching both of these with the same
weight, we place a greater emphasis on the latter.
In terms of Environment (E), we implement initiatives
designed to reduce greenhouse gases and waste as a matter ofcourse, but we also believe it is our responsibility as a manufacturer to develop and provide eco-friendly products that contribute to energy savings and waterproof products that protect lifeand property from global warming related flood damage. At
the same time, we also feel that developing and providing theseproducts is a business opportunity in the face of climatechange.
Finally, in terms of Governance (G), we are aware that wemust consciously increase the transparency of decision-making.
We hope to earn a greater level of trust among all our shareholders and other stakeholders as we work towards sustainablegrowth.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201923

The Evolution of Sanwa

Multi-Product Sales
A company founded for the manufacture and sale of lightweight shutters, Sanwa Shutter entered the door
business in the latter half of the 1960s—by accurately anticipating the changes and needs of the market
brought about by the high growth after the war—and since then has been promoting multi-product sales.
We will continue to provide diverse products as a major global player in the access systems industry thatwill advance in leaps and bounds in the global market.
Japan’s first skyscraper, the Kasumigaseki Building, was completed in 1968, and high-rise buildings were constructed one
after another at the start of the 1970s. In line with this trend,demand for fireproof doors increased rapidly, and we quickly
entered the door business and rapidly expanded our market
share. From the 1980s, we promoted diversification of producttypes through M&A, acquired leading companies with a strong
brand presence in each field and worked on multi-productsales, starting with the Showa Front Co., Ltd. for store fronts,
Showa Kensan Co., Ltd. for automatic door engines, Venix Co.,
Ltd. for partitioning products, Sanwa Tajima Corporation forstainless steel products, and Sanwa System Wall Co., Ltd. forwooden school partitioning. The number of Sanwa Group sub-Safe living with protection

sidiaries in Japan currently stands at 17 companies. As a result,
we have a wide product lineup, including shutters, steel doors,
entrances, door openers, garage doors, partitions and industrial
sectional doors, and are ranked No. 1 in the industry in terms ofthe number of products that contribute to safety and security as
well as to convenient lifestyles. It is our belief that providing
products and services that provide safety, security, and convenience to society leads to the resolution of social issues and, asa result, the Company’s value creation. We aim to solve theproblems in people’s social lives such as those listed below by
providing to society a wide variety of product groups cultivatedthrough our product diversification strategy.

Secure living with protection
from crimes against people
and property

from disasters

Comfortable living througheasy-to-use access systems

Our Products for Buildings
Office Areas

Building Exterior

Partitions

Curtain walls

Toilet booths

Safety Measures

Fireproof & smokeproof
shutters

Entrance Areas

Automatic doors

24

Aluminum & stainless steel
facades

SANWA HOLDINGS CORPORATION

Mailboxes

INTEGRATED REPORT 2019

Waterproof shutters

Fireproof doors (steel doors)

Multi
Products

Sanwa Group products deliver greater safety, peace of mind and comfort
Door openers

Automatic doors

North
EuropeJapan America
No. 4
No. 2

North
Japan
America Europe
No. 3
No. 3

Asia

High-speed sheet shutters

Steel doors

Japan North
EuropeNo. 1 America

Japan North Europe
No. 1 America No. 2

Asia

Garage doors

North
Japan
EuropeAmerica
No. 1
No. 2
No. 2

Asia

Japan North
EuropeNo. 2* America

Japan

Asia

Aluminum & stainlesssteel facades

Asia

Japan North
EuropeNo. 1 America

Asia

Condominium doors

North
Japan
EuropeAmerica
No. 1
No. 2
No. 1

Japan North
EuropeNo. 2 America

Heavy duty shutters

North
Japan
America Europe
No. 1
No. 1

North
Japan
America Europe
No. 1
No. 1

Core
Products

Waterproofing products

Industrial sectional doors

Lightweight shutters

Asia

Asia

Partitions & toilet booths

Asia

Note: S hown in order of market position.
(Sanwa Holdings’ estimates.)* Toilet booth market

Japan North
EuropeNo. 3 America

Detached
Houses

Housing
Complexes

Asia

Curtain walls

Japan

North
EuropeAmerica

Asia

Mail boxes & delivery boxes

Asia

Window shutters

Asia

North
EuropeAmericaJapan North
EuropeNo. 2 America

Asia

Lightweight sliding doors

Asia

Commercial
Facilities
and Office
Buildings

Japan North
EuropeNo. 1 America

Schools

Medical andWelfareFacilities

Asia

Factories andWarehouses

Expansion of the Non-shutter Business
L Non-shutter Sales Ratio (Sanwa Shutter)

L Door Business Sales (Sanwa Shutter)

FY 1988

FY 2018

FY 2019 targets

FY 1988

FY 2018

FY 2019 targets

62.3%

75.8%

77.0%

¥38.3 billion¥58.8 billion¥62.2 billion(Percentage of net sales from products other than lightweight shutters andheavy-duty shutters at Sanwa Shutter Corporation)

L Partition Business Sales (Sanwa Shutter)

L Ratio of the Maintenance and Service Business toOverall Business (Consolidated)

FY 2008

FY 2018

FY 2019 targets

FY 2015

FY 2018

FY 2020 targets¥5.4 billion¥12.1 billion¥14.4 billion

8.9%

12.1%

12.9%

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201925

Special
FeatureWhy Was Sanwa Group
Able to Establish
its Global Position?
Since we established Sanwa Shutter Hong Kong in 1986, the Sanwa Group has been
pursuing global expansion ahead of other Japanese companies in the industry. As amajor global player in the access systems industry, we have now secured a strong presence in 25 countries and regions worldwide. So why were we able to accomplish this?
Firstly, we were quick off the mark within the industry when it comes to focusing attention on overseas markets and establishing ourselves in those locations. Next, from thelatter half of the 1990s to the 2000s, we acquired the top manufacturer in North
America and the No. 2 manufacturer in Europe, and with both localization and PDCA
promotion we worked to create a firm foundation in both of those regions. With aneye on 2020 we are raising our profile in the global markets in which the Sanwa Group
conducts business, and continuing to pursue expansion and to strengthen our presence
across all regions, thus becoming a truly major global player.

The Basis of Sanwa Group Growth
Focusing on Overseas Markets Where
There Is Room to Grow
Established in 1956, the Sanwa Group announced its listing on
the Tokyo Stock Exchange’s Second Section in 1963, the firstcompany to do so, even though we were a latecomer to theindustry. The funds we procured were allocated to investments
for growth, and we aggressively grew our presence nationwide,
becoming the manufacturer with the top share of Japan’s shutter
market. However, looking to the long term, we determined thatmajor growth would be difficult within the confines of theJapanese market. Given this, over the decade of the 1990s webegan to look in earnest and consider setting up a presence inoverseas markets.

Aiming to Achieve North American Market
Penetration through a Corporate Acquisition
In 1974, we had already entered into a technical tie-up with
Overhead Door Corporation (ODC) of the U.S. when we concluded a licensing agreement with that company to sell our respective products in both Japan and the U.S., and to mutually
announce both companies’ newly developed technologies. From

this point until the 1990s we worked to accumulate U.S. market
research in the firm belief that success in expanding overseas
would not be easily forthcoming without an understanding ofthat market’s cultural characteristics. Market penetration will bedifficult by merely bringing Japanese building materials as is tooverseas locations that differ in terms of culture, climate, andweather. We reached the conclusion that M&A would be themost suitable way to achieve development, and consequently set
out to find a partner company that we could consider a good
match for Sanwa.

The Acquisition of ODC, the First Step on the
Road to Overseas Expansion
In our approach to a corporate acquisition, we had as a primaryconsideration the selection of a company withwhich we had chemistry.
Given that, the conclusion we decided upon
was to acquire ODC, thecompany that since 1974
we had entered into a

26

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Signing ceremony for the ODC acquisition

A Global Presence
EuropeOverseas sales
ratio

Number of
production bases

46.4%

No. 2

60 sites

Number ofcountries

25 countries

China/
Asia

EuropeNo.1

17%North America

28%

and regions

Japan

China/Asia
By region
Compositionof net sales

2%

Japan

53%

(Fiscal 2019
forecast)

North
AmericaNo.1

At the time of acquisition

Current

At the time of acquisition

Current(Fiscal 2004)(Fiscal 2019 forecast)(Fiscal 2019 forecast)(Fiscal 2019 forecast)(Fiscal 1997)(Fiscal 2019 forecast)

Net Sales

Net Sales

Net Sales

Net Sales

Net Sales

Net Sales

million(¥70.2 billion)

¥

¥

US$

US$
million(¥118.9 billion)

Major Products• Shutters• Door

Major Products• Shutters• Steel doors• Stainless steel products• Aluminum store fronts

Major Products• Heavy duty shutters/Lightweight shutters• Industrial sectional doors• Door openers

340 million

585

Major Products• Industrial sectional doors• Hinged doors• Door openers

7.0 billion(Notes) 1. T he sales figures for each region include internal sales
2. T he exchange rates for fiscal 2019 are expected to be$1: ¥105 and 1: ¥120

technical tie-up with and had enjoyed a close working relationship. We announced the acquisition in June 1996. The cost of theacquisition was approximately ¥51.7 billion, which was close to
30% of our net sales in fiscal 1996, that being roughly ¥187.5 billion. This was the largest deal in Japan’s building material industry
at the time. At that point ODC boasted the top share of the market for commercial overhead doors and shutters, had net sales of$550 million (over ¥60 billion) and operated with approximately
400 distributors across the U.S. This acquisition marked our firstfull-fledged step toward globalization.

A Three-polar structure in Japan, the U.S., andEurope with the Acquisition of NF GroupThe 2003 acquisition of the Novoferm (NF) Group, a venerable
manufacturer of doors and shutters in Germany, secured for the
Sanwa Group a three-point presence, namely in Japan, the U.S.
and Europe. The NF Group is a long-standing manufacturer,
established in 1955, with manufacturing bases that consisted of
its core site in Germany, together with others in France, Holland,
Italy and Spain. Its sales network spanned all regions of Europe,
occupying a position as a leader among major companies.

251.5 billion

597million

1,132Entering the 2010s we continued to acquire multiple producttypes and pioneer markets through M&A activities, like in the
U.S. and in Europe as well with the acquisitions of Alpha Deuren
International B.V. of the Netherlands and Norsud Gestion S.A.S,
of France among others, and secured the No. 2 share in Europe’s
industrial door, garage door and steel door field.

Thorough Localization, PDCA
We were aware that to generate maximum post-acquisition synergies, before taking on product or technology issues, we would
need to have mutual understanding and communication. Basedon the relationships of trust we had cultivated, we raised thelevel of interest toward our respective products and technologies,
and developed a process to cooperatively tackle the required
localization. In addition, to quickly get up to speed at a highlevel, the Sanwa Group mission of “safety, security and convenience,” as well as PDCA would as a general rule need to bethoroughly engrained outside of Japan as well. This became thefoundation of our path to becoming a major global player.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201927

Special
FeatureThe Challenges of Achieving Growth

A Briefing from the Executive Officer
Responsible for Global Business Unit

L Bold decision to early on establish
an overseas presence
Still tasks for a truly major global player
I’d like to discuss the topic of globalization in the Sanwa
Group. If I were to be asked, “Is the Sanwa Group already atruly global company?” my response would be: No. Likely
our investors would think that there are still things that could
be done, so we must pick up the pace and become a truly
global company.
That said, looking back at things now, the accomplishmentof making two major acquisitions, the early-stage acquisition
of ODC in North America in 1996 and the 2003 acquisitionof Novoferm (NF) Group in Europe, were bold decisions for
management to have made. What is important to remember
is that acquiring companies that we already had lengthy relationships with did not go smoothly owing to coincidence.
When we made the two acquisitions we already had a thorough understanding of what those companies were about,and the results of our careful considerations led to success.
In addition to the remarkable foresight of Sanwa Shutter, acompany that at that time operated domestically in Japan,
certainly the results we have achieved today reflect the persistent efforts to find solutions to each of those big issues
that existed below the surface, unexposed, following theacquisitions.

L Making capital expenditures without
hesitation, and charging aheadon acquisitions
When I first became involved in Sanwa Group’s international
business around 2015, I did not have the impression that
there was management being conducted to respond to market needs. The first thing I applied my efforts to was getting
local management to understand the importance that theywould need to somehow quickly gain an awareness of market needs to respond with maximum speed to get ahead of
our competitors. The next thing I had them take anotherlook at was the product lineup and production equipment.

28

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

We are a manufacturer so of course we aim to run at full
capacity, but at the time, in both the U.S. and Europe, theequipment had certainly seen better days. This was due to it
being the period after the Lehman shock and a prolonged
era of caution with regard to capital expenditures. I was very
active in having local management consider, then take action
to develop new products that met market needs, and to
introduce equipment that could make those products withhigh productivity.
It seems that we Japanese do not have as detailed anunderstanding of overseas operations as the local people. For
that reason, rather than acting like a know-it-all, it is important to leave daily management up to the local team, and on
the other hand, give them clear guidance on the fundamentals of management policy and strategy. For example, tellingthem “The mountain you should climb this year is not Mt.
Takao, and it is not Mt. Fuji either. Your goal is Mt.
Tanigawa.” However, “You can climb the southern face or
the northern face. That’s up to you.” This is what I mean.

L North America (ODC): Low-shareproducts should capture a 30% share,and in Japan as well, introduce new
products we have not dealt with before
Management issues such as the following come up withregard to North America. The first is the introduction of ERP.
We have been deploying Oracle’s integrated system since2013, but this is taking more time than expected, anddeployment expenses are ballooning. According to planscompletion is still years away, however we are applying quitea large amount of human resources to shore things up, and
it is a struggle.
The second issue is do we somehow raise to a 30% share of
the market those products that are below that level, and to dothat, developing concrete measures and then implementing
them. Also, the U.S. is an immense market that can be broadly
categorized into East, Central and Western areas, but withinthese, it is becoming important also have a strategy to somehow raise the share of regions with a low market share.

Hiroatsu Fujisawa
Director
Senior Managing
Executive Officer
Global Business Unit

The third issue is entering into new business domains. Is
that what in Japan we would call “multiple product types?”
This is not entering completely different types of industry, but
we are setting our sights on lines with growth potential in
the access systems industry. To offer one example, I would
definitely like to get into the security door business where adoor does not open for just anybody, but only those people
whose identity can be confirmed. If there was a good company that stood out from the crowd, I would really like toacquire it.

L Europe (NF): Expanding to unserved
areas, and anticipating ongoingtwo-digit growth
For the past few years in Europe we have been making solid
progress, with double-digit growth every year. Market shareis lower than that in the U.S., so there is still room for
growth. It is possible that we will continue to see double-digit growth, and we are setting goals so as to definitely reachnet sales of one-billion euros by about 2023.
We currently have the 20 EU nations as our home market
for Europe, but within that we would like to fill in thoseareas where we do not yet have a presence, and are now targeting the UK, Northern Europe and Eastern Europe. Perhaps
we will move into those areas organically, or gain a presence
through the corporate acquisition process. Following that isthe expansion of existing product sales. As one way to dothat, “bundling” multiple products together for sale is a waythat is proving effective.

L China/Asia: Achieving synergies amongst
each country’s operating companies,
promoting localization of management
To tell the truth, there are many issues in Asia and there is a
mountain of things that should be done. Differing from thepaths taken leading to the establishment of business in the
U.S. and Europe, there was no acquisition process, rather,almost all of the locations in Asia have been newly estab-lished. There are also many cases where we leveraged customers in Japan that were themselves setting up operationsin Asia. When the Japanese companies pull out, though, wehave been faced with the difficulty of contraction to businessscale. The conventional approach had been to conduct business based on the strategy tailored to each country, but fromnow we are changing our stance and endeavoring to take
ASEAN as a single market. Within the ASEAN region there isalso a preferential tax system and we will try out productflexibility in the region. By treating China, Hong Kong andTaiwan as “Greater China,” we are not thinking of each individual company’s profits on an independent basis, but this isa policy in terms of mutual accommodation. On the other
hand, when discussing sales’ strategy it is important to beclear about whether the main targets are Japanese companies, local companies, or both.
Furthermore, we urgently need to put in place a management structure, and with regard to the short term, the issue
is to localize management. In 2018 we went from a minor
investment of 18.88% in the Indonesian business, to a 51%
majority investment and appointed an Indonesian national as
the president. Whether or not this will be successful will be
the touchstone, and if it does generate positive results, I
would like to try something similar in other markets as well.
We have set from ¥20 billion to ¥25 billion as our sales target in China and the rest of Asia for 2023. Although theregion accounts only for a nominal percent of all markets, I
would like to hike this by about 10%. Looking only at
Japanese company customers, we need to be above at least
a 50% share among Japanese general contractors that havea presence in China and ASEAN regions.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201929

The Evolution of Sanwa

Regional Operations
Japan

Maintain the profitability ofcore products and achieve growththrough multi-productsales initiatives 
Meiji Takayama

Representative Director and President,
Sanwa Shutter Corporation

K Number-one share in Japan for shutters and steel doors

K Deterioration of profitability due to market factors

K Vertically integrated business model from development andproduction to installation and after-sales service

K Risk of not being able to pass on price increases
for raw materials and various rises in costs in
product prices

K More than 3,800 installers nationwide
K Maintenance and service business FY2018 net
sales up 15.6%
K Product appeal through order responses
K Strong demand for construction, including facilities for the 2020 Tokyo Olympics and Paralympics
as well as EXPO 2025 Osaka, and the redevelopment of the Tokyo metropolitan area

S

W

Opportunities

Threats

K Volume production not possible due to responses
to ordersStrengths WeaknessesOTK Declining trend in housing starts
K Sudden price hikes for raw materials such as steel
K All types of soaring costs, including for personnel,
logistics and installation

K Full-scale implementation of periodic inspection report system for fire prevention equipment and expansion of service
business following a revision to the Building Standards Act

K Rival manufacturers’ product variations and­quality

K Development of products in response to climate change

K Retaining of personnel

K Total sales proposals by means of multi-product sales initiatives

FY2018 Business Performance and FY2019 Outlook
FY2018 Net Sales Increased 6.4%
Year on Year to ¥234.0 Billion
The main company, Sanwa Shutter Corporation, engaged inmeasures to increase quantity and improve quality while
responding to natural disaster demand and recorded net sales of¥198.6 billion (an increase of 6.0% year on year). Operating
income totaled ¥18.34 billion (an increase of 7.2% year onyear), but there were major issues on the supply side—including
coordination problems between manufacturing, installation andlogistics as well as cost increases—and as a result the initial forecast of ¥19.5 billion was not reached and remained an issue.
Japanese subsidiaries recorded net sales of ¥35.4 billion (anincrease of 9.0% year on year) and operating income of ¥1.21 billion (an increase of 4.6% year on year). Although each subsidiary
improved on its sales results from the previous year, a lack ofgrowth for the Sanwa System Wall and the impact of cost increases resulted in operating income not reaching the initial forecast of¥1.5 billion.
For FY2019, Sanwa Shutter Corporation is forecasting net
sales of ¥208.0 billion (an increase of 4.7% year on year) andJapanese subsidiaries ¥43.5 billion (an increase of 22.9% year
on year). Sanwa Shutter is forecasting operating income of¥20.2 billion (an increase of 10.1% year on year), and Japanesesubsidiaries ¥2.42 billion (an increase of 98.9% year on year).

Net Sales

Operating Income(Millions of yen)

(Millions of yen)

300,000
300,000

25,00025,000260,000
260,000
251,502
251,502250,000
250,000
233,957
233,957
219,852
219,852

24,20024,20022,62022,62020,00020,00019,55019,55018,265
18,265200,000
200,000
15,00015,000150,000
150,000
10,00010,000100,000
100,000
5,000
5,000

50,00050,000
00
(FY)
(FY)

2017
2017 20182018 20192019 2020
2020(Forecast)(Forecast) (Target)(Target)

00
(FY)
(FY)

2017
2017 20182018 20192019 2020
2020(Forecast)(Forecast) (Target)(Target)(Note) F igures for net sales and operating profit represent those before offsetting of internaltransactions

30

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Business Strategy
A Look Back at Our Second Three-Year Plan
Tasks: Dedicated System for Strategic Products andStabilization of Logistics and Installation System
In our business in Japan, we focused on growth by maintaining
profit from core products and by multi-product sales initiatives
and on strengthening the service business. In the case of ourcore products, we implemented measures to cover increases in
raw material costs, such as for steel, and in variable costs bypassing them on in increased sales prices, but these did not filter down sufficiently. We also experienced problems on the supply side, thus our initial profit plan was not achieved. With
regard to the multi-product sales initiatives, we have madeprogress with the establishment of a dedicated system for strategic products, such as partitions, entrances, and exteriors, but
this has not yet led to the establishment of a foundation forgrowth. The strengthening of dedicated systems and the establishment of stable logistics and installation systems remained as
outstanding issues.
In the service business, we advanced improvements of business structure and business expansion. We responded to theperiodic inspection reporting system for fire prevention equipment, introduced in accordance with the revision to the
Building Standards Act that has been in force since June 2016.
As a result of having aimed to maintain a market share of 50%
or more, the maintenance and service business increased significantly by ¥8.6 billion (a 137.8% increase) to ¥31.6 billion over
the three-year period. There was still a shortage of maintenancepersonnel, however, and retaining sufficient personnel remained
an issue.

Third Mid-Term Management Plan
Fiscal 2020 Targets
Net Sales

Variance vs. FY2018

Operating Income

Variance vs. FY2018

Sanwa Shutter¥213.7 billion+7.6%¥21.5 billion+17.2%

Japanese Subsidiaries¥46.3 billion+30.9%¥2.72 billion+123.6%Grow as an access systems company
by establishing positions in each business field
L Expansion of Core BusinessIn our core business, we will work to improve marginal profitsby promoting business-specific customer strategies whilestrengthening the revenue base. We will also increase our dominance over other companies by strengthening our unrivalled
product appeal.
L Expansion of Growing BusinessIn growing business, we will aim to expand our businessdomains by realizing growth strategies while implementing astrategy to defeat rival manufacturers in competition for market
share. Specifically, we will strengthen synergies through cooperation among domestic Group companies and put school partition specialist Sanwa System Wall on track as we aim to expand
the partition business. We will also strengthen our development
capabilities and product appeal to exceed those of specialized
manufacturers.
L Expand Service BusinessIn the service business, we are planning to expand our share of
the legal inspections market, expand the maintenance businessfrom legal inspections, maintain and expand the foundation of
our general repair and maintenance business, and thus steadily
grow the business.

Strengthen the Structure for Business Expansion
L Strengthening of Manufacturing, Logistics, Installation
Structures
We are working to strengthen our supply systems by utilizing
the latest IT systems, such as AI and the IoT, for business expansion. In manufacturing, we will promote production efficiency
by maintaining production lead times, strengthening our manufacturing capabilities, and systematization. In logistics, we will
pay close attention to keeping to delivery deadlines and tomaintaining and expanding our transport capacity by strengthening our logistics management systems. In installation, we will
focus on developing a training system to retain installation personnel and improve our installation capabilities.
L Reforming Employee Safety Awareness, Strengthening
the Product Quality Control Framework
We are working to reform employee safety awareness andstrengthen management systems while aiming to eradicate
occupational accidents. We are also aiming to improve our corporate brand by maintaining product quality.
L Productivity Improvements, Work-Style Reforms
We will work to drastically improve productivity through operational efficiency and process standardization, which will lead towork-style reforms.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201931

The Evolution of Sanwa

Regional Operations

Value Creation for Business Expansion
Expansion of safe, secure products for use in event of disaster:“Airote” steel door with opening force reduction mechanism
launched
Sanwa Shutter Corporation launched its “Airote” steel door, which features a mechanism that allows the door to open with minimal force to facilitate firefighting and ensuring a safe escape route in the event of a fire. This product is a steel door for installationin rooms with special evacuation staircases or in emergency elevator lobbies. By meansof a mechanism that divides the door into front and rear sides, “Airote” creates a gap torelieve the difference in pressure, thereby enabling the door to be opened with minimal
force. Under normal circumstances it acts as single door, and in the event of a fire, thedoor can be opened by a mechanism that releases the connection between the front
and rear of the door, thus we have added to our lineup of products that ensure ease ofoperation and safety.

The “Airote” door facilitates firefighting
and safe evacuations.

Promoting Domestic Group Optimization
From fiscal 2019, we have consolidated four companies: Showa Kensan Co., Ltd., Tajima Metal Work Co., Ltd., Hayashi Kogyo Co.,
Ltd. and Sanwa Electronics Engineering Co., Ltd. Our aims are to improve our capabilities in the manufacture and sale of automatic
doors and of mailboxes, which are positioned as multi-product sales initiative products, and improve our capabilities in the manufacture of our core shutter and door products, while strengthening the management of the entire domestic group. We will work to
speed up business expansion in Japan by sharing issues and strategies and demonstrating synergies through closer collaboration,such as in the development of new customers. We are targeting total net sales from these four companies of ¥6.2 billion and operating income of ¥600 million in fiscal 2019, and total net sales of ¥7.8 billion and operating income of ¥ 700 million* in fiscal 2020.
* All figures shown are those before consolidation.

Net Sales by Product(Sanwa Shutter Corporation)(Millions of yen)
60,000(Millions of yen)
40,00050,00030,00040,00020,00030,00020,00010,00010,000
0
(FY)
L
L

32

2017

2018

2019
(Forecast)

Building & condominium doors
L Heavy-duty shutters
Lightweight shutters
L Window shutters

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

0
(FY)
L
L

2017

2018

Partitions
L Stainless steel products
Maintenance
L Exterior fittings

2019(Forecast)
L

Storefront products

Factors in Co-creating Value with Stakeholders
Development of Safe, Secure Service Providers: Fire Prevention
Equipment Periodic Inspection Skills Contest Held
The periodic inspection reporting system for fire prevention equipment, which became
mandatory following the revision to the Building Standards Act, has been fully operational since June 2019. In connection with this, to improve maintenance inspection skills,
Sanwa Shutter Corporation held a contest in May 2019 that brought together top-classinstallers from each region to pit their skills against each other. The top installers competed on all 22 technical items, including preparation and inspection work as well as
manners. The main purpose is to work to improve the technical level and manners of
installers, but one of the contest’s other aims is to record the work processes of the best
people for training purposes, share those processes with installers across the country,
and standardize them.
In the years to come, we will continue to provide social safety, security and convenience by improving the maintenance inspection and repair techniques of each andevery one of our installers and building relationships of trust with our customers.

Competing on maintenance and inspection skills
at the contest

Improvements in Productivity by Installation Labor-Saving
Sanwa Shutter Corporation has made progress with its installation labor-saving efforts.
These include its integrated-shutter installation method, by which the shafts and slats ofheavy shutters are assembled in advance at the factories and then brought in. This is a“flameless” installation method, by which doors are attached without using welding,and employs a process of connecting all electrical components beforehand. At the present time, the Company has more than 3,800 installers, but shortages of manpower are
expected to become more serious in the years to come due to the ongoing aging of the
population. Labor-saving installation therefore enhances safety and productivity at construction sites and ensures high quality through efficient work.
Logistics facilities advanced by labor-saving
measures during installation

Lightweight shutters

Heavy-duty shutters

Building & condominium doors

Window shutters

Partitions

Storefront products

Stainless steel products

Exterior fittings

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201933

The Evolution of Sanwa

Regional Operations
North America

Strengthening core businesses
while entering into adjacentbusiness fields


Kelly Terry

Overhead Door Corporation
President & CEO

K Business in the United States and Canada (A powerfulbrand and top-tier market share)

K Disparities based on the region of the distributor
or dealer

K A strong network of about 400 “Ribbon Distributors” andmore than 2,000 other dealers

K Distributor competition based on downstream
strategies

S

W

Opportunities

Threats

K Delayed introduction of ERP systems

Strengths Weaknesses

K Economic growth and strong investment in housing

OT

K Enhanced market share in metropolitan areas

K Impact of US administration policies
K Forex risk
K Sharp rise in raw material prices

K Introduction of new products in peripheral businessdomains

K Increased market penetration by overseas companies

Fiscal 2018 results and fiscal 2019 forecasts
On a US$ basis, fiscal 2018 sales were up 4.9%
year on year to $1,056.6 million.
In the North American business, sales improved 3.4% year on
year to ¥116.6 billion, while operating income was flat (±0.0%)
year on year at ¥8.78 billion. Sales expanded by ¥3.9 billion (anincrease of 3.5% year on year) more than initially expected.
While higher sales prices served to offset the increase in raw
material costs, operating income declined ¥0.25 billion (adecrease of 2.8% year on year), falling short of our initial forecast, due largely to weaker-than-expected sales volume.
On a US$ basis, fiscal 2018 sales were $1,056.6 million, (anincrease of 4.9% year on year) while operating income
improved to $79.56 million (an increase of 1.6% year on year).
For fiscal 2019, we estimate sales in the North American business rising to ¥118.9 billion (an increase of 1.9% year on year)
and operating income improved to ¥9.35 billion (an increase of
6.4% year on year). On a US$ basis, we estimate sales rising to$1,132 million (an increase of 7.1% year on year), with operating up to $89 million (an increase of 11.9% year on year).

34

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Net Sales

Operating Income(Millions of U.S. dollars)(Millions of U.S. dollars)

1,500
1,500

100
100

99.5
99.5
89.0
89.0

1,183
1,183
1,200
1,200

80
80

1,132
1,057
1,057 1,132

78.3
78.3

79.6
79.6

1,007
1,007
900
900

60
60

600
600

40
40

300
300

20
20

00
(FY)
(FY)

2017
2017 20182018 20192019 2020
2020(Forecast)(Forecast) (Target)(Target)

00
(FY)
(FY)

2017
2017 20182018 20192019 2020
2020(Forecast)(Forecast) (Target)(Target)

FY

2017

2018

2019 (Forecast)2020 (Target)

JPY/US$ rate

¥112.04¥110.36¥105.00¥105.00

Business strategy
Looking back on the Second Three-year Mid-Term Management Plan
The strengthening of sales channels has produced a certain
amount of positive effects in the mainstay door business, andwe have been able to achieve QCD (quality, cost, delivery)
improvements in manufacturing operations. We also pursued
aggressive overseas development, including the project in Limain South America, and moved forward with the restructuring

and strengthening of our downstream businesses. In the services business, Canadian firm Creative Door Services (CDS),
which constructs, sells, and maintains doors, was successful in
its effort to expand sales, achieving its initial target in the process.

Third Mid-Term Management Plan
Fiscal 2020 Targets

ODC (North America)

Basic
Strategies

Net Sales

Variance vs. FY2018

Operating Income

Variance vs. FY2018¥124.2 billion+6.5%¥10.45 billion+19.0%$1,183 million+12.0%$99.5 million+25.1%

Strengthening core business segments while entering adjacent business fields
New Business
Existing Business

Gate openers

Shutters

Dock levelers
Commercial doors

Access control
Equipments

Security related
Products
Residential
garage doors
Door openers

Automatic doors

Core businesses

Growth businesses

L Targeting profit growth through a strengthening of thecore businesses
While housing starts in the US are expected to remain flat fromfiscal 2018 in both fiscal 2019 and fiscal 2020, we expect capital investment to remain firm. Based on these external conditions, we target ODC sales in fiscal 2020 rising 6.5% from fiscal
2018 to ¥124.2 billion, with operating income rising 19.0%
compared to fiscal 2018 to ¥10.45 billion.
With the goal of expanding our market share in residential
and commercial doors, we intend to strengthen our upstream
businesses and promote improvements in distributor support.
Focusing on metropolitan areas and the west coast, where ourmarket share is relatively low, we are working to improve quality
and capacity through a shift to automated production in linewith our goal of completing the introduction of ERP systems.
We are also considering expanding into the security as aperipheral business to our core business.

L Expanding our business model and strengthening ourservice operations
We are working to improve added value, as well as expand ourbusiness model and develop new customers, by providing services with a close connection to the local communities. Efforts
to strengthen the services business in North America arefocused mainly on Creative Door Services (Canada), with directly managed sales offices (NS) being restructured as part of theDoor Business. We are also working to expand the number of
automated door plants through M&A and improve profitability
through the introduction of a field service system.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201935

The Evolution of Sanwa

Regional Operations

Creating value to expand our business
Expanding supply capacity in door openers and automatic doors
at our plant in Mexico
The expansion to increase production capacity at our plant in Matamoros, Mexico, where
we manufacture automatic doors and door openers in the North American region, wascompleted in May 2019. The expansion was aimed at increasing capacity in the automaticdoor and door opener businesses and proved successful in greatly enhancing production
capacity. With the goal of further improving production efficiency, we intend to close our
Baltic facility in the US and consolidate door opener production at the Matamoros plant. Inline with expectations for economic growth and favorable construction investment in the
North American market, we intend to focus on improving efficiency and further expanding
capacity so that we can effectively meet the expected increase in demand as we enter
peripheral business domains, including the access control equipment business.

Matamoros, Mexico plant

Co-creating value with our stakeholders
Enhancing customer/partner engagement
The sales system in North America is focused on selling products through distributors, andnot directly to end users. The distributors, dealing mainly in Overhead Door Corporation(ODC) products, play an important role in creating value for the group. ODC celebrated the98th anniversary of its founding in 2019, and its distributors, with a sales network of about
400 companies throughout the US, are often referred to as “Ribbon Distributors” in linewith ODC’s ribbon logo. With the goal of continuously strengthening its relationships with
the Ribbon Distributors, ODC uses feedback gained from regular dialogue and informationexchanges with the distributors to improve product quality and develop new products. The
2019 National Ribbon Distributor Meeting in Scottsdale, Arizona was a large-scale event,with about 700 participants from 220 distributorships.

National Ribbon Distributor Meeting

Sales trends by product(Millions of U.S. dollars)
900
750

250

600

200

450

150

300

100

150

50

0
(FY)

L
L
L

36

(Millions of U.S. dollars)
300

2017

2018

2019
(Forecast)

Door division (left scale)
Door opener division (right scale)
Automatic door division (right scale)

SANWA HOLDINGS CORPORATION

Doors (sectional doors)

Doors (commercial doors)

Door openers

Automatic doors

0

INTEGRATED REPORT 2019

Doors (residential garage doors)Europe

Further strengthenindustrial segment andpromote digitalization
through NF4.0


Rainer Schackmann


Novoferm GroupCEOK Business development in the mainstay German market aswell as other major markets

K Intensifying competition in the German market
K Cost burden associated with business centers
being dispersed by regions and countries basedon differing lifestyles and cultures

K Expanding the industrial doors business
K Ability to respond to local needs in each region
K Integrated distribution and sales network built
through structural reform
K Flexible M&A strategy
K Promotion of synergies on integration withacquired companies

S

W

Opportunities

Threats

Strengths WeaknessesO

T

K Strong competitor foothold
K Spike in raw material prices

K Promotion of digitalization through NF4.0

K Forex risk

K Increasing production capacity on the manufacture of awide variety of products

K Ability to secure adequate labor force
K UK leaving the EU

K Expansion into until now undeveloped regions

Fiscal 2018 results and fiscal 2019 forecasts
On a euro basis, sales in fiscal 2018 were up 10.7%
year on year to 565.07 million.
In the European business, sales in fiscal 2018 improved a strong
13.1% year on year to ¥73.5 billion. Operating income also
sharply expanded, to ¥3.83 billion (an increase of 32.9% year
on year). The rise in raw material costs was offset by improved
volume and reduced costs in other areas.
On a euro basis, sales in fiscal 2018 were 565.07 million (anincrease of 10.7% year on year), with operating income rising
to 29.5 million (an increase of 30% year on year).
For fiscal 2019, we forecast sales of ¥70.2 billion (a decreaseof 4.4% year on year) , with operating income of ¥3.6 billion (adecrease of 6.1% year on year). On a euro basis, we anticipate
sales of 585 million (an increase of 3.5% year on year), with
operating of 30 million (an increase of 1.7% year on year).

Net Sales

Operating Income(Millions of euro)
800
800(Millions of euro)
40
40

36.0
36.0

600
600

565
565

585
585

612
612

29.5
29.5

30
30

30.0
30.0

511
511
22.7
22.7
400
400

20
20

200
200

10
10

00
(FY)
(FY)

2017
2017 20182018 20192019 2020
2020(Forecast)(Forecast) (Target)(Target)

00
(FY)
(FY)

2017
2017 20182018 20192019 2020
2020(Forecast)(Forecast) (Target)(Target)

FY

2017

2018

2019 (Forecast)2020 (Target)

JPY/ rate¥127.22¥130.00¥120.00¥120.00

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201937

The Evolution of Sanwa

Regional Operations
Business strategy
Looking back on the Second Three-year Mid-Term Management Plan
In the European business, we focused on our policy aimed at
establishing a profitable growth base centered on our key products. We expanded production capacity at the Alpha Deuren
plant in the Netherlands, and bolstered our industrial door business by shifting supply to Norsud in France. We also strengthened the supply system for the garage door business throughimproved collaboration between the businesses in Germany andthe UK, and between the businesses in Germany and France.
In services, we worked to strengthen service orders in cooperation with our directly managed sales outlets, with a focus inparticular on large-scale projects such as distribution centers.
We also acquired British service company Bolton Gate Services.

Third Mid-Term Management Plan
Fiscal 2020 Targets

NF (Europe)

Basic
Strategies

Net Sales

Variance vs. FY2018

Operating Income

Variance vs. FY2018¥73.4 billion-0.1%¥4.32 billion+12.8%

612 million+8.3%

36 million+22.1%

Further strengthen industrial segment and promote digitalization through NF4.0

Strengthen the industrial overhead
sliding door business• Completed out expansion at the Alpha Deuren plant(Netherlands)(Extended by 18,000m2 to total building area of 53,000m2)• P roduction started in the first quarter of 2019•R
 oughly doubled the yearly production capacity

38

Strengthen the dock leveler business• Expand NF Door (Poland) facilities step by step followed byrobust demand, and promote multi-product sales initiatives
as a total solution provider of industrial productsCore businesses

Growth businesses

L Targeting continued strength from fiscal 2018,
improved profit margins
Numerical targets for fiscal 2020 include sales of ¥73.4 billion
and operating income of ¥4.32 billion. With growth investment
in residential and non-residential construction expected to slow
over the next two years, we do not expect robust sales growth
and along with the impact of exchange rates the outlook is for
low growth. On the other hand, profit margins in the businessare lower than they are in the US and Japan, and we haveaccordingly set a target for operating income growth over two
years of 12.8%.
As part of our strategy aimed at an expansion in the corebusinesses, we target enhanced production capacity in docklevelers and an expanded lineup of high-speed sheet shutters,
as well as a strengthening in the service and spare parts businesses, and an expansion in sales in the industrial doors business. In the hinged doors business, we aim to strengthen our
upstream strategies while advancing synergies with Robust,which we acquired in 2019, and expand sales channels in the
Northern European, Southern European, and Eastern European
markets. Likewise, we aim in the garage door business to
expand sales channels in the Southern European, and Eastern
European markets by bolstering our brand strength.

L Targeting further advancement through promotion ofdigitalization
With the goal of advancing operational reform, we are promoting continued efficiency improvements through the NF3.0
Project, as well as enhanced efficiency in sales, services, production, and distribution through a shift to digitalization in linewith the launch of the NF4.0 Project. We are also enhancing
head office functions to support growth across Europe, including through the establishment of a new internal auditing
department.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Creating value to expand our business
Expanding into areas in Europe where our market share isrelatively low
In May 2019, the NF Group acquired all shares of Robust AB, which is developing thehinged door business in Sweden, Norway, and the UK. The hinged door business inNorthern Europe and the UK, and in particular for security and fire doors, is very importantand is expected to show favorable growth over the next several years. The Robust AB
acquisition allows the NF Group to bolster its hinged door business and target further
growth through the maximization of group company synergies. The acquisition also allows
us to further penetrate the Northern European market and enhance our presence in areas
where our market share has been to date relatively low.
Robust AB recorded fiscal 2018 sales of about ¥3.28 billion and had 175 employees.
Robust AB

Operational process reforms that co-create value with stakeholders
Launching the NF4.0 digitalization project
One of the key themes in the Sanwa Group’s Third Mid-Term Management Plan is thelaunch of the NF4.0 project promoting digitalization in the European business. The project
aims at the digitalization of operations in Europe as a whole in order to improve production and operational efficiency in the sales, manufacturing, and management divisions
throughout the region. Realization of NF4.0 could allow digitalization of the quote andordering process, where the needs of the customers are at their highest. We are also working to achieve enhanced efficiency and optimize the operational process models in production and distribution. In sales, digitalization would allow us to provide added value in avariety of ways, including by displaying product delivery and arrival dates, providing property-related information, as well as information on all offered products, and linking our system to that of the customer.

NF4.0 for reforming operational processes

Sales trends by product(Millions of euro)
300

250
200
150

Hinged doors

Garage doors

Industrial sectional doors

Dock levelers*

Door openers

High-performance doors

100
50
0
(FY)
L
L
L

2017

2018

Hinged doors
Garage doors
Industrial sectional doors

2019(Forecast)* E quipment used to adjust for the height difference between the truck bed and loading platform

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201939

The Evolution of Sanwa

Regional Operations
China/Asia

Enhancing management synergies
of each Group company,
increasing consolidated businesses
K Exceptional quality utilizing Sanwa Group technology

K Delay in localization progress

K The firm financial foundation of the Sanwa GroupK Status of production system

K Production and sales structures that utilize fourbases in the China Business, and four bases in the
Asia Business

K Status of sales channels

S

W

Opportunities

Threats

Strengths WeaknessesO

K Economic growth in the ASEAN region
K Rising income levels

TK Economic slowdown in China and insufficient
workforce
K Geopolitical risks

K Favorable logistics market

K Amendments to laws
K Inroads made by overseas companies

Business Strategy
Looking Back on the Second Three-Year Plan
Under the Second Three-Year Plan we sought to secure a foundation for profits by separating our China Business from theAsia Business, and worked to strengthen our management
structure.
We endeavored to build a sales and production system forthe door business in China, and with Shanghai Baosteel-Sanwa

Door, strengthened action taken on logistics market projects
and worked to improve productivity that would strengthen
profitability.
With Vina-Sanwa in Vietnam we made progress on bolsteringexports to ASEAN markets, and focused efforts on raising productivity.

L Coming within the scope of consolidation from fiscal
2019 will be the China Business (Shanghai BaosteelSanwa Door, An-Ho Metal Industrial, Sanwa Shutter(H.K.), and the Asia Business (Vina-Sanwa)

Net Sales

Operating Income(Millions of yen)
8,000
8,000

(Millions of yen)
400
400

7,001
7,001

7,272
7,272

339
339

6,000
6,000

300
300

4,000
4,000

200
200

2,000
2,000

100
100

269
269

Dongbang Novoferm (Korea)
Shanghai Baosteel-Sanwa Door

Novoferm (Shanghai)

An-Ho Metal Industrial (Taiwan)
Vina-Sanwa (Vietnam)

Sanwa Shutter (H.K)

Sun Metal (Thailand)40

P AsiaSANWA HOLDINGS CORPORATION

2019
2019

(Forecast)(Forecast)

2020
2020

(Target)(Target)

00
(FY)
(FY)

2019
2019

(Forecast)(Forecast)

2020
2020

(Target)(Target)* Comprehensive figures of the four companies that came within the scope of­consolidation

Sanwamas Metal Industry (Indonesia)
P China

00
(FY)
(FY)

INTEGRATED REPORT 2019

Third Mid-Term Management Plan
Fiscal 2020 Targets

China/Asia

Net Sales

Operating Income¥7.3 billion¥0.34 billion

L Aiming for Further Business Expansion by Bringing
China and Asia Businesses Within the Scope ofConsolidation
In our China Business we will take action to strengthen ourdoor business and our business targeting logistics facilities torealize business synergies within the East China region where
Shanghai Baosteel-Sanwa Door and Novoferm (Shanghai) arelocated. We also will work to strengthen cooperation between
Sanwa Shutter (Hong Kong) and Shanghai Baosteel-Sanwa
Door to expand business in the South China region. We aim togrow business in Taiwan with efforts to boost production capacity. We have set consolidated net sales targets for the China
Business in fiscal 2020 at ¥5.6 billion, and for operating
income, the target is ¥0.3 billion.

In the Asia Business, we will work to optimize productivity
across ASEAN through the development of production bases.
Vina-Sanwa is to undertake various efforts, including the raisingof production capacity and taking action on measures tostrengthen installation capabilities, while Sanwamas Metal
Industry is to steadily enhance equipment. We have set consolidated net sales targets for the Asia Business in fiscal 2020 at¥1.7 billion, and for operating income, the target is ¥40 million.
Three companies in the China Business (Shanghai BaosteelSanwa Door, An-Ho Metal Industrial (Taiwan), Sanwa Shutter(Hong Kong)), and one in the Asia Business (Vina-Sanwa) will
come under the scope of consolidation from fiscal 2019.
Leading up to fiscal 2020 we will focus efforts on further
expanding the scope of consolidation.

Value Creation for Business Expansion
Integrated Management in the Asian Region
In October 2018, we took a controlling interest in PT. Sanwamas Metal Industry ofIndonesia, hiking our investment from 18.88% to 51.02%. Leveraging this development,
we will integrate management among Asia’s ASEAN region. Up until now, the primarymethod of business development was for each country in the ASEAN region to conductlocal production for local sales. However, as an element of the plan going forward, we will
make progress on an optimized strategy that takes all of the ASEAN region into consideration and construct a flexible structure that moves beyond such a framework that places
restrictions on each country.
The mutual supply of products produced in the plants of each country and consolidationof production bases will work to promote business growth in each country, and together
with that, we aim to expand sales to markets that have the potential for future economic
growth, even if they currently do not have sales functions.

Sanwamas Metal Industry plant (Indonesia)

Co-creating Value together with Stakeholders
Seizing Upon Synergies in the China BusinessShanghai Baosteel-Sanwa Door has captured a large-scale order for Sanwa Group products
to support a construction project to build the Mongolia-Japan Teaching Hospital in
Mongolia’s capital of Ulaanbaatar, which is the first medical university hospital for thatcountry. This project was undertaken as part of the Japanese government’s Official
Development Assistance (ODA), with construction having commenced in 2015, and completed in the summer of 2019. Under this project we delivered shutters, overhead sliders,doors, partitions, and sash products.
Ulaanbaatar is known for having the lowest average temperature of any of the world’s
capitals. In winter, temperatures fall below minus 40°C so the sash used here employ a distinctive three-panel glass. Patient rooms feature the “Smood” sliding doors manufactured by
Novoferm (Shanghai) Co., Ltd., and installation was cooperatively conducted by Shanghai
Baosteel-Sanwa Door and Novoferm (Shanghai). We will continue to integrate management
operations in the China and Asia businesses to capture synergies amongst each company.

The Mongolia-Japan Teaching Hospital

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201941

Creating Values through ESG

Sustainability Management Approach
Sanwa Group’s CSR Vision
In 2005, the Sanwa Group established its CSR Vision: “We will contribute to the prosperity of society andraise our corporate value by offering products that provide safety, security and convenience.” We haveidentified themes and priority issues from the perspective of stakeholder satisfaction, and work continuously to enhance corporate value at each Sanwa Group company and business division.

CSR Vision

We will contribute to the prosperity of society and raise our corporate
value by offering products that provide safety, security and convenience.
Customers

Local
Communities

Safe living with protection from disaster
Shareholders
and Investors

Secure living with protection from crimes against
people and property
Comfortable living through easy-to-use access systems

Business
Partners

Employees

Installers

The concept behind ESG at the Sanwa Group is to contribute to society through our core business. Our corporate mission is to offer the
products and services that provide safety, security and convenience,and for that very reason it leads to solutions to societal problems, andas a result, to the creation of corporate value for the Company.
In providing society with a diverse product lineup cultivated throughour multi-product sales strategy, we aim to find solutions to issues that
confront people as they live their lives in society.

Promotional Structure
Sanwa Group rolls out is CSR activities in an integrated manner, and to facilitate that, four times a year itholds its Group CSR Promotion Council. In addition, each Group company holds meetings biannually to promote quality, the environment and CSR, and also establishes promotion committees that are a driving force
for carrying out relevant duties and managing their progress.
Group CSR Promotion Council
Chair: E xecutive Officer in charge of Corporate Planning
Unit, Sanwa Holdings
Attendees: Sanwa Holdings President, Executive Officer incharge of Global Business Unit, Sanwa Shutter
President, Vice President

Secretariat: Corporate Communications Department, Sanwa Holdings Corporation
The Council convenes once every business quarter for domestic and global divisions toinvestigate and report on the progress of ESG-related measures, and on quality, risk andcompliance issues.

Frequency: Four times a year

Quality, Environment andCSR Promotion Council
Chair: Sanwa Shutter President
Attendees: Domestic Group company presidents, Sanwa
Shutter Vice President, Heads of production,
development, purchasing and engineering
departments

Secretariat: Quality Assurance Department, Human Resources and General Affairs
Department, Sanwa Shutter Corporation
The Council mainly investigates quality, environment and ESG-related issues at Group
companies in Japan and manages the progress in creating and promoting a complianceaction framework at each company.

Frequency: Twice a year

CSR Promotion Committee
Chair: Group company presidents

42

SANWA HOLDINGS CORPORATION

Secretariat: General Affairs Department at Each Group Company
The Committee within each Group company notifies employees of CSR topics, and drafts,
implements and manages the progress of CSR-related measures.

INTEGRATED REPORT 2019

Decision-Making Process for Key ESG Issues (Materiality)
In light of international trends and the business environment in which Sanwa Group operates, and given
the vigorous efforts companies are making to take global action toward achieving a sustainable society inrecent years, the Sanwa Group has used the following process to identify those ESG priority issues (materiality) upon which we should be applying our energies.

STEP

1 Identify ESG Issues

STEP

Upon organizing the identified ESG
issues, we assessed degree of importance based on the dual tracks ofrelevance to stakeholders and to
the Company, then based on that,specified priority issues to tackle.

Along with creating broad categories of ESG classification based on
ISO 26000, we identified issues taking into consideration external
evaluations, trends and other information with regard to each respective broad category.

SocialGovernanceMade comprehensive decision ofpriority issues based on deliberations at the quality, environment
and CSR promotion meetings andthe CSR Promotion Council.

Key Issues

Background

Environment

In 2007, the Sanwa Group formulated its “Sanwa Group Environmental Policy,” andstrived to reduce the volume of energy it consumed and the waste it produced. Climatechange has for the past few years become an issue garnering attention. On one hand
this means such risks as rising costs for supplies and increasingly stringent CO2 emissions
regulations, while on the other, it presents an opportunity for business growth withenvironmentally friendly products that contribute to a sustainable society, and byproviding disaster prevention products with qualities that help prevent water damage
and that stand up well to abnormal weather conditions.

• Respect for Human Rights

Sanwa Group, developing its business globally, is bolstering its efforts to address an issue
that is gaining worldwide attention, namely “human rights.” Eliminating discriminationand harassment based on nationality, gender, age, disability or other characteristic willlead to the creation of a workplace that is free-spirited and open, high motivation among
employees and the fostering of loyalty, while also raising corporate competitive
capabilities and generating a stream of innovation.

• Work-Life Balance• Diversity• Human Resource
Development• Health and Safety

Sanwa Group requires a multitude of labor capabilities, from development to installation,
so that its building materials and building opening products can exert functionality as
access systems. This is why the Company seeks to create workplaces where people cancarry out their duties with peace of mind given the initiatives taken to remedy long
working hours, and that have respect for the diversity and occupational safety of
employees. Moreover, at the foundation of business is the fostering of human talent thatwill be a driver of corporate growth, and this will be a source of competitiveness.

• Offering Products and Services
that Contribute to Safety,
Security and Convenience• Strengthening of Quality
Control• Improvement of Customer
Satisfaction

Sanwa Group conducts business activities based on its mission of “providing safety,
security and convenience to further contribute to the prosperity of society.” We support
the lifestyles of people and the places they live, on a 24-7 basis. Continuing to do that
into the future requires providing products and services that contribute to safety, security
and convenience, as well as the pursuit of quality assurance and customer satisfaction.
This is the Company’s raison d’etre and is at the core of how we differentiate ourselves.

• Regional Contribution• Social Contribution

Sanwa Shutter Corporation, comprising the core of the Group, was the industry’s
quickest player off the mark in building a nationwide production and sales network,
which has become the cornerstone of our business. We now conduct business activities
deeply rooted in local communities in regions throughout the world. Productdevelopment that takes into account local characteristics, co-existence with communities,
and contributing to society through our core business will link to the development ofboth local society and the Sanwa Group.

• Corporate Governance• Compliance• Risk Management• Stakeholder Dialogue

Sanwa Group is a global corporation with Group companies in Japan, the U.S., Europe
and Asia, and amid escalating corporate competition, we are boosting corporate value
through efforts to build highly transparent management systems, strengthen compliance,and conduct proper risk management. We work to achieve lively communication withvarious stakeholders, and believe it important to perform business activities while
listening to such voices.

• Fair Competition• Anti-corruption

Sanwa Group conducts business activities that are supported by a wide range ofstakeholders, including partners and suppliers, installers, as well as design and factory
support companies. As we move into the future, we have a firm understanding of theimportance of building relationships that are just and fair, as well as ethical, so as togrow and develop together with these stakeholders, and to pursue being a company
that is trusted by society.

Labor Practices

Consumer Issues

Community
Involvement andDevelopment

G

3 Confirm
Appropriateness• Reduction of Greenhouse Gas
Emissions• Appropriate Waste
Management• Promotion of Green
Purchasing• Providing of Eco-Friendly
Products

Human Rights

S

STEP

ISO 26000 Core Subjects

E
Environment

Issues and2 Categorize
Specify Key Issues

Organizational
GovernanceFair Operating
Practices

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201943

Creating Values through ESG

Sustainability Management Approach
Stakeholder Engagement
In pressing forward with CSR activities, we focus on dialogue with a diverse range of stakeholders. The
points made and information that emerge from such dialogue that are deemed to be of importance toCompany operations are provided as feedback to top management.
Dialogue with Customers

Dialogue with Shareholders and Investors

Sanwa Group products are used in the openings of a wide variety of structures,from buildings, condominiums, factories, and warehouses, to schools, medical
and welfare facilities, and others to support the lives of people on a daily basis.
Together with responding to the diverse comments and requests of customers
with a nationwide network of over 250 locations and a 24-7 repair service, theopinions acquired at our customer centers are shared throughout the Group,
which leads to improved products and services.

We are striving to achieve sustainable growth and to raise corporate value by
disclosing information in a timely and appropriate manner, and reflecting thecontent of the dialogue we have with all of our shareholders and investors backto management. We hold financial results briefings on a biannual basis, andindividual IR meetings over 200 times a year, while also holding an internationalroad show to North America, Europe and Asia, as well as briefings to individual
investors and plant tours to institutional investors, among other activities. We
publish the “Integrated Report” annually.

Dialogue with Employees
In addition to briefings on corporate strategy and vision provided by top management to employees, we convey the importance of promoting CSR and compliance through internal newsletters that are issued four times a year as well as
messages sent by e-mail. Sanwa Shutter Corporation’s management team, led
by the president, visits the approximately 10 locations twice a year to explain
strategy and policies, and to exchange opinions. In addition, the Employee
Awareness Survey and internal whistle blower system work to improve organizational climate and eradicate improper behavior.

Dialogue with Installers
We make concerted efforts to raise installation quality and enhance engagementwith the over 3,800 installers who are the lifeline of the Company in their support of safety, security and convenience through access systems. Installers canpick up information on installation quality and occupational safety conveyed atregular monthly occupational safety meetings, and in addition to all types oftraining and contests, we provide long-service awards, and support for benefits
packages. We also publish a biannual public relations magazine catering toinstallers, among other initiatives.

Dialogue with Partners
The “Sanwakai” group, consists of roughly 110 companies that are Sanwa
Shutter’s suppliers, factory support companies and other partners, facilitates thesharing of information and takes QCDE* initiatives to the next level through synergies gained from mutual suppliers. The Company is pursuing long-term mutual
development based on strengthened ties and as one of the activities of the“Sanwakai” we are bringing together a purchasing group, consisting of suppliers
that enables reduced costs and improved quality, and a manufacturing group offactory support companies that has priority goals of raising quality and performing
safety activities, among others.

Dialogue with Local Communities
As a good corporate citizen, the Sanwa Group uses product materials produced
in local prefectures and conducts activities deeply rooted in local communities,
such as factory tours and Sanwa Environmental Day, in which 1,500 people participate every year. In addition, the Group seeks solutions to societal problems in
the course of its business activities, including the development of products thatare environmentally friendly and that serve to support disaster prevention, while
also actively performing work to contribute to society, such as conducting donation drives and volunteer activities.

* QCDE: An abbreviation for Quality, Cost, Delivery and Environment

ESG Data
ESG

ISO 26000
Core Subjects

P SANWA HOLDINGS CORPORATION and Sanwa Shutter Corporation P Group companies in Japan P Group companies overseas P Entire GroupKey Issues

ReductionofGreenhouse
Gas
Emissions

EnvironmentE

44

Results of Initiatives
Reduction in energy consumption
Fiscal 2018 results
P Offices: Basic unit of facility energy consumption 0.0242 (target: 0.0243)
P Factories: Basic unit of facility energy consumption 0.117 (target: 0.1079)
Basic unit of logistics energy consumption 0.0522 (target: 0.0542)

Appropriate Reduction in volume of waste generated
Fiscal 2018 results P Offices: Basic unit of waste 22.29 (target: 23.46)
Waste
P F actories: Basic unit of waste 35.85 (target 36.62)
Management
Environment Promotionof Green
Purchasing

Providing of
Eco-Friendly
Products

SANWA HOLDINGS CORPORATION

Upcoming Issues
P T arget setting forenergy reductionPC ollection ofenvironmental impact
data/target setting forenergy reduction
P T arget setting for waste
reduction

Promotion of 3Rs for packaging materials/Measuring a rate of green purchasing
Fiscal 2018 results
P Promoted switch to 4Ms (manpower, machines, methods and materials):
5 projects (target 4 projects)
P Rate of green purchasing (No. of companies): 68%

P Promoted increase 3Rs
for packing materials
P Raise rate of green
purchasing

Expand sales of environmentally friendly products
Fiscal 2018 results P ¥31.4 billion
Commercialize eco-products and Design for the Environment (DfE) products
Fiscal 2018 results
P Eco-products: 2 items (targets: 2 items)
Design for Environment (DfE) products: 10 items (targets: 10 items)

P E xpand sales ofenvironmentally friendly
products
P E co-products, designedwith the environment
in mind
Product development
and sales

INTEGRATED REPORT 2019

RelatedSDGs

ESG

ISO 26000
Core Subjects

Key Issues

Human
RightsRespect for
Human Rights

Conducting training on harassment
Fiscal 2018 results P 218 people

P E xpand scope of training,
content

Work-Life
Balance

Revising long working hours through appropriate management of work
practices
Introduction of telecommuting trial
Fiscal 2018 results P 6 people confirmed

P P romote work-style reforms
P E xpand scope of teleworking

Diversity

Enhancing measures to support a balance between childcare and work
Fiscal 2018 results P Introduced paid vacation by the hourP No. of employees who took child care leave: 17
P Rate of return to work after child care: 100%
Hiring of sports athletes and conducted spectator events
Fiscal 2018 results P Held 2 times (64 people participated)

P Promote taking of child careleave by male employees
P Support employees balancing
work with home careP Hold career enhancement
training for female employees
P Hold sports experience event

Labor
Practices

S

Health and
SafetySocialHuman
Resource
Development

Offering
Products andServices thatContribute to
Safety, Security
and Convenience
Strengtheningof Quality
Control

ConsumerIssues

Improvementof Customer
Satisfaction

Regional
Contribution
Community
Involvement
andSocialDevelopment
Contribution

Corporate
GovernanceGovernanceG

Organizational
GovernanceCompliance

Risk
Management
Stakeholder
Dialogue

Fair
Operating
Practices

Fair
Competition
Anti-corruption

Results of Initiatives

Upcoming Issues

Cultivating professional and global human resources
Fiscal 2018 results
P Total No. of employees trained at the Human Resource Development
Center: 1,448
P No. of employees who took e-learning: 100
Securing and training installers (including internal installers)
Fiscal 2018 results
P No. of installers trained at the Installation Training Center: 1,121
Initiatives to eliminate work-related accidents
Fiscal 2018 results P Rate of lost-worktime due to injuries (Factories): 0.9%
Health management initiatives
Fiscal 2018 results
P Decided Health management officer and constructed promotion
framework

RelatedSDGs

PC arry out new training planPH
 old diversity management
training

P P romote efforts to eliminate
work-place accidents
P Identify priority health issues
and promote countermeasures

Expanding sales of products and services that contribute to safety, security
and convenience
P E xpand sales of products andFiscal 2018 results
services that contribute toP Products that protect from fire, floods and other disasters: ¥86.8 billion
safety, security and convenience
P Water-proof products: ¥800 million P S ervice business ¥49.0 billion
On-site supplier surveys
Fiscal 2018 results P Quality diagnosis (process patrol): 24 companies
Customer consultation and ample response to repair requests
Fiscal 2018 results P No. of customer consultations: 15,622
P No. of general repair requests: 130,462
Business etiquette training
Fiscal 2018 results
P No. of business etiquette training participants: 23
P No. of installers taking business etiquette training: 307
Participating regional events and local cleanup activities
Fiscal 2018 results
P No. of participants in community clean-up activities: 1,529
Promoting Sanwa Group Social Contribution Club activities
Fiscal 2018 results
P No. of Sanwa Group Social Contribution Club members: 1,185
P Cumulative Sanwa Group Social Contribution Club donations: ¥54.5
millionParticipation in charity events, donations, free loans for facilities
Enhancing Corporate GovernanceFiscal 2018 results P Conducted Board of Directors’ survey
P Decided on lead outside director
P Partially revised basic policy for construction of internal control system(strengthened prevention of misconduct)
Providing Compliance Training
Fiscal 2018 results P 324 participants
Established internal whistleblower system (Japan, U.S., Europe, Asia)
Fiscal 2018 results P 42 issues
Promoting risk management
Fiscal 2018 results P 20 themes
Strengthened information security
Proactive dialogue with major stakeholders
Fiscal 2018 results
P Conducted employee awareness survey Response rate: 95.1%
Thorough Guidelines on Regulations Concerning Contact with Associatesfrom Industry Peers
Implementing Anti-trust Law Training
Fiscal 2018 results P 170 people
Compliance training, education with casebook

P Secure stable quality andpromote initiatives to further
raise quality
P Raise degree of customer
satisfaction with
implementation of customer
survey (repair response,
products)
P P romote local community
development initiatives
P Grow membership in Sanwa
Group Social Contribution Cluband promote volunteer activities
P Further promote social
contributions through corebusiness
P Announce corporate
governance guidelines
P Enhance governance at overseas
subsidiaries
P Expand scope of compliancetraining, enrich contents
P Enhance effectiveness ofinternal whistleblower system
P Construct a structured risk
management system
P Ongoing improvements to BCPPD isclose information in properand timely manner, raise
corporate value by deepening
dialogue
P E xpand scope of Antitrust Law
training, enrich content
P Establish guidelines

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201945

Creating Values through ESG

Sustainability Management System
Environmental Initiatives
As interest in ESG and the SDGs has grown, contributing to the realization of a sustainable society has
become an indispensable part of improving corporate value. Based on the Sanwa Group Environmental
Policy, the Sanwa Group conducts its business activities in coexistence with the global environment andlocal communities. As a good corporate citizen, we contribute to a sustainable, affluent society.
As globally integrated manufacturers of building materials, the Sanwa Group contributes to the realization of anenriched society capable of sustainable development through environmentally responsible business activities andthe supply of environment-friendly products and services.

PolicyReduction of Greenhouse Gas Emissions

Promotion of Green Purchasing

Sanwa Shutter Corporation has created and operates an environmental management system based on ISO 14001 and works to reduceenergy use by promoting various initiatives, including increasing theefficiency of primary logistics using depots (small-scale delivery centers) in the Tokyo metropolitan area and in Sendai, as well as controlling energy use throughdemand monitoring systems
installed in each factory. Startingin fiscal 2019, Group companies
in Japan have been strengthening
initiatives to reduce energy use by
a target of 1% per unit of production from fiscal 2018 levels.

Sanwa Shutter Corporation issued its “Green Purchasing
Guidelines”, and promotes the 3Rs (Reduce, Reuse, Recycle) for
packaging materials during visits to plants and suppliers. In fiscal
2018, the Company began measuring green purchasing ratios andhas been implementing initiatives to raise the green purchasing ratio
through dialogue with and making proposals to suppliers.

Shizuoka Plant Demand Monitoring
SystemWaste Reduction
Sanwa Shutter Corporation works to reduce waste by providing
on-site guidance at high-emissions locations and promoting recycling
at factories. Moreover, improvements made to the coating lines at
the Ota Door Plant and Hiroshima Plant
during fiscal 2017 served to improve theadhesion rates of paint and reduced theamount of waste coating. An-Ho Metal
Industrial Hsinchu Plant has increased
yields 4.4% by purchasing steel sheets thatmatch the size of finished door frames andby improving placement efficiency during
steel sheet nesting. In this way, thesemoves contribute to the effective use of
Improvements in Placement
Efficiency During Nesting
resources and reduce waste.
Increase Yields

N Green Supplier Evaluation Standards• Status of acquisition of certifications from third-party certification organizations (ISO 14001 etc.)• Requirements for establishing and operating an environmental management
system• Management of environmentally hazardous substances contained in products• Environmental impact of business activities• Environment-related laws and regulations
購買先調査・評価要領 付属 $&グリーン調達基準書

三和シヤッター工業株式会社
第３版

２０１８年 ５月

Providing Eco-Friendly Products
As a company engaged in manufacturing, the Sanwa Group contributes to a sustainable global environment through the development
and provision of eco-friendly products.
Sold in Japan, North America, Europe, and Asia, high-speed sheet
shutters, which open and close a sheet-like curtain at high-speed,
contribute to energy savings at factories and distribution centersthroughout the world by increasing airtightness and improving air
conditioning efficiency.

N Sludge (paint residue, etc.) Emissions(kg)
200,000

196,280

188,840
163,140

150,000
Coating Lines Improved

99,600100,000

82,19089,490

0
(FY)
L

46

2016

Hiroshima Plant

2017
L

2018

Ota Door Plant

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

ODC (North America) High-speed Sheet Shutter

Human Resource Initiatives
The source of corporate value creation lies in the full participation of every employee. As measures designed
to utilize a diverse range of human resources, the Sanwa Group promotes the active role of women, cultivates global competence, mobilizes senior workers, and employs those with disabilities. These measuresdevelop human resources that can drive growth and maximize the capabilities of the organization.

PolicyThe Sanwa Group creates new value that contributes to the resolution of customer and social issues by nurturing
an organizational culture that respects and embraces the diversity of each employee. In addition, the Group­focuses on the development of human resources capable of creating value by enhancing systems and work
­environments that enable employees to maximize their capabilities.

Human Resource Development

Promoting Diversity

Sanwa Shutter Corporation introduced a new training system called
the “Sanwa Professional Human Resources Training Plan.” Throughjob rotations over the course of two years, this system provides newcollege graduates who entered the company in fiscal 2019 with theopportunity to learn about the Company’s core operations of sales,
installation, factory work, and design. The goal of this system is toensure closer cooperation between production, sales, and engineering, as well as to train human resources that can make decisions
through a comprehensive, optimized field of view.
Moreover, the Sanwa Holdings Corporation Global Human
Resource Planning Division takes the lead in cultivating global competence, and works to increase the speed of training based on thetwo educational pillars of overseas practical training and e-learning.
During fiscal 2018, 12 managers from Group companies in China,
Hong Kong, and Vietnam were invited to Japan to participate in the
Asia Group Company Manager Training program, which educatesparticipants on the Sanwa Group Mission, Values, and PDCA, among
others. This program spreads Sanwa Group’s DNA throughout the
Asian Region while promoting the localization of the Asian business.

Sanwa Shutter Corporation is committed to enhancing and expanding systems that embrace and ensure the participation of a diverse
range of employees, including women. This commitment includes
introducing paid vacation in hourly units, extending the reduced
working hour system for childcare (up to the sixth year of elementary
school), and introducing a partial paid leave scheme for childcare(five days). In addition, the Group mobilizes senior employees andrecruits and supports sports athletes.

Comments from One Man Who
Has Taken Child Care Leave
Being our second child, I decided totake five days of childcare leave
because I wanted to relieve some of
the burden on my wife. I spent a fulfilling five days helping my wife andher parents feed and play outsidewith our oldest son, as well aschange our youngest son’s diapers
and put him to sleep. I am very
grateful to my managers and colleagues for warmly embracing mydecision to take childcare leave.

Sanwa Shutter Corporation
Akita General Sales Office
Kento Haba

Securing and Training Installation Technicians

Asia Group Company Manager Training

Work-Life Balance Initiatives
Along with appropriately managing working hours and reforming
long working hours, the Sanwa Group also introduced a telecommuting scheme on a trial basis to promote a balance between finding fulfillment in work and arich, fulfilling life among all its
employees. The Group designs
these systems under the assumption that they will be used bythose in different situations, notonly women currently raisingchildren, and is also investigating
Telecommuting Has Been Well-received
the further expansion of these.
by Female Employees Currently Raising

Sanwa Shutter Corporation strives to improve installation quality andrelated skills by offering various training programs to more than
1,000 installation technicians every year at the Installation Training
Center, a dedicated training facility. Some of these programs include
welding training and product installation qualification training.
In addition, the Group utilizes practical skill training videos at safety meetings and training sessions throughout Japan as a means ofhorizontally deploying inspection skills and expertise. Winners of the“Fire Prevention Equipment Regular Inspection Skill Contest” whoachieved outstanding results appear in these videos for this purpose.

Practical Skill
Training Video Being
Played at a Safety
MeetingChildren

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201947

Creating Values through ESG

Sustainability Management System

Human Rights Initiatives
Respect for human rights is a social responsibility of corporations, where human rights must be respectedamong all stakeholders, not only employees. The Sanwa Group stands firmly for the respect of human dignity, and recognizes the diverse set of values held by individuals. The Group respects individual characterand personality, and goes beyond the requirements of the law in presenting a stance that does not endorse
discrimination, child labor or forced labor.

PolicyThe Sanwa Group respects the character and individuality of each person from the perspective of respect forhumanity and conducts business activities giving due consideration to the human rights of all stakeholders,­including customers, shareholders and employees.

Increasing the Awareness of Human Rights
In April 2019, the Group provided harassment training led by an outside expert lecturer to its executives. Attended by a total of 218 individuals, including general managers, plant managers, branchmanagers, and head office managers from Sanwa Holdings
Corporation and Sanwa Shutter Corporation, as well as presidents,
directors, and general managers from Group companies in Japan,

participants learned about whichsituations fall within the appropriate scope of business and ways toprovide guidance. Through continued awareness activities, theGroup is working to eliminate
harassment and raise the overalllevel of human rights awareness.

Harassment Training Seminar

Safety Initiatives
The Sanwa Group is committed to conducting business activities under its mission of providing safety, security
and convenience to further contribute to the prosperity of society. Aside from the obvious of providing productsafety, ensuring a safe working environment for employees, a major asset of the Sanwa Group, is also a criticalissue. The Group promotes safety education and on-site improvements at all factories and installation sites.

PolicyAs a company engaged in manufacturing, the Sanwa Group recognizes that ensuring the health and safety of
employees is fundamental to our sustainability and our responsibility as a Company. Thus, the Group does its
utmost to create a work environment that takes mental and physical wellbeing into consideration based on thenotion that this is the responsibility of the company.

Manufacturing Site Initiatives

Installation Site Initiatives

The Sanwa Group works to raise safety awareness and strengthen its
management system in line with its annual health and safety action
plan as a means of eliminating occupational accidents. A safety notebook covering matters related to safety such as safety-related laws,
risk prediction activities and training, and safe operation guidelines has
been translated into six languages (English, Chinese, Spanish,Portuguese, Vietnamese and Indonesian) for the Group’s foreign
workers, which have been increasing in number in recent years.
In addition, the Sanwa Shutter Corporation Shizuoka Plant has
introduced work-assistance suits for the purpose of reducing thephysical burden on the backs of its workers that handle doors. The
Group will continue to strive towards improving the work environment and work efficiency in aims of reducing the burden on its
diverse range of workers, including women and the elderly.

The Sanwa Group takes steps to prevent and eliminate occupational
accidents through regular, continuous safety education at installationsites. Similarly, during safety-related meetings throughout Japan theGroup also holds presentations regarding actions that can be taken
to prevent accidents. These presentations are made by those whohave been involved in occupational accidents.
In addition, installation managers provide “Job dispatch training”
to all installation technicians using “ Job dispatch card” These cards
provide advanced instructions regarding the site conditions and rules
for the purpose of eliminating occupational accidents and accidents
where installation is at fault as a result of insufficient information
provided beforehand and insufficient planning.
Shanghai Baosteel-Sanwa Door sends dedicated supervisors involvedin the safety of the company to randomly selected installation sites tocheck the clothing of installation technicians and the on-site facilities.

Safety Notebook Is Available in Six Languages

48

SANWA HOLDINGS CORPORATION

Work-assistance Suit

INTEGRATED REPORT 2019

Job Dispatch
Card

Shanghai
Baosteel-Sanwa
Door Safety
Supervisor Checks
the Installationof the Electrical
Earthing for a
Switchboard

Quality Initiatives
Enhancing quality management for products and pursuing safety is the primary responsibility of manufacturers. The Sanwa Group undertakes initiatives to improve product safety, installation quality, service, andtraceability for the purpose of preventing the recurrence of product-related accidents. By striving to
improve quality and safety in these ways, the Group secures the trust and satisfaction of its customers
around the world.

PolicyThe Sanwa Group works to improve quality and safety, the primary responsibilities of a manufacturer, in all­processes from development to sales, production, installation and maintenance.

Further Improving Product Quality

Towards Enhancing Customer Satisfaction

The Sanwa Group promotes measures aimed at achieving the quality
targets set by each company. Group companies in Japan confirm theprogress towards these targets during the Quality, Environment andCSR Promotion Council, held once every six months.
Sanwa Shutter Corporation holds product quality and safety meetings every month in order to prevent the recurrence of complaints
and product-related accidents. Meanwhile, the Purchasing
Department directly visits suppliers for head office purchases tomonitor quality and propose improvements. In particular, the Group
is strengthening its supply chain quality management framework, forexample by making annual visits to suppliers that handle door openers and other core functional components.
Overhead Door Corporation works to ensure quality by employing
quality managers that provide training and guidance to pre-shipment
inspectors and by implementing other measures related to quality
improvements. Meanwhile, Novoferm (Germany) shares the response
history for quality-related problems at each company within theGroup in working to improve the overall level of quality.
Novoferm (Shanghai) has established a quality management
framework in which three dedicated quality inspectors check dimensions and perform an external checks on the attachment of clasps
and paintwork.

Sanwa Shutter Corporation implements various initiatives to enhancecustomer satisfaction, including operating a 24-hour-a-day, 365-daya-year service and repair request receiving system called FTS (FullTime Service) throughout Japan aspart of its efforts to create an environment in which customers canuse its products with safety, security and convenience. At the sametime, the Company utilizes feedback received by the Customer
Center to improve sales office
Sanwa Shutter Corporation Customer
response and to develop new
Centerproducts.
Overhead Door Corporation strives to continuously improve relations with distributors by reflecting feedback from periodic dialogue
and information sharing back into new product development andthe improvement of product quality.
Novoferm (Germany) conducts customer surveys every year, where
higher levels of quality connect to greater customer satisfaction. The
Company is also working to further expand its scope of business andbuild its brand by establishing the image of “Easy to do businesswith Novoferm.”

ODC Quality Manager

Novoferm (Germany) Customer Satisfaction Survey (1: Very good to 5: Unsatisfactory)

Novoferm (Shanghai) DedicatedQuality Inspector“Safety Pledge Day” Initiative
The Group has designated March 26, the date of a fatal revolving door accident in 2004 at Roppongi Hills Mori
Tower in Roppongi, Tokyo, as “Safety Pledge Day.” On this date, everyone involved with the Sanwa Group thinks
about and renews their commitment to safety. To ensure the lessons of this tragic accident are not forgotten, as
well as for use in safety education and training inside and outside of the company, the revolving door involved inthis incident has been preserved in working condition.


Revolving Door Preserved in Working Condition

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201949

Creating Values through ESG

Corporate Governance
To work for continuous growth and improvement in its corporate value and to contributeto the sustainable development of society, Sanwa Holdings Corporation positions corporate governance, which forms its foundation, as an important management issue.

PolicyThe Sanwa Group works to create a more highly transparent and sound management system in order to­continually enhance corporate value through the realization of our management vision.

Basic Approach to Corporate Governance

The Company’s Second Three-Year Plan of Sanwa Global
Vision 2020, our long-term management vision, was launchedin 2016, the year the Company marked the 60th anniversary of
its establishment. In that same year, we transitioned to a company with an Audit & Supervisory Committee structure under
the Companies Act with the aim of further strengthening corporate governance to build a corporate structure trusted bysociety and befitting of a major global enterprise. In the years tocome, we will maintain a system to ensure the appropriatenessof operations, while striving to enhance corporate governanceand build highly transparent group management.

As a global access systems company that is developing businessin 25 countries and regions in North America, Europe and Asia
as well as in Japan, Sanwa Holdings Corporation achieves business growth through good faith and fair business activities on
the basis of the Company’s “Mission,” “Our Values,”“Principles of Business” and “Compliance Code of Conduct”
while aiming to instill “two kinds of reliability” (reliable businessperformance and reliable management). Continuing to growand improve corporate value, the Company will also contributeto the sustainable development of society while positioning corporate governance, which forms its foundation, as an importantmanagement issue.

Corporate Governance Highlights
L Number of Directors(of whom are outside directors)

L Number of Board of Directors Meetings

9 (3)

LA
 ttendance Rate at Board of Directors Meetings(of whom are outside directors)

8

L Number of Audit & Supervisory Committee
Members (of whom are outside directors)

100% (100%)

L Number of Audit & Supervisory
Committee Meetings

3 (2)

LA
 ttendance Rate at Audit & Supervisory Committee
Meetings (of whom are outside directors)

10

100% (100%)

N Timeline of Corporate Governance Reforms
2003

2004

2005

2006

2007

Separation ofManagementand Execution

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Transition to a company with an
Audit & Supervisory Committee
Adopted holding company system
Adopted executive officer system (From 2000)

Enhancement ofSupervision and
Auditing
Functions

One outside director
Three outside directors
One outside Audit &Supervisory Board member

Two outside Audit &Supervisory Board members

Enhancement ofDecision-Making Established Group Strategy Committee
Functions
Established Domestic Business/Overseas Business PDCA Council (Regional PDCA Councils)

50

2019

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Established Management
ConferenceCorporate Governance Structure

CSR Promotion Council has been established, chaired by the executive officer in charge of the Corporate Planning Unit at Sanwa
Holdings. Convening four times a year, deliberating and reportingon the status of themes that include Group-wide CSR policies and
ESG initiatives, Group-wide risk assessment and countermeasures
as well as compliance measures, the Group CSR Promotion Council
works to improve and avoid damage to corporate value. Further­more, each Group company has a CSR Promotion Commit­tee inplace that plans and promotes activities that are integrated withthe workplace and works to promote CSR activities.

The details of specific measures to enhance our business execution
and supervisory functions are set out below. By adopting this system, we believe that we can establish a system to ensure theappropriateness of operations and enhance corporate governance.
Establishment of Management Conference in accordancewith delegation of business to director (CEO)In accordance with the transition to a company with an Audit &Supervisory Committee structure in 2016, from the perspective ofspeeding up management decisions a director (CEO) was entrusted
to make “significant decisions concerning business execution,”
excluding matters prescribed by law. Consequently, set up as anadvisory body to the delegated director (CEO), a Management
Conference deliberates and reports on important management
issues, assists the CEO in making decisions and strengthening theflexibility of business execution. Discussing (i) matters concerning
important business execution decisions delegated by the Board of
Directors to the CEO, (ii) matters deemed necessary by the director(CEO) from among the Board of Directors’ meeting agenda items,and (iii) other important, management-related matters deemednecessary by the director (CEO), the Management Conference
works in conjunction with the Board of Directors in the making ofquick and efficient management decisions.

Status of Compliance with the
Corporate Governance CodeWe are responding to the principles prescribed in the Corporate
Governance Code of the Tokyo Stock Exchange. However, thefollowing principle is not implemented for the following reason
set out below.
Principles Not Implemented and Reasons(Principle 4-10-1: Establishment of an Independent, Voluntary
Advisory Committee)
Each of the Company’s directors is working to actively stimulatedeliberations by the Board. Independent outside directors
engage in lively discussions, stating their opinions based on
their advanced insight, specialized knowledge and global experience. The Board receives appropriate recommendations from
our independent outside directors. The Audit & Supervisory
Committee (comprising three members, two of whom are independent outside directors) verifies the candidates for director
and director compensation and other matters discussed atmeetings of the Board of Directors and, at times, expresses its
opinion as part of a framework that aims to strengthen the
independence, objectivity and accountability of the Board of
Directors. To enhance objectivity and transparency going forward, we will conduct multi-faceted investigations into theoption of establishing a voluntary advisory committee.

Detailed supervision/audits of business execution byGroup and Regional PDCA Councils
Group and Regional PDCA Councils consist of directors who are
not Audit & Supervisory Committee members, directors serving as
full-time Audit & Supervisory Committee members and senior
management such as executive officers. At the councils, whichconvene on a quarterly basis, directors oversee the progress ofmanagement plans and provide guidance on management issues,
while the directors who are Audit & Supervisory Committee members audit the status of business execution by executive officers.
Group CSR Promotion Council
To enable the Group to carry out CSR activities, such as ESG, risk
management, and compliance, in an integrated manner, a GroupN The Sanwa Group’s Corporate Governance Structure
General Meeting of Shareholders
Appointment/Dismissal

Directors

Propose/Report

Report/Present opinion

Appointment/Dismissal

ReportAccounting audit report

Board of Directors

Consult

Group PDCA Council
Regional PDCA councils
Group CSR
Promotion Council
Supervise andguide business
units

ReportRepresentative Director, Consult
Chairman & CEO
Representative Director, Advise
President & COO
Partial transfer ofauthority andresponsibility

Management
Conference

Report/AssistReportAccounting
audit

Cooperation

Audit Dept.

ReportDivisions

Promotion/Support
Promotion/Support

Cooperation

ReportExecutive Officers
Lead and supervise operations

Cooperation

Audit

Refer/Report
Report (Advise)/Discuss/
ProposeIndependent Auditors

Audit & Supervisory
Committee

Audit/Report

Select/Audit
Authority for important business execution decisions

Promote and support
business execution

Internal
audit

ReportGroup Companies
SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201951

Creating Values through ESG

Corporate Governance
Establishment of Corporate Governance
Guidelines (Established July 1, 2019)

System Ensuring Appropriate Duties AcrossGroup Companies

Established to fulfill our responsibilities to all our shareholders,these guidelines clarify the Company’s basic approach to corporate governance. We clarify what the Company specifically has
to address to achieve sustainable growth and increases in corporate value over the medium to long term.
Please see the section “Corporate Governance Guidelines”
posted on our website.
 RL: https://www.sanwa-hldgs.co.jp/english/csr/effort/governance/Uofficer.html

Group Governance
The Company strives to strengthen governance of the Group by
transferring authority to each Group company as deemed
appropriate, and verifying the implementation status of the
PDCA cycle for measures designed to heighten the “two kindsof reliability” (reliable business performance and reliable management) through the Regional PDCA Councils presided over by
the director in charge of that region.
Each Group company autonomously manages itself as anindependent enterprise and fulfills management responsibilities
by complying with laws and internal regulations and rules. In
addition, the director in charge of each region oversees thebusiness decisions and the status of business execution of eachcompany, providing guidance for improving the transparency ofbusiness management. This process ensures and promotes
proper operations of the Group.

(1) The Sanwa Group shall ensure that each Group company is fully
aware of our mission, our values, our principles of business and
our Compliance Code of Conduct to enable the appropriatenessof operations in light of optimal benefit for the Group while
respecting the autonomous and independent management andresponsibilities of each entity. The Group shall promote wholesome and efficient corporate group activities through a Groupwide compliance system, quality assurance system and risk
management system, etc.
(2) Sanwa Group companies are managed autonomously as independent companies and fulfill their management responsibilities
in compliance with laws and internal regulations and rules. To
ensure and promote the appropriateness of operations, the director responsible for each Group company monitors the operational
decisions and status of business execution at each company, provides guidance, issues recommendations and reports to the Boardof Directors to improve business management transparency.
(3) Regional PDCA Council meetings and other meetings are held toformulate management policy, management targets and yearlybusiness plans based on pertinent two-way discussions with eachgroup company.
(4) An executive officer or employee of the Company or an executive
officer or employee appointed by the Company takes on a position as director or Audit & Supervisory Board member at eachgroup company to ensure the legality and effectiveness of management.
(5) The Sanwa Group requires Group companies to seek preliminary
consultation or approval on certain matters concerning businessexecution, as well as to submit follow-up reports, in accordancewith the Group Company Management Regulations and thestandards of respective regulating authorities for companies in
Europe, the United States and Asia.

N Group Governance System

Plan

ActionEuropeDo

Action

North America

Novoferm Group

Overhead Door
Corporation

Companies in Europe

Business Divisions inNorth America

Regional PDCA Council

Check

Sanwa Holdings

Check

Regional PDCA Council

Plan

Do

Corporate Planning Unit/
Global Business Unit
Group PDCA Council

Do

Plan

52

China / Asia
China

Asia

Chinesecompanies

Asiancompanies

Regional
PDCA Council

Regional
PDCA Council

SANWA HOLDINGS CORPORATION

CheckGroup CSR Promotion Council

Check

Japan

ActionSanwa Shutter
Corporation
Domestic
Group Companies
ActionINTEGRATED REPORT 2019

Do

Regional PDCA Council

Plan

Result of Evaluations of Board of Directors’
Effectiveness (Overview)
The Company has been conducting a questionnaire on the effectiveness of the Board of Directors at the conclusion of Board of
Directors’ meetings since the end of fiscal 2017. In the same year,
we obtained responses from all directors, and at the first Board
meeting in fiscal 2018 they analyzed and evaluated effectivenessbased on the response results. As a result, although there were
issues raised, we evaluated that our Board of Directors is functioning effectively. In fiscal 2018, we worked on the “earlyadvance distribution of Board meeting materials” for the purposeof enhancing discussion. Having received evaluations saying that
we could improve, we decided to continue the evaluations andnewly provide other information and improve the secretariat system. An overview of the results for fiscal 2018 appears below.

Evaluation Process
End of Fiscal 2017
After conclusion ofBoard of Directors’
meeting• Handing out of questionnaire on Board of
Directors’ effectivenessFiscal 2018
First Board of Directors’
meeting• Analysis and evaluationof effectiveness basedon the response results

Improvements Made
• Early advance distribution of Board meeting
materials

End of Fiscal 2018
After conclusion ofBoard of Directors’
meeting•C onducted questionnaire based on previous
year’s results (22 questions in all)Fiscal 2019
First Board of Directors’
meeting• Analysis and evaluationof effectiveness basedon comparative aggregation with previous
year and response
results

Areas in Need of
Improvement• Sufficient provision of
information other than
Board of Directors’
meeting materials• Improvement of secretariat system

Board of Directors’ Evaluation Implementation Guidelines
Subjects of evaluation: All nine fiscal 2018 directors
Implementation method: Anonymous survey (freedom toexpress own opinions)
Question content: 22 questions in all, related to the degree ofdeliberation at Board of Directors’ meetings, the status of
ensuring the effectiveness of the Board of Directors, the statusof the Board of Directors’ management, and the self-evaluationof Company and outside directors

Evaluation Method: Compilation of questionnaire results,
implementation of comparative aggregation with previous year
The results of the questionnaire were reported at a Board of
Directors’ meeting and, based on the response results, the evaluation with regard to the Board’s effectiveness was confirmed.
(Content that could be evaluated)• As regards management of Board of Directors’ meeting proceedings, lively discussions are taking place• Sufficient time is being given for discussion
Initiatives arising from fiscal 2017 results• Improved with regard to early distribution of materials for Board
meetings(Points to be improved)• Sufficient provision of information other than Board of Directors’
meeting materials• Improvement of secretariat system(Other opinions expressed)
There were opinions given on the establishment of a voluntary committee on nomination and compensation and increasing diversity on
the Board of Directors.

Based on the above results, we will continue to maintain andenhance the effectiveness of a Board of Directors best suited to
the Company.

Policy for Selection of Outside Directors
We appoint outside directors based on our overall judgment of anumber of considerations using information such as candidates’
career histories and the relationship of their previous employers
with the Company. Judgment criteria include whether there are
any issues regarding their independence from the Company, andwhether the candidates are qualified to perform the monitoringand supervision functions that the Company requires of outside
directors based on their personality, insight and background.
Independence Criteria for Outside Directors
The Company stipulates independence criteria for outside officers. For details, please see the Company’s website.
 RL: http://www.sanwa-hldgs.co.jp/english/csr/effort/governance/U
pdf/Independence_Criteria_for_Outside_Officers.pdf

N Reasons for Appointment of Outside Directors
NameAudit &
Indepen­dent
Supervisory
outsideCommittee
director
memberMakoto Yasuda
Number of
Board of Directors
meetings attended: 8qTsunekatsu
Yonezawa
Number of Board of
Directors meetings
attended: 8
Number of Audit &Supervisory Committee
meetings attended: 10

qq

Akira Gokita
Number of Board of
Directors meetings
attended: 8
Number of Audit &Supervisory Committee
meetings attended: 10qq

Supplementary Explanation

Reasons for Selection

Until 2017, Mr. Yasuda received compensation as a member of the Company’s
Independent Committee for Takeover Defense, but the amount of compensation did
not exceed ¥1 million per year. The Company thus determined that he meets theindependence criteria for outside directors and has no conflict of interest withordinary shareholders. In addition, the Independent Committee for Takeover Defense
was dissolved due to the abolition of anti-takeover measures, and the above
compensation has not been paid to Mr. Yasuda since 2017.

The Company decided to retain Mr. Yasuda as adirector because of his contribution to further
strengthening the Board of Directors. Mr. Yasuda isable to provide keen insight based on his wealth ofexperience and many years as a global corporate
manager and involvement in corporate management
as an outside officer.

Mr. Yonezawa is a former employee of Marubeni-Itochu Steel Inc. (MISI), which has abusiness relationship with the Group. The Group and the MISI Group havetransactions involving the Sanwa Group’s purchase of raw materials and the sale of
Sanwa Group products. However, the amount of transactions between the Sanwa
Group and the MISI Group accounted for less than 1% of the Sanwa Group’s andthe MISI Group’s annual consolidated net sales in each of the past three fiscal years.
Therefore, the Company determined that Mr. Yonezawa satisfies the independence
criteria for the Company’s outside directors and has no conflict of interest withordinary shareholders.

Mr. Yonezawa has been involved in corporate
management for many years as a company manager,
and has global experience and in depth
understanding of management and economics. On
that basis, the Company believes he can provide
appropriate advice and recommendations from an
independent standpoint regarding the Company’s
management in general. He was thus deemed
qualified as an outside director serving as an Audit &Supervisory Committee member

The Company had a legal consultation agreement with Mr. Gokita until December
2015, but the contract has since been terminated. For the duration of theagreement, the monthly legal fees paid to Mr. Gokita were ¥100,000 (there was no
payment for compensation outside of the advisory agreement). Therefore, theCompany determined that Mr. Gokita meets the independence criteria for theCompany’s outside directors and has no conflict of interest with ordinary
shareholders.

Mr. Gokita has many years of experience as aprosecutor and lawyer, and has applied his extensive
experience and knowledge as a legal professional tothe management of the Company. He has thus been
selected as an outside director to serve as a memberof the Audit & Supervisory Committee.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201953

Creating Values through ESG

Corporate GovernanceCompensation of Directors

The compensation of outside directors, however, consists only ofbase compensation. The total amounts of base compensationand performance-linked variable compensation shall be within
the limits of the total compensation determined by the General
Meeting of Shareholders. The total amount of stock options shallbe within the limit for stock options, also determined by theGeneral Meeting of Shareholders.
(2) Compensation of directors serving as Audit & Supervisory
Committee members
Comprises only base compensation, the total amount of whichshall be within the limit for the amount of compensation determined by the General Meeting of Shareholders.
(3) Base compensation
The basic compensation for each director (excluding directors
serving as Audit & Supervisory Committee members) is set foreach position based on consolidated performance with reference
to the compensation levels of other companies presented by aspecialized outside organization. The compensation for eachdirector serving as an Audit & Supervisory Committee member isdetermined by discussion among the Directors who are Audit andSupervisory Committee members, also with reference to the compensation levels of other companies presented by a specialized
outside organization.
(4) Performance-linked compensation
For performance-linked compensation, a standard amount is set
for each executive position based on the Company’s consolidated
business results with reference to the compensation levels of othercompanies presented by a specialized outside organization. The
standard amount of this type of compensation is determined bytaking into account standard amount indicators and the levels ofcontribution of each executive director, evaluated quantitatively
and qualitatively. As far as serving as a reward that functions as asound incentive for sustainable growth that reflects the Company’sbusiness performance is concerned, consolidated operating income
has been selected as the primary indicator of performance-linked
compensation, the amount of which is calculated on that indicator
basis following the Company’s set standards.
(5) Stock options
Stock options are provided to further raise the incentive of directors (excluding directors serving as Audit & Supervisory
Committee members and non-executive directors) to increase theCompany’s corporate value by sharing not only the benefits fromstock price increases but also the risk of stock price declines withshareholders. The number of stock options allotted to each director (excluding directors serving as Audit & Supervisory Committee
members and non-executive directors) is decided by the Board of
Directors, taking the director’s duties into consideration.

Matters related to the policy regarding the determination of theamounts of director compensation and their calculation methods are as follows.
Policies for Determining the Compensation andAmounts of Compensation of Directors andAudit & Supervisory Committee Members
With regard to the compensation of directors (excluding directors serving as Audit & Supervisory Committee members), a
director delegated by the Board of Directors (Representative
Director and Chairman [CEO] Toshitaka Takayama) determines
the compensation for each director (stock options are determined by the Board of Directors) based on the policies below,
which are set by the Board of Directors. (Stock options, mostrecently implemented in June 2018, are determined by the
Board of Directors.) The Company does not currently have a voluntary compensation committee, but the Audit & Supervisory
Committee has the authority to verify and form opinions, frompolicy decisions with regard to compensation to the amounts
decided, thereby ensuring objectivity and transparency. The policy for determining compensation for directors who are Audit
and Supervisory Committee members will be determined basedon the following policy, in consultation with directors who are
Audit and Supervisory Committee members.
Policies for Determining Compensation of Directors andAudit & Supervisory Committee Members
L Basic Concept of Compensation for Directors
Compensation of directors and Audit & Supervisory Committee
members is intended to contribute to continual improvement of
the Company’s business performance and corporate value. The
Company designs its compensation system so that the level andstructure of compensation are in accordance with the roles andresponsibilities required of the Company’s directors and Audit &Supervisory Committee members, and enable the recruitment
and retention of well-qualified people.
L Compensation of Directors(1) Compensation of directors (excluding directors serving as Audit &Supervisory Committee members)
The compensation of directors consists of base compensation,
performance-linked variable compensation, and stock options.

N Overview of Compensation (Fiscal 2018)
Classification
Directors (excluding directors serving as Audit & Supervisory
Committee members and outside directors)
Directors serving as Audit & Supervisory Committee members(excluding outside directors)
Outside directors (excluding Audit & Supervisory Committee members)
Outside directors (Audit & Supervisory Committee members)

Total
Compensation(Millions of yen)

Total Compensation by Type (Millions of yen)
Base
Performance-Linked
Stock
Compensation
Compensation
Options

Number of
Officers
Eligible

380

214

131

34

4

33

33

—

—

1

10
40

10
40

—
—

—
—

1
2

(Notes) 1. T he amount paid to directors does not include the portion of employee’s salary for those directors who concurrently serve as employees.
2. T he compensation limit for directors (excluding directors serving as Audit & Supervisory Committee members) is ¥680 million per year (as approved at the 81st Ordinary General Meetingof Shareholders held on June 28, 2016). For performance-linked compensation, consolidated operating income has been adopted as the main indicator to provide incentives that enable
sustainable growth based on the consolidated performance of the Company as a whole.
3. S eparately from (2) above, the compensation limit for director stock options (excluding outside directors and directors serving as Audit & Supervisory Committee members) is within ¥60
million per year (as approved at the 81st Ordinary General Meeting of Shareholders held on June 28, 2016).
4. T he compensation limit for directors serving as Audit & Supervisory Committee members is ¥100 million per year (as approved at the 81st Ordinary General Meeting of Shareholders heldon June 28, 2016).
5. S tock options are in the amount recorded in the current fiscal year related to stock acquisition rights granted as stock options.

54

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Strategic Shareholdings

tially revised, as a strengthening measure for the prevention of
misconduct. Also, every year, we check the execution status of
the internal control system and report the results to the Boardof Directors and, via business reports, to shareholders. We willcontinue to strengthen corporate governance by making
improvements.

Strategic shareholdings are shares of business partners that theCompany holds to build good business relationships with themand improve its corporate value from a medium- to long-term
perspective through the smooth promotion of business. The
rationality of strategic shareholdings is compared and verified
by the Board of Directors for the holding benefits (dividends
received + business transaction benefits) and capital costagainst the acquisition price (current weighted average cost ofcapital [WACC] = 6%) for each share. As occasion demands,
the Company considers selling stocks for which there is insufficient rationale while regularly scrutinizing the benefits of all
such shareholdings and determining whether they remain
appropriate.
Investment stocks held for purposes other than net investment totaled 46 shares, worth ¥12,396 million (as of the end of
March 2019).

Functions as Corporate Pension Asset OwnerWith regard to the pension management system, we established the Sanwa Shutter Corporate Pension Fund. In addition
to a full-time managing director, management is undertaken bydirectors and representatives selected from each Group company. The management of the reserve fund is based on management guidelines established by the corporate pension fund, andimportant matters, such as decisions on asset allocation policy
and recipients entrusted with assets, are resolved by a board ofrepresentatives using external consultants. The fund is managed
and controlled in an appropriate manner to prevent conflicts ofinterest between pension beneficiaries and the Company. We
carry out stewardship activities that can be implemented as corporate pension funds, such as the assigning of employees familiar with the practical side of the business to the full-time
director, the Board of Trustees requiring that each investment
institution entrusted with assets fulfills its stewardship responsibilities, and the receiving of reports on the results.

Internal Controls System
In accordance with the provisions of the Companies Act, theCompany passed a resolution on its “Basic Policy for Building an
Internal Control System” at a Board of Directors’ meeting and isappropriately establishing an internal control system based onthat basic policy. Passed by resolution at the Board of Directors’
meeting held on March 27, 2019, the basic policy has been par-Individual Investor Briefings
For the purpose of deepening their understanding of theCompany, we hold company briefings for individual investors.
At these events we provide easily understood explanations of
the business and future prospects.

Dialogue with Shareholders and Investors
To increase the transparency of its corporate activities, theGroup will endeavor to achieve sustainable growth and increase
corporate value by disclosing information in a timely and appropriate manner and reflecting dialogue with shareholders andinvestors in management.

L Exercise Ratio of Voting Rights at
84th Ordinary General Meeting of Shareholders

Recognition
In Institutional Investor magazine’s 2019 All-Japan Executive
Team Rankings (best Japanese companies for IR ranking), Sanwa
Holdings ranked third in the Most Honored Companies category
in the construction sector, and ranked second in the Best IR
Program Combined category.

L Number of Explanatory Sessions for
Institutional Investors and Analysis
Fiscal 2018

(held on June 26, 2019)88.62%L Overseas Roadshows2
L Number of Explanatory Sessions
for Individual Investors

Fiscal 2018
In each of the United States, Europe and Asia

1

Fiscal 2018

L IR meetings
Number of
Individual Meetings

Total of 229
Number at which director present
65LT ours of Plants for Institutional Investors
Fiscal 2018

7

1

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201955

Creating Values through ESG

Risk Management and Compliance
Risk Management

PolicyThe Sanwa Group ensures stable business management by implementing a Group-wide risk management system
and working to predict and prevent potential risks, as well as by responding appropriately to risks as required forbusiness continuity.

N Implementing Risk Management

Promoting Risk Management for the Sanwa Group

Identify risks at each company (Plan)

Based on its risk management regulations, the Sanwa Group identifies, analyzes, and evaluates business execution-related risks as well as
undertakes measures required to avoid and/or mitigate risks. As aorganization dedicated to promoting risk management, the GroupCSR Promotion Council reports and deliberates on the Sanwa Group’s
basic risk management policies, risk management-related plans, andthe progress of initiatives. In addition, the subordinate Quality,
Environment and CSR Promotion Council and each Group company’s
CSR Promotion Council manage risks by appropriately and rapidly
responding to risks that occur during the course of each company’sbusiness activities.

Establishment of the Information Security
Countermeasures Council
In June 2019, we established the Information Security
Countermeasures Council chaired by the executive officer incharge of the Corporate Planning Unit in order to enhance andpromote security countermeasures during emergencies. The
Information Security Countermeasures Council identifies security risks Group-wide (including overseas operations); investigates, formulates and implements various measures to maintainand increase security levels; and aims to formulate security measures based on the latest information received mainly fromexternal organizations. In addition, we have established the

Select risks with a high level of importance (Plan)
Plan and implement countermeasures (Do)Monitor (Check)
Correct and improve (Action)
This cycle is repeated annually to identify and reevaluate risks.

24-hour telephone/email hotline Virus 110 as a concrete security measure, distributed security goods to raise awareness of
information security, and plan to conduct e-learning-based
training programs.
Going forward, we will
そのメール大丈夫？
work to further enhance
information security countermeasures through multilayウイルス110番まで
ered initiatives in both hardand soft areas.
Sticker calling attention to suspicious
不審なメールを受け取った際は、開封せずに SAN-Q 内のウイルス 110 番にメールし電話する。
万が一、開いてしまったら、

LAN、LTE をすぐに抜いて電話する！

emailsN Sanwa Group Information Management System
Sanwa Holdings Board of Directors
Sanwa Holdings Representative Director
Audit Department
Information Security Countermeasures Council
Chair: Executive officer in charge of the
Corporate Planning Unit
Summarizes and responds to Group
company issues and problems

Sanwa Holdings
General Affairs Department

Domestic
operating companies

North American
operating companies* Each company’s administrative departments promote information management

56

SANWA HOLDINGS CORPORATION

Sanwa Shutter
Information System
Department

INTEGRATED REPORT 2019

Secretariat:
Sanwa Holdings General
Affairs Department
Risk Management Group

Sanwa Holdings
Global Business Unit

European
operating companies

Asian
operating companies

Compliance

PolicyThe Sanwa Group ensures compliance with laws, corporate ethics, internal regulations and rules as an important
foundation to garner trust and meet the expectations of society.

N Compliance Code of Conduct: Conceptual Diagram
Values to be shared byeach Sanwa Group
employee when undertaking business activities

Our Mission
and Our Values

Areas of conduct in line with corporate
ethics and social demands based on Sanwa
Group values as essential complianceAdherence to the Compliance
Code of Conduct

Principles of business
Internal regulations, rules
and standards
Laws, regulations and rules

Formulation of the Compliance Code of Conduct
In order to maintain the trust of society, the Sanwa Group formulated in October 2005 the Compliance Code of Conduct,
which outlines specific conduct that must be adhered to and isbased on the Group’s mission, Our Values, Principles ofBusiness, and values.
In January 2006, we distributed to all Group employees theCompliance Code of Conduct booklet, which provides examples
and explanations of actual incidents that occurred at individual
departments. This booklet has been subsequently undergone
revisions as needed in an effort to promote compliance.

Set domains thatmust adhere to laws
and regulations

Legalcompliance

Introduction of Internal Whistleblower System
at Companies in China and Asia
Starting in July 2019, we have introduced whistleblower systems (corporate ethics hotlines) at six companies in China andother areas of Asia. We have developed a system that employees can understand through the use of the native
タイ語 languages (orequivalents) in each region, displaying posters and distributing
cards to employees in English, Chinese (simplified, traditional),
Vietnamese, and Thai. Weสายดว่ นจรยิ ธรรมองคก์ รhave also appropriately publiเสยีงรอ้ งเรยีนหนง่ึเสยีงของคณุ จะปกปอ้ งบรษิ ทัcized the system and haveหากท่านไม่สามารถปรึกษาหรือแก้ไขปั
ญหาตา่ งๆซง่ึเกดิ ขน้ึในทท่ี ำงานได้
worked to increase trust byไมต่ อ้ งกลมุ้ ใจคนเดยีวโปรดตดิ ตอ่ มาหาเ
ราไดโ้ดยไมต่ อ้ งเกรงใจ
ผใู้หค้ ำปรกึ ษาจากหนว่ ยงานภายนอกจะ
keeping reported informationรบั เรอ่ื งโดยคำนงึถงึความเปน็สว
่ นตว
ั ขอ
งทา
่ น
strictly secret and prohibiting
Card in the Thai language announcing
the adverse treatment of systhe introduction of the internal whistem users.
tleblower systemช่องทางรับเรื่องภายนอกเพื่อร้องเรียนหน่วยงานภายในองค์กร

พบเหน็ พฤตกิ รรมทไ่ีมเ่หมาะสมเมอ่ื ไร รอ้ งเรยี นทนั ท!ี !

N Compliance Initiatives
Implemented Activities
Compliance code of conduct and casestudy booklet

TargetFrequency

Tools, teaching, materials, output

All employees

Revise every 4-5 years

Management
Newly appointed managers

Once every two years
Every November

New employees

Every April

Harassment training

Management

As needed

Compliance month

All employees

Every November

Compliance code of conduct and case study
bookletCEO message, posters, mini tests

As needed

Corporate ethics hotline card, Complianceposters

As needed

Antitrust Law Guidebook (4th Edition)

Every November

Textbook on compliance training. Antitrust
Law Guidebook (4th Edition)

Compliance training

Safety and quality inspection month

All employees, dispatchedworkers, internal
subcontractors, installers
Sales division employees,
directors, executive officers
Sales positions in the six
prefectures in the Kinki region
All employees

Compliance awareness survey

All employees

Once every two years

Management of working hours

All employees

Monthly

Corporate ethics hotline (whistle-blower
system)Guidelines and regulations on contact
with main competitors
Training on cease and desist measures

Textbook on Compliance training
Compliance code of conduct and case study
bookletAntitrust Law Guidebook (4th Edition)

Every July
Feedback materials on from employees
awareness survey
Working hours PDCA report

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201957

Creating Values through ESG

Interview with an Outside Director

Q

What are the issues with regard to corporate governance, and what in your personal
experience can you bring to the Board of Directors?
The role of the Board of Directors is moving to strengthen functions from conventional “management
decision making” to “management oversight.” I would like the Board of Directors to fulfill a robust
oversight function.
Firstly, allow me to state, in general terms, what is constantly in my thoughts.
From 2010 onward, the term “internal control” came into common use within the governance structures atcertain listed companies, and in corporate governance it has now come to be something that everyone talks
about. However, originally this came about due to the pressure applied by the government (public administration), and it appears that a lot of companies are satisfied that, for the time being anyway, they have cleared theGovernance Code standards.
I previously served at a trading house, and the structure of the business was such that in addition to distribution and logistics that focused on trade, both in Japan and overseas, I was also involved in the business operations across a number of different industries, and performed at the top level of management. Sanwa Group is in
the manufacturing industry, and every day I keenly feel a difference in corporate culture varying from company tocompany. The essence of each company’s strategy is the corporate culture, philosophy, and climate that eachcompany has cultivated, and I believe that people outside a company that have not learned or experienced thesecan only make their decisions based on economic rationalization. As money circulates around the world, on theother hand, we have come to a point where we need to secure transparency at Japanese companies as well.
Consequently, the execution of voting rights by outside directors is in response to a diverse range of stakeholder’s
expectations, and as a desirable corporate function, we will ideally strike a good balance with those who are
actually implementing management. In line with the evolution of governance, we think that the more execution
and management separate, the more that the traditional role carried out by the Board of Directors will transition
from a “management decision making function” to an “oversight function.” I think that having a firm hand in
performing such an oversight function is one of the most critical roles of an outside director.

Q

How do you see the mission of an outside director? As a member of the Audit &Supervisory Committee, please tell us about the Company’s audit system.
The three outside auditors each have their own respective skills and experience, and based on that, weoffer our frank opinions to those who execute management.
Among the outside director members, my role is to voice my thoughts at the Management Conference and
Board of Directors’ meetings, primarily on risk management, based on my personal experience in corporate management gained in overseas business, and as an Audit & Supervisory Committee director. Another member ofthat committee, Outside Director Gokita is an attorney-at-law who offers up sharp questions, mainly on legal
matters, and also gives his straightforward opinions to CEO Takayama.
There’s also Outside Director Yasuda, who is not a member of the Audit & Supervisory Board Committee, who
consults on matters of management at overseas corporations in a range of industries, and provides comprehensive opinions from a broad perspective. From that perspective there are now three outside directors of nine intotal, and I think that this ratio strikes a good balance. It’s necessary to have half or more of the Audit &Supervisory Committee directors be outside directors, and currently two of the three members are outside directors. The other member, Director Zaima, is in charge of accounting and finance matters, so in that sense, each of
the three members of the Audit & Supervisory Committee have different yet complimentary skills, and I believethat it has an exceptional composition.

58

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Tsunekatsu Yonezawa
Outside Director (Audit &Supervisory Committee Member)Q

We are now in our first year of the Third Mid-Term Management Plan. Please outline
your views on the plan.
Based on my experience, mid-term management plans are by their very nature formulated in line with a focus on
qualitative factors, like strategy, and it’s my opinion that quantitative factors, such as numerical targets, are in theend just rough guides. Now we are working on the Third Mid-Term Management Plan, and in line with the completion period of Sanwa Global Vision 2020, this is a two-year plan that to a certain extent unavoidably focuseson quantitative numerical targets. However, I hope that from the next mid-term management plan our emphasis
will be on content such as a qualitative strategy which we will aggressively work to achieve.

Q

What do you think are the priority issues that we should be pursuing, especially
now that we are experiencing steady business results?
Priority issues to tackle are these three initiatives–growth in overseas markets, the nurturing of ourhuman talent, and strengthening governance.
I see the following three points as issues we are now facing. First, there is achieving further growth in overseas markets. It’s well understood that the industry that we operate in, that is to say, the construction business, cannot expect
to achieve significant growth in demand in Japan on account of the country’s declining population. Consequently, I
believe that we should emphasize overseas markets in our growth strategy. As a way to go about doing that, certainly aggressively conducting M&A operations with outstanding projects would be an effective policy.
The second point is nurturing our human talent. Fostering growth in people who can pick up capabilities from awide and varied range of venues requires that focus efforts based on a methodical support of employees’ career
paths. I suppose one topic of discussion will be strengthening our human resource planning functions in HD.
The third point is to strengthen governance. As a global corporation it is necessary that we conduct institutional reform with the separation of the execution of duties and management, and work to accelerate decision making. Perhaps this will come in the next stage. Stakeholders, particularly investors, apply a bit more pressure every
year, and investors are becoming ever-more severe in the way the speak about a responsibility to supervise management. From that perspective, with things such as ROE and ROA, it will also be important to improve indicatorsof management efficiency.
As a stakeholder advocate, I intend to sincerely say what is needed for the Sanwa Group.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201959

Creating Values through ESG

Management Team (As of June 26, 2019)
Directors

Toshitaka Takayama

Yasushi Takayama

Hiroatsu Fujisawa

Representative Director, Chairman & CEO

Representative Director, President & COO

Aug. 1963
Apr. 1972
Apr. 1974
Apr. 1980
May 1981
Aug. 1985

Oct. 2006 Joined the Company
Apr. 2011 Senior Executive Officer
Assistant Responsible for Overseas
Business Unit
Apr. 2012 Senior Managing Executive Officer
Responsible for Corporate Planning Unit
Jun. 2012 Director
Apr. 2016 Executive Vice-President
Deputy President
Apr. 2017 Representative Director, President &COO (present post)
Apr. 2019 Representative Director, Chairman of theBoard, Sanwa Shutter Corporation­(present post)

Director
Senior Managing Executive Officer
Global Business Unit

Jun. 2000
Oct. 2007
Jul. 2009
Apr. 2012
Jun. 2012

Joined the Company
Director
Managing Director
Director, Executive Vice-President
Representative Director, President
Representative Director and President of
Showa Front Sales Co., Ltd. (now Showa
Front Co., Ltd.)
Executive Officer, President
Representative Director, Chairman of theBoard, Sanwa Shutter Corporation
Representative Director, President,
Sanwa Shutter Corporation
CEO (present post) and COO
Representative Director, Chairman &CEO (present post)

Current shareholdings in the Company:
1,858,200 shares

Current shareholdings in the Company:
24,300 shares

Masahiro Fukuda

Meiji Takayama

Makoto Yasuda

Director
Senior Executive Officer
Corporate Planning Unit

Director

Outside Director

Oct. 2006 Joined the Company
Apr. 2010 Executive Officer of Sanwa Shutter
Corporation
Apr. 2011 Director of Sanwa Shutter Corporation
Senior Executive Officer of Sanwa
Shutter Corporation
Apr. 2012 Senior Managing Executive Officer of
Sanwa Shutter Corporation
Apr. 2016 Representative Director of Sanwa
Shutter Corporation
Executive Officer, Vice President and
Deputy President of Sanwa Shutter
Corporation
Apr. 2017 Representative Director and President of
Sanwa Shutter Corporation (present post)
Executive Officer and President of Sanwa
Shutter Corporation (present post)
Jun. 2017 Director (present post)

Jun. 2006 Director, Yamatake Corporation (nowAzbil Corporation)
Jun. 2007 Director, Kanematsu Textile Corporation(now Forward Apparel Trading Limited)
Sep. 2008 President, Yasuda Makoto & Co., Ltd.
(present post)
Jun. 2014 Outside Director of the Company(present post)
Jun. 2015 Outside Audit and Supervisory Board
Member of Secom Co., Ltd. (present post)

Current shareholdings in the Company:
86,838 shares

Current shareholdings in the Company:
5,100 sharesSep. 2005
Oct. 2007
Apr. 2008
Apr. 2011
Apr. 2012
Jun. 2012
Apr. 2014
Apr. 2016

Joined the Company
Executive Officer
Senior Executive Officer (present post)
Responsible for Americas Business
Assistant Director of Overseas BusinessDirector (present post)
Responsible for Americas Business Unit
Subleader of Corporate Planning Unit
(concurrent) General Manager of CSR
Promotion Dept.
Apr. 2017 Responsible for Corporate Planning Unit
(present post)

Current shareholdings in the Company:
73,800 shares

60

Current shareholdings in the Company:
108,287 sharesNov. 2012 Joined the Company
Apr. 2013 Senior Executive Officer
Responsible for Strategic Re-Engineering
Unit
Jun. 2014 Director (present post)
Apr. 2015 Responsible for Europe Business Unit
Apr. 2016 Responsible for Europe and Americas
Business Unit
Apr. 2017 Senior Managing Executive Officer(present post)
Responsible for Global Business Unit
(present post)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Teiko Zaima

Tsunekatsu Yonezawa

Akira Gokita

Director
Audit & Supervisory Committee Member

Outside Director
Audit & Supervisory Committee Member

Outside Director
Audit & Supervisory Committee Member

Mar. 1975 Joined the Company
Apr. 2004 General Manager of Accounting Division
Oct. 2007 General Manager of Accounting Divisionof Sanwa Shutter Corporation
Apr. 2010 Executive Officer, Sanwa Shutter
Corporation
Apr. 2012 Senior Executive Officer, Sanwa Shutter
Corporation
Apr. 2015 Standing Advisor
Jun. 2015 Audit & Supervisory Board Member
Jun. 2016 Director, Audit & Supervisory Committee
Member (present post)

Oct. 2001 Member of the Board, Marubeni- Itochu
Steel Inc.
Apr. 2004 Executive Vice President, Member of theBoard of Marubeni-Itochu Steel Inc.
Apr. 2005 President and CEO, Member of theBoard of Marubeni-Itochu Steel Inc.
Apr. 2009 Chairman, Member of the Board of
Marubeni-Itochu Steel Inc.
Apr. 2012 Advisory Board Member of MarubeniItochu Steel Inc.
Apr. 2013 Director (Assistant to President) of
ITOCHU Corporation
Jun. 2015 Outside Audit & Supervisory Board
MemberJun. 2016 Outside Director, Audit & Supervisory
Committee Member (present post)

Apr. 1978 Tokyo District Public Prosecutors Office(Criminal Division/Trial Unit)
Mar. 1979 Mito District Public Prosecutors Office
Mar. 1982 Tokyo District Public Prosecutors Office(Criminal Division/Special Investigations
Unit)
Mar. 1985 Osaka District Public Prosecutors Office(Special Investigations Unit)
Mar. 1987 Tokyo District Public Prosecutors Office(Special Investigations Unit)
Mar. 1988 Retired from position as public prosecutor
Apr. 1988 Registered as an attorney
May 1994 Representative of Gokita Miura Law
Office (present post)
Jun. 2010 Outside director of Ichiyoshi Securities
Co., Ltd. (present post)
Jun. 2016 Outside Director, Audit & Supervisory
Committee Member (present post)

Current shareholdings in the Company:
22,591 shares

Current shareholdings in the Company:
0 shares

Current shareholdings in the Company:
0 shares

Senior Executive Officers and Executive Officers
Hiroyuki Yamazaki

Senior Executive
Officer

Subleader, Corporate Planning Unit
General Manager of Corporate Planning Dept.

Toshiaki Doba

Senior Executive
Officer

Head of Americas Business

Takenobu Hoizumi

Executive Officer

Subleader, Corporate Planning Unit

Kazuhiko Yokota

Executive Officer

Head of China Business,
Chairman of Sanwa Holdings (Shanghai) Co., Ltd.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201961

Financial Section and Corporate Data

12-Year Summary (As of March 31, 2019)
Sanwa Vision 2010
(FY2001–FY2012)(FY)

Global development and growth in the 21st century,
implementation of the PDCA cycle and enhancement of CSR activities

2008

2009

2010

2011

2012

272,970

232,029

237,295

248,214265,913

36.9

38.1

56.0

41.0

39.3

Cost of sales

205,425

173,108

179,399

186,683

196,631

Gross profit

67,54458,921

57,89561,53069,281

Operating income

8,070

5,624

4,562

8,855

14,174

Ordinary income

7,495

4,829

4,033

8,190

13,988

2,312

(725)

(2,443)

3,297

7,181

Research and development expenses

2,607

2,750

2,436

2,456

2,440

Capital expenditures

6,508

3,894

3,495

2,897

4,293

4,962

4,651

5,063

5,348

5,428

Operating Results (Millions of yen)
Net sales
Overseas sales ratio (%) Profit attributable toowners of the parent company Depreciation and amortization(excluding amortization of goodwill)
Cash Flows (Millions of yen)
Cash flows from operating activities

14,312

17,870

3,717

5,453

14,855

Cash flows from investing activities(7,076)(22,287)(3,791)(9,253)(5,313)

Cash flows from financing activities(12,392)

17,914(14,252)

312(4,340)20,547

34,912

20,306

16,82522,275

Free cash flows
7,236
Financial Position (at Balance Sheet Date)(Millions of yen)
Total assets
231,054(4,417)(74)(3,800)9,542 Cash and cash equivalents(end of year)

246,599

218,933

226,579

241,771

Interest–bearing debt

54,482

74,62859,892

61,60760,799Net assets

95,365

96,10986,021

85,522

97,134

Working capital

60,34356,151

52,18859,83369,593

90.0

91.6

83.3

82.4

84.7

9.6

(3.0)

(10.2)

13.7

29.9

396.65

Cash Conversion Cycle (CCC) (Day)Per Share Data (Yen)
Net income (loss) per share
Net assets per share

399.56357.59355.37404.57

Cash dividends per share
Financial Indicators
Operating income ratio (%)

10

5

8

8

10

3.0

2.4

1.9

3.6

5.3

 R&D expenditures to
net sales ratio (%)

1.0

1.2

1.0

1.0

0.9

Return on assets (%)

0.85(0.30)(1.05)

1.48

3.07

Return on equity (%)

1.9

(0.8)

(2.7)

3.8

7.9
7.7

ROIC (%)

4.5

2.9

2.6

4.9

SVA (Billions of yen)

(1.6)

(3.5)

(3.5)

(1.2)

1.9

Debt/equity ratio (Times)

0.57

0.78

0.70

0.72

0.63

Shareholders’ equity ratio (%)

41.3

38.9

39.3

37.7

40.1

Liquidity ratio (Times)

1.6

1.2

1.7

1.6

1.7

104.2

—

—

58.3

33.4

Payout ratio (%)

Notes: Working capital: accounts receivable + inventory – accounts payable
R&D expenditures to net sales ratio: R&D expenditures ÷ net sales×100 (%)
ROIC: Return on invested capital. Net operating profit after tax (NOPAT) ÷ invested capital* × 100*1 Invested capital attributed to Sanwa Group ROIC is calculated by subtracting cash & deposits and securities.
*2 The effective tax rate changed from 40% to 33% starting in fiscal 2018.
SVA: Our unique indicator of added value. NOPAT – invested capital × WACC (6%)
CCC: Accounts receivable turnover days + inventory turnover days - accounts payable turnover days

62

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019To offer products and services that provide safety, security andconvenience as a major global player in the access systems industry

Sanwa Global Vision 2020
(FY2013– FY2020)

2013

2014

2015

2016

2017

2018

2019 (forecast)

311,957

339,045

365,615353,922385,673

409,990425,000

41.7

43.8

44.7

44.4

46.1

46.4

44.5

225,954242,273

260,078

250,068

273,155

291,301—

86,003

96,771

105,537

103,854

112,517

118,689—

20,64926,334

26,87026,44028,322

31,59334,00020,31625,975

26,161

25,27827,89830,43733,00010,161

12,857

14,627

17,07018,28020,91022,000

3,149

3,505

3,868

3,999

4,422

4,611

—

7,116

7,727

8,127

8,096

11,38312,367

10,274

6,180

7,188

8,022

7,290

7,622

8,049

9,005

19,72822,304

24,37823,67026,532

24,271—

5,932(27,080)(15,641)(8,006)(13,172)(13,677)—

3,876

10,625(25,702)(838)(20,505)(11,349)—

52,30758,60541,51656,29049,26347,977—

25,660(4,776)

8,737

15,664

13,36010,593—281,917323,327

310,269

323,393

331,686

338,432

350,854

69,15388,48470,79874,73965,94561,21752,901

113,956

126,748130,334

139,905

151,121

161,603

168,166

71,05180,82084,012

82,982

90,794

96,162

—

78.8

81.7

82.3

86.1

82.2

83.2

—

42.4

54.1

63.1

74.6

81.0

93.0

97.8

474.63541.49565.64607.16667.09713.50

—

13

16

23

25

30

32

34

6.6

7.8

7.3

7.5

7.3

7.7

8.0

1.0

1.0

1.1

1.1

1.1

1.1

—

3.88

4.25

4.62

5.39

5.58

6.2

—

9.6

10.7

11.4

12.7

12.7

13.5

13.5

10.6

12.6

12.2

12.2

12.8

15.0

—

5.4

7.8

8.2

8.1

9.0

12.7

14.0

0.61

0.70

0.54

0.53

0.44

0.38

0.31

40.4

39.1

41.7

43.0

45.2

47.4

47.4

1.6

1.7

1.8

1.8

1.7

1.7

—

30.7

29.6

36.5

33.5

37.1

34.4

34.8

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201963

Financial Section and Corporate Data

Financial Review (As of March 31, 2019)
Business Overview
The final fiscal year is approaching for the Second Three-Year Plan—“three years to strengthen our competitiveness as a major global player”—of Sanwa Global Vision 2020, our long-term management vision.
Accordingly, in Japan we are continuing to focus on enhancing existing businesses, strengthening andexpanding businesses through tie-ups, and responding the new periodic inspection reporting system forfire prevention equipment along with operating Osaka plant (partition business) and enhancing diversified
product supply capacity. In North America, we are working to enhance our foundation and increase market
share by strengthening support for core door business distributors and sales offices, releasing new products, and pursuing product-specific channel strategies. In Europe, we acquired Bolton Gate Services inJanuary 2018 to strengthen services operations in the U.K. while working to further expand the industrial
sectional door business by focusing on enhancing Alpha Deuren International’s factories, generating synergies with Norsud, and expanding sales of production capacity for dock levelers, a strategic product.

Earnings

Operating income/operating income ratio

Consolidated earnings for the fiscal year ended March 31, 2019were as follows: sales increased 6.3% year on year to ¥409,990
million, operating income rose 11.5% to ¥31,593 million, ordinary income increased 9.1% to ¥30,437 million, and profit
attributable to owners of the parent company grew 14.4% to¥20,910 million.

Operating income rose 11.5% year on year to ¥31,593 million.
Operating income ratio increased 0.4 points to 7.7%

(Millions of yen)

Profit attributable to owners of the parent
company
Profit attributable to owners of the parent company grew
14.4% year on year to ¥20,910 million.

2016

2017

2018

Variance vs.
FY2017

Net sales

353,922385,673

409,990+6.3

Segment Overview for the Fiscal Year under
Review

Operatingincome26,44028,322

31,593

+11.5

Japan

Ordinary income

25,27827,89830,437+9.1

Profit attributable to ownersof the parent
company

17,07018,28020,910

+14.4

(FY)

Net sales increased 5.5% year on year to ¥219,559 million
owing to higher revenues for heavy-duty shutters and othercore products as well as the maintenance and service business.
Segment profit rose 7.0% year on year to ¥22,258 million due
to rises in volumes and successful reflection of higher steel prices in sales prices.

Net sales/Operating income/Operating income ratio

Factors Increasing/Decreasing Operating Income(Billions of yen)
7.8%
400

(Billions of yen)(Billions of yen)

7.3%

7.5%

7.7%

40

7.3%

40

35

300

30

200

20

30

25

+¥3.27 billion
100

0
(FY)

10

2014

2015

2016

LL Net sales (left scale)
LL Operating income (right scale)64

SANWA HOLDINGS CORPORATION

L

2017

2018

Operating income ratio

INTEGRATED REPORT 2019

0

20

0
(FY) 2017

Sales
volumeSales Material
price
price
adjustment

Cost

Foreign Othersexchange
impact2018

R&D Expenditures

North America
Net sales reached ¥116,574 million, up 3.4% year on year (up4.9% on a local currency basis), due to strong sales in the mainstay door and door opener businesses. Segment profit increased
2.3% year on year to ¥8,409 million as a result of the successfulreflection of higher steel prices in sales prices and improved productivity at the door opener business.

R&D activities in fiscal 2018 involved work to develop new
products and improve existing products while enhancing theirproduct lineup for each application market, promoting shifts toplatforms, consolidating products, materials and parts, improving quality, safety and workability, and implementing cost-cutting measures. R&D expenditures totaled ¥4,611 million.

EuropeNet sales increased 13.2% year on year (up 10.8% on a local
currency basis) to ¥73,394 million, a major gain due to steadyprogress in existing businesses and the consolidation of BGS.
Segment profit rose 36.1% year on year to ¥3,658 million
owing to the successful reflection of higher steel prices in sales
prices and large contributions particularly from volume growth.
* Segment sales/profits are before elimination of inter-segment transactions.

Capital Expenditures
In principle, we make capital investments necessary for maintaining and continuing existing businesses within the range ofdepreciation and amortization. The Sanwa Group focuses on
product categories that are expected to see growth over thelong term, and also invests in systems to reduce manpower,
streamline operations and improve product reliability. Capital
expenditures (including intangible assets) totaled ¥12,367 million (including strategic capital expenditures) in fiscal 2018. By
segment, expenditure was ¥2,571 million in Japan, ¥3,978 million in North America, ¥5,803 million in Europe, and ¥14 million
in other regions. Primary investments in each region went
toward renewing equipment at each plant, acquiring production equipment, molds and other items, and improving
IT-related infrastructure.

By Segment: Net sales/Operating income(Billions of yen)

Total assets as of March 31, 2019 were ¥338,432 million, up¥6,745 million from the end of the previous fiscal year. The
increase was mainly due to the acquisition of fixed assets andrises in accounts receivable and inventories. Total liabilities
decreased ¥3,736 million to ¥176,828 million mainly due to therepayment of loans and redemption of bonds. Net assets
increased ¥10,481 million to ¥161,603 million mainly due to anincrease in retained earnings.
As a result, the shareholders’ equity ratio increased 2.2 points
from the end of the previous fiscal year to 47.4 %, indicatingthat financial position remains healthy.

Cash Flows
Cash and cash equivalents (“cash”) decreased ¥1,285 million
from the end of the previous fiscal year to ¥47,977 million.
Cash flows by category for the fiscal year under review are summarized as follows.
Net cash provided by operating activities totaled ¥24,271 million due to an increase in net profit before income taxes(compared with ¥26,532 million in the previous fiscal year).

Capital expenditures/Depreciation and amortization/
Research and development expenses(Billions of yen)

500

50

400

40

300

30

200

20

100

0
(FY)

Financial Position(Millions of yen)

(Millions of yen)

15,000

6,000

10,000

4,000

5,000

2,000

10

2014

2015

2016

2017

2018

Net sales (left scale) L Japan L North America L Europe
Operating income (right scale) L Japan L North America L Europe

0

0
(FY)

2014

2015

2016

2017

2018

0

LL Capital expenditures (left scale)
LL Depreciation and amortization (left scale)
LL Research and development expenses (right scale)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201965

Financial Section and Corporate Data

Financial Review
Net cash used in investment activities totaled ¥13,677 million(compared with ¥13,172 million in the previous fiscal year)
mainly due to the acquisition of fixed assets.
Net cash used in financing activities totaled ¥11,349 million(compared with ¥20,505 million in the previous fiscal year)
mainly due to the repayment of borrowings and payment ofdividends.

Shareholder Returns
In order to further promote management aimed at increasing
corporate value while also improving the corporate culture andstrengthening the management foundation, the Sanwa Group’s
basic policy is to maintain a stable dividend payout ratio and distribute profits based on consolidated performance. Our guideline for profit distribution specifies a target payout ratio of 35%
of profit attributable to owners of the parent company.
Our basic policy is to distribute surplus funds twice per year in
the form of interim and year-end dividends. For fiscal 2018, we
paid a year-end dividend of ¥16 per share (¥32 per share including interim dividend). The Company will utilize internal reserves
for M&A and other strategic investments, capital expenditures,and reduction of interest-bearing debt.

ROE/ROA(%)

15

Outlook
We expect Japanese economic conditions to remain weak due
to a tapering off of domestic demand growth driven by the2020 Tokyo Olympics and Paralympics as well as the consumption tax hike. Despite a slightly slower growth in housing starts,
we expect the U.S. economy to remain steady mainly owing toan autonomous, private sector-driven economic recovery andboosts from tax system reforms. The European economy will
likely continue to slow due to weaker economic growth in each
European country and housing market sluggishness.
Against this backdrop, the Sanwa Group expects new recordhigh sales and profits by implementing the following measuresduring the second year of establishing a foundation for leading
brands as a major global player ahead of the initial year of thethird mid-term management plan, Sanwa Global Vision 2020.
As a fundamental core business strategy, in Japan we will
strengthen systems to expand our businesses as a comprehensive construction materials company with an established position in each business field. In North America, we will focus on
increasing market share in core businesses and rebuilding
downstream integrated business strategies. In Europe, we willcontinue to pursue industrial door business expansion andgarage door market share growth. In addition, we will work tostrengthen services fields and expand our business models inJapan, the United States and Europe while enhancing our business foundation in China and the rest of Asia.

Cash dividend per share/Payout ratio

12(Yen)(%)

9

40

40

30

30

20

20

10

10

6

3

0
(FY)
L

2014
ROE

2015
L

2016

2017

2018

ROA

Free cash flow020142015 *(FY)
LL Cash dividend (left scale)(Billions of yen)

2016
L

2018

2017

0

Payout ratio (right scale)* Includes special 60th anniversary dividend

30(Millions of yen)
20

0
-10
-20
-30
(FY)

2014

2015

2016

2017

2018

LL Cash flows from operating activities
LL Cash flows from investment activities
LL Cash flows from financing activities

66

2017

2018

2019
(forecast)

Net sales

385,673

409,990425,000

Operating income

28,322

31,59334,000

Profit attributable to ownersof the parent company

18,28020,91022,000Operating income ratio

7.3%

7.7%

8.0%

ROE

12.7%

13.5%

13.5%

(FY)

10

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Financial Section and Corporate Data

Consolidated Statements of Operations
Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2019 and 2018

Millions of yen

Net sales    
Cost of sales (Note 15)  
Gross profit  Selling, general and administrative expenses (Note 14, 15)  
Operating income  
Other income (expenses):  
Interest and dividend income
Interest expenses
Equity in losses of non-consolidated subsidiaries and affiliates
Other, net (Note 17)   Other income (expenses), net
Net profit before income taxes  
Income taxes (Note 16)   Current
Deferred   Total income taxes
Net profit
Profit attributable to non-controlling interests
Profit attributable to owners of the parent company

2019

2018

¥409,990¥385,673$3,727,182

291,301
118,689

273,155
112,517

2,648,191
1,078,991

87,09531,59384,19528,322

791,773
287,209

756
(637)
(599)
(1,065)(1,546)30,046

548
(604)
(10)
(304)
(369)
27,953

6,873(5,791)(5,445)(9,682)(14,055)
273,145

8,200
812
9,012
21,034123¥ 20,910

9,079
480
9,559
18,393113¥ 18,280

74,545
7,382
81,927
191,218
1,118$  190,091

Yen
2019

Per share: (Note 21)
Net profit—Basic—Diluted
Cash dividends

Thousands of
U.S. dollars (Note 1)
2019

2018

¥92.9592.73
32.00

U.S. dollars (Note 1)
2019

$0.85
0.84
0.29

¥80.9780.77
30.00

The accompanying notes are an integral part of these statements.

Consolidated Statements of Comprehensive Income
Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2019 and 2018

Millions of yen

Net profit
Other comprehensive income (Note 18)
Net unrealized holding gains on securities
Deferred losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans Share of other comprehensive income of non-consolidated
subsidiaries and affiliates accounted for using the equity method   Total other comprehensive income (Note 18)
Comprehensive income
Comprehensive income attributable to:
Owners of the parent company
Non-controlling interests

Thousands of
U.S. dollars (Note 1)
2019

2019

2018

¥21,034¥18,393$191,218(1,361)109(2,563)
62

2,020
(101)
679
615

(12,373)991(23,300)
564(143)(3,896)¥17,137

72
3,285¥21,679(1,300)(35,418)$155,791¥17,06473¥21,494
184$155,127
664

The accompanying notes are an integral part of these statements.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201967

Financial Section and Corporate Data

Consolidated Balance Sheets
Sanwa Holdings Corporation and Subsidiaries
As of March 31, 2019 and 2018

Thousands of
U.S. dollars (Note 1)

Millions of yen
2019

2018

2019

¥ 43,007¥ 29,208$  390,973

Short-term investments (Note 4, 11)

8,013

21,19972,845

Notes and accounts receivable, trade (Note 11)82,56378,379750,573

Electronically recorded monetary claims (Note 11)

9,526

9,292

86,600Inventories (Note 5)

56,47553,422

513,409

Other current assets

6,607

5,211

60,064ASSETS
Current assets:
Cash and deposits (Note 3)(1,405)(1,383)(12,773)

204,789

195,331

1,861,718

Land

18,505

18,591

168,227

Buildings and structures

54,74052,379497,636

Machinery and equipment

77,32976,570702,991

Construction in progress

4,122

2,454

37,473

154,697

149,996

1,406,326(94,515)(92,230)(859,227)

60,182

57,765547,109

Goodwill

6,769

7,401

61,536

Other intangible assets (Note 6)

17,231

17,073

156,645

24,001

24,475

218,191

36,94941,905335,900

578

452

5,255

Net defined benefit asset (Note 8)

6,088

6,139

55,345

Deferred income taxes (Note 16)

3,011

2,830

27,373

Other assets

3,096

3,096

28,145

Allowance for doubtful accounts

(265)

(311)

(2,409)   Total investments and other assets

49,45954,114

449,627   Total Non-current assets

133,642

136,354

1,214,927

Total assets¥338,432¥331,686$3,076,655

Allowance for doubtful accounts   Total current assets  
Non-Current assets:
Property, plant and equipment:    Less accumulated depreciation   Total property, plant and equipment  
Intangible assets:     Total intangible assets  
Investments and other assets:  
Investments in securities (Note 4, 11)Long-term loans receivable

The accompanying notes are an integral part of these statements.

68

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Thousands of
U.S. dollars (Note 1)

Millions of yen
2019

2018

2019

¥ 20,390¥16,663$  185,364

Notes and accounts payable, trade (Note 11)

52,40150,300476,373

Accrued income taxes

4,479

4,883

40,718

Accrued expenses

22,551

21,707205,009

Other current liabilities

19,045

19,542

173,136   Total current liabilities

118,868

113,098

1,080,618

Long-term debt (Note 7, 11)40,82649,282

371,145

Net defined benefit liability (Note 8)

11,901

13,289108,191

Deferred income taxes (Note 16)

3,467

2,885

31,518Other long-term liabilities

1,763

2,007

16,027   Total long-term liabilities

57,95967,465526,900

Total liabilities  

176,828

180,564

1,607,527

38,41338,413

349,209

Capital surplus

39,90239,902362,745

Retained earnings

81,741

67,403

743,100(8,989)(8,988)(81,718)

151,068

136,731

1,373,345

2,219

3,583

20,173

(25)

(134)

(227)

Foreign currency translation adjustments

8,853

11,55880,482Remeasurements of defined benefit plans(1,593)(1,656)(14,482)

9,454

13,35085,945

Stock acquisition rights (Note 14)  

248

213

2,255

Non-controlling interests

832

825

7,564

161,603

151,121

1,469,118¥338,432¥331,686$3,076,655

LIABILITIES AND NET ASSETS  Current liabilities:  
Short-term debt (Note 7, 11)  Long-term liabilities:    Contingent liabilities (Note 9)    
NET ASSETS (Note 13)   Shareholders’ equity
Common stock:   Authorized—550,000,000 shares at March 31, 2019 and 2018   Issued—235,000,000 shares at March 31, 2019 and 2018

 Treasury stock, at cost
  (10,020,866 shares at March 31, 2019 and
10,019,997 shares at March 31, 2018)   Total shareholders’ equity
Accumulated other comprehensive income:  
Net unrealized holding gains on securities
Deferred losses on hedges   Total accumulated other comprehensive income

Total net assets    
Total liabilities and net assets   

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201969

Financial Section and Corporate Data

Consolidated Statements of Changes in Net Assets
Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2019 and 2018
Millions of yen

Commonstock

Balance at March 31, 2017   ¥38,413 Cumulative effects ofchanges in accounting
policies
Restated balance  
38,413
Net changes during the year  
Cash dividends Profit attributable toowners of theparent company
Purchase of treasury stock
Disposal of treasury stock Retirement oftreasury stock Net changes during theyear other thanshareholders’ equity
Total net changes
during the year  —Balance at March 31, 2018   ¥38,413 Cumulative effects ofchanges in accounting
policies
Restated balance  
38,413
Net changes during the year  
Cash dividends Profit attributable toowners of theparent company
Purchase of treasury stock Net changes during theyear other thanshareholders’ equity
Total net changes
during the year  —Balance at March 31, 2019   ¥38,413

Foreigncurrencytranslation
adjustments

Remeasurements ofdefinedbenefit
plans

Stock
acquisitionrights

Noncontrollinginterests

CapitalsurplusRetainedearnings

Treasurystock,
at costNet
unrealized
holding
gains onsecurities¥39,902¥58,367¥(7,837)¥1,563¥ (33)¥10,806¥(2,271)

¥302

¥691

¥139,905

39,902827
59,194(7,837)

1,563

(33)

10,806(827)(3,098)

302

691

—
139,905

Deferred
losses onhedges(6,348)Total
net assets(6,348)18,280(134)(5,002)263

18,280(5,002)
128(3,587)

3,587

—

2,020

(101)

751

1,442

(88)

133

4,158

—
¥39,9028,208¥67,403(1,150)¥(8,988)

2,020¥3,583(101)¥(134)

751¥11,558

1,442¥(1,656)

(88)
¥213

133
¥825

11,216¥151,121

39,902401
67,804(8,988)

3,583

(134)

11,558(1,656)

213

825

401
151,523(6,974)(6,974)

20,91020,910(1)(1)(1,364)—¥39,902

13,936¥81,741(1)¥(8,989)(1,364)¥2,219109(2,704)62

34

7(3,855)109(2,704)¥ (25) ¥ 8,853

62¥(1,593)

34
¥248

7
¥832

10,080¥161,603

Foreigncurrencytranslation
adjustments

Remeasurements ofdefinedbenefit
plans

Stock
acquisitionrights

Noncontrollinginterests$(1,218) $105,073$(15,055)$1,936$7,500 $1,373,827(1,218) 105,073(15,055)

1,936

7,500

Thousands of U.S. dollars (Note 1)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at costNet
unrealized
holding
gains onsecurities

Balance at March 31, 2018   $349,209 $362,745 $612,755 $(81,709) $32,573 Cumulative effects ofc hanges in accounting
policies
3,645
Restated balance  
349,209 362,745 616,400(81,709)32,573
Net changes during the year  
Cash dividends(63,400) Profit attributable toowners of theparent company
190,091
Purchase of treasury stock(9) Net changes during theyear other thanshareholders’ equity(12,400)
Total net changes
during the year  —— 126,691(9) (12,400)
Balance at March 31, 2019  $349,209 $362,745 $743,100 $(81,718) $20,173
The accompanying notes are an integral part of these statements.

70

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Deferred
losses onhedgesTotal
net assets

3,645
1,377,482(63,400)

190,091(9)991(24,582)

564

309

991
(24,582)564$  (227) $ 80,482 $(14,482)

309$2,25564(35,045)64
91,636$7,564 $1,469,118

Consolidated Statements of Cash Flows
Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2019 and 2018

Thousands of
U.S. dollars (Note 1)

Millions of yen
2019

2018

2019

¥30,046¥27,953$273,145

Depreciation and amortization

8,049

7,622

73,173

Amortization of goodwill

1,449

1,603

13,173

Cash flows from operating activities:
Net profit before income taxes
Adjustments for:

Equity in losses of non-consolidated subsidiaries and affiliates

599

10

5,445

Gain on step acquisitions

—

(38)

—

Interest and dividend income

(756)

(548)

(6,873)

Interest expenses

637

604

5,791

Increase in allowance for doubtful accounts

27

27

245

Decrease (increase) in allowance for bonuses

(122)

370

(1,109)Decrease (increase) in net defined benefit liability and asset(1,072)

11(9,745)Decrease in notes and accounts receivable(3,101)(5,876)(28,191)

Decrease in inventories(5,345)(4,181)(48,591)

Increase in notes and accounts payable

2,478

4,217

22,527

Other, net

(138)

3,864

(1,255)  Subtotal

32,75235,641

297,745

Interest and dividend income received

721

515

6,555

Interest expenses paid

(626)

(577)

(5,691)(8,575)(9,046)(77,955)

24,271

26,532

220,645(1,134)(2,328)(10,309)

Income taxes paid   Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchase of investments in securities

1,255

912

11,409(12,367)(11,383)(112,427)(1,519)(495)(13,809)

Payments for advances(2,972)(864)(27,018)

Proceeds from collections of advances

1,930

513

17,545

Proceeds from sales of investments in securities
Payments for purchase of tangible and intangible assets Acquisition of investments in subsidiaries resulting inchange in scope of consolidation

Other, net   Net cash used in investing activities

1,130

473

10,273(13,677)(13,172)(124,336)

Cash flows from financing activities:
Increase in short-term loans, net

1,414

356

12,855

Proceeds from long-term loans

5,091

5,190

46,282

Repayments of long-term loans(10,265)(11,778)(93,318)(550)(3,000)(5,000)(1)(4,873)(9)(6,974)(6,348)(63,400)

Repayments of bonds
Purchase and disposal of treasury stock, net
Cash dividends paid
Cash dividends paid to non-controlling interests   Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents

(65)

(50)

(591)

(11,349)(20,505)(103,173)

(529)

117

(4,809)(1,285)(7,027)(11,682)

Cash and cash equivalents at beginning of year

49,26356,290447,845

Cash and cash equivalents at end of year (Note 3)¥47,977¥49,263$436,155

The accompanying notes are an integral part of these statements.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201971

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements
Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2019 and 2018

1. Basis of Presenting Consolidated Financial Statements
Sanwa Holdings Corporation (the “Company”) and its domestic subsidiaries maintain their accounts and records in accordance with theprovisions set forth in the Japanese Corporate Act and the Financial
Instruments and Exchange Law and in accordance with accounting
principles and practices generally accepted in Japan, which are different from the accounting and disclosure requirements ofInternational Accounting Standards.
The accounts and records of the Company’s overseas subsidiaries
have been prepared in accordance with International Financial
Reporting Standards or US GAAP for the Company’s consolidation
process, except for certain items which are required to be adjusted in
the consolidation process.

Amounts less than one million yen and one thousand U.S. dollars
are rounded down. Therefore, total or subtotal amounts may notcorrespond with the aggregation of such account balances.
The accompanying consolidated financial statements are preparedbased on the consolidated financial statements of the Company andits subsidiaries (the “Group”), which were filed with the Director of
Kanto Local Finance Bureau as required by the Financial Instruments
and Exchange Law.
The translation of the Japanese yen amounts into U.S. dollars is
included solely for the convenience of the reader, using the approximate exchange rate at March 31, 2019, which was ¥110 to
US$1.00.

2. Summary of Significant Accounting Policies(a) Scope of Consolidation
At March 31, 2019, the Company had 92 subsidiaries and 14 affiliates.
The scope of consolidation for the fiscal year ended March 31,
2019 (FY2018) includes Sanwa Holdings Corporation and its 51 consolidated subsidiaries. Equity method accounting is applied to investments in 7 non-consolidated subsidiaries and 2 affiliates at March
31, 2019 (FY2018).
In the fiscal year ended March 31, 2019, Bolton Gate Services Ltd.
and two other companies were included in the scope of consolidation because the Company acquired additional shares of their stock,and Bemo Brandschutzsysteme GmbH was excluded in the scope of
consolidation because it was filed for liquidation.

(b) Foreign Currency Translation
All asset and liability accounts of foreign subsidiaries and affiliates
are translated into Japanese yen at the exchange rates prevailing at
the respective fiscal year-end and revenue and expense accounts aretranslated into Japanese yen at average exchange rates during the
fiscal year.
Shareholders’ equity accounts of foreign subsidiaries and affiliates
are translated at historical rates. The resulting translation differences
are debited or credited to the foreign currency translation adjustment account in shareholders’ equity or to the Non-controlling interests in consolidated subsidiaries in the consolidated balance sheets.

(c) Cash Equivalents
All highly liquid investments with original maturities of three months
or less are considered to be cash equivalents.

(d) Short-term Investments and Investments
in Securities
The Group adopted the Accounting Standards for Financial
Instruments issued by the Business Accounting Deliberation Council.
In accordance with these standards, securities are classified into four
categories: trading securities, held-to-maturity debt securities, equity
investments in associates, and other securities. Based on this classifi-

72

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

cation, securities with a maturity of less than one year are included
in “Short-term investments” as current assets.
Securities held by the Group are all classified as other securities.
Marketable securities classified as other securities are carried at fairvalue with the unrealized gain and loss, net of applicable tax, reported in a separate component of shareholders’ equity. Non-marketablesecurities classified as other securities are carried at cost determinedby the moving average method. Realized gain and loss and declines
in value judged to be other than temporary on other securities arecharged to income.

(e) Inventories
Inventories of the domestic consolidated companies are valued atcost, determined by the gross average method (Carrying amount in
the balance sheet is calculated with consideration of write-downs
due to decreased profitability). The costs of inventories held by foreign consolidated subsidiaries are stated at the lower of cost or market value by the first-in, first-out method or the moving averagemethod.

(f) Property, Plant and Equipment(Excluding Lease Assets)
Property, plant and equipment is stated at cost. Depreciation is computed by the declining-balance method over the estimated useful
lives of assets, except that the straight-line method is applied tobuildings (other than fixtures attached to the buildings) acquired
subsequent to April 1, 1998 and fixtures attached to the buildings
and structures acquired subsequent to April 1, 2016. The consolidated subsidiaries outside of Japan adopt the straight-line method for
depreciation.
Costs of maintenance, repairs and minor renewals are charged toincome in the year incurred, although major renewals and improvements are capitalized.

(g) Amortization of Goodwill
Amortization of goodwill is determined on a case by case basis andis generally amortized over a period not exceeding 20 years.

(h) Leased Assets(l) Income Taxes

Leased assets related to finance lease transactions that do not transfer ownership rights are amortized under the straight-line method
based on the lease term as the useful life with residual value of zero.

The provision for income taxes is computed based on the pretax
income included in the consolidated statements of operations.
Deferred income taxes are recorded to reflect the expected future
tax consequence of temporary differences between the carrying
amounts and the tax bases of assets and liabilities.

(i) Accounting Method for Retirement Benefits
The Group recognizes pension and severance costs for employees
based on the estimates of the pension obligations and the plan
assets at the balance sheet date. The benefit formula basis is applied
as the method for attributing the expected retirement benefit toperiods of service for the calculation of the retirement benefit obligation.
Actuarial differences are amortized principally over a 10-year period, which is within the average remaining service period of employees, using the straight-line method from the fiscal year when the
difference was generated. Prior service cost of the domestic consolidated companies is amortized when the prior services cost is generated.
Prior service cost of certain foreign subsidiaries is amortized over a
10-year period.
Certain consolidated subsidiaries have calculated their retirement
benefit obligation and retirement benefit expenses based on theamount which would be payable at the year-end if all eligible
employees terminated their services voluntarily (the “Simplified
Method”).

(j) Revenue Recognition
The Group recognizes revenue at the time products are shipped,
which is when title and risk of loss pass to the customer. The Group
recognizes revenue related to installation of products at the time
installation is complete.
However, revenues and costs of construction contracts, of which
the percentage of completion can be reliably estimated, are recognized by the percentage-of-completion method. To estimate theprogress of such construction projects, the Group measures the percentage of completion by comparing costs incurred to date with themost recent estimate of total costs required to complete the project(cost to cost basis). If a reliable estimate cannot be made, revenues
and costs of construction contract are recognized by the completed-contract method.

(k) Research and Development Expense andSoftwareResearch and development expenditure is charged to income whenincurred.
Expenditure relating to software developed for internal use ischarged to income when incurred, except if it contributes to thegeneration of income or to the future cost savings. Such expenditures capitalized as assets are amortized using the straight-line method over their estimated useful lives of five years.

(m) Net Income per Share
The computation of basic net income (loss) per share is based on theweighted-average number of shares of common stock outstanding.
The average number of shares used in the computation was 224,979
thousand and 225,761 thousand for the fiscal years ended March
31, 2019 and 2018, respectively.
Cash dividends per share shown in the consolidated statements ofoperations are the amounts applicable to the respective years.

(n) Derivative and Hedging Activities
The Group utilizes derivative transactions related to foreign currency
exchange rates and interest rates in order to reduce their risk exposure arising from fluctuations in these rates and prices, to reduce thecost of the funds financed and to improve their return on invested
funds.
Derivative transactions currently utilized by the Group include
interest rate swap contracts and currency swap contracts.
Net assets or liabilities arising from derivative transactions aremeasured at fair value, with unrealized gain or loss included in earnings. Hedging transactions, which meet the criteria of hedge
accounting, are accounted for using deferral hedge accounting that
requires the unrealized gain or loss to be deferred as a liability orasset until gain or loss relating to the hedge object is recognized.
In addition, certain forward exchange contracts and certain interest rate swap transactions are accounted for using the allocation
method and the special method, respectively, which are regulated in
the standard. The allocation method requires recognized foreign currency receivables or payables covered by forward exchange contracts
to be translated at such contract rates. Under the special method,interest rate swap transactions are accounted for as if the interest
rates under those transactions were originally applied to underlying
borrowing.
The Group has established a control environment, which includes
policies and procedures for risk assessment and for the approval,reporting and monitoring of derivative transactions. The Group does
not engage in derivative transactions for trading purposes. The
Group is exposed to certain market risks arising from derivativetransactions. The Group is also exposed to the risk of credit loss inthe event of non- performance by the counterparties to those transactions. However, the Group does not anticipate non-performanceby any of these counterparties, all of whom are financial institutions
with high credit ratings.
The Group evaluates hedge effectiveness by comparing the cumulative changes in cash flows or the changes in fair value of thehedged items with the corresponding changes in the hedging derivative instruments.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201973

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements

The assessment of hedging effectiveness regarding forward
exchange contracts and interest rate swap transactions, which areaccounted for under the above allocation method and special method, is omitted.

(o) Other Significant Matters for Preparation ofConsolidated Financial Statements
Adoption of Consolidated Tax Return Filing System(p) Reclassifications
Certain reclassifications of the financial statements for the fiscal year
ended March 31, 2018 have been made to conform to the presentation for the fiscal year ended March 31, 2019.

(q) Changes in Accounting Policies
Certain subsidiaries of the Company have applied IFRS 15 (Revenue
from Contracts with Customers) from the fiscal year ended March 31,
2019. Cumulative effects of applying IFRS 15 have been added to or
deducted from the opening retained earnings at March 31, 2018 inaccordance with the transitional treatment prescribed in IFRS 15.
As a result of this change, the opening retained earnings at April
1, 2018 increased by ¥401 million. The effects of applying theaccounting standard on the consolidated financial statements for the
fiscal year ended March 31, 2019 were immaterial.

(r) Accounting Standards Issued but
Not Yet Effective• Accounting Standard for Revenue Recognition (ASBJ Statement
No. 29, issued on March 30, 2018)• Implementation Guidance on Accounting Standard for Revenue
Recognition (ASBJ Guidance No. 30, issued on March 30, 2018)(1) Overview
This is a comprehensive accounting standard for revenue recognition. Revenue is recognized by applying the following five steps.
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 (or as) the entity satisfies a performance obligation(2) Planned Date of Application
To be applied from the beginning of the fiscal year ending March 31,
2022(3) Effect of the Application of the Accounting Standard
The amount of the effect was under review when the consolidated
financial statements were prepared.

3. Cash and Deposits
The balances of cash and deposits reflected in the accompanying consolidated balance sheets at March 31, 2019 and 2018 were reconciled to thebalances of cash and cash equivalents in the accompanying consolidated statements of cash flows for the years ended March 31, 2019 and 2018
as follows:
Thousands of
U.S. dollars

Millions of yen
2019

Cash and deposits¥29,208$390,973
72,845

8,013

21,199Time deposits with maturities of more than three months(30)(1,145)(273)

Debt securities with maturities of more than three months(3,013)(0)(27,391)¥47,977¥49,263$436,155

Securities

Cash and cash equivalents at end of period

74

2019

2018

¥43,007

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

4. Short-term Investments, Investments in Securities and Investments in
Non-consolidated Subsidiaries and Affiliates
At March 31, 2019 and 2018, other securities, which are included in short-term investments and investment in securities, were as follows:
Millions of yen

Thousands of U.S. dollars

2019

2019

2018

Carrying
value

Acquisition
costs

Unrealized
gain (loss)

Carrying
value

Acquisition
costs

Unrealized
gain (loss)

Carrying
value

Acquisition
costs

Unrealized
gain (loss)¥10,548¥ 7,028¥3,519¥13,916¥ 8,657¥5,259$ 95,891$ 63,891$31,991

9,186

9,154

32

9,091

9,054

37

83,50983,218291

Securities whose carrying
value exceeds theiracquisition costs:
Equity securities
Bonds and debentures
Other

3,006

3,005

0

4,306

4,305

0

27,32727,3180Subtotal¥22,741¥19,188¥3,553¥27,314¥22,016¥5,297$206,736$174,426$32,300

Equity securities¥1,934¥ 2,208¥ (274)

¥598

¥692

¥(94)

$ 17,582$ 20,073$ (2,491)

Bonds and debentures

5,384

5,400

(15)

10,556

10,599(43)

48,94549,091(136)

Securities whose carrying
value does not exceed
their acquisition costs:

Other

2,924

3,004

(79)

13,191

13,204(13)

26,582

27,309(718)

Subtotal¥10,242¥10,613¥ (370)¥24,345¥24,497¥ (151)$ 93,109$ 96,482$ (3,364)¥32,984¥29,801¥3,182¥51,659¥46,513¥5,146$299,855$270,918$28,927

Total

Unlisted equity securities (carrying value for the years ended March 31, 2019 and 2018 amounted to ¥259 million ($2,354 thousand) and ¥275
million, respectively), unlisted debt securities (carrying value for the years ended March 31, 2018 amounted to ¥20 million, respectively) for which
it is extremely difficult to determine the fair value are not included in the above table.
Information regarding sales of other securities for the years ended March 31, 2019 and 2018 is summarized as follows:
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

Proceeds from sales¥85,555¥88,417$777,773

Gross realized gain

154

4

1,400

The Group has recognized loss on impairment of marketable securities classified as other securities in the amount of ¥0 million ($6 thousand) for
the year ended March 31, 2019 and in the amount of ¥4 million for the year ended March 31, 2018. Impairment loss is recorded for the securities
whose market value declines by 50% or more as compared with their acquisition costs.
At March 31, 2019 and 2018, investments in non-consolidated subsidiaries and affiliates were as follows:
Thousands of
U.S. dollars

Millions of yen
2019

Equity securities
Advances

2019

2018

¥11,719¥11,150$106,536

341

76

3,100

¥12,060¥11,226$109,636

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201975

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements

5. Inventories
Inventories at March 31, 2019 and 2018 comprised the following:Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

¥ 9,640

Finished goods¥10,529$ 87,636

Work in process

23,965

21,747

217,864

Raw materials and supplies

22,86921,146

207,900¥56,475¥53,422$513,409

6. Other Intangible Assets
Other intangible assets at March 31, 2019 and 2018 comprised the following:Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

¥ 5,071

Trademark¥ 5,233$ 46,100

Software

8,216

5,901

74,691

Other

3,944

5,938

35,855¥17,231¥17,073$156,645

7. Short-term Debt and Long-term Debt
Short-term debt and long-term debt at March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

Short-term debt (unsecured)¥ 6,845¥ 5,847$ 62,227

Current portion of long-term debt

12,045

10,266

109,500—550—

0.100% unsecured bonds, due 2018

1,500

—

13,636

Short-term debt

¥20,390¥16,663$185,364

0.494% unsecured bonds, due 2022

20,00020,000181,818

0.100% unsecured bonds, due 20190.100% unsecured bonds, due 2019

—

1,500

—

0.370% unsecured bonds, due 2026

10,00010,00090,909Loans from banks and other financial institutions unsecured
maturing 2020 - 2025 with interest average rate from 0.27% to 3.20%

22,872

28,048207,927$480,664

Long-term debt

¥52,873¥59,548Less, current portion(12,045)(10,266)(109,500)

Long-term debt

¥40,826¥49,282$371,145

Aggregate annual maturities of long-term debt at March 31, 2019 were as follows:
Years ending March 31

76

Millions of yen

Thousands of
U.S. dollars

2021¥ 5,926$ 53,873

2022

20,950190,4552023 and thereafter

13,950126,818¥40,826$371,145

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

8. Retirement and Severance Benefits
The Company and its consolidated subsidiaries have funded andunfunded defined benefit pension plans and defined contribution
pension plans to provide for the retirement of employees. The
defined benefit pension plans are paid either in a lump sum or as apension based on the employee’s salary and years of service. In the
lump-sum payment plans, a lump sum is paid as a retirement benefit
based on salary and years of service.

For the defined benefit pension plans and lump-sum payment
plans of certain consolidated subsidiaries, the simplified accounting
method is used to calculate net defined benefit liability and retirement benefit expense.
Information on retirement benefits for the fiscal years ended
March 31, 2019 and 2018 was as follows:

1. Defined Benefit Pension Plan
(1) Changes in Retirement Benefit Obligations (excludes application of simplified accounting method)
Thousands of
U.S. dollars

Millions of yen
2019

Beginning balance of retirement benefit obligations

2019

2018

¥43,723¥43,708$397,482

1,504

1,524

13,673Service cost
Interest cost

494

547

4,491

Actual differences arising during the year

(671)

692

(6,100)(2,831)(2,910)(25,736)

(767)

162

(6,973)¥41,452¥43,723$376,836

Retirement benefits paid
Other
Ending balance of retirement benefit obligations(2) Changes in Plan Assets (excludes application of simplified accounting method)
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

¥37,090¥35,813

Expected return on plan assets

1,161

1,080

10,555

Actual differences arising during the year

(1,383)848(12,573)

Beginning balance of plan assets$337,182

Contribution made by the Company and consolidated subsidiaries

1,533

1,641

13,936Retirement benefits paid

(2,001)(2,146)(18,191)

(233)

(148)

(2,118)¥36,166¥37,090$328,782

Other
Ending balance of plan assets(3) Changes in Net Defined Benefit Liability (only application of simplified accounting method)
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

Beginning net defined benefit liability

¥517

¥258

$4,700

Increase Due to New Consolidation

—

226

—

Retirement benefits expense

90

97

818

Retirement benefits paid

(45)

(29)

(409)

Contribution to plan
Ending net defined benefit liability

(36)

(35)

(327)

¥527

¥517

$4,791SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201977

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements(4) Reconciliation of Retirement Benefit Obligations and Plan Assets with Net Defined Benefit Liabilities and Assets on theConsolidated Balance Sheets (includes application of simplified accounting method)
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

Funded retirement benefit obligations¥36,169¥38,424$328,809

Plan assets(36,731)(37,630)(333,918)

(562)

793

(5,109)Unfunded retirement benefit obligations

6,375

6,356

57,955

Net amount of liability and asset on consolidated balance sheets

5,812

7,150

52,846

Net defined benefit liability

11,901

13,289108,191

Net defined benefit asset(6,088)(6,139)(55,345)¥ 5,812¥ 7,150$ 52,836

Net amount of liability and asset on consolidated balance sheets(5) Retirement Benefit Expenses
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

Service cost

¥1,504¥1,524

Interest cost

494

547

4,491

(1,161)(1,080)(10,555)

Amortization of actuarial differences

669

1,144

6,082

Retirement benefit expenses using the simplified method

90

97

818

¥1,598¥2,232$14,527

Expected return on plan assets

Retirement benefit expenses for defined benefit pension plans$13,673(6) Remeasurements of Defined Benefit Plans
Breakdown of remeasurements of defined benefit plans (before deduction of tax effects)
Thousands of
U.S. dollars

Millions of yen
2019

2018

2019

Actuarial differences¥47¥1,283

$427

Total

¥47

¥1,283$427(7) Accumulated Remeasurements of Defined Benefit Plans
Breakdown of accumulated remeasurements of defined benefit plans (before deduction of tax effects)
Thousands of
U.S. dollars

Millions of yen
2019

78

2018

2019

Unrecognized actuarial differences¥(2,169)¥(2,216)$(19,718)

Total¥(2,169)¥(2,216)$(19,718)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

(8) Plan Assets
a. Breakdown of pension assets
2019

2018

Bonds

52%

46%

Stocks28%

34%

Cash and deposits

0%0%General life insurance accounts

16%

16%

Other

4%

4%

Total

100%

100%

b. Determination of long-term expected rate of return on plan assets
The long-term expected rate of return on plan assets is determined by considering the current and expected allocation of plan assets and the current and expected long-term rates of return in the future for the various components of the plan assets.
(9) Basic Assumptions for Calculating Retirement Benefit Obligations
2019

2018

Discount rate

(0.2%)–4.4%

0.0%–3.7%

Expected rate of return on plan assets

1.0%–6.8%

0.7%–6.8%

Expected rate of increase in compensation level

1.5%–6.1%

1.5%–6.1%

2. Defined Contribution Pension Plans
Contributions to defined contribution pension plan
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

¥974

Contributions to defined contribution pension plan902

$8,855

9. Contingent Liabilities
Contingent liabilities at March 31, 2019 and 2018 were as follows:
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

As a guarantor of indebtedness of:Affiliates¥1,142¥1,480$10,382

10. Leases
Obligations under non-cancelable operating leases as of March 31, 2019 and 2018 were as follows:
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

Due within one year

¥1,289¥1,566

Due after one year

2,959

2,899

26,900¥4,248¥4,466$38,618SANWA HOLDINGS CORPORATION$11,718

INTEGRATED REPORT 201979

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements

11. Financial Instruments
1. Status of financial instruments(1) Policy for financial instruments
In light of plans for financing, the Group raises the funds it requires
through bank loans and bonds issuance.
The Group manages temporary fund surpluses through financial
assets that have high levels of safety. The Group reduces customer
credit risk by applying internal policies for managing credit risk.
Long-term debt and bonds are taken out principally for the purposeof capital expenditure and acquisitions.
The Group undertakes interest rate swap transactions as a hedging instrument for certain long-term debt to reduce such risk and fix
interest expense for debt bearing interest at variable rates.
The Group limits the use of derivatives to the volume of long-term
debt and bonds and actual requirements based on established internal control rules, and does not engage in speculative transactions.
(2) Types of financial instruments and related risk
Trade receivables - notes receivables and accounts receivable - electronically recorded monetary claims - are exposed to credit risk inrelation to customers.
The Group holds securities and investments in securities, which aremainly issued by companies who have business relationships with
the Group, and these securities are exposed to the risk of fluctuationin market prices. Trade payables - notes payable and accounts payable - mostly have payment due dates within one year.
Bank loans and bonds are taken out principally for the purpose ofworking capital, capital expenditure and acquisitions, which areexposed to liquidity risk and interest-rate risk.
Currency swap and the interest swap transactions are almost
always used as a hedge as a type of derivative transaction.
(3) Risk management for financial instruments(a) M onitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies for managing credit risk of
the Group, the Group monitors credit worthiness of its main customers periodically, and monitors due dates and outstanding balancesby customer.

80

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

To minimize credit risk when entering into derivative transactions,counterparties are limited to financial institutions with high ratings.
(b) Monitoring of market risks
Derivatives mainly include Currency swaps and interest rate swaps,
which are used to manage exposure to market risks from changes inforeign currency exchange rates of receivables and payables, andfrom changes in interest rates of bank loans.
Investments in securities, primarily the equity securities of corporations with which the Group does business, are exposed to the risk offluctuations in market price. The Group manages this risk by periodically examining market prices and the financial condition of the issuing entities.
The Group executes and manages derivative transactions within
the limits of established internal rules and regulations, and reduces
credit risk by limiting counterparties to highly creditworthy financial
institutions.
(c) Monitoring of liquidity risk for financing (the risk that theCompanies may not be able to meet obligations on the scheduled
due dates)
The Group manages the liquidity risk mainly through the cash-flowplans, which are prepared by the financial department.
In order to achieve more efficient and flexible financing, the Group
contracts line-of-credit agreements with certain financial institutions.
(4) Supplementary explanation of items relating to themarket value of financial instruments
The Group calculates the fair value of financial instruments based onmarket prices, or by using reasonable estimates when market prices
are not available. These estimates include variable factors, and are
subject to fluctuation due to change in the underlying assumptions.
The contract amounts of derivatives are not an indicator of the market risk associated with derivative transactions.

2. Fair value of financial instruments
Amounts recognized in the consolidated balance sheets, fair values and the differences between them on March 31, 2019 and 2018 are as shown
below.
Moreover, items for which it is extremely difficult to determine fair values are not included in the following table (see (Note 2)).
Millions of yen
2019Book value(1) Cash and deposits

Fair value

Difference¥  43,007¥  43,007¥  —(2) Notes and accounts receivable, trade82,56382,563—(3) Electronically recorded monetary claims

9,526

9,526

—

(4) Securities and investments in securities

32,98432,984—¥ 168,082¥ 168,082¥  —(52,401)(52,401)—

Total assets(1) Notes and accounts payable, trade(2) Short-term debt

(20,390)(20,401)(10)(3) Long-term debt

(40,826)(41,197)(371)

Total liabilities¥(113,618)¥(114,000)¥(381)

Millions of yen
2018Book value(1) Cash and deposits

Fair value

Difference¥  —¥   29,208¥   29,208(2) Notes and accounts receivable, trade78,37978,379—(3) Electronically recorded monetary claims

9,292

9,292

—

(4) Securities and investments in securities
Total assets

51,65951,659—¥ 168,540¥ 168,540¥  —(1) Notes and accounts payable, trade(50,300)(50,300)—(2) Short-term debt

(16,663)(16,709)(45)(3) Long-term debt

(49,282)(49,485)(202)

Total liabilities¥(116,246)¥(116,495)¥(248)

Thousands of U.S. dollars
2019(1) Cash and deposits(2) Notes and accounts receivable, tradeBook value

Fair value

Difference$   390,973$   390,973$   —

750,573

750,573—(3) Electronically recorded monetary claims

86,60086,600—(4) Securities and investments in securities

299,855

299,855—$ 1,528,018$ 1,528,018$   —

Total assets(1) Notes and accounts payable, trade(476,373)(476,373)—(2) Short-term debt

(185,364)(185,464)(91)(3) Long-term debt

(371,145)(374,518)(3,373)

Total liabilities$(1,032,891)$(1,036,364)$(3,464)

Note 1: Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201981

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements

Assets(1) Cash and deposits and (2) Notes and accounts receivable, tradeand (3) Electronically recorded monetary claims
Since these items are settled in a short period, their carrying value
approximates fair value.

is based on the assumed interest rate if a similar new loan wasentered into.
Because long-term debt payable with variable interest rates are
based on the condition that interest rates are revised periodically,
their fair values are almost the same as their book values, the relevant book values are used.
A specially treated interest rate swap is accounted for as an integral part of long-term debt payable, or the subject of hedging, sothat the fair value of the swap is stated by being included in the fairvalue of long-term debt payable.

(4) Securities and investments in securities
The fair value of equity securities is based on quoted market prices.
The fair value of debt securities is based on either quoted market
prices or prices provided by the financial institutions making markets
in these securities.
For information on securities classified by holding purpose, pleaserefer to Note 3 of the notes to the consolidated financial statements.
Liabilities(1) Notes and accounts payable, trade and (2) Short-term debt
Since these items are settled in a short period of time, their carrying
value approximates fair value.

(Bonds)
The fair value of bonds issued by the Company is based on market
prices when market prices are readily available. The fair value ofbonds without market prices is measured as the present value, calculated by discounting the total amount of principal and interest at a
rate determined by taking into account the remaining maturity ofeach bond and the current credit risk.

(3) Long-term debt
(Long-term debt)
The fair value of long-term debt payable is calculated by applying a
discount rate to the total of principal and interest. That discount rate

Derivative transactions
For information on derivative transactions, please refer to Note 12.
“Derivative transactions” of the notes to the consolidated financial
statements.

Note 2: Financial instruments for which it is extremely difficult to determine market values were as follows:
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018
Book value

Book value¥11,719¥11,150$106,536

Unlisted equity securities

259

275

2,355

Others—20—

Investments in non-consolidated subsidiaries and affiliates
Other securities

Because it is recognized that these do not have market values or that the market values are extremely difficult to determine, they are not included in the chart above.
Note 3: P lanned redemption amounts after the balance sheet date for monetary assets and investment securities with monetary assets and maturity dates
Millions of yen
2019Within 1 year

¥ 43,007

Cash and deposits

2018
Over 1 year

Within 1 year¥    —¥ 29,208

Over 1 year¥    —

Notes and accounts receivable, trade82,563—78,379—

Electronically recorded monetary claims

9,526

—

9,292

—

Other securities (Bonds)

3,012

11,557

4,719

14,948Other securities (Others)

5,000

920

16,500986¥143,111¥12,478¥138,100¥15,935

Securities and investments in securities

Total

82

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Thousands of U.S. dollars
2019
Within 1 year

Over 1 year$  390,973$     —

Notes and accounts receivable, trade

750,573—

Electronically recorded monetary claims

86,600—

Other securities (Bonds)

27,382

105,064

Other securities (Others)

45,4558,364$1,301,009$113,436

Cash and deposits

Securities and investments in securities

Total

For information on respect to the redemption schedule of bonds and long-term loans, please refer to Note 7. “Short-term Debt and Long-term
Debt” on the notes to the consolidated financial statements.

12. Derivative Transactions
Derivative transactions to which hedge accounting is not applied at March 31, 2019 and 2018 are as follows:
Millions of yen
2019
Contract
amounts

Fair
value

2018
Unrealized
gain (loss)

Contract
amounts

Fair
value

Unrealized
gain (loss)

Currency swap contracts:
Over-the-counter transactions
Receive in dollar, pay in euro

¥11,709

¥172

¥172

¥11,208¥(1,242)¥(1,242)

Thousands of U.S. dollars
2019
Contract
amounts

Fair
value

Unrealized
gain (loss)

Currency swap contracts:
Over-the-counter transactions
Receive in dollar, pay in euro$106,445$1,564$1,564

Note: The fair value is provided by financial institutions with which the company made the contracts.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201983

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements

Derivative transactions to which hedge accounting is applied at March 31, 2019 and 2018 are as follows:
Millions of yen
2019
Contract
amounts2018

Over
1 yearFair
value

Contract
amountsOver
1 yearUnrealized
gain (loss)

Currency swap contracts:
Classification: Deferral hedge accounting
Hedged item: Long-term debt interest
Receive in euro, pay dollar¥  294¥76¥(36)¥  491¥282¥(182)

¥   —

¥—

¥ —

¥  500¥ —¥  (0)

¥   —

¥—

¥ —

¥  231¥ —¥ (11)¥1,412¥—¥(21)¥1,070¥ —¥ (13)¥  142¥—¥ (2)¥  460¥ —¥   0Interest swap contracts:
Classification: Special method
Hedged item: Long-term debt
Receive floating, pay fixed
Currency swap contracts:
Classification: Deferral hedge accounting
Hedged item: Accounts payable
Receive in dollar, pay yen
Foreign currency forward contracts:
Classification: Special method
Hedged item: Short-term receivables
Receive in cyn, pay yen
Foreign currency forward contracts:
Classification: Special method
Hedged item: Short-term receivables
Receive in yen, pay cyn

Thousands of U.S. dollars
2019
Contract
amountsOver
1 yearFair
value

Currency swap contracts:
Classification: Deferral hedge accounting
Hedged item: Long-term debt interest
Receive in euro, pay dollar$ 2,673$691$(327)$12,836$ —$(191)$ 1,291$ —$ (18)

Foreign currency forward contracts:
Classification: Special method
Hedged item: Short-term receivables
Receive in cyn, pay yen
Foreign currency forward contracts:
Classification: Special method
Hedged item: Short-term receivables
Receive in yen, pay cyn

Note: The fair value is provided by financial institutions with which the company made the contracts.

84

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

13. Shareholders’ Equity
The Law provides that an amount equal to 10% of the amount tobe disbursed as distributions of capital surplus (other than the capitalreserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until
the sum of the capital reserve and the legal reserve equals 25% of
the capital stock account. Such distributions can be made at any

time by resolution of the shareholders or by the Board of Directors if
certain conditions are met.
The Company’s legal reserve included in retained earnings is nil at
March 31, 2019 and 2018.
Movements in common stock and treasury stock for the years
ended March 31, 2019 and 2018 were summarized as follows:

1. Stock Information
Thousands of Shares
2019
Balance at
beginning of year

Increase

Balance at
end of year

Decrease

Shares issued:
Common Stock

235,000——

235,000

10,0190—

10,020Treasury stock:
Treasury Stock

The increase in treasury stock is purchases of 0 thousand shares of less than one voting unit.
Thousands of Shares
2018
Balance at
beginning of year

Increase

Balance at
end of year

Decrease

Shares issued:
Common Stock239,000—

4,000

235,000

10,209

4,107

4,297

10,019Treasury stock:
Treasury Stock

The decrease in common stock of 4,000 thousand shares is due to cancelation of 4,000 thousand shares by the resolution on board meeting.
The increase in treasury stock of 4,107 thousand shares is due to purchases of 4,105 thousand shares by the resolution on board meeting and purchases of 1 thousand shares of less than one voting unit and the decrease in treasury stock of 4,297 thousand shares is due to cancelation of
4,000 thousand shares by the resolution on board meeting, sales of 0 thousand shares at the requests of shareholders who own less than one voting unit and of 297 thousand shares corresponding to exercising stock options for the year ended March 31, 2018.

2. Dividend Information
2019
Dividends paid in fiscal year ended March 31, 2019
Resolution

Shareholders' meeting on June 27, 2018
Board of Directors on October 31, 2018

Dividends Per share
Record date

Effective date

March 31,2018

June 28,
2018

15.0

September 30, December 5,
2018
2018

16.0

Dividends paid after March 31, 2019
Resolution

Shareholders' meeting on June 26, 2019

Yen

Total dividends
Millions of yen

Thousands of
U.S. dollars

0.14

3,374

30,673

0.15

3,599

32,718

U.S. dollars

Dividends Per share
Record date

Effective date

March 31,2019

June 27,
2019

Yen

Total dividends

U.S. dollars

16.0

Millions of yen

Thousands of
U.S. dollars

3,599

32,718

0.15

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201985

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements

2018
Dividends paid in fiscal year ended March 31, 2018
Resolution

Dividends Per share

Total dividends

YenMillions of yen

Record date

Effective date

Shareholders' meeting on June 28, 2017

March 31,2017

June 29,
2017

13.0

2,974

Board of Directors on October 31, 2017

September 30,
2017

December 5,
2017

15.0

3,374

Record date

Effective date

March 31,2018

June 28,2018

Dividends paid after March 31, 2018
Resolution

Shareholders' meeting on June 27, 2018

Dividends Per share

Total dividends

YenMillions of yen

15.0

3,374

14. Stock Options
1. The amount of expense appropriation and the accounting name during the fiscal years ended March 31, 2019and 2018.
Equity deal expense (included in “Selling, general and administrative expenses”) was ¥34 million ($309 thousand) and ¥40 million for the fiscal
years ended March 31, 2019 and 2018, respectively.

2. The contents, scale, and change in Stock options(1) The contents of Stock Options
June 2008 stock option

June 2009 stock option

Company

Sanwa Holdings Corporation

Sanwa Holdings Corporation

Resolution dateJune 26, 2008

June 30, 2009

Grantee classification and the number

1 director

1 director

Type and number of shares

Common stock of the Company: 49,000 shares Common stock of the Company: 52,000 shares

Date of grant

July 15, 2008

July 15, 2009

Exercise period of rights

For 30 years from grant date(from July 16, 2008 to July 15, 2038)

For 30 years from grant date(from July 16, 2009 to July 15, 2039)

Company

Sanwa Holdings Corporation

Sanwa Holdings Corporation

Resolution dateJune 30, 2010

June 29, 2011

Grantee classification and the number

1 director

1 director

Type and number of shares

Common stock of the Company: 61,000 shares Common stock of the Company: 63,000 shares

Date of grant

July 15, 2010

July 14, 2011

Exercise period of rights

For 30 years from grant date(from July 16, 2010 to July 15, 2040)

For 30 years from grant date(from July 15, 2011 to July 14, 2041)

Company

Sanwa Holdings Corporation

Sanwa Holdings Corporation

Resolution dateJune 28, 2012

June 26, 2013

Grantee classification and the number

3 directors

3 directors

Type and number of shares

Common stock of the Company: 90,000 shares Common stock of the Company: 49,000 shares

Date of grant

July 13, 2012

July 12, 2013

Exercise period of rights

For 30 years from grant date(from July 14, 2012 to July 13, 2042)

For 30 years from grant date(from July 13, 2013 to July 12, 2043)

June 2010 stock option

June 2011 stock option

June 2012 stock option

86

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

June 2013 stock option

June 2014 stock option

June 2015 stock option

Company

Sanwa Holdings Corporation

Sanwa Holdings Corporation

Resolution dateJune 26, 2014

June 26, 2015

Grantee classification and the number

4 directors

4 directors

Type and number of shares

Common stock of the Company: 40,000 shares Common stock of the Company: 26,900 shares

Date of grant

July 14, 2014

July 13, 2015

Exercise period of rights

For 30 years from grant date(from July 15, 2014 to July 14, 2044)

For 30 years from grant date(from July 14, 2015 to July 13, 2045)

Company

Sanwa Holdings Corporation

Sanwa Holdings Corporation

Resolution dateJune 28, 2016

June 28, 2017

Grantee classification and the number

4 directors

4 directors

Type and number of shares

Common stock of the Company: 38,400 shares Common stock of the Company: 35,700 shares

Date of grant

July 14, 2016

July 14, 2017

Exercise period of rights

For 30 years from grant date(from July 15, 2016 to July 14, 2046)

For 30 years from grant date(from July 15, 2017 to July 14, 2047)

Company

Sanwa Holdings Corporation

Resolution dateJune 27, 2018

Grantee classification and the number

4 directors

Type and number of shares

Common stock of the Company: 36,800 shares

Date of grant

July 13, 2018

Exercise period of rights

For 30 years from grant date(from July 14, 2018 to July 13, 2048)

June 2016 stock option

June 2017 stock option

June 2018 stock option(2) Scale, and change in Stock Options(2)-1 Number of stock options
SharesJune 2008stock
optionJune 2009stock
optionJune 2010stock
optionJune 2011stock
optionJune 2012stock
optionJune 2013stock
optionJune 2014stock
optionJune 2015
stock
optionJune 2016
stock
optionJune 2017stock
option Beginning of
period

—

—

—

—

—

—

—

—

—

35,700—Granted

—

—

—

—

—

—

—

—

—

—

36,800Forfeited

—

—

—

—

—

—

—

—

—

—

—

Vested

—

—

—

—

—

—

—

—

—

35,700—

Unvested

—

—

—

—

—

—

—

—

—

—

36,800June 2018stock
optionBefore vested

After vested Beginning of
period49,00052,00061,00063,00090,00049,00040,00026,90038,400——

Vested

—

—

—

—

—

—

—

—

—

35,700—Exercised

—

—

—

—

—

—

—

—

—

—

—

Expired

—

—

—

—

—

—

—

—

—

—

—

49,00052,00061,00063,00090,00049,00040,00026,90038,40035,700—Exercisable

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201987

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements(2)-2 Unit value and exercise period for stock option rights
Yen
June 2008stock
optionJune 2009stock
optionJune 2010stock
optionJune 2011stock
optionJune 2012stock
optionJune 2013stock
optionJune 2014stock
optionJune 2015
stock
optionJune 2016
stock
optionJune 2017stock
optionJune 2018stock
optionExercise price

1

1

1

1

1

1

1

1

1

1

1

Average shareprice at exercise

—

—

—

—

—

—

—

—

—

—

—

Fair value
unit price(Date of grant)

301

263

250

243

252

515

625

921

810

975

928

June 2008stock
optionJune 2009stock
optionJune 2010stock
optionJune 2011stock
optionJune 2012stock
optionJune 2013stock
optionJune 2014stock
optionJune 2015
stock
optionJune 2016
stock
optionJune 2017stock
optionJune 2018stock
option

0.009

0.009

0.009

0.009

0.009

0.009

0.009

0.009

0.009

0.009

0.009

Average shareprice at exercise

—

—

—

—

—

—

—

—

—

—

—

Fair value
unit price(Date of grant)

2.736

2.391

2.273

2.209

2.291

4.682

5.682

8.373

7.364

8.864

8.436

U.S. dollars

Exercise price

3. Assumptions used in estimation of the fair value of stock options
Valuation method for estimating fair value was the Black-Scholes model. The major assumptions used for the 2018 stock option plan are as­follows:
Major assumptions

2018 plan

Estimated Volatility

a

32.1%

Estimated remaining periodb

10 years

Estimated dividend

c¥30 per share

Risk-free rate

d

0.03%

(a) Estimated volatility was computed by the closing stock prices of common stock in each trading day from July 7, 2008 to July 9, 2018.
(b) The remaining period was reasonably estimated.
(c) The estimated dividend was calculated based on the dividend amount applicable to the year ended March 31, 2018.
(d) The risk-free rate was determined based on the rate of Japanese government bonds, for which redemption dates corresponded to the estimated remaining period.

15. Research and Development Expenses
Research and development expenses included in selling, general and administrative expenses were ¥3,970 million ($36,091 thousand) and ¥3,877
million for the fiscal years ended March 31, 2019 and 2018, respectively.
Research and development expenses included in cost of sales were ¥641 million ($5,827 thousand) and ¥545 million for the fiscal years ended
March 31, 2019 and 2018, respectively.

88

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

16. Income Taxes
The Company and its domestic subsidiaries are subject to several taxes based on income, which in the aggregate resulted in a statutory tax rate of
approximately 30.6% and 30.9% for the fiscal years ended March 31, 2019 and 2018 respectively. Foreign subsidiaries are subject to income taxesof the countries in which they operate.
The effective rates for the fiscal years ended March 31, 2019 and 2018 differ from the Company’s statutory tax rates for the following reasons:
2019

2018

30.6%

30.9%

Expenses not deductible for income tax purposes

(0.4)

0.1

Depreciation of goodwill

1.3

1.9

Change in valuation allowance

(0.3)

0.2

Other

(1.2)

1.1

30.0

34.2

Statutory tax rate

Effective tax rate

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at March 31, 2019 and 2018
were as follows:
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

Deferred tax assets:
Allowance for bonuses
Net defined benefit liability
Tax loss carryforwards¥   1,196¥ 1,206$ 10,873

4,099

4,218

37,264

871

1,096

7,918

Securities

255

385

2,318

Investment in affiliates securities

155

103

1,409

Impairment loss

1,492

1,492

13,564

Other

3,757

3,370

34,155  Subtotal

11,827

11,873

107,518   Valuation allowance (Deficits) (Note 1)   Valuation allowance (Temporary difference)   Less valuation allowance subtotal  Total(217)—(1,973)(1,912)—(17,382)(2,130)(2,283)(19,364)¥   9,697¥ 9,589$ 88,155(5,817)(5,228)(52,882)(982)(1,581)(8,927)(2,807)(2,492)(25,518)

(547)

(342)

(4,973)

Deferred tax liabilities:
Depreciation
Net unrealized holding gains on securities
Net defined benefit asset
Other  Total¥(10,154)¥ (9,645)$(92,309)   Net deferred tax assets¥   (456)¥   (55)$ (4,145)

Note 1: Amounts of deficits and related differed tax assets by tax loss carry-forwards for the year ended March 31, 2019, were as follows.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201989

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements

Millions of yen
2019Within 1 year

More than
1 year,within 2 years

More than
2 years,
within 3 years

Deficits

312

225

141

56

13

121

871

Valuation allowance

(91)

(7)

(12)

(13)

(13)

(80)

(217)

Deferred tax assets

221

218

129

43

—

41

653(*2)(*1)

More than
3 years,
within 4 years

More than
4 years,
within 5 years

More than
5 years

Total

Thousands of U.S. dollars
2019

Within 1 year

More than
1 year,within 2 years

More than
2 years,
within 3 years

More than
3 years,
within 4 years

More than
4 years,
within 5 years

Deficits(*1)

2,836

2,045

1,282

509

118

1,100

7,918

Valuation allowance

(827)

(64)

(109)

(118)

(118)

(727)

(1,973)

Deferred tax assets

2,009

1,982

1,173

391

—

373

5,936(*2)

More than
5 years

Total(*1) Deficits are the amount after multiplying the statutory tax rate.
(*2) Regarding deficits of ¥871 million ($7,918 thousand) (amount after multiplying the statutory tax rate), the Company records deferred tax assets of ¥653 million ($5,636 thousand). Regarding
deficits, valuation allowance related to the portion deemed to be recoverable based on future taxable income forecasts is not recognized.

17. Other Income (Expenses)
Other, net, for the fiscal years ended March 31, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019

90

2019

2018

Gain (Loss) on sales and disposal of fixed assets¥   (20)¥ 134$  (182)

Gain (Loss) on sales of investments in securities

154

0

1,400

Write-down of investments in securities

(1)

(4)

(7)

Loss on restructuring cost of subsidiary

(180)

(83)

(1,636)

Loss on liquidation of subsidiaries

(21)

(27)

(191)

Other, net

(997)

(322)

(9,064)¥(1,065)¥(304)$(9,682)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

18. Other Comprehensive Income
The reclassification adjustments and tax effects for components of other comprehensive income (loss) for the fiscal years ended March 31, 2019and 2018 are as follows:
Thousands of
U.S. dollars

Millions of yen
2019

2019

2018

Unrealized holding gains on securities:
Amount arising during the year
Reclassification adjustments for losses realized in net income
Before tax effectTax effect   Total unrealized holding gains on securities¥(1,808)¥2,910(154)

1$(16,436)(1,400)(1,963)

2,911(17,845)

601

(891)

5,464

(1,361)

2,020(12,373)

Deferred losses on hedges:
Amount arising during the year

158

(146)

1,436

Reclassification adjustments for losses realized in net income

—

—

—

Before tax effect

158

(146)

1,436

Tax effect

(48)

44

(436)

109

(101)

991

(2,563)

679(23,300)———(2,563)

679(23,300)

Amount arising during the year

(385)

103

(3,500)3,927   Total deferred losses on hedges
Foreign currency translation adjustments:
Amount arising during the year
Reclassification adjustments for losses realized in net income   Total foreign currency translation adjustments
Remeasurements of defined benefit plans:
Reclassification adjustments for losses realized in net income

432

1,179

Before tax effect

47

1,283

427

Tax effect

15

(668)

136

62

615

564

Amount arising during the year

(143)

72

(1,300)   Total other comprehensive income¥(3,896)¥3,285$(35,418)   Total remeasurements of defined benefit plans
Share of other comprehensive income of non-consolidated
subsidiaries and affiliates accounted for using the equity method:

19. Segment Information
1. Outline of reportable segments
Reportable segments of the Group are components for which discrete financial information is available and whose operating results
are regularly reviewed by the Executive Meeting of the Company tomake decisions on the allocation of management resources andassess performance.
The Company is mainly engaged in business management activities and research and development as the global headquarters.
The Group is primarily engaged in the manufacture and sales ofsteel construction materials for commercial and residential construction. Sanwa Shutter Corporation and other subsidiaries in Japan are
responsible for Japan. Overhead Door Corporation is responsible for
America. Novoferm Gmbh is responsible for Europe, Local legal entities are independent management units and they set overall management strategy for their businesses and conduct separate businessactivities. The “Japan,” the “North America,” and the “Europe”
segments primarily manufacture sell steel construction material.

2. Calculation method used for sales, income or loss,
assets and other items on each reportablesegment
Accounting policies of the reportable business segments are thesame as those noted in the “Note 2. Summary of Significant
Accounting Policies.”
The amount of income on reportable segments is based on operating income. Intersegment sales and transfers between segments
are based on market price.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201991

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements

Information about operations in reportable segments of the Group for the fiscal years ended March 31, 2019 and 2018, was as follows:(1) Reportable Segments
Millions of yen
2019

Japan

North America¥219,559

Sales to customers¥116,574

Europe

Total

Adjustments

Consolidated
financialstatement¥73,394¥409,528¥   462¥409,990

0

32

70

102

(102)

—

Total sales

219,559

116,60773,464

409,631359

409,990

Segment income (loss)¥ 22,258¥  8,409¥ 3,658¥ 34,326¥ (2,733)¥ 31,593

Segment assets¥137,047¥ 69,968¥49,042¥256,059¥82,372¥338,432

2,813

3,202

1,998

8,014

34

8,049

—

223

—

223

6,043

6,267

2,571

3,978

5,803

12,35314

12,367

Intersegment sales or transfers

Depreciation and amortization
Investment in equity method companies
Capital expenditures

Millions of yen
2018

Japan

Sales to customers

North America¥208,021

Intersegment sales or transfers¥112,768

Europe

Total

Adjustments

Consolidated
financialstatement¥64,817¥385,607¥    65¥385,673

3

46

145

195

(195)

—

Total sales

208,025

112,815

64,962385,803(129)

385,673

Segment income (loss)¥ 20,794¥  8,221¥ 2,687¥ 31,702¥ (3,380)¥ 28,322

Segment assets¥132,440¥ 65,164¥46,241¥243,846¥87,839¥331,686

2,428

3,225

1,933

7,587

34

7,622

—

309

—

309

5,886

6,195

5,576

3,378

2,424

11,3794

11,383Adjustments

Consolidated
financialstatement$  4,200$3,727,182

Depreciation and amortization
Investment in equity method companies
Capital expenditures

Thousands of U.S. dollars
2019

Sales to customers

Japan

North America

Europe$1,995,991$1,059,764$667,218

Total$3,722,982

0

291

636

927

(927)

—

Total sales

1,995,991

1,060,064

667,855

3,723,918

3,264

3,727,182

Segment income (loss)$   20,527$   76,445$ 33,255$  312,055$ (24,845)$  287,209

Segment assets$1,245,882$  636,073$445,836$2,327,809$748,836$3,076,655

25,573

29,10918,16472,855309

73,173

—

2,027

—

2,027

54,93656,97323,37336,16452,755112,300

127

112,427

Intersegment sales or transfers

Depreciation and amortization
Investment in equity method companies
Capital expenditures

Adjustments are as follows;
1 (1) Adjustments on segment sales mainly consist of adjustments of intersegment transactions and sales which are not included in the reportablesegments.
(2) Adjustments on segment income or loss mainly consist of adjustments of intersegment transaction and income or loss which are not included in
the reportable segments.
(3) Adjustments on segment assets mainly consist of the eliminations of investment balance and corporate assets.
(4) Adjustments on Depreciation and amortization consist of adjustments of depreciation and amortization to which are not included in the reportable segments.
(5) Adjustments on Investment in equity method companies consist of adjustments of investment in equity method companies to which are notincluded in the reportable segments.
(6) Adjustments on Capital expenditures consist of adjustments of capital expenditures to which are not included in the reportable segments.
2. Segment income or loss is reconciled primarily to operating income on the consolidated statement of income.
3. Major countries in each region
North America : USA, Canada and Mexico etc. Europe : Germany, France, Netherlands and England etc.

92

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

(2) Related Informationa) Information on Products and Each Service
Millions of yen
2019Commercial

Sales to customers¥255,969

Maintenance/Home
improvement

Residential¥108,155

Other¥42,627¥3,239Consolidated¥409,990

Millions of yen
2018

Commercial

Sales to customers¥241,035

Maintenance/Home
improvement

Residential¥104,885

Other¥36,623¥3,128

Consolidated¥385,673

Thousands of U.S. dollars
2019

Commercial

Sales to customers$2,326,991

Residential$983,227

Maintenance/Home
improvement

Other

Consolidated$29,445$3,727,182$387,518b) Information on Each Region
Millions of yen
2019
Japan

Property, plant and equipment¥29,725

North America

EuropeTotal¥16,475¥60,182

EuropeTotal¥13,386¥57,765¥13,980
Millions of yen
2018

Japan

Property, plant and equipment¥30,422

North America¥13,956

Thousands of U.S. dollars
2019
Japan

Property, plant and equipment$270,227

North America$127,091

EuropeTotal$149,773$547,109

20. Information on Related Parties
Fiscal years ended March 31, 2019 and 2018
Not applicable.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201993

Financial Section and Corporate Data

Notes to the Consolidated Financial Statements

21. Per Share Information
Yen
2019

U.S. dollars
2019

2018

Net assets per share¥713.50¥667.09$6.49

Earnings per share

92.95

80.97

0.85

Diluted earnings per share

92.73

80.77

0.84

(Note 1) The basis for calculation

1. Earnings per share
Yen
2019

Profit attributable to owners of parent¥20,9102019¥18,280$190,091———

20,91018,280190,091

Amount not attributable to common shareholders
Profit related to common shares attributable to owners of parent

U.S. dollars
2018

Thousand shares
2019

Average number of common shares during the period

2018

224,979

225,761

527

565

Increase in common stock:
Stock subscription rights

2. Net assets per share
Thousands of
U.S. dollars

Millions of yen

Total net assets

2019

2018

2019

¥161,603¥151,121$1,469,118

Deductions from total net assets:
Stock subscription rights

248

213

2,255

Non-controlling interests

832

825

7,564

160,522150,082

1,459,291

Total net assets attributable to common stockholders

Thousand shares
2019

Number of shares of common stock used in the calculation of net assets per share

22. Subsequent Events
Fiscal years ended March 31, 2019 and 2018
Not applicable.

94

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

224,979

2018

224,980

Independent Auditor’s Report

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201995

Financial Section and Corporate Data

Corporate Data
Consolidated Subsidiaries and Affiliated Companies (As of July 31, 2019)
RegionCompany Name

Established

Investment Ratio

Category

Main Business

Sanwa Shutter Corporation

Oct. 2007

100.00%Consolidated
subsidiary

Manufactures, sells and services general building
materials, including shutter products, door products
and partitions

Showa Front Co., Ltd.

Jun. 1963

100.00%Consolidated
subsidiary

Sells aluminum store fronts and curtain walls

Okinawa Sanwa Shutter Corporation

Jan. 1996

100.00%Consolidated
subsidiary

Manufactures and sells steel building materials suchas shutters and doors, and store building materials

Sanwa Tajima Corporation

Oct. 1938

100.00%Consolidated
subsidiary

Manufactures and sells stainless steel building
products

Sanwa Exterior Niigata Plant Co., Ltd.

Apr. 1987

100.00%Consolidated
subsidiary

Manufactures exterior products and shutters forwindows

Venix Co., Ltd.

Jul. 2011

100.00%Consolidated
subsidiary

Manufactures partitions

Sanwa System Wall Co., Ltd.

Apr. 2017100.00%Consolidated
subsidiary

Manufactures and sells partitions

Showa Kensan Co., Ltd.*

Jul. 1967

100.00%Consolidated
subsidiary

Manufactures automatic door engines

Tajima Metalwork Co., Ltd.*

Apr. 1963

100.00%Consolidated
subsidiary

Sells post boxes, delivery boxes, nameplates, etc. forcondominiums

Yoshida Seisakusho Co., Ltd.

Mar. 1955

100.00%Non-consolidated
subsidiary

Manufactures stainless steel products

Metalwork Kansai Co., Ltd.

Oct. 1969

100.00%Non-consolidated
subsidiary

Manufactures stainless steel products

Hayashi Kogyo Co., Ltd.*

Dec. 1973

100.00%Consolidated
subsidiary

Manufactures steel doors

ACE Co., Ltd.

Apr. 1969

100.00%Non-consolidated
subsidiary

Manufactures and sells facades for stores and otherbuilding materials

1954

100.00%Consolidated
subsidiary

Manufactures door operators

Sanwa Mitaka K.K.

Apr. 2003

100.00%Non-consolidated
subsidiary

Manufactures aluminum/wood/plastic composite
doors

Living110.com Co., Ltd.

Nov. 2000

100.00%Non-consolidated
subsidiaryBusiness related to rental garage houses

Japan

Sanwa Electronics Engineering Co., Ltd.** Consolidated subsidiary from fiscal 2019

North
America
Overhead Door Corporation

96

1921

100.00%Consolidated
subsidiary

Access Systems Division

Manufactures and sells residential and commercial
doors, provides services and manufactures and sells
dollies, doors and walk ramps for truck loading/unloading

Genie

Manufactures and sells residential and commercial
door operators

Horton Automatics

Manufactures and sells automatic sliding and slide
doors for commercial, industrial, public facility andhospital use, as well as revolving doors, operator
systems, platform screen doors

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

RegionCompany Name

Established

Investment Ratio

Apr. 1955

100.00%Category

Main Business

EuropeGermany

Novoferm Group

Consolidated
subsidiary

Novoferm GmbH

Consolidated
subsidiary

Manufactures and sells residential garage doors,
sectional doors and door products

Novoferm Riexinger Türenwerke GmbH

Consolidated
subsidiary

Manufactures and sells fireproof doors andindustrial sectional doors

Novoferm Siebau GmbH

Consolidated
subsidiary

Manufactures and sells various door products

Novoferm Tormatic GmbH

Consolidated
subsidiary

Manufactures and sells garage door operators

Netherlands Novoferm Nederland B.V.

Consolidated
subsidiary

Manufactures and sells industrial sectional doors

Alpha Deuren International B.V.

Consolidated
subsidiary

Manufactures and sells industrial sectional doors

Novoferm France S.A.S

Consolidated
subsidiary

Manufactures and sells residential garage doors andfireproof doors

Norsud S.A.S

Consolidated
subsidiary

Sells and installs industrial sectional doors

Italy

Novoferm Schievano S.r.l.

Consolidated
subsidiary

Manufactures and sells door products

U.K.

Novoferm UK Limited

Consolidated
subsidiary

Manufactures residential garage doors

Bolton Gate Services Ltd.

Consolidated
subsidiary

Service business for industrial sectional doors

Consolidated
subsidiary

Sells door products

Novoferm Door Sp. zo.o.

Consolidated
subsidiary

Manufactures door products and dock levelers

Novoferm Polska Sp. zo.o.

Consolidated
subsidiary

Sells residential garage doors

Spain

Novoferm Alsal S.A.

Consolidated
subsidiary

Manufactures door products, residential garage
doors and industrial sectional doors

SwedenRobust AB*

Consolidated
subsidiary

Manufacture and sale of hinged doors

FranceSwitzerland Novoferm Schweiz AG
Poland* Acquired May 2019

China/Asia
China

Shanghai Baosteel-Sanwa Door Co., Ltd.*

Apr. 2006

80.00%

Consolidated
subsidiary

Manufactures and sells shutters

Novoferm (Shanghai) Co., Ltd.

Dec. 2005

100.00%Equity-method
affiliate

Manufactures and sells doors

Oct. 1986

100.00%Consolidated
subsidiary

Manufactures and sells shutter and doors

Hong Kong Sanwa Shutter (H.K.) Ltd.*

TaiwanAn-Ho Metal Industrial Co., Ltd.*

Aug. 1988

79.02%

Consolidated
subsidiary

Manufactures and sells shutters and doors

VietnamVina-Sanwa Company Liability Ltd.*

Jan. 2008

87.63%

Consolidated
subsidiary

Manufactures and sells shutters and doors

Indonesia

PT. Sanwamas Metal Industry

Dec. 1996

51.02%

Equity-method
affiliate

Manufactures and sells shutters

1957

50.00%

Equity-method
affiliate

Manufactures and sells doors

Feb. 1991

25.60%

Affiliated company Manufactures and sells shutters and doors

Korea

Dongbang Novoferm Inc.

ThailandSun Metal Co., Ltd.

* Consolidated subsidiary from fiscal 2019

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201997

Financial Section and Corporate Data

Corporate Data
Global Network
Japan

China/Asia

26

20 19
1
22

21
23

24
15
11
3
17
6

16
12
18

5

10

14

4

2

9
13

7

8
25

Group Plant Locations
Country

Company

Plant Name

Products

Japan
Sanwa Shutter Corporation

1 Sapporo

Rolling shutters, overhead doors, doors & door frames

2 Ashikaga

Rolling shutters, overhead doors

3 Ota

Doors & door frames

4 Shizuoka

Window shutters, doors & door frames, partitions

5 GifuRolling shutters, overhead doors

6 Hiroshima

Rolling shutters, doors & door frames

7 KyushuRolling shutters

Okinawa Sanwa Shutter Corporation

8 Okinawa

Rolling shutters, doors & door frames

Sanwa Tajima Corporation

9 Saitama

Stainless steel products

Sanwa Exterior Niigata Plant Co., Ltd.

0 Nagoya

Stainless steel products

A Niigata

Exterior products, window shutters

Sanwa System Wall Co., Ltd.

B Amagasaki

Partitions

Venix Co., Ltd.

C Ranzan

Partitions

Showa Kensan Co., Ltd.

D Gunma

Automatic doors

Hayashi Kogyo Co., Ltd.

E Niigata

Doors & door frames

Metalwork Kansai Co., Ltd.

F Sannan

Stainless steel products

Yoshida Seisakusho Co., Ltd.

G SakuStainless steel products

Sanwa Electronics Engineering Co., Ltd.

H Osaka

Shutter openers

China/Asia
China
Hong Kong
TaiwanI Shanghai

Overhead doors, rolling shutters, sheet shutters

J Shanghai

Doors & door frames

Sanwa Shutter (H.K.) Ltd.

K Hong Kong

Rolling shutters, doors & door frames

An-Ho Metal Industrial Co., Ltd.

L Hsinchu

Doors & door frames

VietnamVina-Sanwa Company Liability Ltd.

M Hanoi

Doors & door frames, rolling shutters, sheet shutters

ThailandSun Metal Co., Ltd.

N KoratRolling shutters, doors & door frames

Indonesia
Korea

98

Shanghai Baosteel-Sanwa Door Co., Ltd.
Novoferm (Shanghai) Co., Ltd.

PT. Sanwamas Metal Industry

O Bekasi

Rolling shutters

Dongbang Novoferm Inc.

P SeoulDoors & door frames

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

NorthAmerica

Europe

35
36

60

33
32
31
29

28
27

30
37

55

39

56

44
53 43 45 48
52
47

54

38
34

51

41
49

40
42

50

59

46

57
58

Country
North America
U.S.A.

MexicoU.S.A.
MexicoU.S.A.
MexicoCompany
Overhead Door Corporation
Access Systems Division

Genie
Horton Automatics

EuropeGermany

Novoferm Group
Novoferm GmbHFranceNovoferm Riexinger Türenwerke GmbH
Novoferm Siebau GmbH
Novoferm Tormatic GmbH
Novoferm France S.A.S

Netherlands
U.K.

Italy
Spain
PolandSwedenNovoferm Nederland B.V.
Alpha Deuren International B.V.
Novoferm UK Limited
Horton Automatics Limited
Robust UK Limited
Novoferm Schievano S.r.l.
Novoferm Alsal S.A.
Novoferm Door Sp. zo.o
Robust AB

Plant Name

Products

Q Lewistown
R Williamsport
S Grand Island
T Mt. Hope
U Dalton
V Trail
W Conneaut
X Pensacola
Y Centralia
Z Portland[ Marion\ Tecate] Baltic_ Matamorosa Corpus Christib Matamoros

Rolling shutters
Residential garage doors, commercial sectional doors
Residential garage doors, commercial sectional doors
Residential garage doors, commercial sectional doors, hardware parts
Rolling shutters
Sheet shutters
Resin panels & parts
Residential garage doors, commercial sectional doors, hardware parts
Residential garage doors
Residential garage doors
Truck & trailer doors
Truck & trailer doors
Garage door openers
Garage door openers
Automatic doors
Automatic doors

c Haldernd Werthe Dortmund
f Brackenheim
g Buschhuttenh Dortmund
i Machecoul
j Bavilliersk Melunl Roermondm Didamn Lutono Telfordp Stoke-on-Trent
q Padovar Cantabrias Wykrotyt Nykroppa

Doors & door frames
Residential garage doors, doors & door frames
Residential garage doors, industrial sectional doors
Fireproof doors & door frames, industrial sectional doors
Other doors
Garage door operators
Residential garage doors
Residential garage doors
Fireproof doors
Industrial sectional doors
Industrial sectional doors
Residential garage doors
Automatic doors
Doors & door frames
Doors & door frames
Doors & door frames, residential garage doors, industrial sectional doors
Doors & door frames, dock levelers
Doors & door frames
SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 201999

Financial Section and Corporate Data

Corporate Data
History of Sanwa Group
1956Apr.

Established Sanwa Shutter Manufacturing Co., Ltd. (President: Manji Takayama), a predecessor of this company, in Amagasaki, Hyogo
Prefecture. Began manufacture and sales of rolling shutters.

1963Apr.

Merged three Group companies and established Sanwa Shutter Corporation. Relocated headquarters to Tokyo.

1970Jul.

Listed on the First Section of both the Tokyo and Osaka stock exchanges.

1974Aug.

Entered into technical tie-up with Overhead Door Corporation (U.S.A.).

Oct.

Relocated the headquarters to Shinjuku, Tokyo.

1981May

Toshitaka Takayama becomes President.

1983Mar.

Deployed nationwide 24-hour full-time service (FTS).

1984Apr.

Began sales of facades for stores by Showa Front Sales Co., Ltd. (now Showa Front Co., Ltd.).

1986Oct.

Established Sanwa Shutter (H.K.) Ltd. in Hong Kong.

1988Aug.

Established An-Ho Metal Industrial Co., Ltd. in Taiwan.

1990Jan.

Acquired stake in automatic door company Showa Kensan Co., Ltd.

1996Apr.

Okinawa Sanwa Shutter Corporation began sales after being split off Okinawa Regional Business Division.

Jul.

Established Sanwa USA Inc. and acquired Overhead Door Corporation, a leading U.S. manufacturer of garage doors and commercial doors.

1999Dec.

Acquired 100% of the shares of Tajima Junzo Seisakusho Co., Ltd. (renamed Sanwa Tajima Corporation in April 2006), the top brand of stainlesssteel architectural materials.

2000Oct.

Transferred Sanwa Exterior Co., Ltd.’s sales operations to Sanwa Shutter Corporation and its production operations to Sanwa Exterior Niigata
Plant Co., Ltd., which was established in September 2000.

2003Oct.

Acquired Novoferm, Europe’s second-largest manufacturer of doors and shutters.

Dec.

Acquired 100% of the shares of Venix Co., Ltd. (dissolved in a merger in October 2011), strengthening manufacturing and sales of partitions.

2004Jan.

Established Sanwa Shutter Design (Shanghai) Corporation in China.

Apr.

Established an internal office on corporate social responsibility to oversee risk management, legal compliance and environment-friendly policies.

2005Sep.

Entered into comprehensive business alliance with Hochiki, a leading fi re detection and disaster-prevention equipment company in Japan.

Nov.

Acquired 100% of the shares of Tajima Metal Work Co., Ltd., strengthening sales of stainless steel products.

2006Apr.

Sanwa Shutter celebrated its 50th anniversary. Established Shanghai Baosteel-Sanwa Door Co., Ltd., a joint venture with Baosteel Development
Co., Ltd., a subsidiary of Baosteel, in Shanghai to manufacture and sell overhead doors, rolling shutters and sheet shutters.

2007Oct.

The Sanwa Group adopts holding company system. Sanwa Shutter Corporation changed its trade name to “Sanwa Holdings Corporation,” andthe operating company succeeded the trade name “Sanwa Shutter Corporation.”

2008Jan.

Sanwa Holdings agreed to establish a joint-venture company, Vina-Sanwa Company Liability Ltd., with the Vietnamese construction and trading
company Vinaconex Corporation.

2009Dec.

Overhead Door Corporation, our consolidated subsidiary, acquired the door businesses of Wayne Dalton Corporation.

2010Feb.

Sanwa Shutter Corporation concluded a direct sales agreement for the Japanese market with EFAFLEX Tor-und Sicherheitssysteme GmbH & Co.
KG of Germany.

2011Jan.

Overhead Door Corporation acquired an automatic door sales, installation, and maintenance business from Automatic Door Enterprises, Inc., anautomatic door distributor in the U.S.A.

Jul.

Established Venix Co., Ltd..

Oct.

The partition sales business of subsidiary Venix Co., Ltd. and the automatic door sales business of subsidiary Showa Kensan Co., Ltd. were
integrated into Sanwa Shutter Corporation.

Dec.

Overhead Door Corporation acquired 100% of the shares of Creative Door Services Ltd. of Canada.

2012Jan.

Sanwa Shutter Corporation announced that it concluded an OEM contract with LIXIL Corporation.

May

Overhead Door Corporation acquired Door Control, Inc., strengthening the automatic door service business.

Aug.

Showa Front Co., Ltd. acquired Ace Co., Ltd., a front sash manufacturer.

Oct.

Overhead Door Corporation acquired Advanced Door Automation, LLC., strengthening the automatic door service business.

2013May

Overhead Door Corporation acquired Texas Access Controls, Inc., strengthening the automatic door service business.

2014Mar.

Acquired 100% of the shares of Sanwa Electronics Engineering Co., Ltd., strengthening development and manufacturing capacity of door
openers.

Jun.

Novoferm Group acquired Alpha Deuren International B.V., strengthening the industrial door business.

Dec.

Overhead Door Corporation acquired Horton Automatics of Ontario, strengthening the automatic door service business.

2015Oct.

Acquired the door business of Mitaka Kogyo and established Sanwa Mitaka Co., Ltd.

2016Jun.

Shifted from a “company with an Audit & Supervisory Board” to a “company with an Audit & Supervisory Committee.”
Novoferm Group acquired all of the shares of Norsud Gestion S.A.S of France.

100

2017Jan.

Acquired additional shares of Novoferm UK Limited and made it a wholly owned subsidiary.

Apr.

Acquired the partition business of Nihon Spindle Manufacturing Co., Ltd., and established Sanwa Spindle Co., Ltd. (now Sanwa System Wall
Co., Ltd.)2018Jan.

Novoferm Group acquired Bolton Gate Services Ltd., strengthening the service business in the U.K.

Dec.

Overhead Door Corporation acquired Lux Overhead Door to strengthen the services business in North America.

2019May

Novoferm Group acquired Robust AB of Sweden to strengthen the hinge door business in Europe.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

Corporate Overview (As of March 31, 2019)
Company Name

Sanwa Holdings Corporation

Head Office

Shinjuku Mitsui Building 52FNishi-Shinjuku 2-1-1, Shinjuku-ku,
Tokyo 163-0478, Japan
Phone: +81-3-3346-3019

Established

April 10, 1956

Capital (Paid-In)¥38,413 million

Employees

10,151 (consolidated)

Stock Listings

Tokyo Stock Exchange

Transfer Agent

Mitsubishi UFJ Trust andBanking Corporation
Corporate Agency Department
Higashisuna 7-10-11, Koto-ku,
Tokyo 137-8081, Japan

Common Stock

Authorized:
550,000,000 shares
Issued:
235,000,000 shares
Number of shareholders:
9,800

Principal Shareholders
Percentage ofvoting rights (%)
9.27
7.30
4.99
3.60
2.88
2.85
2.34
2.20
2.06
1.85

Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Sumitomo Mitsui Banking Corporation
The Dai-ichi Life Insurance Company, Limited
SSBTC CLIENT OMNIBUS ACCOUNT
Aioi Nissay Dowa Insurance Co., Ltd.
BBH FOR MATTHEWS JAPAN FUND
Nisshin Steel Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
JP MORGAN CHASE BANK 385632

Notes: 1. The Company’s treasury stock (10,020,866 shares) is not included in the above.
2. The percentage of voting rights is calculated after excluding treasury stock.

Stock Price Trend
High (Yen)
  357
  367
  333
  492
  783
  925
1,113
1,165
1,624
1,449

April 1, 2009 – March 31, 2010
April 1, 2010 – March 31, 2011
April 1, 2011 – March 31, 2012
April 1, 2012 – March 31, 2013
April 1, 2013 – March 31, 2014
April 1, 2014 – March 31, 2015
April 1, 2015 – March 31, 2016
April 1, 2016 – March 31, 2017
April 1, 2017 – March 31, 2018
April 1, 2018 – March 31, 2019

Low (Yen)
  218
  204
  222
  282
  457
  598
  660
  793
1,016
1,135

Stock Price Range(Yen)(Yen)
25,0002,000
M Stock price (left scale)    Nikkei Stock Average (right scale)
22,5001,800
1,600

20,0001,400

17,5001,200

15,0001,000

12,500800

10,000

600

7,500

400

5,000

200

2,500

0

Jan. 2013

Jan. 2014

Jan. 2015

Jan. 2016

Jan. 2017

Jan. 2018

Jan. 2019

Jan. 2014

Jan. 2015

Jan. 2016

Jan. 2017

Jan. 2018

Jan. 20190

Trading Volume(Thousands of shares)
50,00040,00030,00020,00010,0000Jan. 2013

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2019

101

SANWA HOLDINGS CORPORATION
Shinjuku Mitsui Building 52FNishi-Shinjuku 2-1-1, Shinjuku-ku,
Tokyo 163-0478, Japan
Phone: +81-3-3346-3019

https://www.sanwa-hldgs.co.jp/english/